The Competition for Talent in Ireland – Local
                   Trends and Offshoring Practices

                        ...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Table of Contents




Executive Summary ......
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Executive Summary


A total of 82 leading I...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Organisational Approach to Talent Managemen...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




IDENTIFYING AND ATTRACTING HIGH PERFORMERS
...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Looking back


When we compare the survey r...
The Competition for Talent in Ireland: Local Trends and Offshore Practices



Comparing with Previous Year


Respondents w...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Functional Areas for Which Hardest to Locat...
The Competition for Talent in Ireland: Local Trends and Offshore Practices



Year on Year Comparison


While there are st...
The Competition for Talent in Ireland: Local Trends and Offshore Practices



Comparison by Industry Sector


The followin...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Methods of Sourcing High Performers


Compa...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Figure 8
2007 and 2008 responses compared. ...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Figure 9
When recruiting high performers fo...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Factors Attracting High Performers

Survey ...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




RETENTION AND TURNOVER OF HIGH PERFORMERS

...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Cost to the Business of the Loss of a High ...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Figure 13
Can you estimate the cost of losi...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Factors Contributing to the Loss of High Pe...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Factors in Retaining High Performers


If, ...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




ORGANISATIONAL APPROACH TO TALENT MANAGEMEN...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Effectiveness of Organisation’s Talent Mana...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Managing Talent by another Name

We were in...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Managing the High Potentials in the Organis...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Identifying High Potential Employees

Respo...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




OFFSHORING PRACTICES IN IRISH-BASED ORGANIS...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Satisfaction with Level of Work Delivered O...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Effectiveness of Offshoring

We asked surve...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Plans to Increase Offshore Activities

Whil...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Plans to Commence Offshore Activities


Com...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




IMPACT OF CURRENT ECONOMIC CLIMATE ON BUSIN...
The Competition for Talent in Ireland: Local Trends and Offshore Practices



Regarding curtailment or expansion plans, on...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Key factors for a Competitive Advantage


T...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Expectation of Employment Levels at 31/12/2...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




METHODOLOGY


The 2008 White Paper is a fol...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




Recommendations for Irish Organisations


T...
The Competition for Talent in Ireland: Local Trends and Offshore Practices



          Practical Tip 1 – Implement a Tale...
The Competition for Talent in Ireland: Local Trends and Offshore Practices




About Talent Partners & MRINetwork Worldwid...
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White Paper 2008 Competition For Talent Talent Partners

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Here is a copy of the white paper on The Competition for Talent in the Irish marketplace which was published in December 2008.

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White Paper 2008 Competition For Talent Talent Partners

