Author Archives: Michelle Dunne

I have recently reviewed the executive talent acquisition plan for a progressive global partnership. As I engaged with the individual heads of business, a familiar theme became apparent: each described his/her business and its value in terms of numbers and objectives. Not one single partner in the organisation estimated the value of their individual businesses in terms of the people in those businesses.

People run businesses and what is often forgotten is that people drive performance. It is the value of talent that drives business value. Hence, it makes sense that people strategy should drive business strategy. Executive leadership should realise and capitalise on the strategic value of employees by placing talent at the heart of strategic planning. Finding and developing people to execute vision and strategy should be a priority for all businesses looking to grow. Talent acquisition and skills development should be proactive and aligned with business goals. Talent management should be value driven and supported by evidence that is both empirical and based on qualitative judgements. This is both an art and a science.

Talent drives business value in three ways: productivity, leadership and know-how. Talent management is one of the major challenges every company needs to address in order to thrive. It encompasses how employees work, how managers manage and how companies plan and measure talent.

Investors often value businesses as independent from the people that run them. It is important to acknowledge that the structures and processes that underpin any business are irrelevant without effective leadership and talented teams working at each level within an organisation. Investing in a business without considering its people and their skills leaves no business to invest in. Valuing talent in a business is not about individual star performers or leaders. Rather, it is valuing how talent performs and is managed within the structures that frame the business. The annual World Management Survey consistently correlates the combination of management practice and talent development with successful companies.

The most effective businesses align talent strategy with business strategy. According to Harvard Business Review, Blackrock is an example of an organisation that does this well. It’s Human Capital Committee is comprised of senior managers responsible for each of the company’s business and geographic lines. Strategic talent planning is aligned with business objectives and line managers are accountable for people strategy, talent acquisition and skills development. Like Blackrock, successful businesses create value through people and performance by doing three things:

Firstly, the most successful firms recruit and compete for talent on an ongoing basis. They place a high value on finding and keeping great people. Companies that are astute about talent acquisition are constantly interviewing people, benchmarking and marketing the employee value proposition.

To plug any skills gap, companies have two options: acquire new skills or support the development of in-house skills. High performing businesses do both. They excel at talent planning, recruitment, developing employees, talent reviews and succession planning. Managers consider how business critical a role/person is for each role in the organisation. Those roles or people that are business critical are adequately resourced and planned for in the same way as a financial asset. This involves placing the right talent in the right roles at the right time. Responsibility for talent acquisition is reflected in budgets as well as performance goals.

The most effective recruitment strategy is for both the business and human resources to work together when hiring. There is an argument to have the human resources function represented at board level to grasp the strategic importance of a company’s workforce and strive to align performance with business strategy. Ideally, heads of lines of business within an organisation  partner with human resources to develop and implement programs that meet financial objectives. Human resources acts as a strategic partner to the business  and is not just be actively involved in cost savings and administration, which still tends to be the norm in many organisations.

Secondly, successful businesses create environments that foster high performance and continuous improvement. Realising the cost of losing great people is something many businesses do not take seriously or even factor into their planning. As the skills shortage, in the UK in particular, tightens businesses can expect to experience increased staff turnover as companies poach from each other.  The cost of losing key talent is the equivalent of 6-24 months’ salary (PWC Global CEO Survey 2012), yet this financial loss is almost never accounted for when staff leave unexpectedly. Creating environments that enhance performance is achieved when executive management commits to company-wide goals and values and engages directly with talent management strategies and execution. Building a strong and sustainable talent strategy involves developing and maintaining a strong employee value proposition, as well as the right mix of incentives.

Thirdly, successful businesses build knowledge connections. At the moment, both the UK and other countries have access to a global pool of educated, talented and high-potential individuals. However, there is a shortage of people who have the specific skills and experience required to do the jobs at hand. Much of this is the result of the ongoing impact of the 2007/2008 financial crisis as well as fast-moving technological and regulatory changes. In his recent book, Matthew Syed makes a pertinent point about the skills shortage in business today. He writes that employing highly talented individuals is not enough to ensure high performance. Know-how is much more important than raw talent. It is this deep experience and technical knowledge that is scarce in today’s global market of highly educated and talented individuals. The challenge for business over the next few years is to nurture a workforce with the necessary skills to drive economic growth into 2020 and beyond.

