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Friday, May 3, 2013, 09:30
Challenges of hiring the right talent
By Clare Muhiudeen

Challenges of hiring the right talent

Clare Muhiudeen is Managing Director, Talent and Rewards, Asia Pacific, for Towers Watson, a global professional services company.

Challenges of hiring the right talent

A Lenovo product on display at an international electronics show earlier this year. The company, like many worldwide organizations, has a stated goal to attract the best global talent. (AFP)

Global companies have difficulty finding highly skilled and experienced workers, survey shows.

Talent management is now identified as one of the greatest challenges for companies worldwide. In Asia Pacific, many chief executives say it is their No 1 issue. It features alongside big issues like innovation, economic risk and global expansion.

In the current business climate, conventional wisdom suggests that hiring in most parts of the world is easy. After all, in countries like China and India, while millions enter the workforce every year, high unemployment rates indicate there are plenty more seeking work.

But for highly skilled and experienced staff, there’s a shortage and the problem is becoming more acute. It means talent management will become a differentiator in the battle for highly skilled employees.

Towers Watson asked 1,000 companies about the difficulty of recruiting. It turned out that 31 percent of the firms reported difficulty in recruiting in general. There is less difficulty in hiring recent university graduates but critical-skill, high-potential and top-performing employees are difficult to find and even more difficult to hire. In fact, nearly three quarters of companies around the world are having challenges with critical-skill employees.

Keeping talent

Talent retention is another challenge for the businesses surveyed. We found that 25 percent of them experienced difficulty in retention. Again, the degree of difficulty varies with the workforce segment. While not as extreme as the recruiting numbers, the number of companies having difficulty retaining critical-skill employees is triple that for university graduates.

Yet these challenges occur in a world where the International Labour Organization reports 40 million people in the industrialized world being unemployed. Among all those people, companies are having difficulty finding the people they need.

The problem arises, in part, because of a lack of equilibrium in talent in countries around the world and in different industry sectors.

Indeed, a recently released report by Towers Watson projects a new geography of talent in 2021 that will come to define workplace recruitment.

The Global Talent 2021 study conducted by Oxford Economics, in partnership with Towers Watson, looks at how demand for talent will change globally in 10 years, considering economic growth, productivity improvements and structural shifts, and supply of talent, considering basic demographic changes, workforce participation, immigration and emigration, and education. It identifies where there would be enough educated individuals in a country to meet the demand, where there would be a gap, and where there would be a surplus.

Many developed economies such as the UK, US, Japan, South Korea, Australia and Singapore show a strong trend towards a talent deficit by 2021. This shortage is in part due to the ageing population in these countries. It’s also in spite of the fact that these countries will confront the need to undertake a critical “reskilling” of labor to meet the new demands of a highly digitized and interconnected world where higher, and perhaps different, skill sets will be required.

Countries like India, Indonesia, South Africa and Brazil will be talent-surplus in 2021. Even though these countries are expected to experience robust economic growth, more skilled workers will be produced than job opportunities will appear. In fact, eight of the top 10 countries likely to boast the largest talent surpluses a decade from now will be in the developing world.

China leads a small group of countries with talent equilibrium — where there is almost an exact match between aggregate supply and aggregate demand for talent, or where there will be just enough university-educated workers to fill the demand created in the country. In China, improvements in the education system, limited emigration and the growth of the economy get it to the point where supply and demand match in aggregate.

The talent map would differ if we drew the map by industry. For example, we would find a deficit of talent in China in wholesale and retail trade and in India in the construction industry. In the US, we would find a slight surplus in the real estate and mining sectors.

The study of global talent mismatch — between where talent is most needed and where it will be most available — portends the need for human resources (HR) and business leaders to re-think their talent management strategies.

Increasingly, they will need to develop more evidence-based approaches to manage global talent, drawing on improved analytics to identify talent segments and gaps, optimize resource allocation, integrate workforce plans and manage risk. If human capital is as important as the supply chain, management of it requires the same rigorous logic-driven approach, adoption of best practices and application of new innovative thinking to the challenge.

Given the severity of the mismatch in most sectors in so many countries, companies need to find new solutions to the talent challenges. What are some of these solutions?

One consideration is sources of labor. Specifically, as the skills employers require become more complex, labor shortages are projected in many mature markets. Are there non-traditional talent pools that can fill the gaps? In the developed world, where talent shortages in a number of managerial and technical fields are expected to persist, companies will be forced to think more explicitly about the trade-offs between outsourcing work, off-shoring staff and retraining workers.

New horizons

Likewise, decisions about where to locate new centers of innovation, product design or advanced engineering may become focused on geographies not previously considered.

For Medtronic, the world’s largest medical technology company and maker of pacemakers, defibrillators, stents and other medical devices, China offers a rich market for qualified workers. In recent years, the company has moved to expand its presence in China with plans to increase its workforce in the country.

Firms that have invested in new emerging economies will also need to become more proactive about partnering with relevant government and educational institutions to develop and train workers in the requisite skills.

China-based computer maker Lenovo is an example. To support its ambition to become the leading PC vendor in the world, Lenovo has emphasized the building of leaders across the company and it has a stated goal to attract the best global talent.

Lenovo is partnering with top-ranked Chinese universities to identify top talent that may have gone abroad to study but might be interested to return to China to work. Lenovo is building that talent pipeline three to four years down the road.

Organizations could also consider moving jobs, not for the purpose of cost arbitrage, but because it may be required for different types of jobs. To make it work, perhaps jobs will need to be disaggregated and reconstructed in a way that makes them do-able from a remote location.

Up until recently, Cummins Inc, an engine manufacturer with operations in 52 countries, ran its lone engineering center from its headquarters in Columbus, Indiana. As new plants open in fast-growing markets like Brazil and Turkey, Cummins’s HR executives are looking at recruiting the right talent to fill those newly created jobs, and standardize job categories in different geographies.

Cummins’s HR is at the center of organizational planning now and its focus is to make it easier to identify and move talent around the world as needed, helping to offer people development opportunities.

Finally, business transformation and the new geography of talent call for a fresh HR approach and mindset. Companies need much sharper HR strategy to position themselves as employers of choice in the new global marketplace.

Talent segmentation enables companies to obtain a deeper and more nuanced understanding of their employees’ skills and more accurately determine where the skill gaps are. Talent segmentation also allows the companies to measure individual employee contribution, as well as variations in performance, which in turn lead to more successful performance management.

 
 
 
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