Please note that a version of this article appeared as a Guest Column in IPE Real Estate magazine. Please therefore enter the following web link to see the published article: http://www.ipe.com/realestate/The_war_for_talent_27517.php
At a very recent Executive Search Conference held here in London and attended by staff at SUMMIT one of the main themes investigated was “Searching for solutions as the war for talent intensifies”. Consultants from Executive Search firms all over Europe gathered to discuss this intriguing theme and share their thoughts and views from a broader geographic perspective. The overall feedback was amazingly similar, from Milan to London and from Zurich to Barcelona. In a word, challenging!
This ‘War for Talent’ has been widely debated ever since 1998 when McKinsey & Co published the results of a year long study of working trends (involving 77 companies and almost 6,000 managers and executives). McKinsey’s findings were confident and conclusive: “The most important resource over the next 20 years (from 1998) will be talent: smart, sophisticated business people who are technologically literate, globally astute and operationally agile. And even as the demand for talent goes up, the supply of it will be going down.”
So, almost 10 years on, is this executive ‘talent’ crisis a myth or reality? Well, the unanimous opinion at the Executive Search Conference was that it is becoming increasingly difficult to find and, more importantly, to move senior level, high calibre professionals in today’s market. The reasons are manifold and complex, but they primarily revolve around changing demographics, a surge in emerging markets and a general shift in attitude towards work.
In the past, ‘talented’ executives migrated to leading developed countries to progress their careers where as, according a recent survey by the Economist, the current destinations of choice are China and India. As the global economy grows, the global ‘talent’ pool has to stretch to compensate for a shortage of international, skilled workers in these emerging markets. There is also the problem of an aging population. According to the Wall Street Journal, ‘the tip of the baby-boom generation is 57 years old and starting to retire. That age group ranges down to 39-year-olds, and the generation below the baby boomers is only half the size.’ Add to the mix a more discerning employee who wants a better work-life balance and is prepared to step off the corporate ladder to achieve it, and one can start to understand why the executive talent pool is leaking! The question therefore is how is this ‘War for Talent’ affecting you, the hiring client, and what can you do to win the battle?
The most obvious impact has been on executive remuneration. Salaries have risen alarmingly quickly, in particular in the Commercial Property market, where in some cases salaries have increased as much as 50% in the space of two years. As a result of such a competitive and candidate driven market, the hiring client must offer an increase of at least 20% on the candidate’s base salary to have a fighting chance of seeing their offer accepted. If the base salary is not right, there is currently close to a 100% chance that the candidate will accept a counter-offer from their current employer - a frustrating waste of time and money for all concerned! It is also worth pointing out that candidates nowadays are far more driven by the security of the basic salary on offer than they are the bonus (with the exception of pure sales driven roles). The former is always the first question asked during an approach call and acts as a real benchmark for any continued interest in the opportunity being presented.
It is also proving more difficult to source and attract executives. For one thing, traditional advertising is not what it used to be. Advertisements placed in the quality broadsheets are returning 30% less response than two years ago. There is a need therefore to devise more creative recruitment campaigns and to place more emphasis on Executive Search than in previous years, even for middle management appointments. Perhaps people are just ‘sitting back’ waiting to be headhunted by firms such as ours? Possibly. However, even this logic comes unstuck when you consider that fewer than one in ten people secure their next career move this way. Interestingly enough it is this top 10% that will continually be headhunted as they are the most visible and well-known candidates in the market. In all it is a rather strange market! Those that are actively looking for a new role often find it hard to secure one in less than six months and yet executive recruiters find it hard to find people for their senior roles. See the conundrum here?
With ‘retention’ very much the by-word at present, companies need to think carefully about how they retain their key staff. Remuneration alone will simply not suffice. Here are some of the areas that successful companies have addressed: performance based packages, flexible working hours, provision of mentoring and coaching, more paid (and unpaid) holiday days each year, flexible working locations (work, home etc.) and very closely defined Key Performance Indicators for their top executives.
We have compiled some statistics that you may find interesting and also a little surprising.
- 87% of executives are concerned about their work-life balance
- 73% of HR executives are concerned about voluntary resignations
- 75% of employees are looking, either actively or passively
- 75% of HR executives say that ‘retention’ is their No.1 priority
- 48% of male executives want less travel
- 40% of employers worldwide are having trouble hiring
- 33% reduction in aged 40+ workers in the US by 2010
Sources: SHRM; Conference Board; AESC
It is a well-known fact that many hiring clients are struggling to attract executive level candidates and then to retain them. Maybe people are sitting tight, fearful of a move and the potential risk that this can bring. Maybe 2008 will see some flex in this situation. Personally, we suspect not. The executive recruitment market, in our opinion, has changed and changed for good. Companies like SUMMIT will continue to have to dig deep to find high quality candidates using all of our persuasive skills to encourage a candidate to move. Hiring clients may also need to re-think their demand levels and introduce some flexibility into their level of expectation. Perfect candidate matches are almost impossible to find - however talented your researchers or copywriting skills!