  1. 1. The Competition for Talent in Ireland – Local Trends and Offshoring Practices White Paper December 2008 Sponsored by:
  2. 2. The Competition for Talent in Ireland: Local Trends and Offshore Practices Table of Contents Executive Summary ................................................................................... 3 Identifying and Attracting High Performers ................................................ 5 Retention and Turnover of High Performers ............................................ 15 Organisational Approach to Talent Management..................................... 20 Offshoring Practices in Irish-based Organisations ................................... 25 Impact of Current Economic Climate on Business ................................... 30 Methodology ............................................................................................ 34 Recommendations ................................................................................... 35 © Talent Partners 2008 www.talentpartners.ie 2
  3. 3. The Competition for Talent in Ireland: Local Trends and Offshore Practices Executive Summary A total of 82 leading Irish and multinational companies took part in this year’s Competition for Talent Survey sponsored by Talent Partners. These were drawn from a range of industry sectors, including ICT, Banking and Financial Services, Construction and Engineering, Utilities and FMCG. Of these, 62% of responses were from the ICT sector, and 13% from Banking and Financial Services industries – two groups that were specifically targeted in last year’s White Paper and will again this year be presented for the purposes of comparison where appropriate. Identifying and Attracting High Performers Respondents continue to experience difficulties year on year in identifying and attracting high performers to their organisations. 90% of Irish organisations surveyed stated that it is ‘difficult’ or ‘extremely difficult’ to identify high performers, and 30% consider it to be more difficult to do so this year than last. The functions for which respondents find it most difficult to identify or source high performers are in Sales, Technical/IT and Finance/Accounting roles. There is a noted growth in the use of social and business networking sites as a means of sourcing high performers, and there has been an increase since 2007 in the numbers of companies using specialist executive search agencies and headhunters to source high performers. The majority of Irish businesses confine their search for talent to the Irish marketplace, with only about one quarter extending that search to the European marketplace. From the employers’ perspective, role content, corporate reputation and financial package are the three most significant factors in attracting high performers to the company. Retention and Turnover of High Performers Levels of turnover of high performers in 2008 have been ‘as expected’ by survey respondents, with the loss of a high performer potentially signalling a high economic cost to the business – anywhere from €25,000 to €400,000 per any individual high performer lost to an organisation. Factors cited by survey respondents as contributing to the loss of high performers include lack of internal opportunities, financial packages offered elsewhere, a perceived ‘time for change’ on the part of the high performer, as well as the general economic climate. Factors, in the respondents’ views, which assist in the retention of high performers, include training and development opportunities, as well as salary and compensation package. © Talent Partners 2008 www.talentpartners.ie 3
  4. 4. The Competition for Talent in Ireland: Local Trends and Offshore Practices Organisational Approach to Talent Management Despite the recognition of the potential cost to the business of losing a high performer, only 44% of companies surveyed have a talent management programme or policy in place. Just over half of survey respondents rated that their talent management programme as effective. 34% of respondents have a clearly defined policy to attract and retain high performers and 52% have a policy or programme in place to manage high potentials within the business. The key criteria used by survey respondents’ organisations to identify high potential individuals is ‘performance to date’, followed by ‘desire to succeed.’ Offshoring Practices in Irish-Based Organisations 32% of survey respondents currently offshore work which was previously done in Ireland. The stated benefits to them of this activity are cost savings and availability of skilled staff, and just under half of these companies plan to increase their offshored activities. Of the 68% of survey respondents who do not currently offshore, 30% are actively considering this as an immediate term business strategy (i.e. within the next 12 months). Impact of Current Economic Climate on Business The key areas of business activity impacted by the current economic climate, as experienced by our survey participants are on reductions in revenue and profits, as well as reduced market opportunities. The sector most impacted, as identified by our survey, is unsurprisingly, the Banking and Financial Services sector. The top three key factors for securing competitive advantage for our participating companies are people, leadership and technology. 47% of survey respondents expected to be employing more people in their business at 31/12/2008 than they did at 31/12/2007. © Talent Partners 2008 www.talentpartners.ie 4
