Shaping Talent for Success 1.0 by EF Education First Ltd

THE TALENT CRUNCH Shaping talent in an uncertain world

The Talent Crunch

THE TALENT CRUNCH Shaping talent in an uncertain world AN EXECUTIVE REPORT BY EF CORPORATE SOLUTIONS Executive summary. . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 A tough economic climate. . . . . . . . . . . . . . . . . . . . . . . 8 The impact on talent?. . . . . . . . . . . . . . . . . . . . . . . . . 10 The HR response . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Overcoming the Talent Crunch . . . . . . . . . . . . . . . . . . . . 16 The training priority mismatch . . . . . . . . . . . . . . . . . . . . 22 Conclusion and recommendations. . . . . . . . . . . . . . . . . . 26

EXECUTIVE SUMMARY Nurturing and retaining the best talent has always been a significant challenge for organizations. It is as true today as it ever has been, and remains on the boardroom agenda. But how has a slowing global economy affected matters? Has muted global growth in per-capita gross domestic product (GDP) made it easier for employers to find and attract talent? Or has the need for cost containment made it harder to reward top performers? How will talent needs change over the next decade and what should be done now to ensure those needs are fulfilled? To answer these questions, and others, EF commissioned a survey across 12 territories worldwide during spring 2016.

The Talent Crunch

What has emerged from the research is that the tough economy is expected to continue for the next five to 10 years due to reduced consumer spend, increased global competition, currency volatility, and a general global uncertainty.

In view of this situation, EF recommends global organizations should incorporate four lines of action into their global talent strategies.

RECOMMENDED GLOBAL TALENT STRATEGIES This means budgets across the board are tight, companies are trying to do more with less, and worker fatigue, stress and turnover are on the increase. This is a tough situation for human resources and leadership and development departments to manage, which is why we call it the Talent Crunch. However, it is not all doom and gloom and our research highlights that organizations feel a need to focus efforts on four key areas: Engagement and motivation, to both decrease turnover and increase employee effectiveness and impact, especially in such turbulent times. Leadership, to keep employees focused and upbeat, especially during significant corporate change programs (such as corporate mergers).

Create and invest in incentives to attract and retain employees with global experience and an international outlook.

Focus employee engagement and reward programs on areas that are easy to implement and require less management time. For example, providing new skills training could be easier on management than promising mentorships or time off.

Link employee personal development plans to business objectives so you reward talent while at the same time creating a stronger organization.

Put greater emphasis on leadership and innovation support and training.

Creativity, to foster greater innovation as a competitive advantage and as a revenue growth driver. Flexibility, in order to keep the most critical talent engaged and delivering the greatest business impact. Unfortunately, two of these top four priorities, engagement/motivation and leadership, also top the list of factors organizations are least confident about delivering, due partly to concerns over lack of budgets. In the case of engagement, lack of time is also a factor. For leadership, perhaps more worryingly, lack of skills is another cause. Furthermore, just over one in five respondents also felt least confident in delivering the creativity and flexibility needed to be successful in the next five to 10 years. And this is not just a problem of delivery. Currently only some of these areas are being addressed by training. Engagement and motivation, for example, come seventh among organizational training priorities. To overcome the Talent Crunch, it seems businesses need to urgently realign their HR investment priorities to address the engagement, leadership, creativity and flexibility of existing staff. Only then can they hope to attract and develop the global talent skillsets needed to be competitive in the future.

INTRODUCTION Global organizations today have a very different workplace through which to navigate compared to the past: one that requires new strategies for leadership, talent and HR.

The Talent Crunch

Today the barriers between work and life have been all but eliminated. Our employees are ‘always on’; hyper-connected to both their jobs and social life and come with new generational expectations around communication, worklife balance and global social awareness. Networking and social tools like LinkedIn enable them to easily monitor the market for job opportunities, contribute to and impact the organization’s image and culture – all at the tap of a button.

It is therefore no wonder that gearing up for a workforce fit for purpose and highly competitive in a world that is changing so quickly and dramatically is now high on every board agenda. Constraints on talent undoubtedly hurt enterprise growth and profitability: if organizations can’t hire the right people, they will not move the business forward. And if they cannot engage and motivate those they do hire then the business will very quickly fail.

Furthermore, many of today’s employees find themselves working in global teams that operate 24/7, with an increasing number working on a contingent, part-time or contractual basis; all adding to the complexity for organizations looking to integrate them into their talent programs.

More than ever before, HR and Leadership and Development professionals must be closely aligned with the goals of business and have a laser focus on how to attract, develop and retain employees who can help achieve those goals.

Dealing with these new workforce demands requires HR organizations to be bold and innovative in their thinking. It challenges existing people-practices such as how to evaluate and manage people, how to engage and develop teams, and how to select leaders. As the world emerges from one global recession and braces itself for the possibility of another, it’s clear that today’s talent management challenges are dramatically different from the ones businesses faced a few years ago.

TODAY’S HIGH-PERFORMING BUSINESSES ARE FOCUSING ON TALENT MANAGEMENT: IF THEY CAN’T HIRE THE RIGHT PEOPLE, THEY CAN’T MOVE THE BUSINESS FORWARD.

