America Lags in Developing Leaders

HR executives in the United States say they are dealing with a dearth of skilled talent from their pipelines while the global workforce undergoes a transformation.

Wednesday, June 5, 2013
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In an ideal world, an organization's talent pipeline would be swollen with potential future managers and leaders. In the United States, alas, the pipeline is producing a dribble, senior HR leaders say.

In a survey conducted for Right Management, the talent and career management arm of ManpowerGroup, only 4 percent of U.S.-based HR executives said they have an ample pipeline that will cover most of their needs. That was last among 14 countries, with 31 percent of Singapore HR leaders, followed closely by those in Japan and India, finishing in the top three. Seventeen percent of China's respondents answered affirmatively, eighth among the 14 nations in the survey.

"It's definitely an issue," says Josh Bersin, founder of Bersin, now known as Bersin by Deloitte, and a principal with Deloitte Consulting LLP.

The paucity of skilled talent in the United States -- as well as much of Europe -- has a direct impact on organizations' pipelines because it means there are fewer candidates for future management and leadership roles in organizations.          

Right Management's take on this: U.S. companies were so consumed with layoffs and restructuring in recent years that they neglected to develop talent. Now that the economy and companies are faring better, there is a gap.

Some 2,360 senior-level HR executives from government, nonprofit and private sectors participated in the survey, including 650 from the United States.

Large majorities of the respondents in every country said they were under increased pressure at their organizations to measure the business impact of talent-development initiatives. This was especially true in India and Singapore, where 93 percent said this is so, and China, with 91 percent. In the United States, 83 percent said this was the case.

"One conjecture about U.S. companies' non-readiness might have to do with less preparedness about engaging with the 'world,' especially the emerging markets, than they feel is needed," says Tarun Khanna, a Harvard Business School professor who is director of  the university's South Asia Institute.   "We are moving as a society to a better intellectual and practical understanding of the emerging world, but aren't there yet. It's a work in progress."I am surprised though that, say, Chinese and Indian companies feel more prepared," Khanna says. "Their problem is different. The growth rates are very rapid. And the challenge is to find managers who can grow rapidly into positions of responsibility. My impression is that this is also a work-in-progress, of a different kind."

The survey results didn't surprise Ravin Jesuthasan, managing director and global practice leader in the Chicago office of Towers Watson, and co-author of Transformative HR: How Great Companies Use Evidence-Based Change for Sustainable Advantage. The results mirror those of a global survey and modeling exercise Towers Watson did last year in collaboration with Oxford Economics and several other organizations that found a global realignment of the workforce, Jesuthasan says.

More talent is being "home grown" in the developing world, where many countries will develop a surplus of talent at the same time labor shortages are projected in mature markets that include the United States, Canada, Germany and Italy, according to the Towers Watson report.

Deloitte recently conducted a survey of 1,300 business and HR leaders in 59 countries in which 64 percent of U.S. respondents said the war to develop talent and leadership is a leading trend today.

Jesuthasan cites three reasons for U.S. pipeline problems: demographics, education and immigration. The labor force is aging and relatively well educated, so there is less room for significant growth than in developing markets.

At the same time, a number of other countries have younger populations that are seeking a good education.

"More people are getting more skills" in these countries, Jesuthasan says. He points out that Singapore decided years ago that it wanted to attract biotech companies and realigned its education system to do so. "We're just not putting out the volume of higher education talent we have in the past. It's time for the government to get back into education in a much more collaborative way."

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Meanwhile, the number of highly-skilled temporary foreign workers with technical expertise admitted into the country on H-1B visas is a fraction of what it was in the 1980s and 1990s, Jesuthasan says.

All of this presents challenges to HR leaders. They will have to have to make choices on how to access a limited talent pool, how best to use and when to outsource work and retrain workers, Jesuthasan says. They also will need to become more proficient at risk management.

Bersin says only about a quarter of large companies have a global talent acquisition process. "You're not leveraging your global brand" without one, he adds.

HR leaders must determine if their organization's brand is being effectively promoted, Bersin says. "HR executives should be getting to know and work with their [vice presidents] of marketing. People want to work for companies they like."

With so few potential leaders in their pipelines, organizations need to begin "candidate farming" early on. Deloitte has developed partnerships with universities and their professors to begin targeting potential new hires as early as their sophomore years, Bersin says. Right Management contends that organizations need to start leadership development programs for employees soon after they begin work with them.

At the other end of the age spectrum, Bersin suggests that HR professionals consider hiring talented but unemployed people struggling to find work because they are in their 50s and 60s. "You have to broaden your outlook on what are high-performing candidates for you organization,' Bersin says. Diversity and inclusion "have to be thought of as a talent acquisition issue, not a compliance issue. Great companies have diverse workforces."

Research also shows that referral programs in which employees get a bonus for recommending friends and others who subsequently are hired for open positions are effective, Bersin says.

One way to smooth the talent search is to develop a more seamless deployment of work, Jesuthasan says. Rather than having HR, procurement and operations each responsible for certain types of talent acquisition, they should consolidate their efforts, he suggests.

Even so, there is a hard fight ahead for talent. Some organizations are offering unlimited vacation days, flexible hours -- even free laundry service, Bersin says. "It's sort of an arms race for attracting talent."   

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