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  • the great talent shortage

    awakening: actions to take for a sustainable workforce

  • 2013 THE GREAT TALENT SHORTAGE AWAKENING2

    ExEcutivE Summary manpowerGroup’s eighth annual talent Shortage Survey found that

    35 percent of employers on average report having difficulty filling jobs due to a lack of available

    talent. this is the highest shortage since the start of the global recession.

    in the world of 2013, the only certainty is uncertainty. changing demographics, technological

    evolution and a world prone to political, economic and social shocks have created a global

    environment in which talent shortages are the rule rather than the exception. as business cycles

    have become compressed, so too have skills cycles.

    Last year, we reported that employers had become so accustomed to talent shortages that

    complacency had set in. a majority did not expect such shortages to impact their businesses,

    largely because they assumed that this universal challenge was something their competitors were

    also faced with.

    in 2013, there has been a collective awakening. Globally, the number of employers who believe

    talent shortages will negatively impact their business has increased by nearly a third. in countries

    where the problem is particularly acute, many employers express even greater levels of concern.

    as employers increasingly recognize that the talent shortage threatens their ability to compete, they are

    still frustrated by the lack of a straightforward solution. they realize that expanding their workforces,

    increasing compensation or looking to competitors to poach talent are unsustainable solutions.

    Fortunately, solutions do exist. By asking the right questions, companies can understand how talent

    shortages affect them specifically and identify how to address the issue. uncertain economic times

    have cast a light on the need for employer agility, and that agility must be driven by a company’s

    human resources (Hr) leaders.

    this paper examines several strategies Hr leaders can pursue to ensure a sustainable talent pipeline

    for the future. By operating as a strategic partner, rather than solely as a functional leader, Hr leaders

    can design workforce solutions to fuel their organizations’ competitiveness for years to come.

    These include: • Developing and supporting a framework for teachable Fit™

    • creating a culture of talent development

    • achieving the right cultural profile

    • tapping into new sources of talent

    • Driving agility from the outside

    • Driving collaboration

  • 3executive overview

    tHE taLEnt SHortaGE tHrouGH tHE yEarS When manpowerGroup first conducted its annual talent Shortage Survey in 2006, we were driven

    by a common refrain echoed by businesses around the world: there simply weren’t enough qualified

    people to fill available jobs and this was hampering productivity. Because it is our business to

    unleash human talent as a key driver of organizational success, we wanted to understand just

    how acute this shortage actually was and where in the world its impact was most significant.

    the original survey showed 40 percent of employers were struggling to fill positions. this came as no

    surprise based on our daily conversations with companies all over the world. in fact, we anticipated

    this would happen due to unique global world of work insight into the direction and health of

    labor markets.

    By 2009, at the height of the global recession, the figure had understandably dropped by a quarter.

    However, with millions of people unemployed, it was certainly noteworthy that 30 percent of

    companies still reported difficulty filling jobs. although employment opportunities existed, employers

    felt those candidates lacked the specific skills they were looking for. as economies have recovered,

    this trend has accelerated and talent shortages are now at their highest level since before

    the recession.

    alarmingly, by 2012 employers had become so acclimatized to talent shortages that complacency

    had started to set in, and the majority of employers believed talent shortages would not negatively

    impact their business. With their competitors facing similar challenges, there seemed to be a belief

    that having a shared problem somehow minimized its impact.

    Figure 1

    0%

    20%

    40%

    60%

    80%

    20132012201120102009200820072006

    40% 41%

    31% 30% 31% 34% 34% 35%

    global: % Having DiFFicutly Filling Jobs

  • 2013 THE GREAT TALENT SHORTAGE AWAKENING4

    GroWinG concErn aBout tHE taLEnt SHortaGE’S impact on BuSinESS twelve months later, the percentage of companies experiencing talent shortages has risen slightly

    again, and the proportion of employers who expect their talent shortages to have a medium-to-high

    impact on their business has increased dramatically—to 54 percent of employers.

    in many cases, employers in countries with higher-than-average talent shortages are also more

    likely to expect the problem to impact their business. For example, in the country with the

    highest reported shortages (Japan), 85 percent of employers expect a medium-to-high impact

    on their ability to meet client needs. virtually all Japanese employers expect it to have some

    degree of impact. in Brazil, where the problem is almost as acute, 78 percent believe the talent-

    shortage will have a medium-to-high impact.

    While employers increasingly recognize that the talent shortage poses a serious threat to their

    business competitiveness, many appear to be at a loss for answers with more than one fifth

    reporting they are doing nothing at all to address the problem. merely expanding their workforces is

    not necessarily the solution—and is likely not a viable option anyway when demand is uncertain and

    subject to economic shocks. in the midst of certain uncertainty, employers must learn how to adapt

    in real time. to fully succeed in the Human age, an entirely new brand of workforce flexibility and

    agility is required.

    Figure 2

    tHe greater tHe talent sHortage, tHe greater

    tHe PerceiveD iMPact

    0%

    20%

    40%

    60%

    80%

    100%

    35

    54

    80

    68

    78

    90 85 85

    97

    GLOBAL JAPAN BRAZIL

    TALENT SHORTAGE RATE

    EXPECT MED/HI IMPACT

    EXPECT SOME IMPACT

  • 5executive overview

    the good news is that solutions do exist. those who are already deeply affected by the talent

    shortage can take action to turn the tide, and those who currently experience minimal impact can

    put systems into place to prevent intensifying problems in the future. First, however, it is important

    to understand how the problem became so dire.

    tHE LoominG taLEnt SHortaGE the talent shortage—the disparity between what employers need and what available employees

    have to offer—has a variety of causes. Some are interconnected, while others are isolated. taken

    together, they create a “perfect storm” that shows no sign of subsiding.

    The demographics of the global talent shortage are both old and young.

    in the 2012 Survey, we reported that the talent shortage is “an old problem” in Japan. indeed

    it is. Japan’s population is shrinking due to a record-low birthrate and its proportion of citizens

    over age 65 is higher than any other country in the world. at the 2009 low-point, 55 percent of

    employers in Japan reported difficulty filling jobs. By the time of the 2013 survey, the figure had

    spiked to 85 percent. Dwindling numbers of workers cannot possibly support what was once a

    fast-growing economy. in Japan, its skills—both the “hard” technical competencies and “soft”

    workplace skills—are far and away the most commonly cited cause of the talent shortage.

    Japan might be an extreme example, but it is not the only country to face such a problem. this

    year, retirees in canada will outnumber youth for the first time. and, by 2050, it’s expected that the

    elderly in china will equal the number of nearly 40 percent of its labor force, while the global share

    is expected to double, to more than 25 percent.ii

    While some wealthy countries are experiencing declining fertility rates and a growing elderly

    population, many countries are seeing the exact opposite. they’re going through what’s known

    as a “youth bulge”—a demographic phenomenon in which the share of 15-24 year-olds increases

    significantly faster than other age groups. in 2012, this trend was especially prevalent in countries

    in sub-Saharan africa, Latin america and the middle East.iii

    in terms of the talent shortage, the youth bulge impacts labor markets on multiple levels. First, it

    increases the supply of labor, albeit a segment of the population often considered by employers to

    be inadequately prepared for employment. Second, the added pressure on labor markets naturally

    depresses wages, which impacts the entire working age population. Finally, there’s the vexing issue

    that presents itself when a company’s workforce doesn’t reflect the varying levels of experience