Talentism: the most
­e ffective weapon in
the War for Talent
Talent is becoming scarce and there will be a fight for it. This was, in short, the line of
thinking behind the term ‘The War for Talent’ coined by McKinsey & Company at the
end of the last century. So what is the state of affairs in the current economic climate?
Let’s put a few aspects in today’s perspective.
The grey impact
The ageing population, as we all know, is having a huge impact on the balance of
the labour market. The large outflow of baby boomers (1945-1964) compared to
the much smaller inflow of newcomers is expected to already mean a shor tage
of 500,000 employees in 2015, increasing to no less than 700,000 in 2040.
The expectation is that the ageing population will be at its peak level in 2040, with
some 40% of the labour market then being over 65 years old.
From capital to talent
The problem of a reduction in the supply of talent due to the ageing population is
not restricted to the West. Countries such as China, India, Russia, and par ts of South
America are also struggling to find the right talent. The labour force in Russia is
expected to drop by 20 million by 2030. China is already suffering from a lack of
experienced managers and the growth in the labour force is unlikely to get ahead
of the growth in the demand for labour. It is therefore no surprise that during the
World Economic Forum in Davos last year the point was emphasised that the
distinguishing factor for businesses is shifting from having sufficient capital to having
sufficient talent. It was then referred to as ‘Talentism’. We have taken on the term
and made it what we do at ORMIT: finding, developing, and connecting talent.
Talentism: the most e
­ ffective weapon in the War for Talent
01
Can it turn out better than expected?
There is no shor tage of gloomy demographic predictions. However, the real extent
of the estimated shor tages depends on a number of factors. Limited economic
growth has, for instance, a negative impact on the demand for labour. However, the
increase in labour force par ticipation will mean there will be less of a fall in available
labour potential than the figures for the ageing population actually suggest, par ti­
cularly considering the increasing par ticipation of the over-50s and the rise in the
retirement age. In addition, we should also bear in mind the rise in the number of
working hours and the improved levels of labour productivity. And on top of that,
there is the expected influx of talent from abroad…
In shor t, you could almost conclude that it is not all as bad as we feared. So is there
no War for Talent after all?
The answer is yes, there most cer tainly is.
Demand and supply mismatch
Although the consequences of the ageing population may not be as bad as expected
at a macro level, there is already a shor tage of qualified personnel in healthcare,
transpor t, engineering, technology and agriculture. A lot of companies in these
sectors are faced with job vacancies that are difficult to fill – and the situation is
expected to only get worse. The shor tages are mainly due to a mismatch between
demand and supply in the labour market. There is a surplus of medium-skill managers and a huge shor tage of vocationally trained workers (such as carpenters,
plumbers, etc.). And there is a shor tage of high-skilled employees which will only
increase, with high potentials with leadership prospects being the absolute outliers.
WAR FOR TALENT 2020
McKinsey predicted a shortage of 18 million high-skilled employees in the
wealthiest countries.
-16 to 18 million
Medium-skill workers
Demand: 253-258 million
Supply: 288 million
-1 million
High-skill workers
Demand: 160-168 million
Supply: 150 million
-10%
+32 to 35 million
+11%
Low-skill workers
Demand: 60 million
Supply: 59 million
-1%
Source: McKinsey Quar terly, November 2012
Talentism: the most e
­ ffective weapon in the War for Talent
02
Communicating barrels
There is also a big difference in the way the ageing population affects par ticular
branches, sectors and companies. For instance, government organisations are
expecting a huge shor tage for some positions. For ever y 10 current employees, 3
are expected to retire by 2020. But this does not mean that those industries with
generally younger personnel are safe. For many positions, the labour market works
like communicating barrels and shor tages in one sector are par tly compen­s ated by
an outflow of labour from another.
Managing complexity
The developments in the labour market are not the only factors of influence in the
War for Talent. Globalisation and extremely fast technological development are
making things more complex and companies are having to test their ability to
change more. Talent of a high level is needed to manage the complexities and the
changes. Talent that is difficult to find at the best of times, let alone in a shrinking
labour market.
