Skip to comments.Looming Talent Crisis Faces U.S. Companies
Posted on 02/17/2005 9:25:25 AM PST by qam1
RISMEDIA, Feb. 16 Impending Baby Boomer retirements, a widening skills gap driven by declining educational standards, and outdated and ineffective approaches to talent management are combining forces to produce a "perfect storm" that threatens the global business economy, according to Deloitte Consulting.
In a recent U.S. survey of human resources executives nationwide conducted by Deloitte Consulting, more than 70 percent of the 123 respondents say incoming workers with inadequate skills pose the greatest threat to business performance over the next three years, followed by Baby Boomer retirement (61 percent), and the inability to retain key talent (55 percent).
These survey findings are underscored in Deloitte Research's report, "It's 2008: Do You Know Where Your Talent Is? Why Acquisition and Retention Strategies Don't Work."
"The overwhelming accumulation of data, including Deloitte Consulting's new research, points to an inescapable conclusion: the widening skills gap, particularly among the categories of workers who disproportionately drive companies' growth and performance, is a global phenomenon that will create unprecedented challenges for businesses," said Ainar Aijala, vice chairman, Deloitte Consulting and global service area leader of Deloitte Consulting's Human Capital practice. "The confluence of demographic and social trends -- the full force of which will begin to be felt in as little as three years -- will leave behind companies that do not begin to rethink and redesign their approach to managing human capital."
In only three years, the first wave of Baby Boomers will turn 62, the average retirement age in North America, Europe and Asia. According to the Deloitte Consulting survey, one-third of U.S. companies expect to lose 11 percent or more of their current workforce to retirements by 2008.
"While the 'greying' of the workforce will independently create large vacancies across industries, additional factors, such as low birth and immigration rates in Europe and the single-child policy in China, present further perils to companies worldwide," explains Aijala. "Companies will also continue to face inadequate skills among an increasingly diverse, virtual, global, and disengaged workforce."
Life sciences, energy and the public sector will be the hardest hit with manufacturing, consumer business and financial services industries close behind. For example, Canada, Australia and the U.S. could lose more than a third of their government employees by 2010. The National Association of Manufacturers revealed in a recent survey that more than 80 percent of U.S. manufacturers face a shortage of skilled machinists, craft workers and technicians. Further, the U.S. Department of Education predicts that 60 percent of new jobs in the 21st century will require skills possessed by only 20 percent of the current workforce.
Among the many threats affecting the global workforce over the next few years, the exit of "critical talent" could be the most damaging. Deloitte Consulting defines "critical talent" as the individuals and groups who drive a disproportionate share of their company's business performance and generate greater-than-average value for customers and shareholders. These individuals are "critical" to their company's ability to meet strategic goals and objectives.
"When we talk about critical talent, we are not necessarily referring to the 'A players' or senior executives," explains Mike Fucci, principal and U.S. leader of Deloitte Consulting's Human Capital practice. "Critical talent represents those individuals who possess highly developed skills and deep knowledge of not just the work itself, but of how to make things happen within a company, such as the couriers within package delivery companies who have daily client contact and direct knowledge of the supply chain, or researchers and clinicians within drug companies."
Unfortunately, few organizations have talent management processes in place to address the impending workforce shifts that will negatively impact critical talent segments. In fact, only half of the organizations surveyed by Deloitte Consulting have identified a list of the critical skills they need for future growth. Even more alarming, more than a quarter of respondents say defining critical skills as a workforce tool is "unimportant."
"Employers need to focus quickly on understanding which skills will make or break their business, where those skilled individuals will come from, and how to keep these workers engaged and committed within the organization," Fucci cautions. "Only those organizations that respond swiftly and plan effectively will find themselves on top of these new challenges."
Traditional approaches to talent management frequently focus on acquisition and retention. When the talent pool tightened in the 1990s, companies responded by offering rich compensation packages and "hot skills" bonuses. The end result, however, was often disappointing -- recruiting costs soared while investments in training languished. In addition, such compensation packages were often matched by competitors, contributing to high attrition rates of talented personnel.
Despite the changing landscape, organizations still plan to increase their investment in traditional talent solutions for 2005. Approximately 60 percent of survey respondents plan to increase experienced employee recruitment, while 42 percent plan to increase campus recruitment. Additional investment will also be given to rewards packages for experienced employees (39 percent) and new recruits (30 percent).
"Acquisition and retention strategies remain important parts of talent management. Such strategies, however, attend to the "end-points" of the process and only offer a quick fix to these new workforce challenges," says William Chafetz, national practice leader of Deloitte Consulting's Organization and People Performance Services. "To survive the changing labor landscape, organizations must employ more comprehensive talent management strategies that reflect an understanding of critical workforce segments and satisfy the conditions those employees need to succeed."
