UK: Talent Edge 2020 - Building The Recovery Together

Last Updated: 13 May 2011
Article by Deloitte Financial Services Group

Most Read Contributor in UK, August 2017

What talent expects and how leaders are responding

Many companies are not addressing the critical needs and potential frustrations of their employees—and often do not have a realistic picture of how employees see them, according to a March 2011 survey of employees at companies worldwide conducted for Deloitte Consulting LLP by Forbes Insights. While corporate executives and talent managers may be tempted to believe the talent market has returned to normal and they can go back to "business as usual" now that the economy is growing again, our survey suggests that this strategy could leave companies on the losing side of the competition for talent.

As part of the Deloitte Talent Edge 2020 series, this report examines employee attitudes to provide insights into the forces that are expected to drive the talent market over the next decade. More specifically, the survey probes divergences between the attitudes and desires of employees and the talent strategies and practices being utilized by employers. The survey also compare scurrent employee views to the views held by employees during the depth of the recession and to the opinions of executives we surveyed in October 2010.The March 2011 survey of 356 employees at large global companies (annual sales greater than $500 million)revealed several important trends Deloitte believes will shape the talent market in the coming decade:

Employers may risk losing the hearts and minds(not to mention the heads and hands) of employees: With a stronger economy, more employees with pent-up desires to leave their current employers are now actively testing the job market. Rising turnover intentions, which built slowly but steadily during the recession, may hit companies at the exact time when many executives predict talent shortages across business units that companies rely on to drive growth and innovation.

  • Only 35% of employees surveyed expect to remain with their current employers—a 10 percentage point decrease compared to September 2009 survey. Nearly two out of three employees (65%) surveyed are passively or actively testing the job market.

What do the 65% of employees looking for the exitsign see that their employers don't? The nearly two out of three employees surveyed who are exploring their career options have strong, negative views about the job employers are doing to create challenging career paths and to open up advancement opportunities.

  • Among employees surveyed who are actively or passively seeking out new employers, 53% report the prospect of job advancement or promotion would persuade them to stay with their current companies. Majorities or near majorities of employees "on the market" rate their companies' efforts at creating career paths, developing leaders, and retaining top performers as "fair" or "poor."

Targeting talent strategies by generation and gender helps keep teams intact: Both turn overtriggers and retention incentives appear to vary significantly across employee generations, with emerging differences by gender. Companies that adapt their talent and retention strategies to meet the unique expectations and motivations of different employee populations will likely be rewarded, while those that do not could find themselves on the losing end of the competition for talent.

  • When it comes to ranking the top turnover triggers, surveyed Baby Boomers rated "lack of trust in leadership"at the top of their list at 32%, while both Generation X and Millennial employees placed "lack of career progress" first at 38% and 30% respectively.
  • The findings also revealed that surveyed men rate "lack of compensation increases" at the top of their top turnover trigger list at 27% (compared to 14% of women),while women placed "excessive workload" fi rst at 31%(compared to 15% of men).

Companies that lift their games to deliver "worldclass"talent programs will likely be rewarded: Very few employees defi ne their employers' overall talent efforts as "world-class" or even "very good"—and the same lack of confidence holds true when it comes to key talent retention strategies. However, based on survey findings, employers that lift their talent efforts will likely be rewarded with employees who are more satisfied with their jobs and career prospects (and who are far more likely to remain with their current employers).

  • Only 6% of employees surveyed rate their companies' overall HR and talent efforts as "world-class," while more than four in ten (43%) called them "fair" or "poor." Not surprisingly, employees who describe their companies'talent programs as "world-class" or "very good" are nearly twice (42% to 23%) as committed to remaining at their jobs than employees who work at companies with"fair" or "poor" talent efforts. Employers may risk losing the hearts and minds of employees.

Imagine if a company could count on keeping only one third of its customers next year. The discovery would set off alarm bells inside every C-suite office and trigger emergency meetings, strategy reevaluations, and demands for improvement. Substitute the word "employees" for"customers" and that may be the position that many companies face today.

If alarm bells are not going off, maybe they should.

Among employees surveyed in March 2011, only 35% expect to remain with their current employers, compared to45% who were committed to their employers during the recession in 2009 (Figure 1). In addition, by a margin of more than 2:1 (45% to 20%), employees are more likely to predict an increase rather than a decrease in employee turnover during the next year

Digging Deeper: Survey findings suggest that companies may be at a greater risk with retaining female employees. Women appeared more likely than men to be actively looking for new employment in the next 12 months (55% of women vs. 41% of men). Men, on the other hand, were more likely to be passively looking (24% of men vs. 12% of women )

When it comes to retaining talent, many employers risk losing the battle for the hearts and minds (not to mention the heads and hands) of their employees. Nearly half(49%) of employees surveyed have been, plan to, or are currently seeking new employment. Another 21% are exploring new options by posting their resumes online or keeping an open mind about calls from corporate recruiters (Figure 2).

Employees' increasing restlessness coincides with employer concerns about losing critical talent. Employers are right to be worried.

