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Contact: Tom Wilson
Deloitte
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Impending baby boomer retirements, a widening skills gap and outdated approaches to talent management are combining forces to produce a “perfect storm” that threatens long-term business performance, according to a new survey conducted by the Human Capital practice of Deloitte.

In a global survey, 69% of the 1396 human resources practitioners surveyed say attracting new talent poses the greatest threat to competitiveness, followed by the inability to retain key talent (66%) and incoming workers with inadequate skills (34%). These survey findings are underscored in a Deloitte research report, “It’s 2008: do you know where your talent is? Why acquisition and retention strategies don’t work.”

“Deloitte’s new research points to an inescapable conclusion: the widening skills gap is a global phenomenon, particularly among the categories of key workers who disproportionately drive an organisation’s performance,” says Cormac Hughes, a partner at Deloitte. “This trend will leave behind companies that do not begin to rethink their approach to talent management.”

With Ireland’s economy operating close to full employment, Hughes adds that talent shortages are not only a concern for the HR departments in Irish businesses, but are also a top priority of senior management and solving this problem is no longer the sole purview of HR.

Hughes says that organisations are offering money, perks and new challenges in order to attract and retain staff. However, such knee-jerk measures are often ineffective, he says, because there is inadequate medium and long term resource planning.

“Rather than fight a futile ‘war for talent’, business leaders should ‘build talent’ by looking within their organisations for the critical skills, knowledge and attributes required to execute their company’s most important roles, while continuing to seek to attract the best people,” comments Hughes.

Hughes adds: “Irish companies can avoid sustaining a direct hit from the looming talent crisis by rethinking and reinventing their talent management processes into a well-designed talent strategy that drives productivity and differentiates a company from its competitors.”

Draining of the global labour pool

Over 70% of respondents surveyed by Deloitte confirmed they were experiencing, or expected to experience, a shortage of white-collar workers. Global demographic changes show that the number of 15-29 year olds entering the job market is steadily contracting, while growing life expectancy is further contributing to the problem.

Worryingly, only 13% of respondents identified approaching baby boomer retirement as a concern, despite overwhelming evidence indicating a large exodus of experienced staff from the labour market in the next three-five years.

“Retirement legislation is under review in some countries but the current situation sees skilled workers continuing to leave their profession or trade around late middle age and too few people are joining the workforce to fill their place,” says Hughes. “Governments are able to partially alleviate the depth of talent pools through policies on immigration, taxation and education but their impact is likely to be superficial in the face of global working population forecasts.”

The survey found the level of significance accorded to recruitment and retention of able staff was consistent across every region surveyed, irrespective of the size of the organisation.

Almost half (46%) of the survey respondents stated that demographic changes and the impending skills shortage had been discussed at board level and most identified a clear link between talent management and business performance. 54% believe talent management issues will impact their overall organisational productivity and 40% say it affects the firm’s ability to innovate. 33% acknowledge it will limit their ability to meet production requirements and fulfil customer demand.

Cormac Hughes observes: “It is encouraging to see that so many organisations have discussed the impending skills shortage at board level. Given the potential impact on business performance, it is essential that board-level commitment is gained to help drive rapid change to talent management strategies.”

- Ends -

Notes to editor:

The electronic survey of 1396 human resource practitioners in 60 countries was conducted in July and August 2005. The results of this survey are outlined in a report titled “Becoming a magnet for talent”. The report is available on request.

The Deloitte research, “It’s 2008: do you know where your talent is? Why acquisition and retention strategies don’t work” is also available.

About Deloitte
In this press release references to Deloitte are references to Deloitte & Touche LLP. Deloitte, one of Ireland’s leading professional services firms, provides audit, tax, consulting and financial advisory services through nearly 800 people in Dublin, Cork and Limerick. Known as an employer of choice for its innovative human resources programmes, the firm is dedicated to helping its clients and its people excel. For more information, please visit Deloitte’s web site at www.deloitte.ie.

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