Talent scarcity and organisation design dominate human capital agenda

Attracting talent is likely to become an area of increased difficulty, according to a new study. While companies battle it out for talent, almost 80% say that they will also focus on developing their talent internally. Companies too note that they are likely to change their organisation structure in the coming years in the face of wider changes to business models and ways of working. A disconnect between what employers and employees see as important continues, with employees focused on pay, while executives focus more on culture.

Last year was marked by global uncertainty as a range of geo-political factors, such as Brexit and the somewhat unexpected win of the new Trump administration shifted global dynamics. These events, and their long-term consequences, are set to continue to shape business decisions across Europe and Norther America. At the same time, new technologies are affecting the internal dynamics of organisations, particularly due to automation and digitalisation affecting business models, as well as new dynamics around employment as companies seek to take advantage of weaker employment agreements.

In a new report from Mercer, titled ‘Talent Trends: Global Study 2017’, the consulting firm explores key trends in the employment space. The report is based on input from more than 400 senior executives, more than 1,700 HR professionals and more than 5,400 employees across 37 countries and 20 industries.

The headline findings are that firms will primarily focus on attracting top talent externally (1) as well as developing leaders for succession internally (2). Other areas of focus in the people management space include the identification of high potentials, building skills across the workforce, supporting employees with career growth and increasing employee engagement across the business.

In terms of the strategy for talent planning for the next 12 months, surveyed firms indicate that they will largely focus on building their already acquired talent, as cited by 79% of respondents, followed by attracting new talent, at 48% of respondents, while 40% of respondents say that they plan to borrow talent where possible. According to 43% of C-Suite respondents, the competition for talent is expected to be significant, somewhat above that of HR professionals at 36% of respondents in the category.

The respondents also indicated that they expect there to be a ‘dearth of quality workplace talent’ over the coming years. Particularly in the IT/Technology and core ops segments, which were both indicated by respondents as areas in which undersupply outweighed oversupply. Marketing and leadership saw slightly unfavourable weightings towards undersupply. Finance, customer service and administration were the areas in which considerable oversupply is noted.

The vast majority of respondents said that their organisation will be making design changes over the next two years to their organisational structure. 41% of respondents said that they would be ‘moving support functions to shared services’, and 33% of respondents said that they would be ‘flatting the organisational structure’. 31% of organisations said that they would be ‘eliminating roles/departments’, with an identical percentage saying that they would be ‘decentralising authority’.

The areas in which the fewest respondents said they would be implementing organisational design changes are in ‘moving operations to low-cost locations’, cited by 16% of respondents, ‘outsourcing parts of the business model’, cited by 20% of respondents and ‘increasing regional control’, also cited by 20% of respondents.

Money concerns remain a key area of concern form employees globally, with on average employees worrying about their finances for 13 hours per month. In terms of the key area of positive impact on employees’ work situation, ‘fair & competitive compensation’ is noted by 47% of all surveyed employees globally. The factor is number of for employees in Canada, China, France, Germany, Italy, Singapore and the US.

‘Promotion opportunity’ comes in second spot globally, followed by ‘leaders who set clear direction’. Oher areas of concern for employees include ‘working with the best and brightest’, ‘transparency on pay calculations’ and ‘career path information’.

While employees remain concerned about being paid enough to not need to count pennies, 28% of employers say rewards competitiveness will be an area of focus in 2017, while 16% of HR leaders have equitable pay on their list of top five priorities – reflecting a considerable disconnect. While economic reality may mean that employees are paid low wages, their respective level of engagement may be being affected by chronically low pay or poor benefits.

The research explored how three different parties within the wider organisation see the Employee Value Proposition, which broadly indicates how the passion for the job is affected by a range of factors.

The results show a considerable disconnect between employees, HR and the executive. 80% of the executive is convinced that culture will drive a compelling EVP, with which 22% of employees agree. Brand recognition, too is of key importance according to 40% of executives, about which 6% of HR and 13% of employee respondents agree. Pay and rewards was cited by 14% of the executive as an area of importance to the EVP, while HR and employees themselves are considerably more concerned with the area, at 38% and 33% respectively.