competitive futures steep report: the future of the talent crunch

8/6/2019 Competitive Futures STEEP Report: The Future of the Talent Crunch

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A monthly report to keep you thinking aboutthe strategic impact of

society, technology, economics,

ecology and politics.

September 2007


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This months issue:

The Upcoming Talent Crunch

2007 - 2027


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Welcome to The STEEP Report.

Here at Competitive Futures, we work everyday with leaders of business and government to help

them anticipate and profit from future trends.

Our clients have been asking us to develop a different kind of strategic update service. Many of our

clients have subscriptions to services that bombard them with interesting facts about the changing

world hundreds of emails a week! They said to us, Give me ONE trend, ONE thing to tell my

CEO about if I get him in the elevator. Give me ONE interesting trend per month and what to do

about it.

Once a month, the STEEP Reportbrings you the most important developments in Society,

Technology, Economics, Ecology, and Politics. Our goal is to give you a five- to twenty-year

perspective on the major changes of the day the long-view in a world that prizes next quarter

thinking. Unlike many news services that simply push data on you, The STEEP Report brings you

strategic implications and recommendations from both our own analysts and world-renowned

subject matter experts.We bring you the future, what it means, and what you can do today to profit

tomorrow.

I look forward to helping you inspire vigorous strategic discussions and also to help you create a

culture offuture-focusedleaders, wherever you are.

Yours,

Eric Garland

Eric GarlandPrincipal

Competitive Futures, Inc.

AboutTHE STEEP REPORT: a monthlyservice tohelpbusinesses

anticipate andprofitfrom whats next


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ThinkS.T.E.E.P. to anticipate future trends

Why do we talk about S.T.E.E.P.? What does it mean?

If you happened to read Eric GarlandsFuture Inc: How Businesses Can

Anticipate and Profit from Whats NEXT, then you remember that one of

the biggest reasons companies are surprised by the future is that they dont

look at changes outside of their own industries. (Record companies were

caught flatfooted by the expansion of the home computer and the MP3, and

ended up suing teenagers, for example.)

One remedy we recommend is to look beyond your industry in a

systematic way dividing up trends into groups such asSociety,Technology,Economics,Ecology andPolitics. This forces you to

consider broader changes that are not obvious, not directly from your

industry or right in front of your nose. This is essential in a rapidly-changing

global economy! Here at Competitive Futures we say the world is

superconnected meaning that family trends, the Internet, biotechnology,

agriculture, beer, air travel its ALL going to change your future. So you

must stay on top of all kinds of trends.

As such, not every issue of The STEEP Report will appear to pertain

directly to you. But think deeper it will likely mean something to your

customers, your suppliers, the government.

Combine insights about this broader future with your tactical, day-to-

day, cash-register-filling activities, and youre practicingfuture intelligence.


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The STEEP Report is designed to help you developa culture offuture intelligence

The STEEP Report is just one tool to use in developing a culture offuture intelligence.

The Future Intelligence System, elaborated in Eric Garlands bookFuture Inc.:HowBusinesses Can Anticipate and Profit from Whats Next, shows that there is an organized,

rigorous way to bring the future into the strategic thinking of your organization. There are

six steps:

Systems thinking thinking broadly

Trend analysis collecting reliable data about the future

Forecast assessment considering the opinion of experts

Implications analysis - asking what it all means

Scenario generation weighing several strategiesCommunications - sharing your insights with others

The STEEP Report is a point of departure for several of these steps, specifically systems

thinking, trend analysis, and implications. Our goal is to bring you the larger system, the

relevant trends, and some thinking about what it all means.

The rest is up to you we hope youll use this series of reports to get your organization

talking about what these changes mean (implications) and how trends could combine indifferent ways (scenarios) and to bring more of your company into the discussion

(communications).

In the end, we hope this motivates profitable action ahead of the competition.

Please let us know any feedback at [email protected].


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Sept 2007 STEEP Report: At a glanceThe Big Picture

Overview60 Seconds with the CEO

Systems MapTimeline

The TrendsTrend #1: Aging populations leads to mass retirement

Trend #2: International competition for talentTrend #3: Increase in knowledge-based industries

Trend #4: Generation X & Y taking power, with different values

What to do TodayStrategic implications

Recommendation


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The Big Picture60 Seconds with the CEO

OverviewSystem MapThe Timeline


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When the Boomers retire, your company is going to be strapped for talent. This you know.Remember that nearly EVERY company throughout the industrialized world is going to belacking skilled workers, and thus competing for the same brains.