  5. 5. The Competition for Talent in Ireland: Local Trends and Offshore Practices IDENTIFYING AND ATTRACTING HIGH PERFORMERS While the Celtic Tiger economy boomed, employment levels in Ireland soared and it was to a large extent a candidates market in recruitment terms. More recently, events at home and internationally have seen the Western economies plunge into recession. The impact that this is having on Irish industries, across public and private sectors, is an extreme focus on cost management, particularly in the area of headcount. News of plant closures, industry consolidation and reduction in headcount feature in media reporting on an almost daily basis. The 2008 Competition for Talent in Ireland survey presents statistical evidence of the impact of these factors on the management of high performers within Irish-based industry. Finding High Performers We began the survey by asking participants how difficult it is to find high performers in Ireland today. Overall, 90% of survey participants responded that it was ‘extremely difficult’ or ‘difficult’ to do so. In fact, over 30% of respondents reported that they perceive it is more difficult to find high performers this year than last year. This might indicate that, despite the recession, the market is not being flooded by high performers who find themselves out of work. One hypothesis for this might be that if an organisation is forced to reduced headcount, high performers would be among the last to be let go. Another reason may be that, in uncertain economic times, high performers who in better circumstances might consider themselves more mobile, are now staying in jobs that provide security of income, rather than risking an uncertain future with a new employer. Just 10% of survey respondents stated that it was ‘easy’ or ‘extremely easy’ to identify high performers today. Figure 1 How difficult is it to identify high performers for your business today? Is it extremely difficult, difficult, easy or extremely easy? High Perform ers - Degree of Difficulty in Finding 1.3% Extremely easy 8.8% 20.0% Easy Extremely difficult 70.0% Difficult Source: Talent Partners, 2008 © Talent Partners 2008 www.talentpartners.ie 5
  6. 6. The Competition for Talent in Ireland: Local Trends and Offshore Practices Looking back When we compare the survey responses from the 2007 survey with 2008, there is little difference in statistical terms with those stating that it is difficult to identify high performers (93% of respondents in 2007 compared with 90% in 2008). Figure 2 2007 and 2008 responses compared. How difficult is it to identify high performers for your business today? Is it extremely difficult, difficult, easy or extremely easy? Difficulty in Finding High Performers (2007 - 2008) 2008 20% 70% 9% 2007 25% 68% 7% 0% 20% 40% 60% 80% 100% Extremely difficult Difficult Easy Extremely easy Source: Talent Partners, 2007 & 2008 However, it is interesting to note the different perceptions that exist about the difficulties in identifying high performers now compared to 12 months ago. 25% of today’s respondents believe that it has been easier to recruit high performing candidates in 2008 and that may be attributed to the fact that there is greater availability of candidates due to the economic slowdown, and the cut backs and redundancies that have followed. But over 30% of respondents believe that it is even more difficult this year than last year to attract high performing individuals. One possible explanation for this response is that, when times get tough high performers tend to keep their heads down and are absolutely focused on their existing role rather than looking for new opportunities. As economic times become more difficult, companies are more discerning in who they employ, as the requirement to see a return on investment is critical and the hiring of a new employee is made in expectation of delivery as opposed to hope. The reality is that they are offering remuneration packages to candidates which are the same if not less than their previous employments. We have to ask whether today’s candidates were swept along on the economic wave of the past and somehow acquired a falsely elevated sense of their worth in the marketplace, and whether their salary and performance expectations are realistic in the current market conditions? © Talent Partners 2008 www.talentpartners.ie 6
  7. 7. The Competition for Talent in Ireland: Local Trends and Offshore Practices Comparing with Previous Year Respondents were asked to rate their perception of the difference in finding high performers in 2008 compared with the previous year. The majority of respondents (43%) felt that it was ‘the same as last year’. Interestingly, 56% of respondents from Banking and Financial Services sector stated that the difficulty of finding high performers was ‘the same as last year’. Figure 3 Based on your experience, how does the situation with regard to recruiting high performers for your business today compare with 12 months ago? Is it much more difficult, more difficult, the same as last year, easier or much easier? Ease of Recruiting High Performers Compared with 2007 1.3% Much easier 2.5% Much more difficult 24.1% Easier 29.1% More difficult 43.0% Same as last year Source: Talent Partners, 2008 © Talent Partners 2008 www.talentpartners.ie 7
