Looming Talent Crisis Faces U.S. Companies

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Feb. 16 – Impending Baby Boomer retirements, a widening skills gap driven by declining educational standards, and outdated and ineffective approaches to talent management are combining forces to produce a "perfect storm" that threatens the global business economy, according to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."

I am not sure I understand the question, the market determines the price.

The actual $$ spent is irrelevant, what matters is what you get for those $$, standard of living. We have, by far, the highest standard of living in our history. Our labor productivity is still very high, not sure of the actual numbers, but I believe it is the highest in the world.

I know of a paper mill in Indonesia, they have 15,000 people working there, they pay them $2/day. Equivalent US companies have 400 people but pay them $20/hour. The US paper company is more profitable, however. A reason is that the Indonesian paper company has 6 months in inventory, so they are clueless about how to run a business, but have cheap labor. That's the way it works. If we are smarter and more efficient than they are, we win.

But we produce many 'great', skilled people.

Lots of actors, singers, dancers, power forwards (men who can jam), ecstasy heads, pregnant teenagers, gang-bangers, hip hoppers.

What more do we need?

I see. I am just trying to figure out why everything is being outsourced. They have cheap labor. Do they do everything as well as our workers for less? Their standard of living is so poor. Ours is so high. Is it too high? What is wrong with this picture? Are we living beyond our means? Are we demanding too much in wages? Are unions running up the wages and taking some of the money? I just don't understand. Even my doctor is sending his dictation to Manila to be transcribed and he gets it back within 24 hours. He is a very conservative Republican, but he said it is business. He has to be able to make a living. He is not a rich man, either.

First, "everything" is not being outsourced. But if you are a company, much like yourself, you are going to do things as cheaply as possible, just like you shop on-line or at Wall-mart for the best price.

This idea that searching for the best bargain is traitorous or immoral just does not make sense. Everyone does it, so what?

So the people in the US need to grow up, there are people, and lots of them, in the world who are willing to work for less. The response to that is make yourself more valuable, to do a better job, to improve your skills, to fix our countries problems (tort, taxes, education, etc). Everyone is a "free agent" an "entrepreneur" as a previous poster said. Buy a business, go to school, reeducate yourself, be more diligent at work, and, for those slackers, make them accountable.

What else would you propose?

Well, thanks, I guess. However, I am not that old. I am 55. Guess you have not worked with many of us, huh? There are legions of us who work hard and have excellent work ethics. Also, we were not spending all your money. We put you through college and made sure you had everything you needed to have a good future. (At least I did for my children as did my friends and the people I worked with.) It just all depends on how one was brought up. We weren't all hippies, you know.

Nothing. Oh, happy day. I said the same thing once on another thread, not as eloquently as you, and got slammed big time. So, I thought I was wrong. I am new and I doubted myself. I believe education is the way to go. People should look at the job market and see what is in demand. Nursing is way up there for one. If you have what it takes to be a good nurse, go after it. Be informed as to what is in demand, don't just go to college with no idea what career path you are going to follow.

You are in the right, do not back down from this idea, it is core.

More important than picking a field is understanding that things change, that your job today is very likely to be totally different even 5 years from now. If you let yourself get complacent or stagnant, then you have a big problem.

I am taking machinist classes.

Machinist trades have taken a hit salary wise over the last 10 years

Why train to enter a field with a 10 year track record of declining wages?

I'm getting sick of the people that say you need to update your job skills/go back to school etc. That is exactly what I'm doing. But I'm faced with making $8 an hour to start(which is way less than I'm making now)

You appear to be obviously dedicated and willing to put forth the work necessary to enhance your skills. Why pick a skill that you know is trending downward, and you realize will be a step down instead of up (or over)?

More important than picking a field is understanding that things change, that your job today is very likely to be totally different even 5 years from now. If you let yourself get complacent or stagnant, then you have a big problem.

I'd even take it a step further, if your job today is the same as it was 5 years ago, big problems are on your doorstep right now. Change is the only constant in life, and that applies to work as much as anywhere else.

Always push to learn something new, take (smart) chances, and either set, or be at the top of the learning curve. That approach will make you be make mistakes more often than if you stay stagnant, but the payoffs are always better.

At the same time, if you want to have a technical skill and enjoy working with your hands, which is great, go somewhere that cannot be outsourced. How about auto repair, these guys can command top dollar, and you cannot send your car to china to be fixed. I read the other day where top flight mechanics can make over $100K.

~$100/hr fee at auto repair joints around here. Sure the guy doing the work doesn't get all of that, but he's not paying overhead etc...

Then there's plumbers, electricians, whatever. Very skilled labor that can't be shipped to my house from oversees when I need them, and my last look at their rates encouraged me to learn more DIY skills.

I guess that is a long way of saying I totally agree with you.

My sentiments exactly. What a promotion piece. And to think that the corporations are paying big bucks to be part of the show. Can you imagine the nature of the show after this season when Trump disappears? Ratings have to be headed in the toilet.

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