There are two major fixes: Recruitment, and knowledge management. The smart money ispreparing human capital systems that attract and keep top people and keep valuableknowledge in your company any way you can.

When this crisis hits over the next 15 years, successful companies may be defined by thosewho build theirhuman resources today.

HUG A 30 YEAR OLD.

Loss ofhuman capital due to global aging and mass retirement will challenge long-termprofitability. To assure your success over the next fifteen years, your organization must take

a proactive approach

toh

uman capital and knowledge management.


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Alumni

relations

Demographics

Education

RecruitmentRetention

Workforce

Development

Retirement

WILDCARD:

Technology:

Will robots & IT

help any of this?

Gen Y needs

work skills in

addition to their

tech savvy

Generation X

needs leadership

training

Boomers demandthe new retirement:

Half retirement,

Late retirement,

NO retirement

Form consulting

relationships with

retirees an alumni

network

Skyrocketing cost

of college and grad

school makes

young workers

more indebted

than ever

Unprecedented

global aging sends

millions of experts

into retirement

New immigration:

H1B Visas hard to

get

Branding & marketing as important for

HR as it is customers!

Talent poaching

may be more

important than

price wars in thecompetition of

tomorrow Need for avariety of

compensation:

Money, time,

education,

lifestyle

Outsourcing

increases to find

scarce talent

TALENT CRUNCH

2007 2025

A systems view

Birthrate

insufficient to

provide enough

workers

Immigrants starting to go BACK

after working in USA

Trend #3:

Industries more

knowledge-

based than ever

Trend #1: Aging

populations

around the world

Trend #4: Gen X

& Y ascending to

management

Trend #2: Global

demand for

talent increasing


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2009 2013 2017 2020 202720072007: Business

and government

begins to takethe upcoming

talent crunchseriously

Now, whatcomes next?

2015: Missing200,000doctors,

800,000 nursesin the USA

alone!

2010: Millions ofBoomersdiscover

$50,000 notenough to retire,seek consulting

positions

2011: More Latinosreturning home to takeadvantage of booming

economy in Mexico, CostaRico, not to mention good

coffee, fresh fruit, goodmusic.

YOU, 2020:Did you use the trends yousee here to anticipate and

profit from whats next,ordidthese developments

take youbysurprise?

2012 :Peoplehiring ANY 26year old off the

street to bedirector of

marketing gotta have

someone, right?

TIMELINE: A short history of the future

2020: Chinaneeds 1.1

billion workersto operate its

economy

InFuture Intelligence, we like to seethe next 15 years of developments

and compare them with what weexpect in our own industry.

What does yourtimeline look like?

2009: Lack of

engineers andscientistsintensifies


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The Trends


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Four major trends are making human resourcesa strategic issues for the next fifteen years

MASS GLOBAL RETIREMENT

INTERNATIONAL COMPETITION FOR TALENT

INCREASINGLY KNOWLEDGE-based industries

Generation x & y take power and havedifferent values


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Trend #1: Global aging leads to mass retirement

50% of top execs at Fortune 500 ready toretire within five years

Italy: Rapidlyaging population,birthrate of only

1.2

Federal government losing people enmasse: 60% of total federal workforce,90% of senior executive staff in next tenyears

Healthcare workforce: Short 200,000doctors, 800,000 nurses by 2020

U.S. Fed Chief Ben Bernanke:Avoiding dealing with the Boomerretirement may harm the U.S.economy.

U.S. Defense contractor: We expect 2/3 of

our engineering staff to leave within 5 8years.

Japan: TurningDaycare Centersright into SeniorCare Centers

Worldwide, the Boom Generation(born 1945 1961) is preparing to

leave the workforce. Its effect will beunprecedented in the history ofindustry

Most

industrializedcountries areunprepared

for the shock!


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Twenty- and thirty-somethings remain hungry to provethemselves, to buy houses, and to pay off recently-

acquired student loan debt. So Boomers may stay in the

workforce, but they wont be a replacement for hungry,

motivated, (indebted) talent.