  8. 8. The Competition for Talent in Ireland: Local Trends and Offshore Practices Functional Areas for Which Hardest to Locate High Performers Survey respondents were asked to identify those functional areas for which they found it most difficult to identify or source high performers. The Sales (39%) and Technical / IT (21.5%) functions were reported as most difficult, followed by Finance / Accounting (13%). Figure 4 For which functional area does your company find the most challenging to recruit high performers? Functional Areas - Hardest to Locate High Performers Other 8.9 General Management 7.6 Research & development 6.3 Technical/IT 21.5 Finance/Accounting 12.7 Marketing 3.8 Sales 39.2 0 20 40 60 80 100 Source: Talent Partners, 2008 © Talent Partners 2008 www.talentpartners.ie 8
  9. 9. The Competition for Talent in Ireland: Local Trends and Offshore Practices Year on Year Comparison While there are statistical differences in the year on year numbers stated in 2007 and 2008, there is consistency in the top three functional areas found most difficult to recruit for, namely Sales, Technical / IT and Finance / Accounting. Figure 5 2007 and 2008 responses compared. For which functional area does your company find the most challenging to recruit high performers? Functional Areas - Year on Year 2008 Technical/IT 2007 2008 Finance/Accounting 2007 2008 Sales 2007 0 10 20 30 40 50 60 Source: Talent Partners, 2007 & 2008 © Talent Partners 2008 www.talentpartners.ie 9
  10. 10. The Competition for Talent in Ireland: Local Trends and Offshore Practices Comparison by Industry Sector The following figure illustrates the difference across industry sectors in locating high performers to fill roles in these top three functional areas. Clear differences emerging between ICT and Banking and Financial Services sectors, with 29% of ICT respondents stating difficulty in recruiting high performing Technical/IT specialists, while 30% of Banking and Financial Services respondents stating difficulties in recruiting high performing Finance/Accounting specialists. These are quite obvious differences, to be expected based on the functional specialisms of these two industry sectors. What is of more interest is that only 30% of Banking and Financial Services respondents stated difficulty in filling Sales roles, compared with 42% of ICT respondents. It may be due to a number of factors, including a difference in the volume of sales vacancies in the different sectors, or indeed a difference in the approach to recruitment and/or reward for these roles across the ICT and Banking and Financial Services sectors. Certainly, the difficulty in filling Sales roles with High Performers has decreased marginally from 2007 to 2008 across all industry sectors. Figure 6 Industry sector responses compared. For which functional area does your company find the most challenging to recruit high performers? Functional Areas - By Sector 29 Technical/IT 22 9 Finance/Accounting 30 13 42 Sales 30 39 0 10 20 30 40 50 Overall Banking & Financial Services ICT Source: Talent Partners, 2008 © Talent Partners 2008 www.talentpartners.ie 10
  11. 11. The Competition for Talent in Ireland: Local Trends and Offshore Practices Methods of Sourcing High Performers Companies were asked how they go about sourcing high performers. New media, such as business and social networking sites are increasingly playing a prominent part, with one third of survey respondents stating that they use these to source high performers. However, the traditional methods, such as employment agencies, executive search agencies and headhunters, as well as newspaper and magazine advertisements continue to be the most used sources. Figure 7 How do you normally go about sourcing high performers? (You may tick more than one answer) Sourcing High Performers - Methods Used Business/Social networking sites 33 Word of Mouth 48 Executive recruiters/headhunters 63 Employment agencies 63 Advertisement in newspapers/trade publications 27 0 20 40 60 80 100 Source : Talent Partners, 2008 Year on Year Comparison Interestingly, when comparing the methods used to source high performers year on year, some significant differences emerge. For example, there is an increase of over 40% in the use of ‘word of mouth’ between 2007 and 2008. As the market contracts there is greater visibility of who is and isn’t available and a direct approach can therefore be used, with many companies offering incentives and internal referral schemes in order to source candidates from the contacts of their existing employees. Similarly, while the use of traditional recruitment or employment agencies has decreased since 2007, there is a decidedly greater increase in the use of specialist executive recruiters and headhunters. This may be due to the more specialist services offered by executive recruiters and headhunters as distinct from employment agencies. However, it also may be due to the fact that roles for high performers may be filled at a more senior level in the organisation, typically the kinds of roles which are assigned to executive recruiters and headhunters. © Talent Partners 2008 www.talentpartners.ie 11
