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Human resources teams acquire, develop and deploy a company’s most profitable asset: their pools of talented people. Yet, many companies still treat HR like a cost center. A compliance necessity. A business pillar, but not a business leader.
I, along with our team of change marketers, work with businesses in a wide range of categories — from large companies struggling to stay agile to smaller companies with dreams of growth that need to prove they can accelerate, scale up and return immediate value.
The key to both challenges is people. Talented humans who care about the work they do feel respected, nurtured, supported and valued. Your employees are your agility, your scale and the culture on which your business depends. If they get it, you’ll get the success you deserve. If not, the challenges of agility and scale get exponentially more painful.
For employers, finding, hiring and keeping talented people has always been hard. But as we enter a profound global talent shortage, competition is increasing dramatically. Already, 73% of employers say there is a talent shortage in their industry, and 92% say talent shortages are hurting their business.
For employees, the desire to do something meaningful has never been higher, and disengagement has never been lower: 67% of employees are disengaged at work.
HR may be the next big hope companies have of surviving — maybe even thriving — in this looming global shortage of talented employees.
Talent Is Possibility
A pool of highly talented employees is more than a full staff of people qualified to do their present jobs. It’s more than preparation for known future needs; it’s the capability to build the future from the unknown.
As CEO.works founder Sandy Ogg said in an interview with McKinsey & Company’s Rik Kirkland, “The word ‘talent’ means something different [now] … someone who is incredibly capable and is going to be able to build an advantage for me.”
Talent is more than an employee’s job-specific skills. It’s an ability to adapt to new ways of working, to ad hoc collaboration and to learn new skills on the fly.
“Being able to rapidly re-deploy that talent,” says Ogg, “that’s how you build agility into a large enterprise that can operate at scale.”
Talent is possibility, agility and the ability to leap when new, unforeseen opportunities emerge. Highly talented people give a company the capacity to accelerate scale. It’s a capacity that smart companies invest in strategically. A capacity they grow and utilize. A capacity that generates revenue and value. It’s a profit center, and HR is the talent leader.
Crunch, Chasm, Calamity
A global gap in high-value talent is already upon us, and it’s projected to get much worse. According to a report (registration required) by Korn Ferry, “By 2030, demand for skilled workers will outstrip supply, resulting in a global talent shortage of more than 85.2 million people.” To put it another way, companies will be hunting for — and not able to find — the entire population of Germany.
Many countries, including the United States, are already experiencing significant talent deficits. By 2030, the only country projected to have a talent surplus is India, while much of the world will struggle with acute deficits, according to Korn Ferry.
The projected losses are daunting. According to the report, “Left unchecked, the financial impact of this talent shortage could reach $8.452 trillion in unrealized annual revenue by 2030, equivalent to the combined GDP of Germany and Japan. The United States alone could miss out on $1.748 trillion in revenue due to labor shortages, or roughly 6% of its entire economy.”
The report offers some strategies for mitigating the shortage, including investments in education and retraining, and immigration policies that allow talent to move where it’s needed. But the scale and momentum of the trend is such that it cannot be avoided. A global talent shortage will be the new normal for the foreseeable future. We can’t prevent it, but we can prepare.
Talent Is The Business
The alarm Korn Ferry raises on a global and national level is also a warning to individual companies. A talent gap risks lost possibilities and opportunities to create new value. It prevents companies from growing into new and promising markets or sectors and from gaining a competitive edge. And while solving the global talent gap is the work of nations, companies will increasingly look to HR.
When talented people have more choice, high-impact HR leaders can recruit and keep them with strategic investments in three key areas:
• Growth: Better learning, development and expansion pathways.
• Impact: Closer connections to the meaning and value each individual creates.
• Relationships: Stronger, more collaborative, more creative processes and team structures.
These HR investments are direct business performance drivers, with returns to both top-line and bottom-line growth:
• Productivity: How much each employee contributes.
• Quality: How well each employee contributes.
• Customer Satisfaction: How much market value each employee’s contribution creates.
• Efficiency: How quickly and cost-effectively each employee contributes.
• Retention: How long each employee continues to contribute to the company and not to a competitor.
• Advocacy: How positively employees speak and write about their company.
Attracting, developing, nurturing and supporting talented people in their success and growing revenue while controlling costs are not bureaucratic functions. In the new normal of chronic talent shortages, they offer a competitive edge. Talent is the business, and in this profit center, HR leads the way.
Calm Seas Don’t Make Skilled Sailors
Like a headwind bringing a storm at sea, the approaching global talent crunch cannot be avoided. Some companies will go under, and some will be blown off course. Others will press on into the wind with hope for calmer waters tomorrow. With perseverance and fortune, they may survive.
But as Seth Godin says, “Survival is not enough.”
In turbulent times, it’s the agile companies that will thrive. They’ll tack into the headwinds and use their force for speed. That agility will come from their people. In the coming crunch, companies that better inspire talented people will win. Talent pools are profit centers, and HR must take the lead.