Lets take a second away from strategy to deal with a particular psychological

blindspot in America. At Competitive Futures, we have heard people try to

dismiss the impact of the aging and talent crunch trend, implying that

Boomers will be differentin their old age. After all, for Boomers it was Life

Begins at 40 then Fabulous at 50, and now even

60 is the new 40.

IT AINT. And thats not because of Boomers, who may in fact be more social,

healthy, and active than previous generations of sixty- and seventy-

somethings. Its not about Boomers being different.Its that 30 is about the

same as it ever was.

But wait, were Boomersand we feel great.

Isnt 60 just the new 40?

COMPETITIVE FUTURESNEWSFLASH:60 IS NOT

THENEW40.


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Not shockingly, 2/3 of Boomers want aphased-retirement some work, some play

The IRS has put forth a proposal to allow workers tocollect salary, social security

It used to be a pretty straight line from the office chair to the rocking chair. But there arefinancial and industrial realities that may change what the next retirement looks like.

So Boomers may not leave the workforce entirely, but will likely create

THE NEW RETIREMENT

ITEM: 55% of Boomers aged 45 54have less than $50,000 saved toward

retirement. 66% have less than$100,000. 90% have less than $250,000


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Trend #2: Competition for talent is global

Indias thriving economy is leading directly to a homegrown talent crunch. Due to the linguistic and cultural barriersinherent in global work, only25% of tech grads and 10-15% of general grads in India are ready for work withWestern companies

Australia and New Zealand are especially looking for talent 61% of companies report difficulty finding appropriatecandidates

As Latin America increases in prosperity, its brain drain of the 1970s, 80s, and 90s, due largely to civil strife, iscausing a lack of homegrown talent

A dangerous assumption people make is, Well, if wereshort of talent, well just import more from (Mexico,Turkey, Philippines - wherever.)

Not sofast. The critical, oft-forgotten aspect about globalaging and talent crisis is that its GLOBAL! Just as manycountries are establishing advanced industries, they arebecoming crippled for talent.


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Trend #3: Industries are becoming more

knowledge-based than ever.

According to the U.S. Dept. of Education: 60% of all new jobs in the 21st century willrequire skills that are possessed by only 20% of the current workforce.

Research and development is more essential than capital investment for future success--the top-ten R&D spenders increased R&D by 42% since 2000, while only increasingcapital investments 2% in the same period. Businesses are investing in brains.

China and India are taking the next step into value-added products the more complextheir economy becomes, the more they require brains as well. Consider the billions ofdollars they are investing in nanotechnology. They arent just looking for simplemachinists or guys who can paint. Asian industries are becoming every bit asknowledge-intensive as Western ones.

In short, replacing people is going to get even harder, because world-classcompanies are increasingly driven by innovation and intellectual capital

than by physical capital and brute strength.


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Trend #4: Generation X & Y ascending to power

but with a different set of values

Slackers

Apathetic

Cynical

Rebellious againsttraditionalauthority

Since were talking about attracting the next wave of talent, it bears mentioning that the people for

which you are competing are going to be a bit different than past generations.Lets have a quick look.

Generation X

Cliches

Generation Y

Cliches

Old stereotypes that have been beaten to death in the media

Selfish

Whiners

Creative

Never even heardof how traditional

authority issupposed to work


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Think deeper about these upcoming generations and howthey will LEAD, not just how they work! The point is, they

are soon to be LEADERS!

The job market has neverbeen good or stable for

either generation. Even the Dot Com boom was

chaotic, if well-paid.

Degree inflation has required Gen X and Y to get

lots of expensive masters degrees they are

chomping at the bit for real jobs

Both generations are in record levels of debt

housing and education costs have skyrocketed well

ahead of wages

Gen Y is the YouTube community, and virtual

networks are more comfortable than typical military-

styled hierarchies

Cliches aside heres the real issue:

Gen X and Y will be entering positions ofresponsibility very quickly once people

begin to retire and they lack managerialexperience as well as practical business

experience.

Trend #4: Generation X & Y ascending to power

but with a different set of values


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What To Do Today


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Strategic implications

why you should care

Strengthening

human resources

is one of the keys

to the future of

competition

Need forimmigration will

exacerbate ethnic

tensions

especially in

Europe and Asia

Likely, in your career, human resources has been the office that deals withhealth insurance paperwork and runs the career fair at the college. They areabout to be the lynchpin in ALL of your strategic plans.