A TOUGH ECONOMIC CLIMATE Our research shows that reduced consumer spending has resulted in some very significant challenges, which are anticipated to bite even harder in the future due to increased competition globally. Having to do more with less will remain an issue for the next five to 10 years.

What are the economic pressures facing global organizations in recent years and into the future? Our research looked at a range of possible economic stress factors, including currency volatility, inflation, legislation, globalization and technological change.

THE NEXT FIVE TO 10 YEARS Legislation and globalization look set to remain minor concerns in future, each cited by less than a quarter of those surveyed. A similar level expressed concern about demographics, which is surprising given falling birth rates and a rapidly ageing population. And there is less fear of continued low levels of consumer expenditure, with 29% citing this as a worry [FIG. 2]. Instead, the big concern in years ahead looks set to be competition, from both developed and developing nations (cited by 34% and 32% of the sample, respectively). Developed market competition appears to be a special concern in some European countries, with 46% of Italians and 44% of Germans foreseeing this as having the greatest impact on their business in the next five to 10 years. There is some evidence to support this concern, with Germany automakers, for example, being challenged by US rivals such as Tesla.

THE LAST FIVE YEARS The main economic pressure that organizations have faced in the last five years, by a large margin, is reduced consumer expenditure. This was cited by 39% of respondents overall, but up to 56% in France and 53% in Brazil [FIG. 1]. After this came four factors that appear to have had almost equal weighting in terms of their impact on organizations. These were competition from developed countries (cited by 33% of the sample), currency volatility and technology change (both 32%), and inflation (31%). Inflation seems to have had an uneven impact, cited by 29% of the sample overall but up to 62% in Brazil and 54% in Russia, reflecting those countriesâ&#x20AC;&#x2122; currently very challenging economies. Legislation, globalization and changing workforce demographics seem to have been lesser challenges.

THE BIG CONCERN IN YEARS AHEAD LOOKS SET TO BE COMPETITION, FROM BOTH DEVELOPED AND DEVELOPING NATIONS.

The Talent Crunch

FIGURE 1: ECONOMIC PRESSURES OVER THE LAST FIVE YEARS

FIGURE 2: ANTICIPATED ECONOMIC PRESSURES OVER THE NEXT FIVE TO 10 YEARS

Q: Could you please indicate which of the following economic pressures have had the greatest impact on your business over the last 5 years?

Q: Which of the following economic pressures do you anticipate having the greatest impact over the next 5-10 years?

Reduced levels of consumer expenditure

Increasing competition from developed countries

39%

Increasing competition from developed countries

33%

Increasing competition from developing countries

Currency volatility

32%

Currency volatility

Technological changes

32%

Technological changes

Increasing competition from developing countries

31%

29%

Inflation

25%

Government legislation

Changing workforce demographics (an ageing population) Other

32%

31%

30%

Reduced levels of consumer expenditure

29%

Inflation

29%

Government legislation

24%

Changing workforce demographics (an ageing population)

18%

Globalisation

34%

13%

18%

Globalisation

Other

16%

FIGURE 3: IMPACT ON HUMAN RESOURCES OVER THE LAST FIVE YEARS

FIGURE 4: ANTICIPATED IMPACT ON HUMAN RESOURCES OVER THE NEXT FIVE TO 10 YEARS

Q: Which of the following pressures have had a significant impact on the HR function over the past 5 years?

Q: Which do you think will have a significant impact on the HR function over the next 5-10 years?

More stressful working environment

38%

Higher levels of worker fatigue

32%

Reduced employee effectiveness

30%

Increased employee turnover

29%

Recruitment freeze

28%

Reduced training budget

26%

Poorer knowledge-sharing

Other

25%

35%

Increased employee turnover

31%

Higher levels of worker fatigue

27%

Reduced employee effectiveness

27%

Recruitment freeze

Reduced levels of trust The leadership team is more detached from the business

26%

25%

24%

THE IMPACT ON TALENT?

Other types of fallout from the long recession included higher worker fatigue (mentioned by 32% of respondents) and, in spite of the tighter work market, increased staff turnover (29%).

A dampened economy might have been

Finally, 30% of respondents cited reduced employee effectiveness (30%) as a problem. This is interesting given the abundance of tools that now exist to support and boost worker efficiency.

expected to benefit employers by increasing the pool of talent available to them. It has not. While global GDP per capita has tended to rise every year since the 1960s, annual GDP per capita growth has stayed below 2.8% for the last decade1. What effect has this had on employers around the world? And where does it leave them placed in future?

One reading is that staff burnout is reaching levels that reduce effectiveness in spite of technological capabilities at their disposal. Whatever the reason, this and the other findings all appear to be symptoms of a work environment that makes heavy demands on employees yet delivers scant rewards.

THE LAST FIVE YEARS Prolonged constraints on consumer spending can act to limit the amount of money available to reward valued employees. This appears to have been the case over the last half decade; there is a sense from the research that HR functions are struggling to continue doing more with less. For many years now, businesses have faced significant competitive pressures and struggled to keep up with a constantly evolving market. To succeed, they have had to address old challenges with innovative solutions, and initiate new ideas for getting ahead. The ‘new normal’ of stricter financial controls, cutthroat competition and constant evolution is taking its toll on workforces, the research shows: 38% of respondents said the main impact for HR of economic pressures was a more stressful working environment [FIG. 3]. This effect was particularly apparent among the world’s top economies. Stressful working environments were a problem for 50% of respondents in the USA and 48% in China.

