According to PwC’s latest Annual Global CEO Report, the fifteenth, CEO concern over talent is growing – and with good reason. According to the report, nearly a quarter of CEOs (24%) said they had to cancel a key strategic initiative because of a talent shortage in the past year.
The same percentage (24%) said they couldn’t achieve growth forecasts overseas or in their home countries because of the talent shortage.
Dennis M. Nally, Chairman of PricewaterhouseCoopers International, pointed out that two-thirds of CEOs said they will “devote more attention to developing talent pipeline.” In a letter opening the report, her wrote, “The focus on talent and customers today is a natural ‘next step’ towards establishing their organisations in the markets where they operate and building the trust needed for the business of tomorrow.”
The report, which polled 1,250 company leaders from 60 countries, showed that CEOs are taking a more strategic approach to talent management – and given the competitive nature of today’s changing workforce, they have their work cut out for them.
Global Talent Crunch
According to the report, the biggest challenge facing business leaders today is a shortage of talent around the world. It explains:
“This is the talent crunch. It’s a complex and frustrating challenge and it’s being felt worldwide. To give a measure of the scale of the problem: more CEOs are changing talent management strategies than, for example, adjusting approaches to risk: 23% expect ‘major change’ to the way they manage their talent. And skills shortages are seen as a top threat to business expansion.”
The talent shortage problem is damaging companies’ profitability, too. According to the report, one in three CEOs is concerned that “skills shortages impacted their company’s ability to innovate effectively.” And it’s getting expensive. In the past year, 43% of respondents reported, talent related expenses rose more than expected.
PwC believes these challenges are related to a lack of strategy and future planning when it comes to talent management. Nally wrote:
“That’s why so many CEOs are changing talent strategies to improve their ability to attract and retain the right people. Skills shortages are very real – just 12% of CEOs say they’re finding it easier to hire people in their industries – and the constraints are having quantifiable impacts on corporate growth. Just as our customers are changing rapidly, so are our workforces – and our talent needs are changing, too.”
Next Generation Talent Strategy
According to PwC, in the past, talent strategy must be measured more carefully before it can be managed properly. That’s what a lot of the CEOs polled say they intend to do, with 79% saying that the chief human resources officer (or similar) reports directly to him or her and two-thirds seeking data from talent managers to align business strategy with human capital planing.
“CEOs are determined to be more strategic in the way they manage their workforce today and plan for future needs. Up to now, an assumption has held that the market analysis element of a strategic plan is paramount, and how a business ‘resources up’ to meet the plan is something that’s worked out later. Now, leading businesses are looking beyond the next budget round to plan talent needs. A longer-term strategic view is needed, if they want to close the gap today and map how talent needs will change.”
One week spot is that many of data measurement tools CEOs use to define talent strategy do not measure employee engagement, the report says. “These measurements are much harder to make, which is one reason why they’ve been neglected and why today, so many CEOs are frustrated with the issue of talent.”
By taking a more holistic view of strategic talent measurement, CEOs can better project where their people will be needed and how they can keep them there.