turning the downside upsidewhy talent management is now the top priority of Ceos
teresa Carroll
Global markets remain uneven and
unreliable, but the CEO mood is shifting.
Rather than waiting for the next piece of
news out of Europe, the US or China, the
world’s C-suite executives are stepping off
the roller coaster to chart their own course.
After three years of market volatility,
CEOs have come to one grand, unified
conclusion: they are confident that with the
right inputs, they can continue to grow.
In fact, 30% of public company CEOs
and 45% of emerging-company CEOs
anticipate significant growth through
2012—regardless of the volatile investment
climate. For many, this growth means
2 | turning the downside upside
Fear turns to motivation. In 2010 talent management was third on the list of CEO priorities. A year later it’s number one. What’s changed?
expanding in emerging markets, where the
economic recovery is most promising.
It seems that fear and trepidation has turned
to motivation and CEOs are now looking for
sound strategies to move forward through
rather than ‘waiting’ for the clouds to clear.
This newfound motivation and
confidence will mean fresh approaches
to some old problems. Above all, talent
management issues are rising to the
surface and CEOs are looking at these
with increased intensity and rigor.
In fact, it’s talent issues that dominate the
CEOs’ list of top challenges for 2011.
When asked about their top business
concerns for 2011, CEOs returned this list:
1. talent management
2. navigating risk
3. innovation
4. leadership development
When we consider that a company’s
ability to innovate and develop leaders
is largely dependent upon its ability to
attract, retain—but most importantly to
engage—talent, this shift in CEO priorities
makes sense. Here, we look at some
of the ways they plan on doing this.
“We pay much more attention now to making sure we understand and pressure-test the upside/downside of various decisions.” John v. FaraCi, Chairman and Ceo, international paper
To achieve growth within the current
economic and political climate, executives
are taking a more proactive approach to risk.
CEOs are asking their teams to be
more aware of the risk-reward tradeoff.
Volatility is no longer a reason to sit still,
so companies must adapt. Yet, in the
face of continued volatility and uncertain
public investment, organizations must
increase the veracity of the investment
analysis and apply more stringent stress
tests to ensure the risks are worth it.
3 | turning the downside upside
talent is required to address risk.
Adapting to the persistence of volatility is now a key issue for organizations, and they need the right people to help them do it.
Two-thirds of CEOs (67%) say
they will formally incorporate
risk scenarios into their
strategic planning.
Almost three-quarters (72%)
say they will devote more
senior management time to
addressing risk.
72%67%
4 | turning the downside upside
Innovative companies have our attention.
The world moves fast and people
want to know what’s coming next.
As such, CEOs are focused on innovation
as a key element of success in a climate of
ongoing volatility, and they’re confident
their innovations will succeed.
It’s clear, however, that CEOs already find
access to the right talent to execute on
transformative plans restrictive. Some 39%
of CEOs this year expect the majority of
their innovations to be co-developed.
Instead of direct hiring and working
through all elements of product or service
development internally, organizations see
the speed to market as equally critical
to success as the innovation itself.
talent is required to innovate. The appetite for change is strong and CEOs are looking to reorganize and realign their workforces to put innovation at their center.
78% expect their
development efforts to
generate ‘significant’ new
revenue opportunities over
the next three years.
79% believe innovation will
drive efficiencies and lead to
competitive advantage.
84% of CEOs have changed
strategies in the past two
years, effectively changing
their talent needs.
84%79%78%
5 | turning the downside upside
talent is required For good leadership. As job tenure continues to fall the outlook for companies looking to develop leadership ability over the long term faces serious setbacks.
CEOs worldwide recognize the need to
grow talent internally, but only 23% of
business leaders say their firms are “strong
at developing future leaders”. Already,
companies are facing an acute internal talent
supply problem:
• Shouldtheneedarise,51%ofcompanies
state they could not name a CEO
immediately and 39% report having no
internal candidates whatsoever.
• Ofthoseenjoyingstronginternaltalent,
64% are highly concerned about losing
those future leaders through voluntary
turnover.
• Morethanhalfofemployers(57%)saythe
talent shortage impacts key stakeholders.
Organizations are struggling with how to
develop agile leaders that possess the
business acumen and cultural savvy to
operate in a global market. In fact, 66%
of CEOs believe there is a limited supply
of candidates with the right skills, while
another study shows 75% of companies
are experiencing a deficiency in candidate
qualifications.
diFFiCulty Filling Jobs by Country
JApA
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TAIW
An U.S.
TURkEY
nEW zEAlAnd
BUlGARIA
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O
gerM
any
pana
Ma
COSTA RICA
ITAlY
AUSTRIA
cOlO
Mbia
HUnGARY
FRAnCE
SWEdEn
SOUTH AFRICApERU
IRElAnd
90%
80%
70%
60%
50%
40%
30%
20%
10%
6 | turning the downside upside
how will they meet these Challenges? CEOs know what they’re up against, now they must find the right adaptive strategies and lead their organizations through the change.
In this new reality, CEOs are looking to be proactive and adapt their organizations for success. As a result, three key talent trends have emerged for 2012:
1. Talent development: ensuring a strong supply or ‘talent pipeline’ and looking to diversify the talent pool are essential to filling growing vacancies in specialist and high-skill roles.