The current skills shortage is an urgent priority for more than 60% of UK businesses (Inspiring Growth CBI/Pearson Education and Skills Survey 2015) with job creation on the rise and unemployment at its lowest rate for many years. Most newly created jobs in the next five to ten years are predicted to be highly skilled and business has no choice but to invest in skills acquisition and development of people. Business is also more active and engaged in education as it invests in helping to prepare younger generations to enter the workforce in the next decade.

 

 

Our clients are kept up at night by the difficulty they are having recruiting skilled professionals and and they are not alone.  Business in London and across the UK is concerned about the shortage of skilled talent and the impact this deficit will have on economic growth. The latest CBI/Pearson London survey found that half of businesses in London are concerned about the shortage of skilled talent and the impact this deficit will have on economic growth. The Deloitte Finance Director Survey 2015 Q2 found that the primary issue for CFOs in the UK is expansion and driving new products coupled with a high expectation for hiring. Skilled labour is in short supply.

It has been almost two decades since McKinsey coined the term ‘War for Talent’ and much has changed on the global landscape. Yet, as business growth picks up in spite of continuing debt burdens in the West and slowing growth in emerging markets, the ‘War for Talent’ is as rife as ever. In the UK in particular, the skills gap is biting in key sectors that rely heavily on knowledge workers such as financial and professional services, technology, education and the creative industries.

A recent article in the Harvard Business Review (https://hbr.org/2014/08/employers-arent-just-whining-the-skills-gap-is-real/) points out that it is difficult to measure exactly what a skills gap is and hence to manage it. James Bessen states that the global skills gap is not necessarily related to education. On the contrary, there is a good supply of educated candidates. The difficulty is finding candidates who have the skills to work with today’s rapidly changing technologies. Take the highly regulated world of financial services as an example. Even at the CRO level, many global investment banks have not yet fully understood or even begun to deal with the risks of new regulations like FRTB. Hiring teams to implement these changes is a real challenge as the regulatory and technological skills in demand are just not there.

The reasons for the skills gap are myriad and complex. The financial crisis in 2008 and subsequent years of recession and economic slack has impacted the size and availability of the skilled talent pool needed for the current wave of growth.  A large pool of highly talented, employed individuals have missed out on a decade of stretching assignments and lack the experience necessary to take on senior leadership roles. Many of these individuals, heading into mid-career, have adjusted their ambitions in line with a ‘new normal’ at work. Forced by circumstances to make lifestyle changes and meander along the career path, these candidates are reluctant to make the sacrifices necessary now to develop skills to climb the next rung on the corporate ladder.

A change in immigration policy and the visa system in the UK has limited business’ ability to hire skills from abroad. Changes to the visa system were made during the last parliament as the government sought to decrease immigration into the UK.  A recovering economy in 2015 has seen an increase in hiring for skilled labour from abroad and the quota caps were hit for the first time in Q2 2015. Business has petitioned government to remove these caps but David Cameron remains defiant stating that business should do more to train UK citizens. He may have a point but the investment required to cultivate a pool of skilled labour required takes time. Also, SMEs, employing half of UK private sector workers, do not have the resources to fund training.  We could look to the EU for skilled labour and it is true that there has been a net gain of immigrants from the EU. However, most EU immigrants entering the UK over the last decade are unskilled or low skilled and do not plug this crucial gap.

The Deloitte Global Human Capital Trends 2015 reported that the key trends for businesses and HR for this year is the difficulty in developing leadership at all levels and developing a culture that engages with employees. Cultural engagement is imperative to both recruiting, retaining and developing leadership talent but it is a bit like the chicken and the egg. Cultural engagement is driven by a company’s leadership and if that isn’t strengthened or is a vacuum, recruitment and retention and development of internal talent cannot happen.

Multinational organisations have the advantage of being able to relocate roles to any geography outside the UK and can tap a larger, mobile candidate population.  Home-grown and start up businesses, particularly in fledgling technology and fintech companies, require workers to be UK based. Consideration needs to be given to what that means for UK competitiveness and how we foster entrepreneurial enterprises competing on a global field. Britain has seen an influx of venture capital into new technology businesses this year, but if we cannot grow these companies investment will flow to the geographies where talent resides .

