Dennis Nally, Senior Partner at PwC, on the challenges companies face to recruit and retain talented people.
When it comes to talent, CEOs agree: while there have never been so many educated and mobile people in the world, recruiting the right ones – and getting them to where they are needed most – is more difficult than ever.
This challenge comes up time and again in my conversations with business leaders around the world. And it was also one of the key findings of PwC’s recent Global CEO Survey. Over half of the CEOs surveyed – and 62% in the Asia-Pacific region, home to the world’s largest workforce and fastest-growing economies – said that being unable to find key skills could hurt their ability to grow.
The reason is a chronic skills gaps and a mismatch between supply and demand. The rise of emerging markets is creating jobs in places where it is hard to find the right people. International and local competition for workers who do have the right skills is growing increasingly intense. New kinds of jobs are being created – in old and new industries – for which many recent university graduates are poorly equipped. And the demand is not limited to technical know-how; companies are looking for international experience, wide-ranging “soft” skills, and adaptability.
Meanwhile, demographic trends, particularly in developed economies, are causing the workforce to shrink and giving rise to a new generation of employees with different expectations. The labor pool is getting smaller as people age and birth rates fall. And highly demanding young people, weaned on technology, have a much different perspective on work, flexibility, and rewards. Retention is also a major problem in many countries, particularly in emerging markets. Spiraling compensation is partly to blame for job-hopping, but loyalty is falling for other reasons as well.
There is no easy solution to these problems. Tapping into under-used areas of the labor pool – like women and older workers – can help companies as they face the talent crisis. But, while more and more companies are investing in diversity and inclusion, they are still struggling to get real results.
One thing is certain: to meet these challenges, companies cannot keep doing what they have done before. Business leaders need to think more strategically about how they manage their workforce – fueling planned growth with the right people, who have the right skills, in the right locations. This sounds like a simple plan, but implementing it in our interconnected global marketplace is increasingly difficult.
Better workforce planning is a start. This can help businesses to make informed decisions about what resources they need and what is available in which locations.
A deep understanding of, and respect for, what employees genuinely value is a vital step toward shaping an organization that attracts, motivates, and retains the best talent, at every level, in every location. Another important step is to forge ties with the providers of new talent – schools, universities, and apprenticeship programs. The traditional education curriculum is not keeping pace with change and meeting the needs of business; but effecting change requires business leaders to engage fully with educators and policymakers.
There are signs that things are changing for the better. Companies are starting to take a longer-term, strategic approach to closing the gap between what they have, what they need, and what’s out there. This includes focusing at the leadership level on good succession plans, mobility strategies, and diversity programs – not relegating these initiatives to a business-planning afterthought.
Undertaking this kind of analysis and forecasting becomes more even crucial when companies enter new markets where different risks (local skills shortages, high turnover, soaring costs) can easily mean the difference between success and failure. As the alignment of personnel strategies with business goals become more critical, the role of human-resources issues grows in significance. Talent plans become an integral element of business plans.
I will be moderating a session at the 2013 World Economic Forum Annual Meeting in Davos called “The Human Capital Context.” The session will look at the strategic shifts and transformational issues that are making human-resources challenges a central concern for companies. The session will address the true depth of the talent problem, the structural nature of youth unemployment, and the impact of technology on workforce education. It promises to be an interesting, lively – and significant – debate.
Author: Dennis Nally is Chairman and Senior Partner, PwC.
Published in collaboration with http://www.project-syndicate.org.
Image: People are waiting in line for a job fair in New York REUTERS/Shannon Stapleton