Adapting to the New Normal: Talent Strategies for the Next Decade and Beyond
Deloitte Insights video podcast
Unemployment in the United States has hovered around 9.5 percent for the last year — more than four percent higher than the rate was at the start of the recession in December 2007. Yet some talent professionals believe the global competition for talent has accelerated.
In this episode of Deloitte Insights, Jeff Schwartz and Andy Liakopoulos, both principals with Deloitte Consulting LLP, discuss this paradox and provide insights based on the findings of Deloitte’s global survey, Talent Edge 2020: Blueprints for the new normal.
Jeff Schwartz, Principal, Deloitte Consulting LLP, Co-leader of Human Capital’s global talent initiative and the U.S. leader for all client talent services and solutions.
Andy Liakopoulos, Principal, Deloitte Consulting LLP, leader of Deloitte’s National Talent Strategies practice.
Sean O’Grady, Host, Deloitte Insights: Hello and welcome to insights! Unemployment in the United States has hovered around 9.5 percent for the last year and that’s an average of about four percentage points higher than the unemployment rate was at the start of the recession in December 2007. Now paradoxically, some Talent professionals believe the global competition for talent has accelerated throughout the recession.
And with some of those points, we have two guests - one of them is Jeff Schwartz, a Principal with Deloitte Consulting LLP, who leads Deloitte’s national talent cross-function practice in the U.S. and is also the global co-leader of Talent services. Also joining us, we have Andy Liakopoulos, a Principal with Deloitte Consulting LLP, who leads Deloitte’s National Talent Strategies practice.
Jeff, Andy - Glad to have you both here.
I want to begin with this paradox. How can be hiring if unemployment is that high?
Jeff Schwartz: The talent paradox is really the essence of the problems that companies are seeing right now in the talent markets. What’s confusing about it is clearly in the U.S. the unemployment rate 9.5, 9.6, 9.8 percent, a lot of people are looking for work. Interestingly, although there has been a global recession, it really hasn’t been a global recession in about half the world. If you look at what’s going on in the labor markets in China, Australia and India, those economies are growing very strongly and there are real shortages there now. But even in the U.S., the essence of the paradox is although there are people who are looking for work; they don’t necessarily have the specific technical skills and experiences that companies are looking for. And we actually expect this situation to get worse, not better, over the coming years.
Sean: Now, when you began your remarks, you talked a little bit about the BRIC economies; you cited them as hotspots. What do see as the hotspots, what are the geographic zones that really might be hiring?
Jeff: There are two aspects of the hotspots. Let me talk a little bit about the geographies and let me ask Andy to talk about some of the functional areas where we are seeing some challenges. The overall point is it’s not only about the BRIC economies. It’s not only about China, India, Russia and Brazil, but for the first time, millennials, the gen Y, these lucky digital natives, for the first time in history, knowledge workers- people with technical skills find that they are competing real time with people around the world and that’s a real difference that we have seen in the last couple of years. So in the introduction when you talked about what’s going through the recession, that’s actually made the talent paradox worse. What’s gone on is the Talent markets have continued to globalize. They are more people around the world, who are being trained and have the skills to do jobs that people used to be able to compete for pretty much in their own countries. Andy, maybe you can talk a little bit about some of the functional areas we have been seeing.
Andy Liakopoulos: I think the functional areas really start hitting when we are looking at this paradox. Given that unemployment is hovering at that nine percent to 10 percent range, people think that there is no demand for jobs, but really there are. There are critical roles out there that organizations even during the recession, are struggling to fill and now are increasingly struggling to fill them even more. Now for example, in our recent global talent survey that we have conducted, when we interviewed executives and we surveyed them on where they think the biggest concerns are going to come, it’s really around these technical roles. For example, Research and development - R&D more than 70 percent of these leaders felt that they are going to have difficulty filling these R&D roles going into the future. Let me actually even give you an example. There is a technology company here based in the U.S. that’s having difficulty finding engineers already, so what they have done is they developed a center of excellence where they have actually gone out to the global marketplace, to the global talent marketplace to find engineers and create these centers of excellence to tap into that global talent that they can then use here in the U.S.