  12. 12. The Competition for Talent in Ireland: Local Trends and Offshore Practices Figure 8 2007 and 2008 responses compared. How do you normally go about sourcing high performers? (You may tick more than one answer) Sourcing High Performers - Year on Year Word of Mouth Executive recruiters/headhunters Employment agencies Advertisement in newspapers/trade publications 0 20 40 60 80 100 2008 2007 Source: Talent Partners, 2007 & 2008 Geographical Sources of High Performers The survey then asked respondents to state where, that is, which geographies they focus on in terms of their search for high performers. As might be expected, the majority of respondents across all industry sectors focus their search for high performers in the Irish marketplace. Over one quarter of respondents do search abroad, with the majority of those searching in Europe only, with significantly fewer searching further afield. When analysed by industry sector, of note is the fact that 90% of respondents from the Banking and Financial Services sector confine their search for high performers to the Irish marketplace alone. This is less so within the ICT sector. This may be due to the less geography or location specific nature of ICT work, and the more regulated, legislative framework within which the Banking and Financial Services companies operate here in Ireland, requiring more ‘local’ knowledge. However, it is interesting to see the extent to which Irish organisations overall narrow their search to the Irish marketplace, particularly as in recent years, there has been an increase in the numbers of Irish immigrants returning from abroad, as well as significant growth in the influx of foreign migrant workers across all sectors. In particular, one might question whether this is a useful approach to search, considering the difficulties expressed by 90% of survey respondents in identifying high performers, combined with the growing increase in the use of specialist executive search agencies and headhunters, many of whom are part of international search organisations with extensive networks. © Talent Partners 2008 www.talentpartners.ie 12
  13. 13. The Competition for Talent in Ireland: Local Trends and Offshore Practices Figure 9 When recruiting high performers for your business, where is your primary geographic focus in your talent search? Geographical Source of High Performers 15% Overall 25% 68.80% 13% ICT 26% 70% Banking & Financial 20% Services 90% 0% 20% 40% 60% 80% 100% Irish marketplace European marketplace Worldw ide marketplace Source : Talent Partners, 2008 © Talent Partners 2008 www.talentpartners.ie 13
  14. 14. The Competition for Talent in Ireland: Local Trends and Offshore Practices Factors Attracting High Performers Survey respondents were asked to consider those factors which they believe attract high performers to their organisations. Overwhelmingly, ‘role content’ and ‘corporate reputation’ were named as the two most important factors in attracting high performers. This suggests that, in order to overcome difficulties in identifying and attracting high performers, organisations may be paying particular attention to the presentation of both their organisation (employer branding, for example) and the quality of their role description materials. Figure 10 What are the key factors that attract high performing individuals to your organisation? (Please rate each option in order of importance from Very important, important, somewhat important to unimportant) Factors Attracting High Performers Work/Life Balance Location Calibre of People Career Progression Package Corporate Reputation Role Content 0 1 2 3 4 Source: Talent Partners, 2008 Comparison with Candidates Perceptions What is of interest to note, is that reward or compensation package ranked fourth out of seven possible factors attracting high performers, at least in the perception of survey respondents, that is, those involved in the recruitment of high performers. Earlier this year, Talent Partners conducted an on-line Candidate Survey, and asked candidates themselves what were their top three criteria when choosing a new employer. For 80% of respondents, the financial package on offer was ranked as the top reason for moving. 68% of respondents mentioned ‘role content’. 52% of candidates cited ‘opportunities to progress’ as their reason for choosing a new employer, while this was similarly ranked the third most important factor by hiring organisations in attracting high performers. The candidate survey did not ask about corporate reputation as a factor in choosing a new employer. © Talent Partners 2008 www.talentpartners.ie 14
