The War for Talent as One of Top Global Risks
When it comes to the way that companies and organizations assess the risk of failure to either attract or retain talent, it is important to consider the impact that macro-environment can have on this issue. Global economic and political landscapes are volatile and constantly changing, so it’s necessary to consider how it affects an organization.
Economic factors are number one on the list. 8 years after the 2008 recession, the unemployment rate in the world’s biggest economies has decreased dramatically. The United States’ employment rate dipped 4.6%, while the United Kingdom’s dipped 4.8%, Germany shows a 4.2% decrease and Australia shows a 5.6% decrease. As the economic environment recovers its health, demand for talent easily surpases supply.
Moving on to demographic factors, it is known that aging in industrialized countries removes skilled employees out of the workforce a lot faster than they can be replaced. This can be observed in Japan, where 26.3% of the population is currently 65 years old or older. On the other hand, poor economic conditions and negative political climate cause severe talent and brain drain due to mass immigration. Greece, Italy, Spain and Venezuela are perfect examples of this phenomenon.
As for political factors, it can be observed that governments such as the United States and Europe turn to talented, hardworking and skillfull immigrants as a temporary solution to the problem of shortage of native labor force and talent. However, this measure has had consequences which are represented through immigration reforms that will undoubtedly reverse the original gains by making it difficult for immigrants to occupy important positions in fields such as technology, healthcare, and finance.
Last but not least, workplace factors also have a weigh on this issue. Workplace is defined by workers, and the Aon Hewitt’s People Trends in 2017 showed that it is indeed changing due to the addition of millennials who have different expectations about work, the rise of contingent workers, and ever changing work boundaries. Organizations are also forced to reconsider their value propositions and recruitment strategies because now they’re dealing with an expanding middle class in emerging markets.
Understandably, each one of these factors makes it more difficult for corporations to address the failure to attract and retain top talent. Aon’s 2017 survey shows that this risk is ranked at number 7, while respondents from the technology sector consider it a number three risk. This can be due to the fact that technologies are under more pressure than other industries to provide specific and quick solutions to complex issues, which creates demand for employees with flexible and specific skills.
To paint a picture, according to the United States government statistics, there are only 50,000 computer science graduates a year to cover more than 500,000 computing jobs that are currently vacant.
The truth is that failure to attract and retain top talent can have negative effects on the future of economic productivity, which means that it directly affects the competitiveness and profitability of companies all around. Most of these external factors are beyond the grasp of businesses, but experts consider that there are still measures that companies can employ in order to enhance their efforts and counter the risk.
Among the helpful measures, it is found that creating an ethical and friendly work culture is essential to both attracting and retaining talent. A survey made by Corporate Responsibility Magazine showed that 86% of females and 67% of males affirmed that they wouldn’t work at a company that had a bad reputation.
It is also worth considering that most people would accept lower pay if a company had an outstanding reputation and corporate culture. This is due to the fact that people want to know they can work somewhere that will allow them to grow as professionals. For talented people, professional development in the right company is more important than a big paycheck.
Experts at Aon Hewitt recommend that HR measures human capital like they measure financial capital, in terms of rigor and leverage, when it comes to filling talent gaps. Companies should also employ special skill training and development programs for both new talent and managers so that they can be able to meet needs that will arise as the company moves forwards. Training could include coding, data analytics, programming, communication, and negotiation.
When it comes to retaining the talent that companies can attract thanks to the aforementioned strategies, value propositions should be reconsidered and rethought by senior management and HR.
An Aon Hewitt report recently released shows that 43% of millennials will actively look for a new job in 2015 and their biggest motivation to do so is the feeling that their current employer’s values focus primarily on organization, rather than relationship-oriented values such as work/home balance, employee recognition, loyalty, and respect, which is ultimately what they look for.
Employee recognition is actually an overlooked factor that needs to be reassessed. According to Aon Hewitt’s People Trends of 2017, an effective recognition program can create a 40% difference in employee engagement. As a result, companies have been making an effort on finding unique ways to reward employees who want to trade free time for salary while other companies are focusing on telecommuting.
It’s also worth noting that organizations that provide tools for their workers to create a work/life balance will be more attractive to top talent given that workplace preferences are continuously evolving.
It is safe to conclude that organizations that overlook the risk of attracting and retaining top talent can easily lose the advantage necessary for them to thrive. When the organizations that have effectively incorporated all of these strategies are observed, it can be clearly noted that they gain the upper hand when it comes to both recruiting and retaining top talent.