Sean: Now that’s a pretty good segue because we have been talking about millennials, we have been talking about different geographies. How does a company win? What does a company have to do now in the 21st century to win in the talent market?
Jeff: Well, the first thing that companies have to do to win is recognize that the game has changed on both sides. What we mean by that is clearly we are pretty comfortable with the notion that customer and product markets are very global. The first thing we think companies need to do to win is recognize that talent markets are global. And maybe take some of the same sophistication and some of the same thinking around segmenting customer markets; recognizing that there are different kinds of customers and different industries, they have different buying preferences, there are different things that keep a customer loyal to a company. In the same way, what we are encouraging and seeing companies do is really focus on segmentation, understanding different kinds of workers.
Probably one of the most interesting things that we saw in this recent survey that we did was we asked companies a couple of questions about how well they thought they were doing. And one of the questions we asked was: are you world-class at talent or are you a company that’s really in trouble in talent? About one in five of those respondents - 20 percent self described themselves as being world-class. That wasn’t the interesting part. The interesting part was what world-class companies were doing and said they were doing were different from the rest of the sample! So there really were some objective differences that are seeing between talent leaders, between who are positioned to be successful in global markets and people who are thinking about being successful in global markets. Let me give you some very quick examples of what those examples are:
- The first one is companies that define themselves as world class have a plan - by a percentage of about 79: 42 percent. 79 percent of the self-proclaimed world class companies have a retention plan for the most important workers that they concerned about losing over the next several years. 42 percent -rest of the sample-don’t have a retention plan. They are actually not sure what they are going to do to keep these critical workers.
- The second thing that we saw was that companies that define themselves as world-class, who are more competitive, by their own definition, are better aligned and looking at their business requirements and their talent requirements by something like 75 percent to 50 percent. So again they are thinking about the alignment of business and talent.
- The third is companies that are going to be successful have clear metrics. This was one of the biggest differences we saw in some of the work we have been doing. Almost 50%-49% of the companies who said they were world-class have clear metrics- clear key performance indicators as to what’s important to managing talent going forward. Only 14 percent of the rest of the sample said they had clear key performance indicators for what they were doing in talent.
Jeff: Let me just focus on two more if I could:
- One was companies that are better positioned to be competitive and world-class talent markets are using new technologies in their talent programs. There’s a lot of discussion about social media technologies, about cloud computing technologies- what we saw again, about 3:1, 60 percent of world class companies are in the process of evaluating and implementing- using new technologies to support their talent program, and only about 20 percent of other companies are thinking about it.
- And lastly was one that we actually found very striking- focusing on gender and diversity issues. Companies that described themselves as world class by about a 75%:40% comparison are very focused on gender programs, diversity programs as key to their business performance.
So those are five different things companies are doing/ world-class companies are doing and we think there are some very interesting lessons for everybody out there.
Sean: We let into that question talking about the millennials but I think there is another side to the spectrum and that is the Boomers- the folks who are already in the market. So I have to say “how is planning for the Boomer retirement going into these talent plans?
Andy: When we look at the boomers, we try to look at all the generations together and here is why it’s so: If you look at the data in the baby boomer generation, they are currently the largest workforce we have right now in the US and most Western countries are in the same situation. The generation right after them, known as Gen X, is roughly 35-45 years old right now. What’s interesting with that generation is there was actually negative population growth in the US and some of the global Western countries. The next largest generation coming into the workforce are the Gen Y or the Millennials; so we have created is this environment where as the boomers start exiting the workplace or the workforce, the generation right behind them- they are simply not enough of them to replace the baby boomers.
One of the key things that are causing some anxiety right now in organizations and our global talent survey has also surfaced this is leadership development. You’re not going to have the pool of leaders to select from in the future that organizations had in the past.
