Today’s talent market is characterised by scarcity. Never have there been more open job vacancies across the globe, and companies are struggling to attract and retain top talent. In the recent Route to the Top 2021 survey, by Heidrick & Struggles, it was found that in the first half of 2021 alone there was a record number of CEO appointments—the highest since 2018. Three significant demographic trends have converged to create this unprecedented situation and fundamentally reshape today’s talent landscape.
1. The “Great Resignation”
Companies may be watching their next generation of leadership talent walk out the door. The Covid-19 pandemic has inspired millions around the globe to consider leaving their current company or to opt-out of the corporate ranks altogether. According to the study, there were 103 new CEO appointments in the first half of 2021, this comes after there were only 49 CEO changes in the latter half of 2020. This shows that many CEOs perhaps waited until the pandemic settled somewhat before resigning.
2. Exit of baby boomers from the workforce
Along with the mass exodus of the baby boomer population from the workforce—leaving a gap in leadership, expertise and experience—there is a much smaller Gen X population left to fill the ranks. In the US alone, over 10,000 people a day are reaching retirement age. The pandemic has significantly accelerated this trend: now over 75% of remaining baby boomers are planning to retire early. Companies may want to reimagine end-of-career roles by challenging rigid HR models and ageism in order to retain this talent.
3. Increasing demand for female and under-represented talent
Within the context of this labour shortage, competition for women and talent from underrepresented groups is particularly fierce, as companies respond to myriad pressures to build diverse leadership teams and workforce. For example, in the study the share of female CEOs in the first half of 2021 doubled at 13% from the 6% during the end of 2020. However this figure is still too low. The spotlight is now on companies’ track record on diversity, with increased expectations from boards, investors, clients, employees and the media—alongside new legislation and reporting requirements being implemented regularly across global markets.
How can companies compete in the talent market?
In response, companies will need to do two things better than the competition to win the war for talent in the current market:
1. Tap into 100% of the talent pool
This means knowing how to connect successfully with both top female and male talent; it also means knowing how to identify and attract historically underrepresented talent. Companies need to broaden where they look for candidates beyond the traditional channels and universities. For example, it may mean looking outside the industry and casting their net to a larger number of universities.
But it’s also about looking internally to find talent that might not be visible or the most obvious fit, and to accelerate the development and advancement of the people you have in your pipeline. This may mean challenging preconceived notions of what good talent looks like. Great talent may not look and sound like leaders currently in place—nor have perfectly linear careers, nor check the exact industry or functional or years of experience boxes.
2. Create a healthy, high-performing and inclusive culture
In order to attract, retain and get the best out of the whole available candidate market investing in culture is vital. Companies increasingly are challenged to listen more deeply and frequently to their people, to double down on their retention strategies, and to ensure that they have a winning employee value proposition. People are more likely to stay when they feel a strong sense of belonging and connection, with a common purpose and strong sense of community.
The objective is to create the kind of inclusive environment where all skills, talents, ideas and voices are leveraged. As a result, this leads to higher engagement, with people feeling passionate about their jobs and committed to delivering their best work; they even choose to go the extra mile for their company. In short, it’s about creating the kind of environment where people want to work.
People are paying attention to how diverse and inclusive companies are before accepting a new position. A study by Glassdoor published in September found that three-quarters of job seekers consider that diversity is an important factor when it comes to choosing a company. It also found that a lack of diversity could be an active deterrent to around one-third of candidates.
Are you ready?
In the past, most companies could muddle along with average performance with their diversity, equity and inclusion agenda. But that is no longer the case. The stakes have been raised and we will increasingly see winners and losers emerge in this battle for top talent.
Companies that are lagging in the diversity, equity and inclusion space because they have failed to strategically invest in talent and culture will become less and less attractive as employers. They will increasingly have difficulty attracting top talent and will struggle with retention. Eventually they will become the hunting ground for top talent.
On the other hand, companies that strategically invest in building diverse teams and inclusive cultures will become talent magnets. They will develop a reputation as a great place to work. Their value proposition will attract and retain the best of the best—and importantly, create an environment where individuals from all backgrounds can thrive and contribute their full set of skills and capabilities.
The benefits of an inclusive culture go far beyond the ability to attract top talent, as research clearly shows. Indeed, smart companies know that an inclusive culture is a strategic asset that can accelerate growth, innovation and performance.
This creates a virtuous circle: the better they get at creating a diverse and inclusive organisation, the easier it will get to attract great talent, the more they will reflect their customers and their markets, and the easier it will be to create high performing teams. This in turn, will allow the best companies to drive innovation and growth, to anticipate and meet changing customer needs and increase their market share.
The shortage of talent currently means that, far from competing against one another to work at the best firms, candidates increasingly have their pick—and they’re exercising the right to use it. The bar has been raised, and companies will need to work harder to attract, develop and retain great talent.
Jennifer Flock is head of the EMEA diversity, equity & inclusion practice at executive search firm Heidrick & Struggles.