Winter is coming. Six reasons why the 'war for talent' is only going to get worse.
When it comes to talent, we are about to enter the perfect storm, if we haven’t already. In the words of the eponymous House of Stark from The Game of Thrones, now is a time for vigilance.
Eighteen months of lockdowns, furlough schemes, work from home directives and declining mental health has led to a damaged and stuttering economy for many sectors, and severe staffing shortages in others. As a result, it would seem that Covid-19 is exacerbating what seems like a several decades long 'war for talent', (geek attack, the term was first coined in 1997).
In a survey of 85 HR professionals working in firms employing approximately 50,000 people in total, Randstad Risesmart UK found that only 2% of those polled thought that war for talent was over or that it’s going to be easier to find and retain talent in 2021.
“Many people expected the pandemic and its economic aftermath would mean the war for talent was over. It’s not.
Organisations need talent whether the economy is burning white hot or being challenged by global disruptors like the pandemic and A-players are needed to chart the course and rebuild their organisation’s fortune.””
So why, is the war for talent so tough in 2021?
Many companies are now banking on the worst being behind them as far as Covid is concerned, and are planning for a period of growth. However, the reality is that we are on track for a significant and sustained talent shortage – more severe than we have seen in recent memory.
So, what's going on? Here are a few reasons that have created the 'perfect storm' in a several decades old 'war for talent':
1. The war for top talent never went away in the first place
As McKinsey alluded to when first coining the term 'war for talent', within any organisation a small percentage of individuals – top talent or high potentials – will be disproportionately responsible for its success. In addition, these elite workers are, and always will be, in short supply. As Tomas Chamorro-Premuzic says in his book, the Talent Delusion, organisations are playing a zero-sum game, where competition for top talent will be as fierce as for gold, oil or silver.
2. Talent poaching is on the rise
As pointed out in a recent article in the Chief Executive, no company has all the talent it needs internally, and every company is vulnerable to losing the talent they have. They anticipate a forthcoming poaching frenzy as businesses try to respond to the severe talent shortage they see unfolding. Business Insider reported that between January 2020 and April this year, Amazon lost some 10% of its VPs and above, with its finance executives also being in high demand.
3. The age of LinkedIn and the 'passive job seeker'
In recent times recruiters and head hunters have developed an enduring and growing fascination with the 'passive job seeker', enabled by the growth and expansion of LinkedIn as a professional networking platform. The often-quoted statistic is that 73% of individuals are 'passive job seekers,' open to hearing about new job opportunities.
Combine this with the aforementioned rise in talent poaching and we have a situation where no one is off limits. No wonder businesses are worried about protecting their top talent from being poached by a competitor – or are quietly scheming how to do a bit of poaching themselves!
“The ‘juiciest’ candidate is he or she who has made the decision to move, but has not acted yet”
4. The disengagement epidemic just got worse
The idea that most people are disenchanted with their jobs, or even alienated by them is not a new idea. In a survey taken in over 142 countries, this year’s State of the Global Workplace: 2021 Report shared the statistic that only 20% of employees globally are properly engaged, suggesting that up to 80% are either not engaged or are actively disengaged. The same finding is echoed more locally. Across Europe, less than two in 10 employees are engaged by their day-to-day workplace experiences.
Now let's add to that 18 months of fundamental disruption to how people live, work, rest and play. So is it any wonder that Microsoft's recent Work Trend Index found that 41% of workers globally are questioning how they really want to spend their working hours and are thinking about handing in their notice?
5. The growing appeal of self-employment and the lure of becoming an entrepreneurial rock star
The age of the 'job for life' is well and truly dead, and in its place we have entered the 'entrepreneur revolution', according to bestselling author Daniel Priestley; or as Forbes described it, the 'rise of the global entrepreneurial class, noting that 'entrepreneurs are the new rock stars'.
The impact on the 'war for talent' is that often the characteristics which would single someone out as being top talent or high potential can be very similar to those associated with what makes a successful entrepreneur.
