Talent Management during the Economic Upturn: Preparing for the “Résumé Tsunami”

By David Conradie, Director of Human Capital at Deloitte and Head of the annual Deloitte Best Company to Work for Survey.

The global recession saw many companies implement defensive actions, such as layoffs and cutbacks, in order to contain costs and remain afloat. Overall business strategies revolved around surviving tough economic conditions while talent retention and management was pushed lower on the HR agenda. In 2010 however, a new sense of economic optimism has emerged, and businesses need to re-evaluate their talent management strategies in order to retain top talent and manage the expected “résumé tsunami” – both flooding in and flooding out of the company.

Since January 2009, Deloitte has been conducting a longitudinal global survey titled Managing Talent in a Turbulent Economy to evaluate how executives are managing their workforce during the economic downturn, from the aftermath of the global financial crisis through the resulting slowdown and the inevitable uptick in the economy. The purpose of the survey was to explore whether effective human capital strategies are in place for the economic recovery, the disparities between employer beliefs and employee needs and how these factors will impact on the effectiveness of business strategies as the economy improves.

The latest results of this survey clearly indicates that the over-riding trend is no longer defensive, for example, many executives report that layoffs are declining and expect that trend to continue. Heading into the first quarter of 2010, only 39% of talent managers and executives surveyed anticipate additional layoffs, compared with 51% who see no layoffs on the horizon. The focus now shifts to managing employee expectations as the economy improves and retaining and maximising top talent while developing leadership.

With the changing economic climate in mind, the survey explores the three objectives and highlights the top talent management challenges for 2010:

1. Top talent on the move

The priorities of employers do not always match the needs of employees – this has always emerged as a finding with my experience with the annual Deloitte Best Company to Work For. This disparity could leave companies blindsided as the economy recovers. Understanding what their employees really want and then realigning their retention strategies, tactics and priorities to match those goals is vital. Companies must therefore plan for economic renewal with a keen strategic sense of how to position and retain key talent, sustainably for the long term. Irrespective of the economic conditions, companies that lose key talent to new opportunities must bear the costs of attracting, recruiting, and training new employees to replace those who have left.

The segmentation of talent becomes more vital than ever, as companies need to understand what motivates different segments and age groups of their workforce. Greater compensation and financial incentives typically ranked as the most effective retention tactics across the four key generational segments of employees. With 43% of surveyed employees listing additional compensation, followed closely by, additional bonuses and financial incentives at 41%. Notably however, Baby Boomers ranked strong leadership (41%) as the most effective retention initiative, above monetary retention strategies.

Overall, surveyed employees also ranked non-financial retention tactics third (strong leadership), fourth (job advancement expectations/guidelines) and fifth (support and recognition from supervisors and managers), allowing even the most cost-constrained companies to implement effective retention plans to keep hold of top talent.

Training and development and retention programs will be competing for the top spot among talent priorities with the executives who participated in this survey. It is here that international learning and development experiences for emerging and high-potential talents can have high value to both the employee and the employer.

2. Employee dissatisfaction

Significantly, during 2009, low morale and poor communication, especially where companies had not communicated effectively about belt-tightening actions resulted in discontented employees. Leadership and communication always come up as top factors in the Deloitte Best Company to Work for Survey – in a time of crisis these factors tend to dovetail. How companies handle communicate during the tough times will remain with the organisation for a long time, and ultimately determine how attractive the organisation is for present and potential employees.

As with previous, as economic conditions improve, companies will feel the impact of poor morale and communication as employees are able to act on their desire to move on. Nearly half (49%) of all surveyed employees who are considering leaving their jobs and a high proportion of employees (30%) are actively seeking new employers, which supports the assertion that the “résumé tsunami” could well exceed previous post-recessionary trends.

Early 2009 saw many surveyed corporate leaders (44% to be exact) labouring under the illusion that voluntary turnover actually increases profitability. Yet, while cutting employee cost may initially have a positive effect on the balance sheet, the ultimate cost of replacing a list employee can be two-to-three times that of the employee’s annual salary. These costs can be related to the loss of intellectual capital, client relationships, productivity and other job skills.