  15. 15. The Competition for Talent in Ireland: Local Trends and Offshore Practices RETENTION AND TURNOVER OF HIGH PERFORMERS The process of identifying, attracting and recruiting high performers is only one aspect of any organisation’s talent management strategy. As the previous section indicates, this is difficult in itself, with differences in perception between candidates and companies as regards what candidates are looking for in an employer. But with candidates having high expectations in terms of role content, opportunities for progression and compensation package, the challenge to retain high performers and manage their career development expectations is one which employers cannot afford to ignore. During the economic boom, the mobility of high performers increased, with a corresponding impact on employee turnover. With industry-wide restrictions on headcount imposed in recent months, this survey asked respondents to give their views on the current situation with regard to retention and turnover of high performers. Expectation Regarding Turnover First, survey respondents were asked about their expectations with regard to the levels of turnover of high performers in their businesses – had it been ‘as expected’? For the majority of survey respondents, the levels of turnover experienced were ‘as expected’. For 28%, in fact it was lower than expected, perhaps indicating a note of caution among high performers of the impact of economic factors on employment opportunities elsewhere. Of particular interest are the responses from the Banking and Financial Services sector, where 67% of respondents stated the turnover of high performers has been lower than expected in 2008, perhaps indicating an awareness among high performers of credit crunch and uncertainty within the financial sector in general, and thereby a corresponding caution. Figure 11 Has the turnover of high performers in your business this year been higher, as expected or lower than expected? Expectation of Turnover am ong High Perform ers 7.6% Higher than 27.8% expected Low er than expected 64.6% As expected Source: Talent Partners, 2008 © Talent Partners 2008 www.talentpartners.ie 15
  16. 16. The Competition for Talent in Ireland: Local Trends and Offshore Practices Cost to the Business of the Loss of a High Performer The majority of respondents (88%) agreed that the departure of a high performing individual has a ‘large’ or ‘very large’ impact on their business. Figure 12 What impact does the departure of a high performing individual have on your business? Impact of Departure of High Performer Very litt le impact 1% Very large impact 11% Lit tle impact 11% Large impact 77% Source: Talent Partners, 2008 Last year, when asked to quantify this impact, the average cost to the business of the loss of a high performing individual was estimated €237,000. This year, the question was asked slightly differently, but nonetheless, respondents indicated significant financial costs to the business associated with the loss of a high performing individual. When asked to quantify this, 76% of respondents estimated the cost to business to be between €25,000 and €250,000. Within the Banking and Financial Services sector, 50% of respondents estimated the loss of a high performer to cost their business between €75,000 and €150,000. This appears to be significantly less than comparative figures from 2007 (where Banking and Financial Services respondents estimated an average cost of €208,000). © Talent Partners 2008 www.talentpartners.ie 16
  17. 17. The Competition for Talent in Ireland: Local Trends and Offshore Practices Figure 13 Can you estimate the cost of losing a high performer for your business in the last 12 months? Estimated Cost of Losing a High Performer 6% 7% 11% 32% 21% 23% <€25k €25k - 75K €75k - 150k €150k - 250K €250k - €400K €400k plus Source: Talent Partners, 2008 © Talent Partners 2008 www.talentpartners.ie 17
  18. 18. The Competition for Talent in Ireland: Local Trends and Offshore Practices Factors Contributing to the Loss of High Performers Several factors were identified as being ‘key’ in accounting for the loss of high performers from respondents’ businesses during 2008. These included lack of internal opportunities, financial packages offered elsewhere, the economic climate, the individual’s perception that it was a time for new challenges and downsizing of the company. Interestingly given the current global financial crisis, at the time of survey, 56% of respondents from Banking and Financial Services reported that downsizing of the company was ‘unimportant’ as a factor in losing high performers. However, this may be indicative of a point in time, and it would be interesting to speculate how this factor might impact over the coming months as we move towards speculated consolidation within this sector. Figure 14 What do you consider to be the key factors for the loss of high performers from your business this year? Factors for Loss of High Performers Downsizing of Company 13% 24% 41% 24% Time for new challenges 26% 68% 5% 3% Economic Climate 10% 50% 25% 16% Financial Packages offered 25% 56% 17% 1% elsewhere Lack of internal 28% 54% 18% 1% opportunities 0% 20% 40% 60% 80% 100% Very Important Important Unimportant Very unimportant Source: Talent Partners, 2008 © Talent Partners 2008 www.talentpartners.ie 18
  19. 19. The Competition for Talent in Ireland: Local Trends and Offshore Practices Factors in Retaining High Performers If, as stated previously, the factors which encourage high performers to leave organisations include ‘a time for new challenges’, lack of internal opportunities and financial packages offered elsewhere, we asked survey respondents for information about their employee retention programmes. Specifically, they were asked to rate the importance of a range of factors in their employee retention programme. Figure 15 How important are the following factors in your employee retention programme? (4 = Very important, 3 = Important, 2 = Unimportant and1 = Very Unimportant) Factors to Retaining High Performers International Opportunities Flexible Working Hours Fast Track to Promotions Improved Benefits Package Higher Salary Training & Development 0 1 2 3 4 Source: Talent Partners, 2008 There appears to be a good ‘fit’ between factors impacting the loss of high performers and those factors making up the organisations employee retention programme, including training and development, salary and compensation package. This may in fact, account for why the majority of respondents to the previous question stated that the level of turnover among high performers was ‘as expected’. © Talent Partners 2008 www.talentpartners.ie 19
