A Perfect Storm is Coming

In 1997 Mc Kinseyís termed the phrase ìWar for Talentî and the following few years were characterised by a critical shortage of skilled talent fuelled by economic expansion, the emergence of the dotcom sector, expansion in the Technology arena, growth in consulting fortunes and the rise of the service industry. As we began to enter the era of the ìGeneration Yî worker there was a shortage of key skills in the available population. Many firms struggled to secure the talent required for growth and wages spiralled. Heady exuberance in packages on offer took the war out of the reach of many firms. Companies were forced to compromise on talent and those who did not act were weakened and when the exuberance abated in 2001, as the good times slowed, they suffered further.

All Line Managers and Human Resource professionals need to make a diary note for January 2007. A decade on from its origination by McKinseyís, 2007 will see the return of the War for Talent, however, there is going to be some significant differences, this time itís going to be Global affecting all levels of employee in all functions, a ìPerfect Stormî in talent terms.

The 1997 War was largely localised in country, contained within a few skill functions and did not affect all business sectors. Firms were either feeding grounds for the boom enterprises hiring in the late 90ís or were trying to outpace their opposition. This time, driven by a number of additional factors examined below, the second war for talent will be truly global and far-reaching.

A confidential survey Antal has undertaken of mid to senior executives in firms across markets in EMEA, CEE and Asia shows that 34% would consider a move in 2007.

This is mainly due to increased market confidence and greater awareness of their appreciating market value. When added to expected general levels of staff turnover, competitor hiring and those addressing satisfaction issues, the result is a turnover storm of epic proportions.

72% of employers are forecasting up to 12% new job growth in 2007. Alone, this job creation wonít start the war, but when combined with higher staff turnover and other factors, it will exacerbate it.

Recently published data across EMEA and Asia demonstrates that over a quarter of employees are not fully satisfied, evidenced in employee feedback, increased workplace stress and work-life balance issues rising.

Companies held the power in the ìEmployer marketî of the last 5 years and in that environment some paid less attention to employee motivation, retention, engagement and work-life balance than perhaps they should have.

Salaries have stayed relatively flat in recent years and fewer promotion opportunities have been widely available. Many businesses have reported productivity gains but against a backdrop of falling morale.

It is much easier today for employees to appraise themselves of their market value and to review available positions on countless job boards and corporate sites. Discrete job surfing remains one of the most popular uses of the Internet. The rise of jobs-by-email functionality means they donít need to publicise their resume and jobs come to them direct.

Increasing numbers of senior managers have started to leave the workplace and this generation ages further it will grow leading to critical shortages of experienced managers, creating a Leadership and Experience Gap. Our survey found that over 25% of senior managers were considering retirement within 5 years.

Generation Y workers (those born in the 70ís to 90ís) are increasingly likely to change jobs more often. They have grown up in a world of immediacy and fast change and view a change of employer as a positive way of increasing their worth, advancing careers more quickly. Many see a position lasting up to 2.5 years as sufficient. Average tenure in firms is dropping in the under 30 age ranges.

So that these factors donít aggravate staff turnover in the January ìtransfer windowî quick thinking Hiring Managers are acting today to address these issues.

Picture this ñ It is early 2007, your own new headcount needs to be filled, as does that of your competitors, employee confidence in the market place grows, theyëre more comfortable looking externally for opportunity, ìjob security paralysisî becomes less of a factor and a large section move, some of your senior managers retire or seek more work life balance, your generation Yís begin their quest for the ìnext best thingî and move on, the best executives have moved early and are already locked-in to new firms, new entrants open in your market trying to attract your talentÖ and whatís more, this happens in all your locations.

This War for Talent is going to be global. With recent increased investment in boom markets like Russia, Eastern Europe, China and Latin America, companies wont just be fighting for talent in their domestic market, they will be engaged in a battle on all fronts. Employers will face the same issues of attraction, recruitment, retention, motivation and leadership development in every location they have expanded into around the globe.

Over the last decade, firms have internationalised far more than ever before, sourcing and production has moved to different countries such as China or Eastern Europe, massive new B2B and consumer markets have opened in emerging markets like Latin America and China leading companies to expand sales and operations internationally to tap this lucrative market opportunity. Often the easiest route into a new market for others is to target experienced people at competitor firms, buying in valuable local knowledge and experience.

In 2007, the cost imperative of globalisation and the faster pace of opening operations internationally will further the boom in emerging markets. FDI, new office and manufacturing facility openings are set to grow exponentially in 2007, fuelling the storm in even remote locations.

Antal polled a selected number of clients to see how they are preparing to head off the storm and some areas where they are taking action include:

- An increase in availability of remote access allowing staff to work remotely on selected days.

- More use of ìgolden handcuffsî to lock in top talent and more benchmarking of salaries to market.

- A sharper focus on the individual, identifying and nurturing ìRising Starsî in every corner of their global businesses.

- Greater use of recruitment technology and web sourcing and more use of diverse sourcing methodologies.

- As salaries and packages start to rise and talent pools dry up, companies are turning to flexible workers and an increased use of contractors in IT, Accountancy, HR and Marketing is envisaged in many markets.

- Firms focus more on the core aspects of the business, outsourcing non-core activities in areas like IT, Call Centres, Customer Service, Recruitment, Media Management.

- Far more focus on retention, with increased line manager input and reworked retention plans.

- Greater emphasis on the ìsellî of the company and opportunity to potential employees at interview.

- More HR time spent on areas like Talent Development, Leadership Development, and Compensation and Benefits with less focus on administrative tasks.

- Early search activity ñ many firms are starting to look for talent now ñ acting before the market heats up, enabling the best to be hand picked early.

- Selecting service providers with international reach to tap global talent pools.

- More non-salary elements available for new hires including sign-on bonuses, contracted reviews with set increments agreed at offer stage, higher relocation packages and increased employee referral incentives.

While some companies in our survey have clearly learnt from the last war for talent, many have not yet begun to act and risk becoming a casualty of the next one. Forward thinking managers are preparing now before the storm breaks.