Interestingly, more than half (54%) of the executives surveyed expressed a high concern over competitors poaching high-potential employees. The combination of low morale and renewed employee willingness to take risks means that this is a perfect time to lure top talent.

3. The multi-generational workforce

Managing the multi-generational workforce once again emerges as one of the increasingly complex challenges for 2010. These include the waning percentage of Veterans borne between 1928 and 1945, whose focus is on stability and security; the Baby Boomer generation, with its idealism and need for personal expression; Generation X, with its focus on free agency and independence; and the fast-emerging cohort of Generation Y workers, born since 1980, whose social activism, tolerance of diversity, and propensity for social networking and collaboration are beginning to define the workplace more and more.

Employees from Generation X and Generation Y represent the biggest turnover risks, with 37% of Generation X planning to stay with their current employer, while 44% of surveyed Generation Y members expect to remain in their current job.

4. The lack of structured leadership development

Nearly three-quarters of surveyed executives believe that leadership developments are either critically important (27%) or very important (45%). An overwhelming eight out of ten executives agreed (55%) or strongly agreed (25%) that their companies have a clear leadership development strategy and yet only 10% describe their leadership initiatives as “world class across the board”. Yet despite its agreed importance a striking 77% of surveyed executives do not conduct rigorous succession planning as part of their overall leadership development strategy. A significant number of respondents are not employing the right tools and tactics required for an effective leadership development strategy. Only half (52%), use objective, merit-based standards to identify potential leaders from within their ranks.

Surveyed executives (25%) also report that their leadership programs are lacking in several key areas, such as, developmental career paths, global assignments, web-based learning, external classroom programs, and internal mentoring programs.

In 2009, when asked about any foreseeable significant barriers to retaining emerging leaders twelve months after the recession ends, the most significant responses from surveyed executives were lack of developmental job opportunities (29%), lack of career progression (25%), and lack of senior management opportunities (22%). In comparison, surveyed employees reported that the most significant factors that would cause them to switch jobs after 12 months after the recession ends was a lack of compensation increases (36%), followed by new opportunities in the market (35%). Contrary to executives, employees seem to consider money as a major factor in retaining high-potential talent once the economy recovers. The Survey therefore revealed critical disparities between what employees reported as their needs and what surveyed executives think employees want.

In relation to leadership, especially for multinational corporations, the careful segmentation of experienced local professionals with key skills in host countries is balanced by the segmentation of top strategic talents in corporate headquarters.

Conclusion

Companies that achieve the best balance of offensive and defensive talent strategies will have the inside track on the recovery curve. Furthermore, a strong employer brand strategy that goes beyond recruitment campaigns and a desire to simply be seen as an employer of choice will be crucial if companies wish to engage and retain those employees who add the most value and organisational strength.

Developing high potential employees remains a priority, with more than 4 in ten executives expect to increase their programs aimed at training such employees and cultivating future corporate leaders. In light of these survey results, companies that have effective leadership programmes are more likely to establish developmental career paths, establish robust leadership pipelines and have higher workforce morale.

Clearly, the New Year brings a renewed imperative to grow and compete for both customers and talent while retaining and up-skilling critical talent. Now is the time to shift out of ‘survival mode’ and get proactive on your talent management strategy remembering that the upturn could be as rapid as the slide into recession, so organisations should not allow themselves to be caught off guard.

More about the Managing Talent in a Turbulent Economy survey

This international, cross industry survey involved tapping into employee and executive perceptions and human capital decision-making post the global financial crisis. The results of the survey have been packaged into six different reports – acting as snapshots of sentiment at different times during the global recession. Read as a series the reports show how sentiment has changed during this difficult time. Over 350 employees at large companies (with annual revenues of over $500 million) representing a cross section of industries, such as, technology, media/telecommunications, financial services, health care, consumer and industrial products, as well as approximately 330 senior business leaders (occupying positions such as CEO, CFO, SVP, VP or Director) and human resource executives from large corporations (with annual revenues between $500 million to $20 billion) representing industries such as consumer/industrial products, financial services, technology/media/telecommunications and health care. South African companies were included in the survey.

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