1. GDP statistics from the World Bank, available at https://knoema.com/mhrzolg/gdpstatistics-from-the-world-bank.

EMPLOYERS WILL NEED TO FOCUS ON EMPLOYEE ENGAGEMENT AND MOTIVATION, AND FIND NEW WAYS OF PROVIDING A FULFILLING WORK EXPERIENCE FOR STAFF.

The Talent Crunch

THE NEXT FIVE TO 10 YEARS Unfortunately, the picture does not look set to get any better in the future. Stressful working environments will continue to dominate the workplace agenda, with 35% of respondents saying it will have a significant impact on the HR function in the next five to 10 years [FIG. 4]. This looks set to heighten levels of employee turnover, which will emerge as the second-largest problem for employers. Overall, 31% of respondents consider this a threat, but the level rises to 46% in the USA.

This implies that employers will need to focus on employee engagement and motivation in order to remain competitive, and will have to find new ways of providing a fulfilling work experience for staff. Organizations may also want to consider formalizing their employer brand and will need to cast a wider net in the search for talent. â&#x20AC;&#x153;Transforming social diversity into a strategic asset requires senior executives and managers to pursue talent wherever they are,â&#x20AC;? says ManuĂ¨le Lemaire, Director at Campus Veolia Environnement in France.

Initiatives to counter this trend will take center stage in the war for talent. Worker fatigue and reduced employee effectiveness will also continue to be a challenge.

THE HR RESPONSE Organizations believe they should be more imaginative in the way they reward staff. This strategy is well founded, but there are

2. LEADERSHIP SKILLS It takes a strong captain to navigate stormy seas. Accordingly, leadership skills were cited as a critical focus area by 36% of the sample [FIG. 5]. Concerns about delivering these skills may be well founded: good leaders tend to be good motivators, so bolstering leadership talent can have a multiplier effect on employee morale.

problems in practice.

A tired, ineffective and unengaged workforce is the last thing you need when times are tough and competition is fierce. And you don’t want key talent leaving when you only have a limited budget for recruitment. How does this impact on HR strategies? According to our research, there are four key areas of focus needed: employee engagement and motivation; leadership skills; employee creativity; and employee flexibility.

At the same time, though, the growing international dimension of many organizations is likely complicating the task of leadership. Good leaders must not just be great with people but also communicate effectively across languages and cultures. Perhaps because of this, 24% of leaders felt this was the area they were least confident in delivering on, making it the second-largest worry after employee motivation [FIG. 6].

3. EMPLOYEE CREATIVITY Cited by 36% of the sample, employee creativity ranks alongside leadership skills as a critical factor in helping organizations deliver against people challenges [FIG. 5]. Why is creativity so important?

1. EMPLOYEE ENGAGEMENT AND MOTIVATION Poor morale inevitably leads to falling performance and in uncertain times when staff stress starts to rise, it is more important than ever to ensure employees are engaged with the company and motivated towards achieving its goals. Business leaders understand this: 46% of survey respondents listed it as the most important factor in helping the organization deliver against its people challenges within the next five to 10 years [FIG. 5]. At the same time, however, there is significant concern over the enterprise’s ability to deliver on engagement and motivation.

Reduced consumer spending and competition are forcing organizations to become more innovative. In a world where the ability to generate new ideas can spell the difference between business success and failure, it is more important than ever to foster creativity. Conversely, creativeness can be hard to muster in a wornout, jaded workforce. Hence the hunt is on for measures that can help workers recover the spark of inspiration. But 22% of those queried said they thought this was an area their organization was least capable of delivering [FIG. 6].

4. EMPLOYEE FLEXIBILITY Motivation, in particular, is seen as a major stumbling block, with 27% of respondents saying they were not confident about their organization’s ability to deliver. For engagement, the level was a worrying 22% [FIG. 6].

Employee flexibility ranks just one percentage point below creativity and leadership skills in terms of its importance [FIG. 5].

The Talent Crunch

This is likely due to the fact that organizations recognize the turbulence ahead could lead to rapid changes in direction that workers will need to follow. There are abundant examples of this already in many world markets. In Spain, for example, renewable energy companies such as Acciona and Sener have had to transition from a national to an international focus within the last five years, as a result of government-imposed austerity measures that wiped out their home market. For the workforce, this has meant language skills and cultural knowledge are suddenly of vital importance. Organizations with international ambitions increasingly expect prospective employees to be fluent in key foreign languages.

CREATIVITY IS CRITICAL, AS REDUCED CONSUMER SPENDING AND COMPETITION ARE FORCING ORGANIZATIONS TO BECOME MORE INNOVATIVE.

Not surprisingly, a majority of executives surveyed in France believe that their workforce will need to know English â&#x20AC;&#x201C; level C1 is even required â&#x20AC;&#x201C; if the company is to succeed in its international expansion plans. Compared to motivation or leadership skills, this is an area that organizations are more confident in delivering on, but was still cited as the biggest stumbling block by 21% of the sample [FIG. 6].

