Back in 1997, research published by The McKinsey Group coined the phrase ‘the War for Talent’ to describe the increasingly competitive landscape for recruiting talented employees.
Today the war is over. Talent has won.
In the UK, the widely reported skills gap in cyber security and digital IT is growing, and despite efforts to attract people to the industry, there still exists a massive
disparity between the number of vacant skilled roles and professionals capable of filling them. By 2019, PwC estimates the number of cyber security vacancies will hit 1.5 million – up from 1 million in 2018.
The solution for businesses to find and retain top talent in the sector is deceptively simple: learn what the new generation of skilled digital professionals wants, and deliver it to them.
What else can employers learn from the War for Talent in their battle to build the best teams?
War is over
Focused on the US and European employment market, McKinsey’s seminal report from the late 90s highlighted a growing gap between supply and demand, driven
by demographic shifts that saw baby boomer workforces retiring en masse, without fresh blood to take their place.
In response, employers were forced to recognise that the most valuable parts of their businesses were not their products, services and intellectual property; but instead their staff. As Enron Chairman Kenneth Lay explained of his own business in 1997: “The only thing that differentiates Enron from our competitors is our people, our talent.”
In response, companies were driven to offer better remuneration and benefits packages than they would have considered previously. This shift reached its peak in Silicon Valley, where – at the height of the dotcom boom – skilled professionals were offered huge salaries and eye watering sign-on bonuses.
“Today, opportunities for learning and development rank among the most important considerations for job hunters.”
Paradoxically, while many businesses woke up to the importance of talent management at the end of the 90s, many more helped drive the War by reducing their investment in learning and development for employees – thereby encouraging staff to look elsewhere for work. Today, opportunities for learning and development rank among the most important considerations for job hunters.
The War raged on, slowing down when the US and European economies struggled – as they did following the bursting of the dotcom bubble in 2000 – and then recovering in line with market growth. In better performing economies, employees are more likely to think about tak
ing up a new role. Commentators have seen an uptick in this type of employee confidence in recent years, following the 2008 crash.
The ongoing battle
The vicissitudes of the 1990s and 2000s have put skilled employees firmly in the driving seat, particularly when it comes to the IT sector. Talent has won the war, and businesses must accept that where in-demand candidates go, employers must follow. As Biswajeet Pattanayak writes in Human Resource Management: “In today’s knowledge economy, the calibre of a company’s talent increasingly det
ermines success in the marketplace.”
This new business reality is widely recognised. McKinsey’s report found that 72% of managers believed that winning the War on Talent was critical to organisational success. Yet their confidence in achieving victory was lacking. The same poll indicated that only 9% of employers thought their current actions would lead to a stronger talent pool.
This belief in the importance of talent management persists, but confidence remains low. In January, members of executive organisation Vistage cited talent recruitment as one of the five issues most important to their organisation. Meanwhile, the most recent ManpowerGroup Talent Shortage Survey found that 36% of employers have difficulty filling jobs.
Field strategies
What must business owners do to win the War, once more?
First, recognise that today’s skilled professionals belong to a new generation and, accordingly, have different expectations. Second, serve those new expectations.
Today, ‘Millennials’ – those aged 22–37 in 2018 – constitute the largest minority of working professionals, making up 35% of the workforce in both the UK and the US. Globally in 2017, 56 million Millennials sought a new role, outnumbering 53 million Gen Xers and 41 million Baby Boomers.
“It is important for employers to better understand those outside their own age group using workplace reports and surveys.”
According to ManPowerGroup, young people are working harder and longer than previous generations – clocking, on average, 45 hours of work each week. 21% have a second job. Given the number and diversity of individuals covered by the term ‘Millennials’, it’s important to not rely too heavily on generalisations like these to inform business decisions. However, it is important for employers to better understand those outside their own age group using workplace reports and surveys. Deloitte’s annual Millennial Survey and ManPowerGroup’s Millennial Careers report are good starting points.
Both reports paint a picture of a workforce that values long-term employment but is willing to consider leaving their employer in the near future. While Deloitte’s 2017 survey found 70% of Millennials in developed economies favoured the stability offered by full-time employment, the 2018 edition reports that 43% of millennials envisage leaving their employer within 2 years. These results are significant, because they suggest that the War on Talent can be won – provided employers fulfil the needs of their skilled employees.
These needs fall into three categories:
– Flexibility. ‘Digital natives’ lack traditional assumptions that work must be performed in one location. Candidates offered a similar salary by two employers are more likely to choose the one which allows home working or flexible hours, as confirmed by the Deloitte 2018 Millennial survey. Janet Levesque, CISO at RSA/EMC is emphatic about the importance of cyber security businesses offering work-at-home options to strong candidates who don’t want to relocate.
– Learning and Development. BlessingWhite research shows that employees favour personal development over career progression, being significantly more likely to stay in an organisation that provides opportunities for learning.
– Engagement. According to LinkedIn, 45% to 60% of its 400 million users feel ‘dissatisfied’ with their current jobs. Less-engaged employees are four times more likely to leave their role than their more highly-engaged peers. The Deloitte 2018 Millennial survey finds employees increasingly attracted to employers that act with a sense of social and environmental purpose, and who recognise the importance of work-life balance – findings corroborated by PwC and the Corporate Executive Board.
Finally, employers must also focus on offering a better recruitment experience. First, by marketing roles accurately and attractively, as the likes of Google are exceptional at doing. Second, by making the candidate experience smooth and rewarding. 60% of candidates withdraw their job application when an application process takes too long.
A focus on candidate experience pays its own rewards, while a failure to focus on it can badly damage a business’ employer brand – and therefore its chances of winning the War for Talent. The Talent Board’s 2014 Candidate Experience Report showed that 64.3% of applicants would share negative application experiences with friends and family; 27% would go as far as actively discouraging others from applyin
g. And thanks to forums like Glassdoor, it’s easier than ever for candidates to find honest and trusted reviews of potential employers online.
To date, employers have failed to understand their employees’ needs and expectations – leading some commentators to characterise their efforts to attract and retain top staff less a War for Talent, and more a War on Talent.
Today, employers have no excuse not to work harder to win the hearts and minds of skilled candidates. First, they must recognise that the War on Talent is in full-swing, and that employees are winning. Then they need to react – offering more flexible, supportive and social workplaces.
Talent is what makes a business. Failing to win it may even cost the business itself.
Improve the way you interview for talent, with our guide to interview questions for your next vacancy.