So what are organizations doing? Traditionally organizations look at leadership development and succession planning. Meaning they will look at the top one or two layers of the organization to determine how we are going to place our leaders going forward. Succession planning has now given way to succession management.
So what does that mean? Organizations now are looking at deeper into their organizations, deeper into their talent pools. They are going into their generation X pool and they are creating talent pools. And they are looking at those talent pools and trying to determine how do we actually give those talent pools the experiences they need? How do we retain them in our organization, and how do we accelerate them into leadership roles in the organization going forward. Because waiting for the millennials to come into leadership positions, they don’t have the luxury of that time and so it’s really created a shift in the mentality around leadership development and succession planning to this idea of succession management and leadership pools.
Sean: We are moving toward the end of our segment and I think that was a great segue and that is what is the workforce going to look like in 2020? So take out your crystal ball, so it’s going to be 2011, so from the talent management perspective, how’s the world going to look in 2020?
Andy: I think if we fast forward 10 years, organizations are going to look at talent much definitely than they are today. So Jeff did talk earlier about talent plans. I think as organizations really start looking at their talent, they’re going to take a closer look at how do they tie their talent plans or their talent strategy to their business strategy.
So what are those critical roles they need in their organization to be successful. So, as we talked about earlier: R&D is a critical role. How we actually go out attract, retain and build R&D within our organization? For every industry there are different critical roles that need to be looking for. So what organizations will need to do is identify where these critical roles are going to come from? Where am I going to tap into their talent? That’s going translate into their talent strategy; that’s going to tie into their business strategy. And rather than look at this as an expense, they are going to look at them as an investment.
I think the second area that’s also going to be unique and different when we look forward to 2020 is looking at the global supply of talent. Much like manufacturing companies looked at supply-chain and they shifted from a local to a global perspective, organizations are also going to shift and they are shifting right now, their perspective on the global talent supply. So I think some organizations are getting into the mentality of “well it doesn’t matter to us because we are not a global company,” but it does.
Even if you are a regionally based company, you’re going to need to tap into that global talent supply in order to meet the talents needs of your organization. So successful organizations- organizations that are leading in the talent market 10 years from now will be tapping into that global talent supply: they will be looking at global talent to meet those business needs.
Sean: Jeff, final thoughts over to you. What’s the world going look like in 2020?
Jeff: It’s a great question and it’s tempting to look into the crystal ball. And building on what Andy said, I think we are going to see three things that are really going to play out very strongly over this decade:
- The first is globalization. If companies were dipping a toe into the water in terms of global talent pools, beginning to move operations of different sorts to India over the last decade, in this decade it’s “everybody’s in the pool” and everybody is in the water. We are going to see really for the first time in history, in knowledge intensive industries, a very rapid globalization of the talent pools. And what this means is, again if you are a millennial you are going to be competing with somebody , if you are born here in the U.S., with somebody in China, with somebody in India, with somebody in Brazil.
- The second is work’s is going to continue to change. The digitization of work has meant that you can do things almost anywhere in the world and these underlying economic forces of the digitization of work is only going to continue and probably become more rapid in the next few years.
- And last- the expectations of workers around the world. As people move into the middle class and as people in the middle class begin to think about what they are looking for, whether they are millennials or whether they are boomers in terms of work-life balance, companies around the world are going to be increasingly focused on what do they need to do to really create attractive places for workers going forward.
In summary it’s going to move from a market that was driven by supply to a market that was really driven by demand. It’s going to be very interesting because workers will have a much stronger voice in terms of the way things are structured over the next ten years and it will very interesting to see how this unfolds.
Sean: Jeff, Andy thank you very much. That’s all the time we have for this episode of insights. If you would like to learn more about the topics discussed on this program you can find that information and much more by clicking on our site: www.deloitte.com/us/podcasts. For all our good folks here at Insights, I’m Sean O’Grady, we’ll see you next time.