SPOTLIGHT:

Radiology’s global talent hunt The challenge of avoiding the Talent Crunch is

“Our aim is to add capacity to the system wherever

central to Telemedicine Clinic, a European provider

possible, so that means finding skilled professionals

of teleradiology services for national healthcare

who right now might not be contributing as much to

services such as the NHS in the UK.

the health service as they could,” says Chief People Officer Sebastian Ross.

The UK’s Royal College of Radiologists is forecasting a drastic under-supply of trained radiologists up until

The company is bringing retired radiologists back for

2022 and beyond. This has serious implications for

part-time work, for example, and providing training

patients: if nobody is available to review a scan, the

and specialist work opportunities to make sure

patient suffers a delay in diagnosis.

newly qualified specialists can increase their skills as rapidly as possible.

Telemedicine Clinic is aiming to deal with the problem by providing training, making it easier for current radiologists to be more productive through

“These people are valuable and we want them to know that,” says Ross. “Remuneration is part of the

collaboration networks, and searching for additional

package, but not the whole story: there’s also the

radiology capacity to cover current shortfalls.

chance to progress professionally, achieve a better work-life balance or even have an adventure.”

Enticements include giving radiologists with UK qualifications a chance to deal with overnight (‘on-call’) cases by working from offices located in Sydney, Australia.

The Talent Crunch

FIGURE 5: MOST IMPORTANT PEOPLE CHALLENGES OVER THE NEXT FIVE TO 10 YEARS

FIGURE 6: MOST DIFFICULT PEOPLE CHALLENGES OVER THE NEXT FIVE TO 10 YEARS

Q: Which of the following will be the most important in helping your organisation deliver against its people challenges over the next 5-10 years?

Q: Which of the following are you least confident in your organisationâ&#x20AC;&#x2122;s ability to deliver against them?

Employee motivation

27%

46%

Employee motivation

Leadership skills Employee creativity

36%

Leadership skills

36%

24%

Employee mobility

23%

Employee engagement

22%

Employee creativity

22%

35%

Employee flexibility

31%

Knowledge sharing

Employee flexibility Employee engagement

30%

Up-skilling employees

30%

21%

Knowledge sharing

FIGURE 7: ANTICIPATED TALENT ATTRACTION OVER THE NEXT FIVE TO 10 YEARS Q: In which of the following ways is your organization looking to attract talent over the next 5-10 years?

Personalised development plans / training

FIGURE 8: EXTENT OF GLOBAL TALENT Q: To what extent is an increasingly global workforce influencing the shape and culture of your workplace?

No change

42%

International job opportunities

16%

39%

Flexible work hours

35%

Collaborative workspaces where teams can brainstorm ideas

34%

52% 27%

Greater workplace autonomy

33%

Providing the latest technology devices (e.g. smartphones / laptops)

32%

Health / wellness programmes

30%

Remuneration packages

30%

Less hierarchal decisionmaking

26%

Life / career coaching

26%

None of the above

20%

We have a higher level of general non-native language speaking employees from all over the world than we did 5 years ago

We are taking proactive steps to hire and nurture international talent

We have a higher concentration of specific non-native language speaking employees from the same region than we did 5 years ago (e.g. French, Spanish, etc.)

OVERCOMING THE TALENT CRUNCH The current challenges that HR faces look set to worsen unless smarter strategies are implemented. Business leaders fear competition is likely to get fiercer in the next five to 10 years. So what are they doing about it? Our research cited four key imperatives:

2. INTERNATIONALIZING THE WORKFORCE One big trend to emerge from the research is the degree to which organizations are responding to increased global competition by internationalizing their workforces. 52% of respondents report they already have a higher level of non-native speaking employees than they did five years ago. And 27% are taking proactive steps to hire and nurture international talent [FIG. 8]. Only 8% of respondents downplayed the importance of attracting international talent, while 27% said it was critical and 53% claimed it was important, likely as a result of the need to operate in an increasingly global marketplace [FIG. 9].

attracting talent; internationalizing the workforce; adapting to new work trends; and building a skilled and adaptable workforce.

As for how they hoped to attract this talent, 39% of respondents thought this could be achieved with better language training (rising to 52% in China and 48% in the USA) and 34% believed it was down to overall business performance [FIG. 10].

1. ATTRACTING TALENT

In addition, says Magali Aimé, talent acquisition director at Club Med: “Having a strong, differentiated and prominent employer brand will help a company attract and retain top-tier talent around the globe.”

The main way in which organizations are looking to attract talent is through personal development plans (PDPs) [FIG. 7]. These are used by 42% of organizations overall, rising to 68% in Brazil, where they have been embraced by organizations ranging from the airline Embraer2 to the car hire firm Hertz3. Other favored tactics include offering international job opportunities (39%), flexible work hours (35%) and collaborative workspaces for teams (34%).

EIGHT OUT OF TEN RESPONDENTS SAY IT’S CRITICAL OR IMPORTANT TO ATTRACT INTERNATIONAL TALENT.

