According to the US Department of Labor, by 2014, more than one out of every three US workers will be 50 years of age or older. The exodus of baby boomers from the workforce will leave vacancies in critical leadership and other pivotal roles. This raises a crucial question: How does a business make the most of the talent it has to ensure the right skills are in the right place at the right time—no matter how often its needs change? Businesses that build their talent pipeline internally, evaluate alternative work pools, and explore ways to meet their future employee needs will be better positioned than their competitors to face these kinds of challenges.

Today, companies are already beginning to see the profound need for a new approach to maximizing talent—companies like the international technology manufacturer that determines it must address the gap left by the retirement of some 50,000 managers and leaders over the next decade and the successful midsize financial services firm that enters expanding markets and must learn to supplement internal talent with key contractor relationships so that the company does not risk derailing its rapid growth. Or consider that most of the nearly 3,000 new graduates from China (87 percent), the UK (71 percent), and the US (90 percent) surveyed by PricewaterhouseCoopers indicated they will actively seek out employers whose corporate social responsibility behavior reflects their own.¹

However, as many companies are discovering, reacting and adapting to current talent trends will not be enough. Thinking about talent like a long-term asset and viewing talent as a distinctive competitive attribute are significant shifts away from thinking about talent as a discrete
war that can be won. Anticipating and preparing for future organizational, societal, and marketplace changes—and then weighing their implications on how to secure talent—are aspects of an organizational sustainability mindset. In an effort to gain insight into how businesses
can accomplish this talent objective, a PricewaterhouseCoopers team conducted a scenario planning exercise to envision ways that businesses could evolve to meet future workforce challenges.

The resulting report—Managing Tomorrow’s People: The Future of Work to 2020—presented three business scenarios. In one, big companies reign supreme in attracting top talent and treat social responsibility as optional; in a green model, social responsibility is paramount, and consumers and employees together drive corporate accountability and responsibility; and in the third scenario, localism prevails, and a global network of linked but separate small businesses prospers under entrepreneurial leaders while larger companies flounder.

¹ PricewaterhouseCoopers, Managing Tomorrow’s People: The Future of Work to 2020, 2008.

Applying the lessons

As a practical exercise, we will consider how the levers are used in prototypical organizations of our future scenarios: large, corporate entities; midsize, highly networked companies;² and, where appropriate, companies driven by social responsibility. We present these examples to show how different kinds of companies are tailoring core talent maximization principles to meet their specific needs. However, these levers apply to any business. In fact, we have found that companies of all sizes and types can and do benefit from integrating the following key principles into their talent planning.

Key considerations

Talent lever		Key considerations
Strategy		How do we align and integrate talent strategies into business planning?
Planning		What will help us anticipate and proactively create talent plans for the future?
Assessment		What is the best way to assess talent strengths and gaps?
Development		What tools and processes will help us build our talent bench at multiple levels?
Succession management		What processes should we put in place to plan to fill every key job whether it is open or not?
Rewards and recognition		What will energize our culture, encourage individual excellence, and help us retain the best talent?
Measurement		What metrics and gauges can we visibly display about our organizational and individual performance?

Creating a strategic workforce plan

In our experience, we have found that successful companies align and integrate their talent strategies around future business plans and review those strategies regularly. For example, a forward-thinking global conglomerate we know of currently integrates its talent strategy and planning into its annual three-year business-planning process. As part of key business strategies to sell or acquire divisions, part of the due diligence process involves assessing current and future talent requirements. Given the rapid pace of change, even corporations that have already embedded the talent-planning process into their strategic planning must be prepared to do it more frequently—even quarterly for economically vibrant regions—in order to anticipate emerging changes and to be able to modify strategies quickly.

Unlike large corporate entities, smaller, more highly networked organizations rely on the talent that is resident in their organizations and in their networked alliances. Their ability to change direction and grow depends on their ability to maintain these alliances in order to anticipate and secure the right kind of talent. For a networked organization, acquiring new talent often means entering into an alliance or a joint venture. Savvy networked organizations understand the need for a systematic approach to assessing, planning, developing, and deploying talent to leverage resources. They are using mechanisms to control the process of identifying strengths and gaps regarding talent built into service-level agreements with vendors. Likewise, some larger companies that are seeking to build up strength in key areas are also attempting to leverage unique talents from alternative sources.

Identifying talent strengths and gaps

To remain ahead of competitors, businesses must regularly assess their existing workforce to better leverage strengths and fill gaps through developing, recruiting, or acquiring the skills they need. Unless dealt with effectively, small gaps almost always grow larger, but merely understanding the gaps won’t move a business ahead as much as will making the most of its strengths. For example, successful organizations where recruitment has always been strong have typically built upon that competency in a competitive market, and attracting talent with speed and a passion for quality are differentiators for successful growth.

