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Dashboard

Published January 2010

Talent Executive Guidance for 2010

  Brian Kropp

Most executives would like to put at least some part of 2009 behind them, and in most cases for good reason. Organizations in the present business climate have had to contend simultaneously with plummeting growth, an evaporation of capital, dramatically curtailed liquidity, commodity price volatility and global supply chain exposures and risks.

That has forced organizations to rapidly curtail spending, pare the workforce and exit some business lines and geographies, all the while trying to maintain morale among employees and the investor base. And, while the press has made much of the so-called "green shoots" portending economic recovery, for most of us today, those feel like much ado about nothing. In short, little about 2009 has been easy.

However, as organizations turn to 2010, there is a commonly held belief that an improving economic outlook will lift all boats. But it is critical to realize that recoveries are not restorations. Approaching the post-recession workforce landscape with the same viewpoint that organizations had in the middle part of the decade runs the risk of organizational underperformance.

After extensive surveys and thousands of conversations and corporate plan reviews, The Corporate Executive Board (CEB) has arrived at the following statistical analyses of past, ongoing and future business trends related to talent management. Further, it has identified six enemies of post-recession performance that can significantly undermine organization recovery, erode profitability and make past performance levels unattainable:

1. Sharply lower marketing and sales productivity due to changed customer needs.
2. Productivity losses due to top talent disengagement and flight.
3. Larger and more frequent losses due to increasing risk velocity.
4. Rising losses and steeper penalties due to high levels of employee misconduct.
5. Low returns from IT budgets due to targeting a shrinking share of enterprise information.
6. Productivity losses due to misplaced leaders.

Two of these enemies — top talent disengagement and misplaced leaders — fall squarely within the responsibilities of human resources officers and talent managers.

Top Talent Disengagement and Flight
As we would expect, in 2009, workforce reductions have driven down employee engagement. While most employees' discretionary effort levels have fallen, this has yet to translate into massive turnover due to a perceived lack of job opportunities. However, this does not hold true for the entire workforce. More surprising may be that the employee segment expressing the greatest likelihood of turning over is the high-potential employee segment, stemming in large part from a 15 percent decline since 2006 in organizational effectiveness at delivering a competitive employee value proposition. Not only is talent bench shortfall a leading cause of corporate stalls, but the typical organization faces an imminent 7 percent productivity hit from the combination of departing top talent and undermanaged recruiting pipelines.

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