Scarcity of Talent – A Key and Consistent Concern

Business leaders around the world have expressed concerns about the growing scarcity of qualified talent to fill vital roles within their organizations.

In a 2012 survey of global leaders (Lloyd’s Risk Index) conducted by The Economist and Lloyd’s  of London, “talent and skills shortages” ranked as the second most pressing concern for CEO’s and corporate leaders trailing “loss of customers” by a small margin.  In a survey of 1,605 HR Professionals around the world, Towers Watson found that 72 percent of the respondents reported difficulty in attracting and retaining the high-potential and critical-skill employees necessary to increase their global competitiveness.

So why are companies so worried about the scarcity of talent and how do competencies impact the most pressing needs of a talent management program?

Challenges to be addressed

A survey conducted by the Human Resource Executive magazine in 2012 reported that the biggest challenges faced by their readers were:

• Ensuring employees remain engaged and productive (34%)
• Retaining key talent as the economy recovers (33%), with 91% reporting that they are moderately to extremely worried about losing their top talent when the recovery takes hold
• Developing leaders (32%, up from 28% in the previous year)
• Aligning people strategies with business strategies (30%)

HR leaders understand that they need to protect their knowledge base – in other words, the valuable talent with the competencies required to maintain their company’s competitive edge in the marketplace.  Key to this are the use of strategies to boost employee retention that focus on communication, as well as training and career development that directly address the competencies needed to achieve both individual and organizational success.

Measuring & Managing the Impact

The impact on the bottom-line of not having good talent management strategies in place is underscored in a recent study conducted by the American Institute of CPAs (AICPA) and Charted Institute of Management Accountants entitled Talent Pipeline Draining Growth: Connecting Human Capital to the Growth Agenda.  A noteworthy 43% of the CEOs, CFOs and HR directors surveyed said their companies have missed financial goals in the past 18 months because of inadequacies in human capital management.  Almost the same number (40%) indicated that shortcomings such as insufficient systems, processes or management information have hindered their ability to innovate.  In a commentary on the study (See Human Resource Executive, November 2012), Arleen Thomas, AICPA senior vice-president for management accounting, noted that, “Ideas are the currency of the knowledge economy, so human capital must be managed as rigorously as financial capital.”  “It is clear from our research that many companies are falling short of their potential because they lack thorough, relevant information about their people to support effective strategy, hiring and training decisions.”

The key to addressing these challenges is to have a solid framework for managing people based on the competencies needed to drive organizational success.  By understanding and clearly articulating the competency standards, organizations can build talent management strategies focused on hiring, training, developing, managing and retaining the human capital needed to achieve the organization’s vision and strategic goals.

HR leaders must understand what is important in their business and translate this into the competency and talent management  metrics that are aligned with the business requirements, including such things as ability to fill key positions, ability for the organization to resource growth initiatives, ability to address critical skills gaps and the strength of succession management within the organization.  While historical data are helpful, to be of true value the analytics gathered should be anticipatory and predictive nature, so that key decisions can be made to address talent requirements before they become a problem.  Beyond this, HR Analytics should demonstrate the return on investment for the talent management programs, processes, systems and tools that have been, or will be implemented.

All of this underscores the need for competency-based management programs supported by technology and tools that enable organizations to more effectively manage their human capital, as well as make evidence-based decisions that enhance and protect the organization’s most important asset – their valued talent.   Based on my experience, companies can develop highly quality “paper-based” tools and processes for managing their talent; but, these are unwieldy for employees, managers and HR staff to use effectively.  Data cannot be easily consolidated and analyzed for strategic decision-making, and information on the talent of the organization becomes quickly out-dated because of the difficulty in maintaining “paper-based” information and processes.  Early adopters of competency-based management quickly became frustrated, not because the processes were flawed, but because they lacked the systems for managing and updating the competencies and competency profiles, as well as for using the competencies in a systematic way to manage their human capital.    Having an effective competency management system is essential for success.

Want to learn more? Competency-based Talent Management, or CbTM, is the best practice for defining job requirements and building effective HR programs to develop skilled, engaged and productive workforces. Download this Best Practice Guide to learn how competencies can increase workforce effectiveness and improve business practices.