Increasingly, successful large corporations are implementing continuous assessment processes. Today, a global financial services company might get away with annually assessing all managers and above to identify strengths and gaps—at both the organizational and the individual levels—and then incorporating the results in its overall talent-planning process. In the future, however, organizations will need to find ways to increase the frequency of assessment and their ability to develop talent rapidly; ultimately, they will need to build agile workforces that can adapt to changing market needs.

Assessment processes are even more important in companies that are growing through acquisitions. Such companies are discovering that it is critical to assess their people resources throughout the process, not just during due diligence. For example, we know an electronics manufacturer that seemed to have lost its entrepreneurial edge after successfully growing more than 20 times larger through a series of international mergers and acquisitions. Management recognized that leading a company of that size and complexity would require different skills and so established a set of critical competencies tied to its future strategy. The existing leadership team was assessed against those new competencies in order to identify leadership gaps to fill and develop. Looking ahead, this large, flexible company plans to continue to conduct assessments regularly and has developed systems for providing feedback on the set of skills it needs for specific growth and improvement projects.

Developing talent that is strong and deep

The cycle of workforce expansion and retrenchment that prevailed in the 1990s is simply not a viable approach in today’s talent-lean environment. Instead, building a nimble workforce through training, coaching, and mentoring will define success—and even survival.

Large corporations that focus only on developing a targeted group of high-potential individuals to fill positions at the top of the organization are at risk. More and more, executives are finding that they need to develop talent at all levels because pivotal roles and employees exist in all functions. Given the rapid pace of change, successful, large organizations are looking beyond traditional classroom and online training. They are also providing individuals with embedded learning and on-the-job experience that will continue their development and increase their readiness to step up to broader roles or expand their expertise.

For example, rather than training employees about business strategy and planning, one global consumer products company selected a group of pivotal employees from a variety of functions. The team focused one-third of its efforts for 120 days on a critical product issue. The team uncovered, tested, and solicited management’s approval for a solution to the problem that resulted in an annual increase in profitability of $6 million. You can bet that team members learned more than a bit about business strategy and planning in the process.

Unlike their larger counterparts, highly networked organizations tend to be lean. Therefore, when it comes to talent, their key challenge lies in the availability of sufficient talent alternatives. The companies we have studied typically meet that challenge through outsourcing, alliances, and joint ventures. However, they have also discovered the need to develop talent for key leadership positions and pivotal roles. In fact, they have found that internal talent needs a broad skill set to be able to adapt quickly to changing needs and to provide support for one another. In these companies, frequent job rotations and multifunctional career paths are expected and required aspects of leadership development. For unique skill sets or highly refined technical skills, they maintain alliances and alternative talent pools to ensure that they are flexible enough to respond and are able to expand capability as the market changes its requirements.

Achieving these objectives poses a problem. Integrating outside talent into the organization requires a level of transparency about skills and capabilities and a level of candid dialogue about talent that typically does not exist today between organizations linked by service and partnership agreements. However, successful networked organizations of the future will build ongoing development of talent into provisions in their service-level agreements with alliance partners or outsourcing providers.

In addition, we have noted that to facilitate ongoing development, enterprises of many shapes and sizes have relied on coaching and mentoring for every employee. Many organizations assign a coach or mentor who is not the same person as the employee’s manager. By so doing, they are expanding access to key resources that will help individuals broaden their perspectives and skills.

An organization seeking to become more green might have key top talent work on a strategy to develop talent via activities that demonstrate social responsibility, such as assisting with an environmental organization or foreign aid program.

Managing succession

Organizations that manage succession well do so by building a deep pipeline of talent and by planning proactively with regard to developing and deploying these resources. In its most recent annual report, PwC’s Saratoga research group noted that the percentage of key roles for which organizations have either one or two unique succession candidates identified per key role has been increasing dramatically. In 2006, the median company over a two-year period had nearly doubled the number of roles that have at least one successor.³

While developing a pipeline to fill leadership roles in the top two or three tiers is critically important, large integrated corporations with foresight are also building talent pipelines at multiple levels. With most companies facing changing talent demands and a shrinking talent pool, these organizations are placing more focus on identifying emerging leaders throughout an enterprise and preparing them not only to step into higher roles but also to take on broader responsibilities for helping the organization fulfill its strategic plans. To be effective, organizations are realizing that they have to better anticipate the need for new skills and knowledge and, equally important, that they must continuously assess how to deploy people to broaden their skills through experience. For example, if a large US organization needs to send talent to oversee a manufacturing facility in China, it would benefit by choosing an individual whose future career role will require significant exposure to Chinese culture and China’s economy. In most companies with multinational footprints, the opportunity to deploy talent returning from international assignments to positions that make use of the experience and skills acquired there is an underdeveloped area.

