An Economic Tipping Point in Corporate Talent Strategies

Each quarter for the last several years we have published TalentWatch®, a comprehensive look at talent trends in organizations around the world. Bersin & Associates TalentWatch This report, which is only available to research members, looks at several key topics:

  • Business performance against plan
  • Expectations for future growth
  • Job openings and expected growth
  • Talent readiness by job role
  • Leadership readiness by levels of leaders
  • Key organizational initiatives
  • Changes in HR and L&D spending patterns
  • Key HR and L&D initiatives this quarter.

We just finished analyzing the findings from Q3 of 2009 and I want to share some important findings.  (TalentWatch® is currently a Bersin & Associates research member-only publication.)

1.  Tipping Point in Expectations.

First, business outlook has shifted from that of capitulation to that of optimism.  In our Q2 findings we felt that organizations had reached a point in their budget and business forecasts that they were resigned to lower expectations for growth and had stabilized their job and budget cuts.  This quarter we see optimism on the rise.

One of the indexes we analyze is current business outlook.  In the Summer of 2008, before the credit crunch, the index was +.29, indicating a slightly positive outlook for the future.  During the last 9 months the index dropped to -.3 and lower as companies continuously lowered their expectations for growth.  This quarter, for the first time in over a year, the index became positive.  37% of respondents now see growth and 4% see significant growth above plan (four times higher than last quarter).   This corresponds with only 23% of organizations seeing any growth at all last quarter.

2.  Business and Talent Leaders are Planning for Growth in 2010.

Second, organizations are forecasting more significant growth in the coming six months.  In prior quarters expectations for growth were negative and actually declining.  This quarter, again illustrating a turnaround, the number of organizations citing “accelerating growth” shot up from 23% to 40%.

This second finding is particularly important, since so much of the world’s economic activity is dependent on human expectations.  When business leaders believe their organizations will grow, they invest.  Investment creates demand for capital, talent, and ideas.  This increases economic demand.  Hiring eventually follows (discussed below).

3.  Business Leaders are Getting Focused on Innovation and Customer Roles Again.

Third, there is significant uptick in focus on new topics in corporate talent and leadership.  Over the last 18 months respondents have been very focused on issues like downsizing, restructuring, and replacement or change in top leadership.  This quarter, again marking a tipping point, business and Human Resources leaders cite “innovation,” and “globalization” as top growing concerns.  Almost 30% of respondents told us that one of their top three challenges today is driving greater innovation into their workforce.  This, also, signals a major shift in perspective.

4.  Hiring is Still Flat, but Growth will Come in 2010.

Fourth, hiring and budget trends are still flat.  This quarter’s data shows no evidence that HR, L&D, or other budgets are being increased – and organizations still have flat to negative headcount plans from the prior quarter.  But when asked about projected headcount needs in the next six months, the index has turned around, and 37% of respondents tell us they see some expansion in hiring (up significantly from only 17% last quarter).  This tells me that by mid 2010 we will be back into an economy of job growth and competitive hiring.

5.  Leadership Capabilities are Waning, Hurt from the Recession.

Fifth, leadership skills and capabilities continue to be flat.  It appears, in fact, that businesses today feel “less ready” to execute than 18 months ago.  One of the indexes we track is a business execution index, where we ask leaders to rate their workforce in their ability to execute across different job roles.  The data for Q3 2009 shows almost a 12% drop from one year ago, indicating that the layoffs and restructuring of the last 18 months have cut real muscle from organizations.  State and local governments, pharmaceutical companies, manufacturers, and retailers in particular have shown significant drops in “business execution” capabilities.   This tells me that investments in hiring, development, and other forms of talent management will increase dramatically in the Spring when leaders realize that they need more talent to compete for growth.

6.  Talent Priorities are Shifting in New Ways.

Sixth, there is a significant and marked change in talent priorities.   All our research, including TalentWatch®, points to a shift in attention toward employee engagement, alignment, multi-generational diversity, and development of a global culture as major topics within HR.

Organizations of all sizes (even small companies) now exist in a global, multi-generational, women-empowered, multi-cultural workforce.  Most large businesses also see their growth markets in Asia first, and then the recovering US second.  And almost all organizations (including government and non-profits) have undergone painful downsizing which affects employee confidence and commitment.  So we believe HR and L&D priorities in 2010 will focus more heavily than ever on the topics of engagement, diversity, and globalization.

We will be publishing our 2010 predictions for Enterprise Learning and Talent Management soon.  Stay tuned for more…

1 Response

  1. Angela says:

    the last quarter of 2009 seems promising as we have seen lots of signs of econic recovery against the massive economic recession. i hope that in 2010 all our economies would be back on track. recession really sucks.