Significant differences exist between employers’ plans for developing talent and employees’ views on an effective workplace.
With tightening labour markets, increased sophistication in hiring for best fit, and a more demanding employee population, the key to achieving business growth is radically redefining how talent is managed, developed, and incentivised. According to Mercer’s 2016 Global Talent Trends Study – the first to take into account the perspective of both employers and employees – a lack of development, outdated processes, and discontent with the role of managers are the main drivers of workforce dissatisfaction. Astonishingly, 85 percent of organisations report that their talent management programmes and policies need an overhaul. Managing these changes requires support from leadership; however only 4 percent of HR professionals report that the HR function is viewed as a strategic business partner within their organisations.
Additionally, Mercer’s study finds 9 out of 10 organisations anticipate that the competition for talent will increase in 2016 and more than one-third expect this increase to be significant (see Figure 1). However, despite 70 percent of organisations reporting they are confident about filling critical roles with internal candidates, 28 percent of employees say they plan to leave in the next 12 months even though they are satisfied with their current role. “Employers are experiencing ever-growing competition for labour. At the same time, unemployment remains high in many countries around the world. The issue goes well beyond lack of available talent,” said Ilya Bonic, Senior Partner and President of Mercer’s Talent business. “It’s a lack of the right talent where and when it is needed to drive competitive advantage and deliver business results. For talent that has analytic skills, inspirational leadership capability, and a global mind set, demand continues to exceed the supply.”
Kate Bravery, Partner and Global Solutions Leader for Mercer’s Talent business added, “Employees today have more options than ever before. They are demanding a new value proposition that combines greater career support with flexibility to manage their work and more opportunities to develop their skills. HR professionals are challenged to meet employees’ demands and achieve a talent advantage, especially if they don’t have a seat at the table – and this is crucial if they are to remain a viable part in the talent ecosystem.”
Workforce trends and top priorities
In today’s global environment, successful talent strategies depend on an organisation’s ability to engage, inspire, and retain employees of different genders, ages, races, and backgrounds. According to Mercer’s study, leveraging an increasingly diverse labour pool is the third most important workforce trend impacting business, following the rising competition for talent from emerging economies and talent scarcity (see Figure 2).
The importance that organisations have placed on developing a diverse workforce has not translated into actions that are visible to employees. While 73 percent of companies are working towards diverse leadership teams, only 54 percent of employees say their organisation has effective programmes in place to do so. “Bridging the gap between employee and employer views will require substantial changes from HR,” said Ms. Bravery. “This includes improved operational capabilities around talent sourcing, enhanced tools and managerial capabilities to deliver a compelling career proposition, and proficiency in workforce analytics for a data-driven approach to managing talent flows.” In tackling talent issues, employers need to make sure that their efforts to build the workplace of the future have a material impact on attraction and productivity. Mercer’s study identified five priorities for organisations to address this year:
- Build diverse talent pools
- Embrace the new work equation
- Architect compelling careers
- Simplify talent processes
- Redefine the value of HR
While these priorities are consistent across organisations and regions, they are viewed differently by employees and employers (see Figures 3 and 4).
Differences by region
Only half of employees in Europe (51 percent) report that their leaders are engaged in championing development programmes. Additionally, fewer European organisations plan to make changes to their performance management programmes in 2016 (53 percent compared to 57 percent globally). “Competition for the right talent is just as intense in Europe as it is globally. As well as competing for talent, employers need to nurture the talent in their organisations. Yet, employees in Europe are the least satisfied globally with their managers’ ability to coach and support them – this is a disappointing reflection on the quality of management today,” said Christopher Johnson, Senior Partner and EuroPac Region Talent Business Leader for Mercer. “Employees in Europe are more likely to stay with their current employer even though dissatisfied with their employment situation. To maintain that loyalty, it is critical European employers lift their game through transparent career opportunities and quality line management; unless they do so they’ll not compete for talent successfully.”
Employees in North America are most likely to say that they have the resources they need to be more productive; 73 percent report that they have the right tools and technology, and 69 percent report that they have creative training available. Additionally, 58 percent of organisations in North America plan to make changes to their performance management programmes, with nearly 30 percent planning to eliminate ratings in 2016, compared to 22 percent globally. “Organisations have invested heavily in HR technology in the past few years, which has enabled HR to focus on playing a more strategic role,” said Pat Tomlinson, Senior Partner and North America Region Talent Business Leader for Mercer. “Now it’s time to upskill HR to provide that value to the business, especially in areas such as predictive analytics and design thinking.”
Employees in Asia are the least likely to report that flexible work schedules would improve their work situation (38 percent compared to 46 percent globally). Notably, organisations in Asia recognise the importance of HR skills and are more likely to invest in upskilling; 44 percent in the region and 53 percent in China have plans in place to build this capability in 2016 (compared to 36 percent globally). “Flexible work schedules are not the norm across the region,” said Susan Haberman, Senior Partner and Growth Markets Region Talent Business Leader for Mercer. “However, as it becomes more popular among younger workers, employers will have to adjust their talent plans to accommodate jobs around a range of work/life styles.”
Big data management is a trend that is influencing the people agenda in Australia more than any other region (it is one of the three top trends influencing talent plans in 2016). “Workforce analytics is a big focus locally as companies strive to grow domestically, while expanding regionally,” said Ephraim Spehrer-Patrick, Principal and EuroPac Talent Strategy Practice Leader for Mercer. Additionally, more than three-quarters (79 percent) of employers in Australia are focused on developing local leaders in emerging economies, compared to 62 percent globally. Yet transparency with pay is an area of contention; the findings show just 81 percent of organisations report they are transparent compared to just 58 percent of employees.
Despite high levels of confidence in development efforts by employers, only half (56 percent)of employees in Latin America report that their leaders are engaged in championing development programmes. Latin America is the only region where managing a contingent workforce is a workforce trend impacting talent management plans this year. Additionally, 62 percent of companies in Latin America plan to make changes to their performance management programmes in 2016 compared to 57 percent globally. “Careers, performance management, and skill development are priority areas of focus in Latin America. Despite favorable results from employers on the state of play with regard to people processes, employee reports indicate more could be done to upgrade HR processes and equip employees to deal with changes ahead,” said Martín Ibanez-Frocham, Senior Partner and Latin America Talent Strategy Practice Leader for Mercer.
Explained Ms. Bravery, “As organisations are faced with a global, diverse workforce in a period of rising skills shortage, they are being forced to rethink their talent infrastructure. This study shows that the workforce of today may be the most career orientated that we’ve seen – and this is forcing a new level of transparency between employers and employees. Successful companies will navigate these changes by not only challenging how work has been done in the past, but by actively considering how it could, and might, be done tomorrow.” Mercer’s 2016 Global Talent Trends Study examines the top trends impacting today’s workforce and how organisations are responding. The study, which incorporates the views of both employers and employees on key workplace issues and priorities, is based on the perspectives of more than 1,730 HR leaders and over 4,500 employees in all industries across 17 countries.