2. Embraer: ‘2014 Annual Report’; available at http://www.embraer.com.br/ relatorioanual2014/en/pessoas.html. 3. I4CP, The Productivity Blog: ‘Strategy in Action: Hertz expands PMED to its operations in Brazil’; available at http://www.i4cp.com/productivityblog/2013/02/22/strategy-in-action-hertz-expands-pmed-to-its-operations-in-brazil.

Other significant factors in attracting international employees, all cited by 30% of respondents, included helping people to adapt culturally, developing talent to reflect changing business needs and improving career development plans. Perhaps because of the tough economic climate discussed above, a quarter of respondents said their organizations had not done enough in analyzing the needs for talent, developing appropriate training or promoting overseas postings [FIG. 11]. Investment in these areas represents a good opportunity for companies that want to gain a competitive advantage in talent. More than 40% of respondents stated that better talent skills could improve talent management, knowledge sharing and, importantly, their company’s reputation as a whole [FIG. 12]. What’s more, 36% stated it could improve their company’s turnover.

The Talent Crunch

A DAMPENED ECONOMY MIGHT HAVE BEEN EXPECTED TO BENEFIT EMPLOYERS BY INCREASING THE POOL OF TALENT AVAILABLE TO THEM. IT HAS NOT.

3. ADAPTING TO NEW WORK TRENDS The biggest change that employers expect to see in the workforce within the next five to 10 years is greater employee flexibility, for example in working hours. This was cited by 49% of respondents overall, but up to 68% in China and 66% in Brazil [FIG. 13]. It could in part be a response to the growing weight of Millennial workers, who are more used to this style of work, in the job market. Other significant work trends include more multi-lingual employees (40%), greater flexibility in employment (for instance in freelancing; 38%), increased legislation to protect workers (38%) and a higher level of hot-desking or working from different locations (36%).

Some of these trends are already apparent. Hot-desking, for example, is already being used by 64% of respondents [FIG. 14]. Greater worker protection and employee flexibility were each reported by 61% of the sample. And 53% said employees were more multi-lingual.

4. BUILDING A SKILLED AND ADAPTABLE WORKFORCE Business leaders believe the ideal workforce five to 10 years from now will be more multilingual (40%), highly skilled (40%), flexible (38%) and willing to relocate (27%) [FIG. 15]. Companies willing to adapt their talent policies to promote these factors are likely to get a head start.

The Talent Crunch

FIGURE 9: IMPORTANCE OF GLOBAL TALENT

FIGURE 10: ATTRACTING INTERNATIONAL TALENT

Q:How important is it to your organization to attract international talent?

Q: To what extent do you need to change the following in order to help attract international talent to your company?

Improve language training 27%

53%

39%

Improve the overall performance of the business

Critical

Important

34%

Help people to learn to adapt culturally

30%

Develop talent to reflect the changing business needs

30%

Improve career development plans

30%

Improve employee mobility

22%

Ensure adequate promotional opportunities for employees

21%

Change corporate culture

12%

Fairly important

Not important

20%

Promote personal enrichment strategies None of the above

11%

FIGURE 11: IMPROVEMENT IN INTERNATIONAL TALENT MANAGEMENT Q: To what extent do you think your organisation has done enough in the following areas to improve your international talent management?

NOT ENOUGH INSUFFICIENT AT ALL

MORE THAN ENOUGH

ADEQUATE

The time management spent assessing the talent training challenges

26%

53%

19%

Looking at the way in which technology can improve your talent skills

25%

53%

21%

Resolving conflicts that arise from cultural misunderstandings

24%

50%

23%

Analysing the training needs for talent

21%

50%

25%

Looking at the way in which training methods can help to improve your talent skills

21%

51%

25%

Developing talent so people can work overseas

19%

52%

24%

FIGURE 12: TALENT SKILLS TO IMPROVE COMPANY OBJECTIVES

FIGURE 13: WORK TRENDS OVER THE NEXT FIVE TO 10 YEARS

Q: In which of the following ways could better talent skills improve the following company objectives?

Q: Which of the following trends do you believe you will see more of in 5-10 yearsâ&#x20AC;&#x2122; time?

47%

Talent management

42%

Knowledge sharing

36%

Company turnover The overseas expansion strategy

34%

Innovation and Research & Development

38%

Employees will become more flexible in their employment (i.e. work more on a freelance basis)

38%

36%

31%

Flatter hierarchy / organisational structures

28%

30%

Greater opportunities for sideward progression (i.e. moving into different

22%

Enhance company culture

Greater legalisation / employee protection

Technology / robots undertaking basic admin work

29%

Business operations

40%

Hot desking / working from different locations

33%

Talent mobility

49%

Employees will become more multi-lingual

41%

The companyâ&#x20AC;&#x2122;s reputation

Greater employee flexibility (i.e. working different hours)

28%

areas of the business)

None of the above

Changes in remuneration (i.e. trading

20%

off higher salary for benefits such as flexible working or training / development)

None of the above

FIGURE 14: EMBRACING WORK TRENDS

FIGURE 15: THE IDEAL WORKFORCE IN FIVE TO 10 YEARS

Q: How well set up is your organisation to embrace the following trends?