Academic research indicates that 44% of employees are likely to act on their turnover intentions.1 With 65% of employees looking to leave their current positions, a total of 29% might actually walk out the door (0.65 x 0.44= 0.29). Moreover, in Deloitte's October 2010 survey of executives, 56% predicted a scarcity of leadership talent, while nearly three in four (72%) expected talent shortages in R&D.

Red Flag for Employers: Is the balance of power in the job marketshifting from employers to employees?

According to our survey, more than one in five employees (21%) have posted their resumes online or are utilizing social media tools to keep their career options open. While employers spent the recession hunkered down and focused on cutting costs, the job market has been slowly evolving, making it ever easier for employees to grab control of the market from employers.

In addition, social media sites like Facebook, Twitter, and LinkedIn open up a new, highly effective method for job-seekers and employers to connect. According to placement firm Challenger, Gray & Christmas, social networking sites now provide the second-most effective way for job-hunters to find new work, falling only behind traditional networking.2 Cachinko, a social media recruiting solutions company, claims that social media sites are driving employee empowerment because of their ease, their efficiency, and their exploding reach. Cachinko recently reported that LinkedIn has 85 million members; Twitter has 175 million registered users; and Facebook has over 500 million active users, over half of which check their Facebook accounts each day. From an employer's perspective, social media provides cheap access to a seemingly limitless talent pool. And for employees, exploring new career options and looking for a new job has never been easier, more fun, or more empowering.3

Nearly two thirds (65%) of employees surveyed are looking for the exit sign, or they are at least open to a career move. What do those 65% see that employers don't?

A close examination of the survey data shows a clear divergence of views between the 35% of employees who remain committed to their employers and the 65% who have at least one foot in the job market. Specifically, employees who are looking to leave believe key corporate talent programs at their current companies are seriously lacking.Employees who are looking to leave believe key corporate talent programs at their current companies are seriously lacking.

  • Uncertain career paths: Based on our survey, well over half of employees planning to leave their current employers (57%) believe their companies do a "fair"or even "poor" job of creating career paths and challenging job opportunities, compared to only 23%who rate this key talent metric as "excellent" or "very good"—a vote of no confidence greater than 2:1.
  • Little leadership development: Our survey indicates that by 50% to 21%, employees who do not expect to stay at their current employers rate their companies' leadership development programs as "fair/poor" rather than "excellent/very good."
  • Lack of trust in leadership: Of survey respondents, only 23% of employees planning to depart believe their companies effectively inspire trust in leadership, compared to the 57% who rank these efforts as "fair/poor."Surveyed female employees appeared less impressed than men by their companies' ability to inspire trust and confidence with 35% of women rating this ability as "poor," compared to 22% of men.
  • Difficulty retaining top performers: Survey results show that of those employees who expect to depart,50% believe their companies are doing a "fair/poor" job retaining top performers, compared to just 23% who label retention efforts in this area as "excellent/very good."
  • Inadequate training programs: Nearly half of employees surveyed (48%) who plan to leave their current jobs believe their companies are doing a "fair/poor" job managing and delivering effective training programs; just 24% rate training programs as "excellent/very good."

What is driving talent out the door?

The key drivers of turnover have remained remarkably stable as employees and their companies have transitioned from a recession to recovery. When employees were asked to rank the top factors that would lead them to see knew employment, "lack of career progress" topped the list at 28%. This was followed by "lack of compensation increases," "lack of job security," and "lack of trust in leadership,"each at 24%. These factors also ranked as the top departure drivers in Deloitte's September 2009 Managing Talent in a Turbulent Economy employee survey.

While many companies might expect morale to strengthen along with the economy, employees have a more mixed reaction. Of employees surveyed in March, 42% report that morale has indeed increased over the past 12months, but a strong 36% believe morale has decreased.

Digging Deeper: Respondents who have been out of work at some point in the past three years are casting a wary eye toward current employers. Just over one-third (34%) of these workers cite a lack of job security as a reason to look for a new job—ten percentage points higher than overall survey respondents. They may also consider their current job to be just the best option available at the moment, not a long-term position—30% would leave current employers for new opportunities, eight points higher than overall responses

Opinions of morale, according to survey respondents, appear to differ between hourly and full–time salaried employees.The majority of hourly employees (59%) believe morale has improved or significantly improved, whereas only 31% of salaried employees hold this view. What's more, almost half (45%) of salaried employees believe morale has either decreased or significantly decreased, a view held by just over one-fifth (22%) of hourly employees.

Digging Deeper: Employers appear to be connecting best with their youngest employees. Nearly three in four Millennials (74%) believe their employers effectively communicate the companies' strategic direction, compared to less than half of BabyBoomers (47%) and 50% of Generation Xers.

Examining employee morale from a global perspective, however, reveals a different picture. In the Asia Pacific and Europe, Middle East, and Africa (EMEA) regions, employees surveyed are reporting a revival of morale, with62% and 49% of employees respectively, responding that morale has improved over the past year. In the Americas, however, the outlook is not so bright. Only 23% of employees surveyed report that morale has increased, leaving the Americas lagging behind the rest of the world(Figure 3).

One possible factor depressing employee morale in the Americas and beyond—even as the macro-economic environment improves—may be poor communication about corporate strategy and direction. While 57% of employees surveyed agreed their HR/Talent managers did an effective job communicating, a significant 40% found company communications lacking.

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