In 2010, companies can no longer depend on the recession for their retention and talent strategies

Diegem, 25 February 2009 – Today Deloitte announces the results of Part V of its Deloitte Managing Talent in a Turbulent Economy study. This report surveyed 335 global executives and features a spotlight focus on leadership, highlighting the fact that companies that “walk the walk” on leadership not only have the right programs in place in order to develop their leaders effectively, but also that they have a different view of the world—and a jump on their competitors¹. The study also indicates that in 2010, companies can no longer depend on the recession for their retention and talent strategies

Clearly this past year was a tumultuous one for managing talent. Defensive actions, such as layoffs and cutbacks, dominated the agenda for many companies throughout the year and remain action items for many executives. Since January 2009, Deloitte has been conducting a longitudinal survey to gauge how senior executives and talent managers are positioning their workforces, both in deep recession and in emerging recovery.

Rolf Driesen, Partner Deloitte indicates; “We believe the companies that achieve the best balance of offensive and defensive talent strategies will have the inside lane on the recovery curve. Based on a year’s worth of survey data, the profile of these successful companies is coming into focus: companies that do not foresee further painful layoff decisions, companies that have committed themselves to retaining top talent, and companies that are investing in “world-class” leadership programs in order to build robust pipelines of emerging and senior leaders”.

The results of the most recent December survey - the final edition in Deloitte’s year-long, longitudinal survey of global talent trends and strategies - have revealed the following key findings:

• Economic optimism advances, but caution remains: By a margin of more than 3 to 1, surveyed executives were more inclined to believe that the worst of the economic crisis has passed, rather than that the worst lies ahead. Moreover, the percentage of executives who expected that the difficult operating environment would continue fell considerably in December to its lowest point since the study’s inception. Companies looking to move beyond the recession and forward on the recovery curve are striving to find the right balance between offensive and defensive talent strategies.
• Companies that plan no layoffs next quarter are more optimistic about the future, are having an easier time holding on to high-potential employees, and are investing in leadership development more heavily: Companies that anticipate no layoffs over the next quarter have a different view of the world—and their employees have a different view of them. Broadly speaking, these companies have a more optimistic view of the future, are having an easier time holding on to high-potential employees, and are investing in leadership development more heavily. 
• One clear difference between companies still facing layoffs and those that are not lies in their ability to develop top talent. Fully 60% of surveyed executives from companies foresaw no additional layoffs plan to increase programs for developing high-potential employees, compared to just 34% of companies that are planning more cutbacks in the coming quarter;
• Talent priorities adjusting to a reviving economy – but slowly : In December, reducing employee headcount remained the leading current talent priority, ranked number one by 35% of the executives and talent managers who participated in this survey, followed by retention (28%) and training and development (25%) Over the course of the entire 2009 survey, participating executives have eased off from defensive strategies and ramped up offensive retention and development measures. 
• Leaving 2009 behind and looking ahead to the next quarter, surveyed executives appear to be adjusting their mix of offensive and defensive talent strategies to match their position on the recovery curve. A ranking of talent priorities over the next three months produced a virtual dead heat, with reducing employee headcount at 31%, training and development at 29%, and retention at 27%;
• Companies that ignore retention may be skating on thin ice: Companies that are using the recession as a retention strategy will need to adopt a new approach in 2010. While some talent managers may be tempted to neglect retention efforts in a period of high unemployment, companies that follow this course risk losing critical talent and being left behind by competitors as organizations move up the recovery curve. Deloitte’s December survey suggests many companies are getting the message: more than half (54%) of the executives surveyed express high (41%) or very high (13%) concern about competitors poaching high potential employees. This may explain the revival of several key retention initiatives that remained dormant during the recession;
• Training and development efforts sharply focused on top talent : When it comes to training and development, companies positioning themselves to accelerate into the recovery intend to stay tightly focused on specific areas over the coming year. More than four in ten executives surveyed expected their companies to multiply programs aimed at developing high potential employees (47%) and cultivating corporate leaders (43%);
• Despite near universal agreement on the importance of leadership programs, surveyed executives did not have a high sense of confidence about their efforts in this area. Only 10% of survey participants described their leadership initiatives as “world-class across the board”. Most surveyed executives agreed that leadership is important and believed that their companies were working to develop it. Yet a significant number of respondents were not employing the full range of tools and tactics required for an effective leadership development strategy;
• Companies heavily invested in leadership development— particularly those with “world-class” leadership programs—act and operate differently from their competitors. While many other companies are still focused on cutting headcount and managing costs, these organizations are effectively opening new career paths to their top performers and cherry-picking the best talent available in the marketplace.

Rolf Driesen concludes; “Based on the emerging economic realities, we believe that the key to success for organizations is to find the right mix of talent strategies in order to keep top talent and identify key leaders”.

About Managing Talent in a Turbulent Economy

This is a year-long longitudinal series conducted for Deloitte Consulting LLP by Forbes Insights surveying global executives across all industries, at large businesses worldwide in the Americas, Asia Pacific, and Europe, the Middle East, and Africa. 

The study currently consists out of 5 parts;

• Playing Both Offense and Defense
  Part I in the series, conducted in January 2009, surveyed 326 executives from businesses worldwide on how they were planning and managing their workforces in today’s challenging economic environment. The report was published in February 2009 and includes a spotlight focus on workforce planning and analytics.
• Navigating a Course Through Rough Waters
  Part II in the series, conducted in March 2009, examined how 397 executives had changed their  strategic priorities and talent tactics since the initial January survey. The report was published in April 2009 and features a spotlight focus on talent and risk.
• Clearing the Hurdles to Recovery
  Part III in the series, conducted in May 2009, focused on retention and continued to track and compare how 319 global business leaders had shifted their talent priorities and strategies since the January and March surveys. This report was published in July 2009.
• Keeping Your Team Intact
  A special report in the series compared the results of an August 2009 survey of 368 employees in large companies worldwide with the May 2009 survey of executives. The study examines employees’ perspectives on retention, their turnover intentions, and how their responses varied across the different workforce generations. This report was published in September 2009.
• Leaning into the Recovery
  Part IV in the series, conducted in September 2009 and published in November 2009, reveals a clear divide between companies that are positioning themselves effectively for the economic recovery and those that are in danger of being left behind. Companies that remain in a defensive posture will risk losing the increasingly critical fight for talent. Those that also embrace a talent strategy in order to drive innovation will separate leaders from laggards.

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