New demands: trust rather than control
Just to make the situation extra tense, the demands made by talent have totally
changed. The new generation consider personal and professional development to be
more impor tant than job security. People are looking for a better balance of work
and play, have a higher need for assessment based on output, are averse to hier­
archies, want trust rather than control, and make career decisions based on intrinsic
reasons. There is even a totally new concept of status: it is no longer a case of the
highest salar y, the most beautiful car or the most demanding position. The new
status symbol is work that gives you freedom, the chance to develop, and is something to be proud of. This all means that the new generation of talent is less loyal
to any one employer. They change jobs more quickly and more often than not do
this as a self-employed worker. It means they are not just choosing a job, they are
choosing an employer. In shor t, the new generation only works if they believe in the
cause and are motivated. We think that there is currently often a false sense of
loyalty. People are staying in a job they do not like because it offers security for now,
but many of them will change jobs as soon as the economy picks up.
Talentism: the most e
­ ffective weapon in the War for Talent
03
What does this mean for you?
In order to be able to deal with the War for Talent, your organisation will have
to implement talentism. Your approach will need to be comprehensive and
­e mbedded in the organisation. To create a good, comprehensive policy, an
­o rgani­s ation will need to ask itself the following questions.
W hat is talent for our organisation? Do we have a uniform policy on talent, even
when it concerns leadership talent?
W hat is our view of the labour market when it comes to this talent?
W hat are the consequences within our organisation of an ageing population and
fewer young workers? What is the age structure of our employees?
W hat talent do we need in order for us to realise our company objectives?
H ow can we attract and keep the talent we need?
H ow can we make optimum use of the talent in our internal labour market?
H ow can we continue to connect the talent we have to our organisation?
H ow will we respond to the changing demands of new generations?
W hat exemplar y behaviour do we expect our top management to set?
H ow can we become and remain an attractive employer?
ORMIT model of Best Employment Practices
engaged
employees
better
collaboration
start
Value and nurture what is good.
Improve what can be improved.
Have insight into and focus on
qualities – and enjoy doing so.
better
results
better
quality
satisfied
clients
Talentism: the most e
­ ffective weapon in the War for Talent
04
Excellent employment practices are essential
Knowing that talent is critical of employers and they only want to connect with
places where they really want to work, it is essential that organisations work on
their employment practices – and we do not mean by dramatically driving up the
terms of employment. Talent is not driven by that anymore. It is far more impor tant
that an environment is created in which talent can unfold, feel valued and have the
space to develop. Talent has to feel involved, be able to pleasantly collaborate, and
enjoy their work. Only then will the conditions be met for attracting talent to the
organisation and, more impor tantly, keeping it there. In other words, excellent
employment practices are a means of captivating and connecting talent.
Leadership is the critical success factor
The steps towards excellent employment practices pave an impor tant road towards
leadership. New reflexes have to be developed and old ones have to be let go at
the highest level. The biggest challenge is connecting the goals and ambitions of the
organisation with the individual desires and ambitions of talent. This can be done by
creating connections and managing through shared values, and by dispersing a vision
and course that inspires. The corporate top needs to facilitate, manage through
output, and trust. People need to have the ner ve to be less in control, and appeal
more to their self-responsibility. In addition, they need to continually encourage
personal and professional development.
The new rules of the game
Connecting talent cer tainly does not mean that companies should place talent
adoringly on a pedestal. There needs to be a mutual connection, in line with the
talent’s perception. It is cer tainly no free licence; talent needs to be accountable for
their work, contribution and self-responsibility. Comments such as ‘prove yourself
first’ simply do not work anymore and merely illustrate the generation gap. Today’s
youth want to do a lot, they are not spoilt, and they are extremely motivated to
make a difference. It is just that they become motivated through different means
and they are far more aware that work is par t of their happiness. If you can recognise the rules of the game and know how to translate this into a successful talent
management policy, you will be strong in the war for talent.
Find more information on www.ormit.be
or contact us on +32 (0)2 533.98.90.
Talentism: the most e
­ ffective weapon in the War for Talent
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