2. Talent retention and engagement: improving the critical measures of loyalty, commitment, and motivation is key to overcoming the list of CEO priorities for 2011.
3. Talent mobilization: talent is more mobile than ever and there is strong growth in repatriation as well as medium-term contracts for foreign workers to assist local talent learning to run new ventures/outsourcing projects.
“If we don’t solve the education issue then the problem will eventually degrade the private sector’s ability to recruit a capable workforce.”
tan sri dato’ azman hJ. mokhtar, managing direCtor, khazanah nasional berhad, malaysia
7 | turning the downside upside
1. talent development: improving pipeline and diversity. Recession has accentuated the shortage of required skills in the workforce. An ill-prepared talent pool is faced with skill requirements they simply cannot deliver.
CEOs are looking for immediate talent
pipeline improvement by expanding their
recruitmentstrategies.Manyareincreasing
their benefits packages, emphasizing
development opportunities, or broadening
their candidate search outside their country.
They are looking to develop a wider variety
of workers who will bring new talents,
skills, and ideas to the table—diversity and
pipeline are the key strategies for improving
the current rate of talent development.
MorethanhalfofceOssurveyedbypwc
(54%) say they are planning to work with
government and the education system to
improve the quality of the next generation
oftalent.Manyarealsooverhaulingtheir
internal programs and improving the
application of knowledge in the workplace.
Organizations are also shifting their talent
focus. They’re looking to underused
sources of talent and innovation—women,
older workers and outside contractors,
for instance—to feed the pipeline of skills
and ideas that will meet local demands.
There is also growth in the use of returning
expats.Manycompaniesenteringnew
markets are identifying local talent to send
abroad for training, or are repatriating
talent to their home regions.
MorethanhalfofceOssay
they are working to improve
the quality of the next
generation of talent.
54%
8 | turning the downside upside
2. talent engagement & retention: leveraging what you have.
With the economic recovery and expansion of the job market, leaders fear an exodus of star talent.
employee engagement has significantly
decreased in the past five years.
and executives are starting to
worry—close to two-thirds (63%)
are concerned about employee
retention over the next 12 months.
• amongglobalemployeessurveyedthis
past spring, just 35% expect to remain
with their current employer compared
with 45% in 2009. And, nearly two out
of three global employees surveyed
(65%) report they are either passively
or actively testing the market.
• generationyworkersareconsidered
most likely to be on the move, with 63%
of executives predicting an increase or
a significant increase in turnover among
this group, followed by Generation
x(ages30-44)at46percent.
most executives (70%) identify employee
engagement as a critical component
to achieving their business objectives.
Forward-looking companies are:
• Usingengagementstudiestoanticipate
and address barriers to inclusion,
productivity, or flight risks within
particular groups of employees.
• refocusingeffortsandinvestments
on those employees who will be
most valuable to their businesses in
light of their growth ambitions.
• Usingmorenon-financialrewards,such
as training and mentoring programs,
with a focus on career trajectories,
particularly for Generation Y employees.
• expandinguseofmoreflexible
work arrangements (telecommuting,
job-sharing, part-time) and non-
linear career paths to meet growing
work-life balance needs.
• Spreadingemployeestock
ownership more widely.
9 | turning the downside upside
3. talent mobility: moving the work and the worker. The near future will see a significant shift in talent mobility, as skilled employees from both emerging and mature markets increasingly operate across their home continent and beyond.
talent is more mobile than ever:
• This year, 59% of CEOs are planning
to send more staff on short- and long-
term international assignments.
• Manycompaniesareallowingemployees
to choose between international
assignments that are of interest, and that
will develop their leadership talent.
• Virtual assignments are on the rise, thanks
to technological tools such as instant
messaging, cloud computing and social
media, which facilitates collaboration.
in the long run, talent mobility has a
positive effect on the quality of workforces,
and on levels of innovation. talent
mobility manifests in a variety of ways.
• Expatriates are still widely used to
manage expansions, with organizations
in the Americas being the most
likely to have expat leaders.
• ‘Managementtrainers’arewidely
used for medium-term contracts so
that expansions/outsourced functions
can eventually be run by locals.
• repatriationisgrowing.Many
repatriated workers that are recruited to
return home are armed with skills and
business acumen developed abroad,
while retaining the valuable cultural
sensitivities of their home country.
ConClusion
10 | turning the downside upside
Ongoing market volatility, skills shortages,
and the increased pressure to adapt
to this new business reality have made
CEOs reassess the importance of talent
management in their organizations.
One year ago, talent management
was third on CEOs’ list of priorities,
now it’s number one. Three key
challenges of have driven this shift:
1. the need to proactively manage risk;
2. the need to innovate more,
and more often; and
3. the need for strong leaders to manage
a more complex business environment.
To ensure they get the most of the
talent they have, and to maximize their
chances of engaging the right, new
talent, CEOs are focusing on these three
key areas: talent development, talent
engagement and talent mobility.
This change in c-suite priorities offers a
valuable—and somewhat hopeful—lesson:
waiting for conditions to improve is no longer
an option. Instead, proactive management
of talent is the key to overcoming the
challenges of the next year and beyond.
11 | turning the downside upside
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about the author
As SVP, Centers of Excellence for Kelly Services, TERESA CARROLL is responsible for leading a team that manages the brand, develops solutions for clients, and supports Kelly’s vision of providing the world’s best workforce solutions.