We can talk glibly about talent crossing boundaries, but not every nation isculturally ready to accept new people. Japan and Europe need MILLIONS ofworkers, but they will have to come from other countries. This is going to meanethnic tensions unprecedented in their history. The United States and Canadamay benefit as places that have practical experience bringing in new cultures.

Information isheaded for the golf

course and must

be caught on the

way out the door!

Chances are, you will never hire and train enough people to make up for thetalent getting ready to walk out the door, especially in very technical fields. Tomake up, you must improve your knowledge management systems, capturingtacit-but-vital knowledge from your talent before they retire.


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Strategic implications

why you should care

India, China, Latin

America, and

other economies

will be

constrained by

this talent crunch

Consulting /outplacement

firms will catch up

the slack but at a

cost

For years, we have heard about how fearsome India and China are as

competitors. As the talent crunch hits, they will be just as susceptible as

everyone to the lack of talent. Manufacturing may not just be about price

when engineers start aging in Asia.

Consulting firms and other contractors are often used to make up fortalent that their customers cannot find. As the talent crunch hits, many

organizations will turn to them as a short-term fix. Naturally, the more

that talent is found this way, the more labor costs will increase.

Dont expect other countries to take this lying down- according to

Manpower, the Malaysian government is planning to offer significant

come home bonuses. As standards of living increase throughout the

developed world, it will be more difficult to attract top talent from abroad

they may be living quite well where they are!

Smaller nations

will fight to keeptheir homegrown

talent


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Recommended options:

What can you do today?

Start an alumni

network

Long-termrelationships are the

key to profit

Knowledge capture,expert systems

Audit your humancapital balance sheet

You study all kinds of risk when you make future plans. Quick how much is yourhuman capital worth?Where are you lacking? If you dont know the answer findout now! By the way, the HR Department may not have a reliable way to give younumbers its still a new field!

Part of a long-term approach to relationships is keeping in touch with people afterthey leave whether they are 30 or 70. Facebook is already offering socialnetworking for companies. Think of ways to keep people involved after they leave

your company. Youll need access to those brains!

We always hear Oh, theres no loyalty anymore. Hey, for years theres been noloyalty on anything not in a world where companies are bought, refinanced,downsized, and shipped overseas. But today is a perfect day to start thinking abouteverything in terms of long-term relationships with people. Your future profitability

will depend on keeping people and their knowledge over the long term.

At the very least, you should attempt to capture the lessons learned of your mostexperienced employees. Some corporations are using corporate historians tochronicle these lessons in an organized way. But you may want to go further. Back inthe 1970s and 80s, people started experimenting with expert systems software-

based processes that would mimic the decision-making ability of the pilots,surgeons, and other specialists. It didnt work that well at the time. Tomorrow, there

will be new impetus to make up for the lack of expertise it could work this timearound.


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Recommended options:

What can you do today?

Make friends withUniversities

Have multiple

retirement options

for employees

We talk about the future of retirement. Have you asked what your employees want?One study showed that 93% of executives surveyed believe aging workers want toremain in the workforce for financial reasons but a whopping 80% of them have

not asked their aging workers about their intentions and their needs! So ask today and start to design custom retirement options.

The American Association of Colleges and Employers says one best practice is to

forge long-term relationships with the universities and colleges that will be trainingyour next workforce. This may be more than just sponsoring basketball games andcoming to the jobs fair. Do you have a network of career professionals at your localuniversities?What about the people who make the curricula for the professions youneed most? Time to forge closer ties.

Mentor, mentor,mentor

For decades, employers have had their pick of Boomer aged talent after all, thegeneration is just so big, there is lots to choose from! This has had an unintendedconsequence many companies look around and realize they havent plannedsufficiently for a succession plan. MENTORING is the answer. Hug a 30 year oldtoday they are about to get scarce. Pick leaders in your organization while they are

young and offer them long-term career ladder. Trust us Generation X isnt used to

that kind of treatment!

Brand yourself as agreat place to work

over a lifetime

Branding its not just for customers anymore. Since you are about to be trying ashard to get talent as you are customers, your branding must serve two roles. Youmust show your products are great, but just as importantly, you must show what agreat choice you are an employer. After all, young talent is going to get so scarce,they will have their pick of companies. Start branding now.