Highly networked organizations approach succession planning differently. They focus on cross-functional development to ensure that talent is ready to step into new roles and to rapidly assimilate new responsibilities. Such companies have recognized the need to broaden the boundaries of succession management to include alliances and alternative work pools and thus ensure they have the talent expertise they need to meet market demand. Companies that use talent development–related criteria when selecting members of their networks are increasingly addressing standards for development and succession in their service-level agreements. They are also utilizing methods for trading talent in order to best service projects. Highly networked organizations are also considering exploiting the portability of benefits and defined contribution plans within their networks of business partners and turning this potential liability into an advantage in the job market.

³ PricewaterhouseCoopers, US Human Capital Effectiveness Report 2007/2008, 2007.

Rewarding and recognizing performance

In the current talent environment, organizations of all sizes are inspiring both individuals and teams with flexible and targeted forms of reward and recognition. As the rising generation of Millennials enters the workforce, organizations recognize the importance of understanding what kinds of rewards and recognition motivate these individuals. And it’s not always about big bonuses and high salaries. A prime parking spot, tickets to a sporting event, or a gift certificate to a day spa could go a long way in promoting short-term job satisfaction and attracting talent. Similarly, on the other end of the demographic spectrum, employees approaching retirement have views different from those of their predecessors regarding how to leave the workforce. No company has yet mastered the concept of phased retirement as a means of managing knowledge and of collaboratively extending the working lives of highly valued employees. This is a frontier where the reward, recognition, benefits, and policy tools will need to come together to help close the knowledge gap that is part of the current retirement process.

Large corporate organizations traditionally have had well-defined reward systems that include annual raises and bonuses. To facilitate teamwork across organizational and geographic boundaries, some large, integrated organizations are considering offering more incremental team-based rewards and individual peer recognition. A number of highly networked organizations are starting to associate flexible cash and noncash reward and recognition programs with individual projects. Vesting individuals in a project’s success offers great incentive for the contractors on which highly networked organizations depend.

Looking ahead, businesses of all types are rethinking their reward and recognition systems to accommodate and motivate workforces with diverse attitudes about job satisfaction. For example, there is rising evidence to suggest that employees are more focused on environmental issues and are making good corporate citizenship a part of the reason they choose to join or stay with an organization. Under such circumstances, socially conscious organizations are rewarding talent for leaving a more gentle carbon footprint on Earth by traveling less, carpooling to work, or participating in community service opportunities. To develop new approaches to social issues, some organizations are taking a forward-looking approach by offering employees opportunities for increased community, external organization, and workplace involvement. Ultimately, this part of the public talent-attraction profile for your company will be measured by what actions occur, not by what aspirations are stated.

Measuring individual and organizational talent attributes

If talent issues are to be taken seriously, measurement is essential. A PwC report covering more than 15,000 organizations in the US and Europe found that few organizations have achieved truly global and real-time people measurement capabilities or have quantified the financial value of their talent, even when it is possible to do so.⁴ The continued adoption of enterprise resource planning systems is actually a boon to the measurement and tracking of talent. With a properly configured system, the year-over-year and long-term views of individuals as measurable and valuable resources can be well served by enterprise systems.

This will change. In the future, leaders of both large companies and networked organizations will be held accountable for developing and coaching people. Talent will be a core part of their responsibility. As large corporations move toward engaging talent across organizational boundaries, others—in addition to an individual’s immediate manager—will participate in the performance management process.

Executives at many organizations are realizing that placing talent on the business agenda is not enough. Going forward, measures around talent need to be part of a corporation’s overall performance metrics. For example, an annual report discussing business performance might include how the company is performing on its talent metrics.

Large corporations rely on the promotion of corporate culture attributes and behaviors as a means of engaging employees. Today’s employees are looking to see these attributes and behaviors represented in how people are measured, rewarded, and promoted. Clearly, how metrics are applied will have an impact on attracting, acquiring, and keeping talent.

To continuously improve, highly networked organizations are integrating talent metrics at the project level to evaluate talent and its relevant impact. Among the challenges networked organizations face are partners whose systems of measuring contributions are completely different from their own. Thus, it is important to align talent metrics to the goals currently at hand.

In the future, organizations that uphold socially responsible ideals will have organizational and individual performance metrics in place to balance corporate results with the public good. To accomplish this, an organization might measure and report the number of hours spent by its employees on community service projects.

Looking ahead

No matter which path a business takes, there is one clear constant: More than ever, it must manage talent resources as carefully as it does business operations. Businesses seeking to practice talent maximization and sustainability are cultivating talent in their organizations today
in order to prepare for the future.

Steve Rimmer is a principal in PwC’s Human Resource Solutions practice and the HR Transaction Services leader. Karen Vander Linde is a principal in and the global leader of PwC’s People and Change practice. Dolores Wilverding is a managing director in the People and Change practice, and Warren Cinnick is a director in the People and Change practice.