These corporate 'intrapreneur rock stars' often muse the idea of leaving the 9-5 daily routine and starting their own business, but say they are waiting for the 'right time'. Well, hello global pandemic, which put approximately 11.6 million jobs on furlough (Statistica, 2021), and led to over 820,000 redundancies (HMRC). So not surprisingly, the same time period saw a record number of people starting a new business.
According to the Centre for Entrepreneurs, nearly half a million companies were launched in the UK between March and September 2020. The U.S. Census Bureau, also reported an upsurge in new business applications in 2020 – rising to about 4.3 million new business applications - almost 1 million more than in 2019.
As Matt Smith, Director of Policy and Research at the Centre for Entrepreneurs says, "A lot of people have had the opportunity to consider entrepreneurship for the first time and really pursue it". The rising number of start-ups is a trend that he very much sees as being likely to continue.
6. Pandemic fatigue: our top talent is burnt out
The impact of Covid-19 on the physical, mental and emotional health of employees is significant and the figures are startling. A recent article by McKinsey quotes that 75% of employees in the United States, and close to a third in the Asia–Pacific region, report symptoms of burnout. European nations are reporting increasing levels of pandemic fatigue in their populations. A recent study conducted by Indeed found that of those polled, 80% believe Covid-19 has worsened workplace burnout, with a lack of work-life balance and a fear of job loss.
When it comes to top talent, a recent article in People Management quotes research suggesting that high performers and those most passionate about their roles can suffer more than most. Those people who achieve exceptional results every time and say ‘yes’ to every opportunity are often doing so with no regard for their own wellbeing.
Quite simply, our top performers have got nothing left to give.
So, now what…
How can businesses weather the storm to identify, attract and retain top talent?
The question of how to identify and retain your top talent is definitely worthy of an article in its own right. However, as a starter for ten, these suggestions from Tomas Chamorro-Premuzic, for the Harvard Business Review are a good start:
1) Think ahead.
Figure out whether or not your potential new hire has skills that align with your long-term strategy. If you know where you want to go, focus your efforts on hiring someone with the skills, abilities, and expertise you will need to move forward, but don’t assume everyone you have today will stay. You must simultaneously play the long game while executing your shorter-term goals.
2) Focus on the right traits.
The World Economic Forum predicts that 65% of today’s jobs will no longer be around in 15 years, so rather than getting caught up in someone's work history, instead focus on transferable soft skills and foundational characteristics such as cognitive ability, drive and learning agility.
3) Don’t go outside when you can stay inside.
External hires take longer to adapt and have higher rates of voluntary and involuntary exits, which is why it’s valuable to look for talent internally before searching outside. Internal hires tend to have higher levels of adaptation and success rates than external hires. They are also more likely to be loyal and committed to their company. Promoting internal candidates also boosts other employees’ engagement.
4) Think inclusively.
A resilient team (and business) is one that thinks about talent inclusively, where business leaders embrace people who are different from them with those already on the team. Taking a step further, a truly resilient organisation is one that seeks out and celebrates people who challenge traditional norms. The engine of progress is change, with change unlikely to happen if you only hire people who perpetuate the status quo. We all know that companies with a diverse talent pipeline tend to have better financial results.
5) Be data-driven.
Every human busy, with managers being no exception, make bad decisions from time to time. But very few are interested in acknowledging this, which is why hiring biases are often so pervasive. In fact, research shows that hiring managers would rather inflate performance ratings than admit they hired the wrong person. So, arm yourself with solid data and evidence when making decisions about talent, even if the future proves you wrong. Talent identification is an ongoing process of trial and error, and the point is not to get it right, but to find better ways of being wrong.
6) Think plural rather than singular.
When thinking about talent pipeline, focus less on individuals and more on the configuration of your team. Within great teams, each individual is like an indispensable organ in charge of executing a specific function, making each part different from the others, and the system greater than the sum of its units.
7) Make people better.
Great managers recognise potential where others don’t. No matter how skilled your employees may be, you still need to help them grow in new ways. This means mastering the art of giving critical feedback, including the ability to have difficult conversations and address poor performance. It also means predicting your future talent needs so that you can stay ahead of the demand, with people on your team who remain relevant, valuable assets for years to come.
Find out more
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