According to Deloitte Research, talent-savvy organizations build strategies around what matters most to their critical talent -- their personal growth or development, their need to be deployed in positions and assignments that engage their interests and curiosities, and their connection to others in ways that drive performance for the company as a whole.
Many of the companies Deloitte Consulting surveyed seem to understand the importance of development and training their employees, with nearly three- quarters (70 percent) of respondents planning to increase investments for mentoring and coaching in 2005, e-learning (64 percent) and classroom training (49 percent). "It is a great sign that most organizations are committed to strengthening the skills and knowledge of their workforce, but they need to do more," states Chafetz. "No single part of the talent management process can sustain an organization or generate superior business performance on its own - organizations must adapt a new way of thinking and use critical talent as a competitive advantage and a long-term investment."
What's wrong with this picture? Looks like a fresh new start to me.
we have plenty of smart americans. but when opportunities and compensation levels for jobs in the sciences and engineering are being diluted by the use of offshore labor who will work for far less, what incentive do people have to enter into those fields. you can make more money in the US as a mercedes benz mechanic then as an engineer. this is why american parents of college aged children, are piling their kids into law school as fast as possible.
Not a problem, President Hillary will pass The Americans With No Abilities Act which will recognize every American's right to take up space. This will allow them to go on SSDI which will be funded by the 401K Seizure Act which Laura D'andrea Tyson proposed in x42's Administration.
Unfortunately, many "government" employees, include scientists at the Lawrence Livermore, Los Alamos, and Sandia labratories...among many other places.
When they retire, we can let the kids with Ethnic studies and fine arts degrees design and develop our high tech future.
One of my contractors just quit to go work for Deloitte Consulting. He had to move to California for the job.
I recently had a conversation with a plant manager on his factory floor.
In response to my "How's business" question he said sales are booming but he can't find anyone to work.
He has had his signs up since early December and has interviewed over 80 applicants. He hired several but all are gone. Half of those hired failed the drug test. The others would come to work a few days and then either not show up or come in late.
He has fairly nice and clean facilities with no really obnoxious jobs. He pays above average wages and has good benefits. He even slacked off on his requirement for a highschool diploma.
The cost for a medical exam and drug screen is nearly $200. He has spent several thousand with nothing to show for it. He has a very bad problem with no good solution in sight.
Right, the baby boomers just can't anyone as good as themselves.
They say obesity is deadly. There's your proof.
What you say is certainly true. But the problem is that the U.S. now lacks enough highly trained people in specialized fields of the hard sciences. We have a plethora of business, arts, and the likes of educational degrees.... but not enough in the hard sciences.
For many years we have been "borrowing" this talent from China, Japan, and India.
The reason for the shortfall you might ask?...Answer..The teachers Unions who have dumbed down both the teachers themselves, the curriculum, and as a result, the children they are entrusted to educate. There are other reasons as well but this is number one.
Of course this has always been true, even if the Baby boomers are creating a more urgent situation, management has always considered interaction with employees to be a necessary chore to be avoided if at all possible. This is because talant in management has been considered not necessary for most management positions as managers attempt to surround themselve with useful idiots who will present no serious competition to their own rise.
Good managers have always known that they must stay in touch with their employees and find ways to keep valuable employees happy. This flies in the face of Political Correctness and Multicultuirism that states that almost any minority is qualified for nearly any position that they want. Enough managers with no talant and the workforce will realize that their needs will not be satisfied at any time in the future. Then they start looking.
In my firm, it was standard practice to immediately accept the resignation of any individual, regardless of ability and critical tasks performed if said individual implied that if they would resign if some action beneficial to them were not taken by management.
Dark Wing tells me that this retirement wave is much worse for the federal civil service.
I know a guy that has been a machinist for 25 years.
He is proficient on CNC maching and has kept up with technology.
However he is 58 years old and no one wants to hire him because of his age (the company he worked for went out of business).
Also the cnc machine jobs are being sent overseas and the ones being offered here now in the states are paying $10 hour. Many machinist jobs in my area start out at $8 hour.
Why go to school for this profession anymore for $8-10 hour?
they might have to hire those "mean, nasty, white males"...
"What all these idiots fail to account for the the very large labor pool in the 40+ year old age group who are unemployed or underemployed. Generally speaking, this age group is savvy, seasoned, with good skills learned in school and in 20 years of being in the workforce, yet they are cast aside or not called back for the second interview because of their grey hair."
Well worth repeating.
what talent shortage? just look at how many people are dying to get on "American Idol", "Apprentice", "Survivor", etc, etc.
Here, here! Many executives are in their posts because of inheritance or nepotism. They are basically out of touch with the current situation, or think that cheaper is always better. I predict the precipitous decline of US corporations in the next 25 years. We have eaten our seed corn.
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