USA faces challenge in talent war, reveals talent index

Citation

Nolan, S. (2008), "USA faces challenge in talent war, reveals talent index", Strategic HR Review, Vol. 7 No. 1. https://doi.org/10.1108/shr.2008.37207aaf.010

USA faces challenge in talent war, reveals talent index

USA faces challenge in talent war, reveals talent index

A look at current trends and data

US faces challenge in talent war, reveals talent index

The US is facing challenge from the UK and China in the war for talent, according to the results of the Global Talent Index (GTI). The US will maintain its position as the world’s leading country for nurturing and developing talent over the next five years, reveals the GTI, but it faces increasing competition from the UK, which is to rise to second place in the index ranking by 2012, and from China, which is forecast to move from eighth to sixth place.

The GTI was produced by executive search firm Heidrick and Struggles in co-operation with the Economist Intelligence Unit. The first survey of its kind, it analyzes the state of global talent and its future configuration in 30 countries around the world, using seven different measures to assess each country. They are demographics, quality of compulsory education systems, quality of universities and business schools, quality of the environment to nurture talent, mobility and relative openness of the labor market, trends in foreign direct investment and proclivity to attract talent. It is aimed at providing businesses with comprehensive evidence of where talent is located across the world.

China moves up talent ranking

The results show that China is set to exploit its natural advantage as the world’s most populous country by significantly improving its compulsory education system and developing a much better environment for producing and nurturing talent. This is expected to allow the country to build on its manufacturing base and attract increasing numbers of foreign-owned businesses.

Despite the strong performance of the US overall, its labor market is set to become less open and flexible over the next five years amid fears of terrorism. The gap between the US and China on this measure is expected to close.

Talent follows money

Overall, the survey shows that talent follows where money leads. After the US and UK, the next best countries for attracting and developing talent are the relatively small but open economies of Canada, The Netherlands and Sweden. A noticeable trend is that several of the least promising performers do not yet boast fully functioning democracies.

Asia performs strongly overall, with Malaysia, South Korea and Japan accompanying China and India in the top 15 by 2012. Ukraine will overtake Russia and Argentina will fall dramatically over the next five years.

More information

A copy of the Global Talent Index wall map and essay booklet is available from Heidrick & Struggles. For more information visit www.heidrick.com

Internet users view networking sites as a recruitment tool

A survey of internet users carried out by e-mail research specialist emedia reveals that 87 percent believe social networking sites could be used for business purposes, with 43 percent mentioning recruitment. Other business uses cited by respondents include networking (65 percent), exchanging ideas (58 percent), getting advice (44 percent) research, (35 percent) and selling (31 percent).

The survey indicates that users of social networking sites are regular visitors and almost half of them admit using these websites at work. Nearly one in four users log in every day, with half of them logging in several times a day. A total of 62 percent of users say they are worried about the safety of their personal data held on these sites, resulting in 31 percent entering false information about themselves to protect their identity.

A total of 81 percent of those surveyed use networking sites, the most popular being Friends Reunited, YouTube, MySpace, Facebook and LinkedIn.

More information

Emedia’s RapidResearch Social Networking Sites online survey researched computer users’ views of social networking sites. It was conducted in August 2007 and over 100 individuals replied. For more information visit www.emedia.co.uk

2008 merit raises to be highest in Asia and Latin America

Merit pay increases for employees in Asia-Pacific and Latin America will continue to top those of US and European workers in 2008. This is according to a report from global consulting firm Watson Wyatt Worldwide and WorldatWork, an association for human resource professionals.

The global survey of 946 companies found that while employees worldwide can expect to see about the same levels of merit pay as they are receiving in 2007, employees in quickly developing regions will receive a higher percentage. Merit-based pay is expected to increase by 5 percent in Asia-Pacific, 4.5 percent in Latin America, 3.6 percent in the US and 3 percent in Europe next year, for a global median of 4 percent.

Employers pushing for performance

Employers are setting aside separate money for market adjustments, reflecting tight labor markets. Employers in Asia-Pacific are budgeting the most for market adjustments at 3 percent, while employers in Latin America are setting aside 2 percent. In Europe, market adjustment budgets of 2 percent are anticipated, and in the US budgets will remain below 1 percent.

However, the survey results show that throughout the world companies are focusing more on rewarding high performers with bonuses than on increasing base pay through merit increases or market adjustments. Employers are increasing the number of employees eligible for variable incentives, but at the same time goals are getting harder to reach.

For more information

For more information, visit www.watsonwyatt.com or www.worldatwork.org

Corporate reward programs are out of date, says survey

Corporate reward and performance programs are out of date in a rapidly changing market. This warning comes from a recent study carried out by global professional services firm Towers Perrin.

Despite enormous shifts in the business landscape over the last decade, driven by factors such as increased competition, cost pressures, globalization, ageing populations, technology advances and skill and labor shortages, at best most companies have made minimal changes in the design and delivery of their base pay, incentive and performance management programs. As a result, current programs do not appear to be meeting talent and people management needs effectively, especially in an environment increasingly focused on attracting and retaining people at all levels in an organization.

Evidence of insufficient change

The study, which is the fourth in a decade-long series, surveyed more than 600 HR and compensation managers in midsize and large organizations in 21 countries. It found a growing “say/do” gap around reward design and delivery. Although many of those surveyed said their reward strategies were designed to retain and attract talent – 73 and 57 percent, respectively – few of the tactics they reported were consistent with this stated focus.

Jim Crawley, principal at Towers Perrin, comments:

Overwhelmingly, we found that companies are making very incremental changes in reward and performance management programs and they’re doing so year in and year out. What makes this of concern is that business changes have been anything but incremental. In fact, its fair to say that the last decade has been among the most turbulent in recent business history, encompassing the dotcom boom and bust, post-9/11 cycles of recession and recovery, and dramatic technological and workforce shifts that are changing both the way companies do business and the way people do their work.

In this environment, we expected to see comparable innovations in rewards practices. Instead, we found most companies doing things like adding or eliminating measures in variable pay plans, broadening or cutting back on eligibility for incentives, and shortening or lengthening the pay communication cycle. Put simply, our data confirms what amounts to a pattern of “tweaking” at the edges of programs rather than creating the more systemic and integrated approach required to address the scope, intensity and magnitude of change on the business side.

Breaking with the past

To break the cycle of incremental change, Crawley says organizations need to engage in “discontinuous change” and identify actions that will have a clear and sustained impact on the bottom line. Towers Perrin recommends the following four steps that companies should consider when revamping rewards programs:

1. 1.

   Think big, bold change.

2. 2.

   Identify required changes in terms of desired business outcomes.

3. 3.

   Place calculated and systematic bets on specific programs and segments of the workforce that align with business objectives and priorities.

4. 4.

   Develop a balanced set of metrics that encompass the key outcomes needed.

For more information

For more information on the 2007 Towers Perrin Reward Challenges and Changes Survey visit www.towersperrin.com

Sara Nolan