An underlying risk aversion on the part of both candidate and client is also influencing the recruitment process. This is a remnant of economic instability and job insecurity during and following the 2008 financial crisis and is exacerbated by current market uncertainties. At many large companies, vendor management maintain a firm grip on hiring decisions limiting overtures to avoid excessive measures to compete for talent. Some have not adapted to the change in tide and behave as if the supply of skilled candidates is unlimited. In fact, for skilled labour, it is a candidate market and businesses will need to change strategy to hire for success.

Finally, it is thought that efficiencies driven by technology will increase the need for highly skilled labour during the next five years. As we enter a new wave of technological change and computers increasingly perform low skilled tasks and jobs, the war for skilled labour with technology know-how will be relentless. Both government policy and business will need to do what it takes to stay ahead of the talent curve.

Women in the UK have much to celebrate this May. Following unpredictable election results, we now have more women MPs than ever before.  Coupled with 20.7% of board seats in the FTSE 100 being held by women, we seem to be enjoying a more egalitarian position than ever before.

Progress over the last few years has been substantial, but we still have a long way to go to achieve parity. Only 6.9% of the board seats held by women in the FTSE 100 are executive positions. Simply put, women’s representation in the board room and in senior management is still token. We need more women holding direct responsibility for British business. We are still very, very far from the tipping point of 30% of women in management roles that will effect sustainable change.

RBS recently committed to filling 30% of its 600 management roles with women within the next five years. The bank should be applauded for its ambition to move beyond the low hanging fruit and tackle the more difficult task of placing more women in management. RBS will face challenges both structural and cultural, but these can be overcome with commitment, pragmatic solutions and sponsorship from the board and executive committee. Addressing organisational and societal structures and frameworks, as well as cultural barriers can be changed through various programs and tend to reduce significantly when tokenism is eradicated.  Perhaps the most critical issue RBS will have will be one of the most common reasons our clients cite for not having more women in the executive office: there just aren’t enough suitably qualified women to fill the roles. It is true that there is a limited pipeline of women candidates who have similar and direct pathways up the corporate ladder as most men in management. However, companies that are creative and flexible in their approach may be surprised to discover a large talent pool of qualified and experienced women to do the jobs at hand. Unless specific product knowledge or specialist expertise is required, there is a wealth of women who are experienced at and capable of running P&L’s and businesses. I am reminded of something Stephen Lewis, ex Special Envoy for HIV/AIDS in Africa for the UN, said a few years ago at a talk he gave in London. At the time, UN women was in its inception and there was a search for someone to lead the new organisation. Mr Lewis said that his colleagues were only considering male candidates for the role because there wasn’t a single women on the planet who could do the job. As it turns out, the UN found an outstanding woman of experience and stature in Michelle Bachelet to lead the newly formed body. UN Women is facing a similar challenge as it looks to replace Phumzile Mlambu-Ngcuka in 2015. I digress. The point I am making is that the pipeline of skilled and qualified women is not dry. There is an ocean of women who have the ability and skills to lead business. The trick is to find them by being creative and using a rigorous process that minimizes bias.

So, where are the women who can do these jobs? Companies like RBS have a number of candidate pools available to them. The first and most obvious is to grow their own talent so that in five years time there is an internal pool of women from which to recruit into management. This requires sponsorship programs, mentorship programs, flexible maternity and paternity arrangements, addressing the gender pay gap as well as a number of other interventions.

In the short term, companies will need to recruit from external sources. Success will come through various routes. One is tapping into the current pool of managers who are women. According to the Office for National Statistics, across all industries, the percentage of managers who are women in the UK is over 33%. Business will also have to be creative about searching for candidates across industries, as well as for those who have followed a non-linear career path, as many highly qualified and successful women do. This will require using  a research oriented approach to recruitment and assessing candidates against a well-crafted framework to reduce bias through each step of the process.  Enrolling new joiners into mentorship and sponsorship programs will be key to retaining and developing women managers going forward.

In the UK, the number of women in executive positions in the FTSE 100 has decreased in the last few years. With the potential threat of quotas and a clear case for tapping the unsourced 50% of management talent, businesses  that tackle the dearth of women in management in a pragmatic and focused way will have the competitive edge over those that do not.