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CEOs are trying to balance cost reduction with the need to support critical talent and improve productivity so that their companies can weather challenging times and prepare for a return to growth.
"Management's success comes after our employees' success, not the other way around. The leadership of this company doesn't sit at the top of the pyramid, we're at the bottom. We're judged on the energy we create and our ability to unleash the power of our people."
Robert Willett
CEO
Best Buy International and Enterprise CIO, US
In the short term, many CEOs are understandably less worried about a skills shortage because their attention has turned to survival.
Globally, the percentage of CEOs who are concerned about the availability of key skills fell from 61 percent in 2008 to 46 percent in 2009. And from September through November, concern for the talent shortage dropped as anxiety about the economy rose.
As the spread and depth of economic deceleration becomes clearer in 2009, CEOs may have to change their plans, but many are heading into the year hoping not to sacrifice long-term staffing priorities for short-term survival.
As Hornsby says, the war for talent remains a major strategic concern. Ninety-seven percent of CEOs believe that the access to and retention of key talent is critical or important to sustaining growth over the long term. Most (72 percent) rate it critical. While 69 percent say that a limited supply of candidates with the right skills is a key challenge.
The long-term supply of key talent depends more on education systems, than on business cycles, and many CEOs do not believe governments are doing enough to create a skilled labour force. Concern about the long-term skills shortage may have made CEOs somewhat more cautious than they would otherwise be about downsizing.
Cost-cutting can be an effective policy, not only to help companies survive in weak economic conditions, but also to help them shed non-core operations and make necessary but unpopular changes; for example, to compensation schemes. But the risk is that companies cut the wrong investments, impair their competitiveness, and lose out to others who are using the economic winter to hire good people or gain market share.
James E. Rogers, Chairman, President and CEO of Duke Energy Corporation, speaks on the challenge of attracting younger people during a period of demand for people that is greater than ever before.
Many CEOs feel that they are trying to conduct surgery by candlelight. They do not have a complete picture of the workforce, the money invested in employees and the skills needed for the business. For example, many companies do not know the total size and costs associated with payroll workers, the contingent workforce and outsourced services. It is, therefore, impossible to predict the full impact of cost cutting.
Most CEOs believe that information about employees is critical to secure a competitive advantage, but only 30 percent believe they have a comprehensive understanding of employees' views and needs. To keep their balance on the tightrope over cost cutting and talent retention, CEOs need to improve the way they identify, interpret and apply information about the workforce.
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