Q: What does the ideal workforce look like in the next 5-10 years?

IN PLACE / SET UP

NEUTRAL

NOT SET UP

Hot desking

64%

25%

11%

Multilingual

40%

Employee protection

61%

29%

10%

Highly skilled in their field

40%

Greater employee flexibility

61%

30%

Highly skilled in a number of fields

Employees more multi-lingual

53%

29%

18%

Flexible

Employees will become more flexible

54%

31%

15%

Collaborative

Flatter hierarchy

53%

34%

13%

Mobile/ willing to relocate

Robots undertaking basic admin work

50%

28%

22%

Cross-departmental experience/skills

Greater opportunities for sideward progression

56%

31%

14%

Culturally adaptable

Changes in remuneration

56%

31%

13%

None of the above

39%

38%

31%

27%

22%

12%

The Talent Crunch

SPOTLIGHT:

Bank fights back in tough talent climate When times are tough it’s more important than ever

“The measures by the European Central Bank,

to invest in training. That’s the message from Banco

the lowering of interest rates to historic lows

Popolare, one of Italy’s largest banking groups, which

and the deterioration of credit quality are just

kept a firm focus on training as a way to foster talent

a few examples of phenomena that have

in a challenging economic environment.

necessitated the search for new organizational and economic balances.”

“Investments in training and core competences, far from being reduced, have been used to seek

In this context, he says: “HR sectors were

out innovative and experiential methodologies to

impacted significantly in the search for solutions

increase the engagement of people,” says Mauro

to reduce costs and to maximize the efficiency of

Baracchi, head of service policy.

competence processes.”

“Returns are more than satisfactory; internal surveys

Banco Popolare has responded by getting smarter

show an increasing level of satisfaction with the

about how it fosters talent, for example with

initiatives put in place, and our talent pipeline has

investments in new IT training platforms.

grown professionally in high-responsibility positions.” Going forward, Baracchi says: “Banco Popolare The continued training focus has helped Banco

will continue to invest in the professional growth

Popolare fight back against harsh market conditions

of its employees, the pursuit of their motivation,

for European banking.

and applying respect and ethics to all areas of corporate life.”

“The banking business is experiencing particularly complex moments due to the difficulty of generating adequate levels of profitability,” Baracchi says.

THE TRAINING PRIORITY MISMATCH Our research reveals there is a misalignment between what organizations need and what they are putting training resources into. As highlighted above, business leaders believe they need to focus on employee engagement, leadership, creativity and flexibility. And they agree that the workforce of the future needs to be highly skilled, flexible and multi-lingual. However, this is not completely aligned with what business leaders consider they are capable of delivering, and where their current training priorities lie.

LEADERSHIP AND MOTIVATION For example, while leadership was recognized as the biggest priority for talent training over the next five to 10 years (cited by 40% overall but up to 60% in USA), the same cannot be said for motivation [FIG. 16]. This is ranked seventh in importance on the list of training priorities, way behind innovation skills, creative thinking and change management (all 33%). And of all the HR functions investigated in the study, employee engagement and motivation is the one that organizations had the least confidence in delivering; 27% of respondents cited it, compared to 24% for leadership skills and 23% for staff mobility [FIG. 6].

The reason for this seems to be simple. Without financial rewards, motivating staff takes time. And HR managers are already stretched as it is. While the delivery of leadership skills may not be as critical as motivation, it is still a problem for almost a quarter of those surveyed; 24% of respondents cited it as the area they were least confident in their organizationâ&#x20AC;&#x2122;s ability to deliver [FIG. 6]. The reasons behind this primarily center on a lack of time or lack of skills (each cited by 20% of respondents) [FIG.Â 17].

CREATIVITY AND FLEXIBILITY Turning to creative thinking, this was seen as a priority for talent training by 33% of respondents [FIG. 16], but 22% felt this was the area their organization was least able to deliver on [FIG. 6]. This means supporting employee creativity ranks higher as a concern than, for example, staff flexibility (21%) or knowledge sharing (20%) [FIG. 6]. As with employee engagement, the keys for fostering creativity are likely to lie in measures that deliver new experiences and development situations, such as learning about new cultures or tackling new tasks. However, creativity is not an easy skill to transfer. The biggest barrier to fostering creativity, cited in 19% of cases, is a lack of know-how about how to do it [FIG. 17]. Finally, 21% of employers felt they would be least able to deliver workforce flexibility [FIG. 6], primarily (in 22% of cases) because of lack of time [FIG. 17]. In fact, lack of time is the main problem associated in delivering on 10 out of 21 different employee challenges covered in the research, highlighting the need for efficient, light-touch human resources strategies that achieve results quickly.

LACK OF TIME IS THE MAIN PROBLEM ASSOCIATED IN DELIVERING ON TEN OUT OF 21 DIFFERENT EMPLOYEE CHALLENGES COVERED IN THE RESEARCH.

Furthermore, this is not an area that can be obviously addressed through training, so it is not listed as a training priority.

