Are you prepared for the Perfect Storm?
“A perfect storm is a severe or disastrous situation created by a powerful concurrence of factors.”
The “war for talent” term has become one of the most overused and overanalyzed concepts since it was first coined in 1997. Executive teams, HR organizations, consulting and executive search companies, universities and business schools have pervasively put it into their presentations to alert leaders about the serious consequences.
But to the astonishment of today’s leaders, data shows that many organizations have either ignored, been indifferent toward their talent gaps, or worse, covered up an increasingly bad situation.
Today, nearly 25 years later, 80% of CEOs say that the availability of talent with the right skills is a serious concern. According to a Korn Ferry Institute study, it is expected that until 2028 the talent shortage could reach more than 85 million people globally. The hardest hit countries and industries will be those where unemployment has traditionally been low.
Additional factors which will further strengthen the storm are decreasing employer loyalty and millennial career concepts, which already make up more than a third of the global workforce, and an intensifying reverse brain drain with talents heading back to their fast-developing home markets.
For example, in 2019, the U.S. had already experienced a reverse brain drain of up to 1.000 talents per day, mainly in the science and technology sectors.
How could this perfect storm progress undetected at senior levels?
The original sin is a severe lack of robust talent data. Less than 10% of companies have talent analytics programs in place. And in many companies where data was available, the answers are even more shocking. Leaders either didn’t trust the information, didn’t prioritize accordingly, or after a short time were corrupting the data gathering processes.
One of the worst situations we analyzed was at a global company in the industrial sector, which downsized its operations for more than 10 years, stopped all strategic recruitment processes, reduced the number of talent management professionals and delegated the task to local managers who in parallel received stretched operational cost targets with no leeway to deal with the talent challenge.
The result of a decade without strategically addressing this issue? All of their key roles had a disastrous bench strength. On average, for 3 critical roles, which had to be backfilled within the next five years, only 1 successor was identified.
How was this company able to deal with the situation for so long?
In the beginning, the downsizing freed up talent which could be reallocated in the remaining operations, but when this supply started drying up, they started the “sliding puzzle” game, moving talent from less critical business units to more critical operations, and increasingly not being able to backfill those roles with the right candidates.
When the company introduced a very basic and simple process to identify talent, they entered the eye of the storm. A whole region, threatened by the continuous loss of their best talent, started to hide their talent. In a silent agreement, during yearly talent reviews, the decision was made not to share any information about their top-talent with the rest of the company.
The role of company leaders
This is precisely the moment when the future of a company becomes seriously threatened and the senior Executive team needs to start fighting the storm. When a powerful concurrence of external and internal factors creates a disastrous situation, company leaders need to own and not delegate the full company talent agenda.
They need to question, whether their companies have the right approach to talent, especially reliable data to make fact-based decisions, the right and trustworthy HR organization to drive changes when needed and ultimately feel personally accountable for the results.
Forward-thinking company leaders need to understand that in the coming years the talent quote from former Honeywell CEO Larry Bossidy will become more relevant than ever to fly successfully through the perfect storm:
Nothing we do is more important than hiring and developing people. At the end of the day, you bet on people, not on strategies.