How the Global Talent Shortage is Reshaping HR Priorities

The world is in the midst of a massive talent shortage crisis that spans across industries and geographies. Recent surveys by ManpowerGroup, Korn Ferry, the World Economic Forum, HBR, and others reveal the extent of this crisis and its detrimental impacts on organizations.

In 2021, 69% of US employers reported difficulty filling open positions, a threefold increase from just 14% in 2010 according to ManpowerGroup’s annual talent shortage survey. This statistic encapsulates a worldwide trend. They found that talent shortages are especially pronounced in fast-growing fields like information technology, manufacturing, and healthcare which require specialized technical skills.

Korn Ferry’s landmark study on the talent shortage estimated that by 2030, the global talent crunch across key sectors could reach 85.2 million people with $8.5 trillion in unrealized annual revenue globally. To put that into perspective, that is close to the combined GDP of Germany and Japan.

Several key factors are converging to drive this crisis

Demographic Shifts

Aging populations and declining birth rates in many developed economies are shrinking workforces. In the US, 10,000 Baby Boomers reach retirement age daily, leaving gaps in critical knowledge and experience. At the same time, younger generations lack the skills and training needed to fill many high-level roles. Emerging economies face a different issue—burgeoning young populations in need of education and development.

Skills Mismatch

The rapid pace of technological change has created a mismatch between available workers and the specialized skills employers need for growing fields like data science, robotics, AI, and more. The formal education system struggles to keep up with these demands. Many organizations also lack robust training programs to reskill employees.

Geographic Imbalances

Talent distribution varies widely by region. Some countries like Germany and Japan face acute shortages and tight immigration controls. Others like India have talent surpluses due to favorable demographics. But barriers exist to worker mobility across borders and reluctance towards remote work.

Generational Differences

Younger generations increasingly expect meaningful work, flexibility, work-life balance, and competitive compensation from employers. Rigid old-school policies struggle to engage Millennial and Gen Z talent who now comprise the majority of the global workforce.

The impacts of these converging factors on organizations are already severe, and set to intensify

• Recruiting difficulties with limited talent pools lead to surging costs and timelines. ManpowerGroup found it takes 10 weeks on average to fill open positions in major economies.
• Compensation costs increase substantially to attract talent as organizations bid for workers. Bonuses, benefits, and incentives add to escalating labor costs.
• Turnover rises as employees take advantage of a job-seekers’ market to change roles more frequently. Replacing workers gets increasingly expensive.
• Innovation and growth suffers without specialized skills needed to take advantage of emerging technologies and markets. Organizations without digitally literate workforces risk falling behind.
• Loss of knowledgeable employees as older generations retire without adequate succession planning causes major risks. Younger hires may take years to develop the same expertise.
• Overall competitiveness declines compared to rivals more adept at accessing global talent pools, implementing skills training, and utilizing technologies to augment labor.

To mitigate the talent crisis, organizations need to treat talent strategy as an urgent priority and take an integrated approach covering the entire talent lifecycle

Workforce Planning

Conduct workforce analytics to forecast talent gaps based on business plans, growth objectives, and labor market trends. This enables data-driven workforce strategies targeting specific skill needs proactively.

Access Wider Talent Pools

Expand talent pools by relaxing outdated hiring criteria that filter out qualified candidates unnecessarily. Evaluate skills and capabilities first without rigid degree requirements. This increases diversity and inclusion also.

Invest in Reskilling and Upskilling

Enable existing employees to fill skill gaps through robust training and development programs. Leveraging internal talent is often faster and more cost effective than external hiring. Learning pathways to upgrade workforce capabilities are key.

Offer Flexibility

Provide flexible remote and hybrid policies, flexible schedules, and career flexibility to access talent globally. This overcomes geographic barriers and expands the talent pool.

Leverage Technology

Use AI, machine learning, and analytics to automate high-volume recruiting tasks, objectively match candidates to roles, predict employee performance, and derive people insights. Technology can enhance speed, objectivity and accuracy of talent decisions.

Focus on Employment Brand

Build a strong and authentic employer brand highlighting culture, values and purpose to attract candidates. Offering meaningful work and flexibility appeals more to younger talent. A poor employment brand repels talent.

Prioritize Internal Development

Emphasize succession planning and leadership development programs to nurture internal capabilities. This safeguards critical organizational knowledge and provides growth opportunities to retain talent.

Partner with Education Sector

Collaborate with policymakers, academic institutions, and training providers to build curriculums and programs aligned to industry skills needs. A robust education ecosystem is vital for developing talent pipelines.

The scale of the talent shortage crisis requires urgent, sustained and integrated efforts. Organizations that treat talent strategy as a top priority and take a holistic lifecycle approach will gain a valuable competitive edge in developing, attracting and retaining top talent globally. The talent decisions organizations make today will determine their ability to field the skilled workforces needed to drive innovation and growth well into the future.

That's all folks ✌️

🖨️Resources

• Manpower Group. (2021). Talent shortage survey.
• World Economic Forum & Korn Ferry. (2021). Global talent risk – Seven responses.
• World Economic Forum. (2022). Global talent trends.
• Arizona Commerce Authority. (2022). To overcome talent shortages, many companies are creating their own recruitment pipelines.
• Korn Ferry. (2021). Korn Ferry global study predicts extreme talent shortage by 2030.
• Universum. (2022). Employer branding NOW report.
• Manatal. (2022). Global talent shortage 2022.
• LinkedIn. (2021). Attracting the right talent.