The Talent Crunch

THE PRIORITY MISMATCH If we take a look at the skills respondents said the ideal workforce would possess, multilingualism and a high skills level are among the top requirements. However, language and communication training, which also might be seen as critical to attracting international workers, languishes in fifth place on the list of talent training priorities. Similarly, function-specific training is bottom of the list with only 9% considering it a priority for training in the next five to ten years. It is evident that there is a mismatch between what organizations believe they need to be successful in the future and where their training priorities lie. The fact that organizations are placing more emphasis on innovation, creative thinking and change management seems out of step with business requirements.

MULTILINGUALISM AND A HIGH SKILLS LEVEL ARE AMONG THE TOP REQUIREMENTS OF THE IDEAL WORKFORCE. HOWEVER, LANGUAGE AND COMMUNICATION TRAINING LANGUISHES IN FIFTH PLACE ON THE LIST OF TALENT TRAINING PRIORITIES.

Before focusing on innovation or change management, itâ&#x20AC;&#x2122;s essential to ensure your workforce is motivated, happy and not looking to move elsewhere. Otherwise, precious training investment could be money down the drain when employees leave.

FIGURE 16: TALENT TRAINING PRIORITIES OVER THE NEXT FIVE TO 10 YEARS Q: What are your priorities for talent training over the next 5-10 years?

Leadership

40%

Innovation skills

33%

Creative thinking

33%

Change management

33%

Language and communication

30%

Computer skills (e.g. Excel, PowerPoint, Word)

29%

Motivation

24%

Cultural

20%

Presentation

13%

Function-specific training (e.g. Marketing / Accountancy)

Other

FIGURE 17: REASONS FOR LACK OF CONFIDENCE

LACK OF BUY-IN FROM TOP MANAGEMENT

LACK OF BUDGET

LACK OF TIME

LACK OF KNOW-HOW

LACK OF SKILLS

RESISTANCE FROM EMPLOYEES

OTHER

Q: You’ve indicated that you’re less confident in delivering against the following people challenges [see fig. 6]. Could you please indicate the main reason for this?

15%

19%

20%

14%

15%

13%

Employee motivation

19%

Leadership skills

Employee mobility

Employee engagement

16% 19%

12%

20% 24%

15%

Employee creativity

16%

Employee flexibility

16%

Knowledge sharing

15%

11%

15% 14%

22% 18% 22% 24%

16%

15%

20%

11%

14% 16%

5% 3%

22% 16%

Red indicates the concern with the highest percentage of every people challenge

18%

12%

19%

12% 21%

19%

4% 7%

11%

The Talent Crunch

SPOTLIGHT:

The future is distributed leadership What will it take to make a leader in five years’

In an example she studied, “we noticed a team

time? Sharon Olivier, a leadership expert at

mindset: to be able to be optimistic and reframe

Ashridge Executive Education, has been studying

their view,” she says.

the differences between high- and low-performing teams and has found that the style of leaders has a

Team members also put mutual support structures in

major impact.

place to make sure mutual objectives were achieved.

In a soon-to-published study on two teams subject

and let each person lead on a different set of key

to similar external factors it became apparent that

performance indicators.”

In team meetings, the leader “held the space

employee engagement is greatly enhanced through what Olivier calls ‘distributed leadership’.

Conversely, situations where the team leader is more

This is a hands-off style of leadership where team

sense of being watched and judged.

hands-on can inhibit engagement by giving staff a members are empowered to make decisions and the leader’s role is limited to guiding and

Olivier cautions against ego-control, where the

supporting subordinates. “One of the things that

leader effectively dominates proceedings, versus

got people going is when they can let their talents

eco-control, where they simply create the conditions

shine,” Olivier says.

for optimal teamwork. Becoming adept at distributed leadership does not come naturally, however. “It means relinquishing control,” says Olivier. This highlights the need for leadership training. Being a manager may simply be a question of promotion. But being an effective manager clearly depends on a lot more.

Sharon Olivier Programme Director, Ashridge Executive Education

CONCLUSION AND RECOMMENDATIONS Talent management has undergone significant change in recent years, with a fundamental shift in the way that organizations source and engage with talent. But our research shows even more is needed.

The Talent Crunch

The challenge for HR in the coming years will be to reassess how it uses innovation to build a workforce fit for the future, in particular with an increasingly global employee base. At the same time, increasing competition and reduced consumer spend are having a knock-on effect on workforces. Companies want to do more with less, which is leading to greater stress and worker fatigue. This trend is only likely to continue. Companies see strong leadership and renewed motivation as the top two ways to address this with their existing talent base. And they want to attract international talent that is highly skilled, multilingual and flexible, to help them achieve their future objectives against a difficult business backdrop. However, they are not doing enough to attract such talent and seem to be assigning training budgets to areas less likely to impact the serious talent issues they face. It is possible business leaders are setting training priorities with sights on strategic goals and global competitiveness. But HR departments need to push back on these priorities to address the grass roots issue of employee motivation in an over-worked, stressful environment. To succeed despite the Talent Crunch, businesses need to urgently realign their HR investment priorities to address the motivation of existing staff first and then attract the highly skilled global talent they need to be competitive tomorrow.

