Executives Worldwide See Talent Gaps as Top People Challenge in Every Region and Industry

Managing talent is the most critical human resources (HR) challenge worldwide and will remain at or near the top of executive agendas in every region and industry for the foreseeable future, according to a new global study conducted by The Boston Consulting Group (BCG), the World Federation of Personnel Management Associations (WFPMA), and the Society for Human Resource Management (SHRM). Key findings of the report, "Creating People Advantage: How to Address HR Challenges Worldwide Through 2015," will be presented today at the WFPMA World HR Congress in London.

The study, which is based on a global survey of 4,741 executives in 83 countries and markets, found that managers worldwide also rated improving leadership development and managing work-life balance as urgent priorities. The report provides rankings and analyses of 17 HR challenges in seven major regions of the world and suggests specific actions to address those issues.

"The study, the most comprehensive review of global HR practices ever conducted, provides piercing insight into the current and future challenges facing companies," said Florent Francoeur, president and CEO of WFPMA, one of the world's leading HR organizations.

In the United States, managing talent and improving leadership development emerged as the two most critical people challenges, followed by managing demographics and managing change and cultural transformation. Nearly one-half of U.S. executives said that they expect their companies to source talent globally by 2015, compared with just one-fifth of companies in 2007. Similarly, 21 percent of U.S. executives said that their companies will be moving businesses to new locations to access talent by 2015, compared with just 8 percent of companies in 2007.

"It may soon be harder to find and keep talented employees than to raise money in an IPO," said Rainer Strack, a BCG partner and one of the report's authors. "In the West, work forces are graying, while in developing markets, companies have an unquenchable thirst for skilled employees. Creating a 'people advantage' will increasingly translate into competitive advantage."

Other Challenges: Improving Leadership and Work-Life Balance

Improving leadership also ranked as a top three HR challenge in 10 of the 17 focus countries, including developed nations such as the United Kingdom and Japan as well as emerging markets such as China and India.

Managing work-life balance was rated a key future challenge in every region except the Pacific Region and a top-three priority in Argentina and Chile, Brazil, Canada, India, Italy, Singapore, and South Africa. Flexible work arrangements are the cornerstone of almost all work-life balance initiatives. Worldwide, more than 60 percent of executives said that their companies already offered flexible working hours, and nearly 80 percent said that they planned to do so by 2015. Offering part-time work was the second-most popular future action by employers.

"The days of company-loyalty-at-all-costs are over," noted Andrew Dyer, global leader of BCG's Organization practice and another author of the report. "Employees, especially the most talented ones, often make career choices based on factors such as flexible work hours and emotional gratification."

Disparate Views on Demographic Risks

While some issues were nearly universally important, others varied widely across geographic locations. Managing demographics, for example, was the fourth-highest priority overall, but executives in different countries offered strongly varying assessments of its importance. Those in the United States, Canada, Australia, and much of Europe (particularly Germany, France, and Italy) rated it a pressing issue. By contrast, Japanese executives, who have been grappling with the effects of an aging work force for years, did not rank it as a key HR priority.

"Many executives don't realize the serious problems they could face from a loss of knowledge and productivity if they don't start preparing today for labor shortages in five or ten years," Strack said. "They should analyze capacity and productivity risks for each location, unit, and job type and then develop a series of measures to mitigate anticipated shortfalls."

To receive a copy of the report or arrange an interview with one of the authors, please contact Eric Gregoire at + 1 617 850 3783 or gregoire.eric@bcg.com .

About the Methodology of the Study

BCG and the European Association for Personnel Management (EAPM) conducted the Web survey in Europe through January 2007, receiving 1,355 responses from HR and other executives in 27 European countries. In conjunction with that survey, during May 2007, we interviewed 102 senior executives in Europe. Between September and November 2007, a global Web survey was conducted in cooperation with the WFPMA, eliciting an additional 3,386 responses from participants in 56 countries and markets. The SRHM assisted with data collection for the survey in the United States. This survey was rounded out with 118 interviews with executives from those countries. In all, the two Web surveys elicited 4,741 responses from 83 countries, and BCG conducted 220 interviews with senior executives.