  20. 20. The Competition for Talent in Ireland: Local Trends and Offshore Practices ORGANISATIONAL APPROACH TO TALENT MANAGEMENT Given the difficulties expressed year on year by survey respondents in identifying high performers, and the very real financial impact on a business of the loss of a high performing individual, we felt it would be useful to ask companies about their organisational approach to talent management. Existence of Talent Management Programme In 2007, 83% of companies surveyed indicated that they did not have a specific policy or programme in place for attracting and retaining high performers. Recognising this, this year we asked the question in a number of different ways in the survey. Our hope was that, although a company may not have a comprehensive talent management programme in place overall (or it may not refer to it as a talent management programme), that the different aspects of talent management might be subsumed under other recruitment, retention and/or performance management and career development programmes, particularly in relation to high performers and employees with high potential within the organisation. This year’s figures indicate that just over half of organisations surveyed still do not have a talent management programme in place. However, with 44% of companies with a policy or programme on talent management, this suggests some efforts being made by Irish-based organisations to take a strategic approach to their high performers. Our hope is that this figure will continue to grow year on year. Figure 16 Do you have a talent management programme in place in your organisation? Talent Managem ent Program m e in Place 44% 56% Yes No Source: Talent Partners, 2008 © Talent Partners 2008 www.talentpartners.ie 20
  21. 21. The Competition for Talent in Ireland: Local Trends and Offshore Practices Effectiveness of Organisation’s Talent Management Programme Over half of survey respondents consider their talent management programmes to be ‘effective’ or ‘very effective’. Conversely, just under half consider their programmes to be ‘ineffective’ or ‘very ineffective’. It would appear from these findings that, while there has been some progress in putting talent management programmes into place, some additional work needs to be done in maintaining these programmes to ensure that they are structured appropriately in order to add value to the business. The low statistic on the existence of talent management programmes may be attributed to its ‘newness’ as a concept within Irish organisations. If this is the case, then it is likely that an increase in their effectiveness will be seen over the coming years, as the programmes get ‘bedded down’ into the organisations, and when, with time, their potential impact can be seen and experienced. Figure 17 How effective would you rate your company’s Talent Management Programme? Effectiveness of Talent Management Programme 5% 7% 40% 48% Very Effective Effective Ineffective Very Ineffective Source: Talent Partners, 2008 © Talent Partners 2008 www.talentpartners.ie 21
  22. 22. The Competition for Talent in Ireland: Local Trends and Offshore Practices Managing Talent by another Name We were interested to understand how those companies who do not have a talent management programme in place are organisationally equipped to handle the various elements which make up a talent management strategy, such as recruitment and retention, for example, particularly with reference to high performers. So we asked them if they had a specific policy or programme for attracting and retaining high performers. Figure 18 Does your company have a specific policy or programme for attracting and retaining high performers? High Performer Policy - 2007 to 2008 83 2007 17 66 2008 34 0 20 40 60 80 100 Yes No Source: Talent Partners, 2008 While the majority of respondent companies still do not have a dedicated high performer recruitment and retention programme in place, we can see quite a change from the 2007 responses. Then only 17% of respondents had such a programme, whereas today 34% of survey respondents have a programme for attracting and retaining high performers – a doubling of the figures. © Talent Partners 2008 www.talentpartners.ie 22
