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Talent management during the economic upturn: preparing for the “Résumé Tsunami”

With the changing economic climate in mind, David Conradie reveals why now is the right time to shift out of ”survival mode” and get proactive on your talent management strategy.

by David Conradie

The global recession saw many companies implement defensive actions, such as layoffs and cutbacks, in order to contain costs and remain afloat. Overall business strategies revolved around surviving tough economic conditions while talent retention and management was pushed lower on the HR agenda. In 2010 however, a new sense of economic optimism has emerged, and businesses need to re-evaluate their talent management strategies in order to retain top talent and manage the expected “résumé tsunami” – both flooding in and flooding out of the company.

Since January 2009, Deloitte has been conducting a longitudinal global survey titled Managing Talent in a Turbulent Economy to evaluate how executives are managing their workforce during the economic downturn, from the aftermath of the global financial crisis through the resulting slowdown and the inevitable uptick in the economy. The purpose of the survey, which included a number of South African organisations, was to explore whether effective human capital strategies are in place for the economic recovery, the disparities between employer beliefs and employee needs and how these factors will impact on the effectiveness of business strategies as the economy improves.

The latest results of this survey clearly indicate that the overriding trend is no longer defensive, for example many executives report that layoffs are declining and expect that trend to continue. Heading into the first quarter of 2010, only 39% of talent managers and executives surveyed anticipate additional layoffs, compared with 51% who see no layoffs on the horizon. The focus now shifts to managing employee expectations as the economy improves and retaining and maximising top talent while developing leadership.

With the changing economic climate in mind, the survey highlights the top talent management challenges for 2010:

1. Top talent on the move

The priorities of employers do not always match the needs of employees – this has always emerged as a finding with my experience with the annual Deloitte Best Company to Work For survey. This disparity could leave companies blindsided as the economy recovers. Understanding what their employees really want and then realigning their retention strategies, tactics and priorities to match those goals is vital. Companies must therefore plan for economic renewal with a keen strategic sense of how to position and retain key talent, sustainably for the long term. Irrespective of the economic conditions, companies that lose key talent to new opportunities must bear the costs of attracting, recruiting, and training new employees to replace those who have left.

The segmentation of talent becomes more vital than ever, as companies need to understand what motivates different segments and age groups of their workforce. In the global Deloitte survey greater compensation and financial incentives typically ranked as the most effective retention tactics across the four key generational segments of employees. With 43% of surveyed employees listing additional compensation, it was followed closely by additional bonuses and financial incentives at 41%. Notably however, Baby Boomers ranked strong leadership (41%) as the most effective retention initiative, above monetary retention strategies.

Overall, surveyed employees also ranked non-financial retention tactics third (strong leadership), fourth (job advancement expectations/guidelines) and fifth (support and recognition from supervisors and managers), allowing even the most cost-constrained companies to implement effective retention plans to keep hold of top talent.

Training and development and retention programmes will be competing for the top spot among talent priorities with the executives who participated in this survey. It is here that international learning and development experiences for emerging and high-potential talent can have high value to both the employee and the employer.

2. Employee dissatisfaction

Significantly, during 2009, low morale and poor communication, especially where companies had not been open and transparent about belt-tightening actions, resulted in heightened levels of employee dissatisfaction.  This was highlighted by a concerning trend in the 2009 Deloitte Best Company to Work For Survey, namely a continuing year-on-year decline in the reported levels of employee satisfaction with the nature and quality of Leadership and Communication in their employer organisations. How companies handle communication during the tough times will remain with the organisation for a long time, and ultimately influence the prevailing level of trust employees have in leadership.

As with previous downturns, as economic conditions improve, companies will feel the impact of poor morale and communication as employees are able to act on their desire to move on. Nearly half (49%) of all surveyed employees who are considering leaving their jobs and a high proportion of employees (30%) are actively seeking new employers, which supports the assertion that the “résumé tsunami” could well exceed previous post-recessionary trends.

Early 2009 saw many surveyed corporate leaders (44% to be exact) labouring under the illusion that voluntary turnover actually increases profitability. Yet, while cutting employee cost may initially have a positive effect on the balance sheet, the ultimate cost of replacing a key employee can be two to three times that of the employee’s annual salary. These costs can be related to the loss of intellectual capital, client relationships, productivity and other job skills.

Interestingly, more than half (54%) of the executives surveyed expressed a high concern over competitors poaching high-potential employees. The combination of low morale and renewed employee willingness to take risks means that this is a perfect time to lure top talent.

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