The war for talent has been waging for two decades and shows no signs of abating. In fact, our new research shows that it’s heating up; by 2030 talent will be the resource in shortest supply. In this article we explore how to get your organisation ready to fight for your fair share.
A major commercial crisis is looming over organisations and economies throughout the world. A new Korn Kerry study, The Talent Crunch, shows that by 2030, demand for skilled talent will outstrip supply, resulting in a global talent shortage of more than 85 million workers. Signs are already emerging that there won’t be enough talent to go around; as soon as 2020 organisations will feel the pinch. Left unchecked, the financial impact of the talent shortage amounts to $8.5 trillion in unrealised annual revenue globally over the next 12 years, equivalent to the combined GDP of Germany and Japan. Australia alone could miss out on $68 billion in revenue due to labor shortages, or roughly 2 percent of our entire economy. Business leaders need to rethink their talent strategies and approach to talent management before skills deficit becomes an impediment to the growth of their companies.
Talent shortage is not a new phenomenon but when the term “war for talent” was coined in the 90s, the main issues affecting talent were about demographic changes leaving less people of working age in the workforce as well as globalisation opening a country’s talent pool to competition from other nations. Back then, there was still high demand for routine and low skilled manual work. At the time, the common approach to deal with talent shortages included aggressively hiring high performers and investing heavily in technology to improve productivity. At the turn of the century, organisations became more efficient with the introduction of personal computers, office productivity suites and email and were achieving short term objectives by hiring the best and brightest and disproportionally rewarding them. Think Enron, a classic case study of talent practices of that era.
But that was then. The war for talent today is more complex. The nature of work has changed, we are transitioning into a white collar workforce as the services industries continues to expand. With the rapid growth in automation, robotics and digitisation there is an increased need for highly skilled staff at all levels. And this is exactly where the acute skills shortage will hit Australia the hardest. The study forecasts that organisations will face a deficit of 739,000 tertiary educated workers by 2020 and it will deteriorate at a rate of 11.3 per cent annually to 2.2 million by 2030. Australia will also have critical shortages in the next level down. By 2020, with the deficit of vocational talent will be 538,000. The gap is expected to deteriorate at a rate of 14.8 per cent annually to 2.1 million by 2030.
Focusing on a few ’high performers’ and investing in technology alone will not prepare organisations for the talent crunch that is looming over the economy.
While the partnership between people and technology can help boost productivity, and advances in artificial intelligence promise even more gains, even significant productivity leaps will be insufficient to defuse the impact of the talent crunch.
Organisations need to continue to leverage advances in technology to evolve their business but it’s only by putting the spotlight on their people that they will reduce the impact that the talent crunch could have on their business. These are three key areas they need to focus to bring people centre stage:
Broaden the definition of talent, look for people with ‘learning agility’
Organisations need a process to categorise and identify potential but relying solely on high performers is a short-sighted approach because previous performance is not always an indication of future potential. Leaders need to look beyond the traditional definition of talent, question their assumptions and biases and create talent programs designed to bring people who do not have the traditional skill sets, into the organisation and to develop those already in the business.
In today’s volatile, fast-paced marketplace, there is one professional attribute that has become highly prized: Learning agility. Individuals exhibiting high levels of learning agility can adapt quickly in unfamiliar situations and even thrive amid chaos. They seek new challenges, solicit feedback, self-reflect, are flexible and resourceful and rapidly figure out the next best steps. Research show learning agility is a strong predictor of business success and organisations will benefit from assessing their talent population as well as external candidates for this ability.
Develop a comprehensive people strategy using strategic workforce planning (SWP)
Do you know that are the critical roles and skills your organisation will need to meet both short and long term objectives? SWP helps organisations determine the skills they need and what they should spend on human capital to generate maximum return on investment. The Korn Ferry framework to SWP identifies the 5 rightS to accurately define what workforce you’ll need in the future
- Right Size – getting the right amount of staff to reach your strategic goals efficiently and effectively.
- Right Skills – identifying gaps in your people’s skills, so you can plan your workforce the right way.
- Right Shape – getting your structure right doesn’t just mean that everything will run smoothly. It’ll also help enable and motivate your people.
- Right Site – as you continue to grow, it’s important to make sure you have the right people in the right places.
- Right Spend – invest the right amounts and spend less on the wrong things.
Find new ways of working
The role of diversity cannot be underestimated to plug talent gaps. Effective diversity programs provide a more robust talent pool for organisations, allowing them to attract and retain more top talent amidst today's shortage of skilled professionals.
Organisational structures need to change to accommodate more flexible work practices and bring together diverse teams.
Companies may need to look for solutions outside the organisation. Solutions for finding the skills they need may be in partnering with supplier, competitors, the government and educational institutions. For example, in the US automotive companies are partnering with community and technical colleges to produce highly skilled technicians for the industry.
The stakes are high and companies need to make changes now to defuse the impact of the talent crunch. Ultimately, the war will be won by businesses that make talent strategy a key priority and seriously reconsider their definition of talent and identify and acquire the skills they need for continuous growth.