Talent Management Challenges Impede Growth Prospects
As companies worldwide begin to position themselves for future growth in the face of an uncertain economic recovery, a new survey finds that concerns over their ability to attract and retain key talent, or to plan for an orderly replacement of talent, could thwart those efforts. The survey also found significant gaps in employers’ capabilities to address talent management and succession planning issues.
The Towers Watson Strategies for Growth study, a survey of more than 700 companies globally, revealed that talent — finding it and keeping it — is the biggest potential workforce obstacle to achieving growth. Specifically, more than half of the respondents worldwide (51%) cited the loss of talent in key skill areas as a workforce challenge that could hinder growth. Slightly fewer (49%) cited the lack of succession planning as a top challenge, while 38% noted concerns about attracting necessary talent.
Regionally, the survey revealed some divergence, which tended to track with the differing economic climate in various parts of the world. North American companies are less concerned about loss of key talent than their counterparts in other regions, but are more concerned about levels of disengagement among employees. In Asia Pacific, disengagement is not a major issue, but the inability to pay workers competitively is, reflecting the region’s fairly young and mobile workers, who are willing to change jobs frequently to advance their careers and raise their paychecks. Respondents in Europe are more worried about the talent drain’s impact on management succession planning.
Only a quarter or slightly more of the respondents indicated they have an appropriate capability in place for acquiring talent (29%) or retaining talent (25%). Even fewer (21%) have a sufficient capability for succession planning. These gaps appeared in all the regions, but were particularly significant in Asia Pacific, where formal and structured HR processes are generally somewhat newer.
Some highlights of the survey:
Expectations for financial performance are modest. While the majority of respondents across the globe expect some growth (Figure 1), about half expect their own company’s growth to be modest rather than significant. (This optimism regarding even modest growth may be due to timing: When the survey was conducted in September, economic indicators were up. Currently, however, the International Monetary Fund predicts lower-than-expected growth in every region except Asia Pacific.)
Figure 1. Expectations for financial performance — 2011 vs. 2010
Companies look to top-line strategies to drive growth. Rather than focusing on cost cutting and other bottom-line measures, companies will look to organic, top-line strategies, including expanding new products and services, and entering new markets(Figure 2). Significant expense reduction and mergers and acquisitions fall to the bottom of the list, with fewer than half of respondents citing those as top growth strategies.
Figure 2. Top five strategies to drive growth
Workforce challenges could hinder these strategies. Across all regions, respondents said that loss of key talent, lack of succession planning and management, and inability to attract the necessary talent could hinder their growth plans (Figure 3). However, there were some points of divergence, with North American respondents less concerned about loss of key talent (not surprising given the extent of layoffs in the U.S.) and Asia Pacific respondents more concerned about their ability to pay competitively. European respondents were more concerned about the linked issues of management talent drain and succession.
Figure 3. Top five workforce challenges
Workforce cost management is here to stay. While 33% of respondents in Europe and North America said their companies will continue to cut staff, respondents in other regions appear to have moved on to more sustainable cost management initiatives such as restricting travel and tighter bonus criteria. Regardless of the tactics, however, our findings clearly show that workforce cost management is not going away anytime soon.
For additional information and to download the full survey, please visit:http://www.towerswatson.com/research/3371