San Mateo, Calif. — Jan. 29
More than nine out of 10 North American business and HR executives surveyed in late 2006 say their companies are experiencing increased competition for talent — leading to higher compensation packages, slower time to new hires and reduced business flexibility.
As a result, executives say they will increasingly look inward to their existing workforces to find and develop the competencies they need to address changing requirements in their markets.
These and other findings were part of a landmark study titled, “The 2007 Performance and Talent Management Trend Survey,” which includes responses from 726 business executives and HR professionals.
The research was conducted by SuccessFactors, a global provider of performance and talent management solutions, in cooperation with the Business Performance Management Forum, an executive thought leadership organization, and the Human Capital Institute, a membership organization and think tank for professionals and executives in recruiting, HR and talent management.
The study shows economic expansion and business growth are major contributors to the human capital shortage, but so are more fundamental shifts in the economy, which are creating the need for new and different competencies at most companies.
Eighty-eight percent of respondents say the critical competencies needed in their organization are changing, and nearly half say they are changing to a “high” or “very high” degree.
The survey also underscores the growing need for improved processes and systems for talent management and development, as well as the significant positive effects the implementation of performance and talent management solutions can make.
Yet, it also demonstrates a large percentage of companies don’t have adequate performance and talent management practices in place. For example, nearly three-quarters of all respondents either strongly or very strongly agreed talent management was a strategic priority within their company.
Only 57 percent, however, said their companies have formal plans to identify, grow and retain talent.
“The talent gap is growing for companies across America and around the world, making human capital management and development more strategic to businesses than ever before,” Lars Dalgaard, Success Factors CEO, said. “Our research indicates that companies that are embracing this need are reaping huge competitive advantages and better financial results.”
Among other key study findings:
- 98 percent of respondents say competition for talent is increasing in their industry, and 65 percent say it’s increasing to a “high” or “very high” degree.
- Nearly 95 percent say the cost of acquiring and keeping talent rose in 2006, and two-thirds say costs increased more than slightly.
- The most profound impacts of growing competition are increases in the time it takes to find talent and a growing requirement to develop internal talent.
- Talent development was indicated as the No. 1 human capital management challenge of 2007, according to respondents, followed by retention and turnover and talent acquisition.
- Fifty-five percent note higher salaries were required in their organization in 2006, and 68 percent identified the need to implement internal talent development in their companies.
- Company growth is expected to be the leading driver for new talent acquisition in 2007, followed by evolving corporate cultures and changing market demands.
- Only about one quarter of respondents say their companies have formal talent score cards, and only 29 percent say they know how to measure talent performance and productivity in terms of business value creation.
“We are tying our systems such as compensation, learning management and performance management, together to make them more effective, “ said Tim Toterhi, Director of Global L&D Strategies and Solutions at Quintiles Transnational, a pharmaceutical services company that has implemented performance and talent management solutions from SuccessFactors. “We are also setting clear performance goals for our employees and helping them to understand how their actions affect the big picture. Having the right tools in place to have those kinds of conversations is critical.”
The study also revealed some interesting differences between large companies with more than 1,500 employees and smaller companies with fewer than 300. For example:
- Globalization is having an impact on the way companies of all sizes acquire and manage talent, but more so for larger companies (63 percent versus 49 percent).
- Larger companies are much more likely to identify management leadership as one of their most valued competencies (70 percent versus 49 percent), whereas smaller companies place a higher value on such competencies as people skills, creativity and intelligence.
- Larger companies are more likely to have formal plans to identify, grow and retain talent (68 percent versus 41 percent).
- Smaller companies are more likely to identify company growth as a leading cause of the need for new talent (57 percent versus 49 percent), whereas larger companies are more likely to identify departure due to a hot job market (34 percent versus 19 percent).
Filed under: Performance Management, Talent Management