Op/ed: Maintaining the talent flow — How to retain your best workers
By Vlad Vaiman
The ever-increasing focus on the effective management of people, especially those who are key to an organization’s success, is one of the most important developments in management in the past 15 years. Starting with a seminal McKinsey study in 1998 and the authors’ 2001 book “The War for Talent,” the field of talent management has gained much respect and attention from scholars and practitioners across industries and national boundaries.
When managed effectively, highly talented employees can generate significantly more value than average performers. For jobs that require repetitive, non-creative work, top performers are two to three times more productive than others. For jobs in more creative and specialized work, the difference can be as much as six times. Across all jobs, trades and world regions, the best employees are on average about four times more productive than their colleagues.
Organizations worldwide are having an increasingly difficult time finding these talented employees to fill critical job roles. In the United States, nearly half of employers report some difficulties in filling key positions, a huge jump from just 14 percent in 2010. Employers in other developed and emerging economies are having similar problems. In Japan, a staggering 81 percent of employers say they are struggling to find talent. About 71 percent in Brazil, 48 percent in India and 42 percent in Germany report the same. Overall, 43 percent of organizations around the world found it more difficult to fill key positions in 2012 compared to previous years.
One of the reasons for the shortage is changing demographics, specifically the aging population. Among the 34 developed nations in the Organization for Economic Co-operation and Development, the number of workers aged 40 and older will soon exceed the number of those younger than 40 for the first time. In the U.S., the number of workers aged 55 and older will reach the 20-percent mark within the next few years, a rather substantial increase from 13 percent in 2006. More than 40 percent of Canadian workers will be between the ages of 45 and 64 in only seven to eight years. In the European Union, the working-age population will decrease over the next 50 years by around 43 million people.
Meanwhile, youth unemployment is overwhelming. Among U.S. youth, unemployment has reached 16 percent while overall unemployment is still hovering around 7 percent. Greece’s and Spain’s rates are a stunning 51 percent and 52 percent, respectively. Among OECD members, the average unemployment among the young was 17.1 percent in 2012.
The abundance of older employees and a lack of quality entry-level jobs only partly explain the high youth unemployment. The other cause is the fact that most of these young people do not possess the knowledge, skills and abilities needed to fulfill the requirements of the modern, sophisticated, fast-paced and increasingly globalized business environment.
As the skills required by employers become even more complex, labor shortages will continue to impact many world markets, including the U.S., Canada, Germany and Italy. In order to combat talent shortages, some companies are concentrating their efforts on retaining and recruiting talent, assigning people with high potential to take charge of critical job roles, and providing additional training and development to existing employees so that they will be equipped to fill future vacancies.
Some of these organizations are also getting involved in the education of both the current and future workforce to ensure an uninterrupted supply of talent.
Governments can also help. They can stimulate birth rates, for instance by providing incentives for young families with more than one child, but such initiatives will take a while to show results. Governments can have an immediate positive impact by introducing meaningful immigration policies. For instance, the Canadian government each year issues a list of professions required by the national economy and regulates the number of professional immigrant visas in accordance with this list.
Immigrants must also fulfill age and work-experience criteria and be able to communicate in English or French. Thanks to this policy, Canada brings in immigrants who can find jobs faster and easier and thus start contributing to the economy almost immediately. Implementing this policy also helps avoid talent gaps in the economy. The government of the United States, or any other country that wishes to avoid a shortage of qualified workers, would do well to follow Canada’s lead.
• Vlad Vaiman is a professor of international management and associate dean in the School of Management at California Lutheran University in Thousand Oaks.
|By the numbers: Why retention matters|
|According to staffing services firm Robert Half:
• Nearly four in 10 — or 38 percent — of CFOs said retaining valuable employees is their primary staffing concern in the next 12 months.
• Hiring and retaining employees with the requisite skills will not be easy, however: 89 percent of executives worldwide are experiencing recruiting challenges, and 83 percent are worried about their ability to keep top performers on board.
• Companies concerned about keeping their top performers and attracting new ones may be sweetening the pot with non-monetary benefits. When executives were asked about the perks they plan to offer or are already offering, subsidized training and education topped the list (29 percent), followed by flexible schedules or telecommuting (24 percent) and mentoring programs (24 percent).