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New Report from the Economist Intelligence Unit: Businesses sailing into a ‘Perfect Storm’ for talent as global economy improves

* Economist Intelligence Unit global survey highlights importance of talent to businesses’ recovery plans but lays bare the damage done during two years of cut-backs; low graduate recruitment and growing age diversity also figure highly in list of issues to be addressed

4 March 2010 – Companies must put their people first in the recovery or risk experiencing deep talent erosion and sustained underperformance, StepStone Solutions warns businesses in a new report1 – Companies at the Crossroads – published today and available at www.stepstonesolutions.com/eiu. According to a worldwide survey of senior managers, sponsored by StepStone Solutions, two years of cut-backs have undermined workplace trust. Combined with increasing demand for executive talent and a sharp drop in graduate recruitment, the survey has found that companies without the right talent strategies risk developing a major skills shortage just when they need employees’ energy and commitment the most. The survey, undertaken in December 2009, covered over 400 senior managers primarily in major corporations in the US, Europe, and Asia-Pacific.

Matthew Parker, Group Managing Director at StepStone Solutions, said: “Right now, businesses are at a crossroads when it comes to their talent. They can either take steps to create, maintain and develop global talent pools, or ignore the warning signs from this survey and suffer a gradual talent erosion at all levels that will inevitably lead to underperformance.”

According to Companies at the Crossroads, researched and written by the Economist Intelligence Unit, nearly one third (29%) of the business executives surveyed said employee engagement is low and they expect to lose key people as talent demand grows. At the same time, graduate recruitment has also been dramatically affected, with just six per cent of respondents saying graduate recruitment would be a focus for their organisation in 2010 – compared with 50% of respondents in 2009. Meanwhile, the survey has found talent has moved fast up the boardroom agenda. The availability of talent has risen to overall third as a driver of growth (voiced by 46% of respondents), sitting behind only economic recovery and credit availability.

Key statistics from the report, which presents a detailed view of businesses’ people strategies in the post-recession environment, include:

  • 41% of respondents agreed they have a shortage of talent in their organisation
  • 44% agreed they find it increasingly difficult to recruit talented employees
  • One respondent in two plans to ramp up recruitment over the coming year; only 18% still plan to reduce or freeze headcounts
  • Only 16% of line managers said that staff were fully engaged with the business, yet this is not recognised in many boardrooms, with 38% of CEOs saying that trust is ‘high’.

The top three priorities for talent investments for 2010 are:

  • Performance management (voiced by 46% of respondents)
  • Leadership development (41%)
  • Training and development (36%)

 
The survey finds that these issues are compounded by attitudes in an age-diverse workforce that is increasingly dominated by older staff, whose motivations for staying with an employer may be changing. This adds to the talent retention problems for managers, especially in companies that fail to recognise the different priorities of young and old workers. For younger workers 50% cited career development as their biggest priority, but this dropped to just 1% for the over 50s. Similarly almost 40% of older workers cited non-salary benefits as important, dropping to just 2% among 20-30 year-olds.

Parker adds: “This research among global leaders shows that they understand the need to focus on their talent, but that greater action is needed today to create talent strategies for the future. It is particularly worrying to see low trust among middle-level employees going hand in hand with low graduate recruitment and an ongoing demand for senior executive talent. Left unaddressed these problems constitute a perfect storm for businesses, as the most capable employees head for the exit and fresh talent is not recruited. These trends have serious, long-term implications for any business in a recovering economy and they require urgent attention.”

1 About the research - available at www.stepstonesolutions.com/eiu

The Economist Intelligence Unit surveyed 410 senior executives from the around the globe during December 2009, with most respondents from Asia (31%), Western Europe (26%), North America (31%), and Eastern Europe, Latin America and MEA (12%). The survey sample was extremely senior, with 87% operating as board members, CEOs and other C-level executives, or as senior vice-presidents, heads of business units and heads of departments. The executives surveyed represented all key employer sectors, including financial services (23%), professional services (13%), IT and technology (12%), manufacturing (7%), healthcare (7%), and consumer goods (6%). The organisations that the respondents worked for included the world’s largest companies: 26% had annual revenues between $500m and $10bn, with 20% generating revenues of $10bn or more.

The Economist Intelligence Unit's editorial team executed the online survey, conducted the interviews and wrote the report.

About StepStone Solutions

StepStone Solutions helps businesses get increased performance from their people, helps them build and develop global talent pools, and helps people find new jobs that match their talents. Across the world thousands of organisations rely on StepStone Solutions every day to improve their business performance and talent development strategies while millions of people rely on StepStone Solutions to improve their careers. StepStone Solutions delivers world class technology and services for finding, recruiting, retaining, managing and developing talented people.

StepStone Solutions provides a complete set of Total Talent Management solutions. StepStone Solutions’ on-demand (SaaS) software and services enable organisations to implement efficient processes, including; attraction and hiring, post-hire talent management, performance management, compensation management, skills and competency management, career and succession planning, training and development management.

StepStone Solutions is a wholly-owned subsidiary of Germany-based publishing and media company Axel Springer AG. At the end of December 2009 more than 1,400 organisations, including many of the world’s leading businesses, use StepStone Solutions’ software and services. It operates in 17 countries and employs around 450 people. Its global customers include Aviva, BASF, Deloitte, Deutsche Telekom, Lufthansa, Kruger Products, PUMA, and Virgin Atlantic.

About the Economist Intelligence Unit

The Economist Intelligence Unit is the business information arm of The Economist Group, publisher of The Economist. Through our global network of 700 analysts, we continuously assess and forecast political, economic and business conditions in more than 200 countries. As the world's leading provider of country intelligence, we help executives make better business decisions by providing timely, reliable and impartial analysis on worldwide market trends and business strategies.

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