EF proposes four lines of action to deal with the issues at hand: 1. CREATE INCENTIVES TO ATTRACT AND RETAIN EMPLOYEES WITH AN INTERNATIONAL OUTLOOK. Organizations with international ambitions might increasingly expect employees to be fluent in foreign languages. For these employees, learning programs and foreign work placements can be positioned as perks for good performance. 2. FOCUS EMPLOYEE REWARDS ON AREAS THAT ARE EASY TO IMPLEMENT. Lack of time is the enemy of most attempts to address training and development challenges. Hence it will pay to focus development plans on quick wins that can be achieved with minimal management input. Giving an employee the option of learning a new skill, for example, may be easier on management than promising mentorships or time off.

3. LINK EMPLOYEE PDPs TO BUSINESS OBJECTIVES. More than two fifths (42%) of business leaders surveyed said personal development plans PDPs and training were one of the top three ways organizations could attract international talent. Yet while PDPs clearly tick the â&#x20AC;&#x2DC;innovationâ&#x20AC;&#x2122; box, with management time at a premium it is important to align talent development programs with critical business goals so that investment in staff has a return for the business, too.

BUSINESSES NEED TO URGENTLY REALIGN THEIR HR INVESTMENT PRIORITIES TO ADDRESS THE MOTIVATION OF EXISTING STAFF FIRST AND THEN ATTRACT THE HIGHLY SKILLED GLOBAL TALENT THEY NEED.

4. PUT GREATER EMPHASIS ON LEADERSHIP AND INNOVATION SUPPORT AND TRAINING. Part of the reason why organizations cannot provide development support in the areas they need it most is because of lack of time and skills. Organizations already know they need to prioritize leadership training; they must not lose sight of this. n

SURVEY METHODOLOGY In the spring of 2016, EF commissioned Londonbased research firm Loudhouse to survey business decision makers across 12 territories and a range of industry sectors. The study covered senior executives from 613 organizations, all trading internationally or planning to do so. All organizations had more than 500 employees; 71% of the sample came from employers with more than 1,000 staff. The field research, carried out in April 2016, covered Brazil, China, France, Germany, Italy, the Netherlands, the Nordics, Russia, Spain, Switzerland, the United Kingdom and the United States. The minimum sample size per country was 50 and the top industry sectors represented were manufacturing (18%), IT and telecommunications (17%), financial services (10%), public sector, and business services (both 7%). The quantitative results were further augmented by the qualitative results of interviews with approximately 80 senior HR professionals within the Agora network in France, following a survey amongst their membership. The interviews were carried out by Patrice Fauchard, Training & Talent Development Consulting Director for EF Corporate Solutions.

The Talent Crunch

FURTHER READING To read more about language training benefits and communication strategies, visit www.ef.com/corporate.

English /ˈɪŋ.ɡlɪʃ/ noun the language of England, now used in many varieties across the world. • adjective relating to England.

– DERIVATIVES Englishness noun. – ORIGIN Old English, related to Angle

margin /ˈɪŋ.ɡlɪʃ/ noun 1. an edge or

EF EPI-c

EF EPI

EF English Proficiency Index for Companies

EF English Proficiency Index

Virtual Conflict

– PHRASES speak the same lan-

guage understand one another as a

result of shared opinions or values. Old French langage, from Latin lingua ‘tongue’.

– ORIGIN

business /ˈbɪz.nɪs/ noun 1. a per-

son’s regular occupation or trade. 2. work to be done or matters to be attended to. 3. a person’s concern. 4. commercial activity. 5. a commercial organization. 6. informal a difficult or problematic matter.

The English Margin TEST YOUR STAFF FOR FREE

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informal an excellent person or thing. 8. actions other than dialogue in a play. oper-

7. (the business)

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sh Proficiency Index for Companies

EF English Proficiency Index

– PHRASES in business informal

ating or able to begin operation. in the business of engaged in or prepared to engage in. like nobody’s business informal extraordinarily. mind one’s own business avoid

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BARRIERS TO COLLABORATION IN GLOBAL TEAMS

WHAT LANGUAGE MEANS TO A BUSINESS’ BOTTOM LINE

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EFSETEF EPI

EPI-c

om/epic

border. 2. the blank border on each side of the print on a page. 3. the furthest reach or limit. 4. an amount above or below a given level. a small amount allowed for in case of miscalculation or change of circumstances. – ORIGIN Latin, margo ‘edge’ language /ˈlæŋ.ɡwɪdʒ/ noun 1. the method of human communication, either spoken or written, consisting of the use of words in a structured and conventional way. 2. the system of communication used by a particular community or country. 3. the phraseology and vocabulary of a particular group: legal language. 4. the manner or style of a piece of writing or speech. 5. Computing a system of symbols and rules for writing programs or algorithms. – PHRASES margin of error

2016

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meddling in other people’s affairs. Old English, ‘anxiety’ (from

– ORIGIN

busy + -ness); the sense ‘a duty’

from which other senses developed, dates from middle English. informal 1. the final total of an account or balance sheet. 2. the underlying or most important factor.

bottom line noun

DECODING MOTIVATION Global insight into motivational drivers of corporate training

IN-FLIGHT ENGLISH: How language skills create commercial value in aviation

VOICES IN THE AIR: The role of language in airline sector safety

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By EF Corporate Solutions