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Find Out More

The Talent Crunch is a complex topic and means different things todifferent organizations.

We hope youll use this briefing as just the beginning of this subject.

For more, check out the references included below.


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Find out more: Books

Lost Knowledge: Confronting the Threat of an AgingWorkforce by David Delong

Doing Nothing is NOT an Option!: Facing the Imminent Labor Crisis,

Robert Critchley

The 2010 Meltdown: Solving the Impending Jobs CrisisBy Edward Gordon

Bridging the Generation Gap: How to Get Radio Babies, Boomers,

Gen Xers, And Gen Yers to Work Together And Achieve More by LindaGravett and Robin Throckmorton

And many other titles.


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Find out more: Articles

Winning the TalentWars by Lars Daggardhttp://www.businessweek.com/careers/content/feb2007/ca20070207_039145.htm?chan=search

How Boomerang Recruiting Brings Valued Execs Back (from 2000)http://www.businessweek.com/careers/content/jul2000/ca20000726_862.htm?chan=search

The Future of the Global Workforce January 2006 registration requiredhttp://www.forbes.com/leadership/2005/12/30/manpower-careers-employment-cx_0102mckinsey.html

Few U.S. Employers Retain, Recruit Older Workers Despite Feeling the Crunch from Talent Shortageshttp://www.thematuremarket.com/SeniorStrategic/manpower_seniors-8955-5.html

The Battle for Brainpower The Economist October 2006http://www.economist.com/surveys/displayStory.cfm?story_id=7961894

Generation Y: What is With You People and 8:30 AM? Harvard Business Review Online; July 2007;http://discussionleader.hbsp.com/erickson/2007/07/what_is_it_with_you_people_and_1.html

Generarion Y at the workplace http://www.usatoday.com/money/workplace/2005-11-06-gen-y_x.htm

Dealing with Generation Gap at the Workplace, http://www.cnn.com/HEALTH/library/WL/00045.html

Generation X and the Work-Life Balance http://www.careerjournal.com/hrcenter/articles/20051205-chao.html

Generation X Retention Tips http://www.fastcompany.com/articles/2007/06/retaining-younger-workers.html?partner=rss-alert


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Addendum:Talent Crunch - By the Numbers

Figure Source

According to research from the International Workforce Survey ofMay 2007, 68% of companies worldwide do not have an employer

brand strategy.

Robert Half Financial Services Group

http://www.accountemps.net/Site/showpage.jsp?s=RHB_UKE&p=PRESS_DETAIL&prid=449

Only 25% of technical graduates and 10-15% of general graduates aresuitable for employment in offshore IT/BPO industries in India.

The Hindu, February 2, 2006.

www.thehindu.com/2006/02/02/stories/2006020206230400.htm

69% of surveyed HR practitioners said that attracting new talentposed the greatest threat to competitiveness.

Deloitte LLC, May 19, 2005

http://www.deloitte.com/dtt/press_release/0,1014,sid%253D2834%2526cid%253D94680,00.html

90% of companies surveyed in a March 2007 study by ERC reportedhaving difficulty finding the talent they needed; 20% considered theproblem severe.

Worldwide ERC

http://www.erc.org/news_events/Press_Releases/03-05-07_newhire.shtml

55% of boomers aged 45-54 have less than $50,000 saved forretirement; 2/3 have less than $100,000 saved.

USNews & World Report, June 5, 2005

http://www.usnews.com/usnews/biztech/articles/050613/13sque

eze.htmNearly two-thirds of workers over 50 hope to scale down their hoursor work in a flexible environment before retiring completely.

WatsonWyattWorldwide

http://www.watsonwyatt.com/research/resrender.asp?id=w-731&page=1

According to AARP, 69% of workers plan to work in some capacity intheir retirement years or not retire at all.

AARP

http://www.aarp.org/money/careers/employerresourcecenter/trends/business_case_for_workers_age_50_key_findings.html


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Coming next month in:

The slow collapse of theA

mericanhealt

hcare system


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ContactFor more information or to discuss what

this means for you, contact:

[email protected](202) 508-1496

competitive futures steep report: the future of the talent crunch

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