  23. 23. The Competition for Talent in Ireland: Local Trends and Offshore Practices Managing the High Potentials in the Organisation If we define high potentials in the organisation as those most likely to become the future leaders of the business, it would be remiss of organisations who do not focus on any other employee, to ignore these select few in terms of retention, identifying and creating career development opportunities for them and actively facilitating their route to the top through strategic succession planning. We asked survey respondents whether they have a programme in place to manage high potentials. Just over half (52%) said that they do. However, the fact that 48% of respondent organisations do not have such a programme in place indicates that they may in fact have to go outside the organisation for their leadership talent. While this can be a good choice if made strategically, if it is made by accident rather than by design, then it has the likelihood of disenfranchising existing committed talent, and of bringing in a new leader who lacks a useful level of tacit knowledge about the organisation. Figure 19 Do you have a programme in place to manage the high potentials in your organisation? Programme in Place to Manage High Potentials 48% 52% Yes No Source: Talent Partners, 2008 © Talent Partners 2008 www.talentpartners.ie 23
  24. 24. The Competition for Talent in Ireland: Local Trends and Offshore Practices Identifying High Potential Employees Respondents were invited to select as many of the following methods as used by their organisations to identify high potential employees. By far the most utilised method is ‘performance to date’. This significantly exceeds academic qualifications, suggesting that while qualifications play an important role in securing the appointment of the individual within the company, once in and on a level playing field with peers, it is actual performance, combined with ‘desire to succeed’ which ultimately help high potential employees become noticed within their organisations. Figure 20 How do you identify high potential employees in your company? Methods Used to Identify High Potential Employees Client Endorsements Desire to Succeed Performance to Date Academic Qualification 0 20 40 60 80 100 Source: Talent Partners, 2008 © Talent Partners 2008 www.talentpartners.ie 24
  25. 25. The Competition for Talent in Ireland: Local Trends and Offshore Practices OFFSHORING PRACTICES IN IRISH-BASED ORGANISATIONS While this survey predominantly addresses talent management practices and perceptions within the Irish jurisdiction, the competition for talent and the competition for jobs have become global. While on some level, it is possible though not palatable to comprehend the loss of Irish jobs due to our own, home-grown, economic downturn, the loss of corporate investment in Ireland to other less expensive, potentially more skilled economies is potentially more worrisome. For this reason, we dedicated a section of this survey to offshoring, with a view to gaining an understanding of the practices and plans of Irish-based organisations to relocate work previously (or currently) done in Ireland to other countries. A total of 32% of respondents to our survey stated that their company currently offshore work previously done in Ireland (although of note, only 10% of survey respondents from the Banking and Financial Services sector stated that they offshore). Figure 21 Does your company offshore any of its work that was previously Irish based? Companies Offshoring Work Previously Done in Ireland 32% 68% Yes No Source: Talent Partners, 2008 © Talent Partners 2008 www.talentpartners.ie 25
  26. 26. The Competition for Talent in Ireland: Local Trends and Offshore Practices Satisfaction with Level of Work Delivered Off Shore Almost 80% of survey respondents, who do offshore work, stated that they are ‘satisfied’ or ‘very satisfied’ with the level of work delivered for their businesses off shore. Figure 22 If yes, how satisfied are you with the level of work delivered off shore for your business in Ireland? Satisfaction with Level of Work Delivered Off Shore 4% 23% 19% 54% Very satisfied Satisfied Neutral Unsatisfied Source: Talent Partners, 2008 © Talent Partners 2008 www.talentpartners.ie 26
  27. 27. The Competition for Talent in Ireland: Local Trends and Offshore Practices Effectiveness of Offshoring We asked survey respondents whose companies currently off shore work to rate the effectiveness or benefits of off shore activities in four different areas. The main factors or benefits of offshoring are perceived by them to be: cost savings and availability of skilled staff. However, when looking at benefits such as time savings, it is evident that 39% of respondents find offshoring ineffective. The question for organisations deciding whether to offshore or not might be determined by setting the savings of cost of overheads against losses sustained by potential time delays. Based on the current findings, cost savings currently appear to outweigh time delays; however this is potentially an interesting factor to measure on a rolling basis. Figure 23 From your experience, how would you rate the effectiveness of offshoring in the following areas? Effectiveness of Offshoring Availability of skilled staff 24 76 Consolidation of functions 15 62 19 4 Time savings 19 43 38 Cost savings 48 48 4 0 20 40 60 80 100 Very Effective Effective In Effective Very Ineffective Source: Talent Partners, 2008 © Talent Partners 2008 www.talentpartners.ie 27
  28. 28. The Competition for Talent in Ireland: Local Trends and Offshore Practices Plans to Increase Offshore Activities While 42% of respondent companies who currently off shore work previously done in Ireland, indicated an intention to increase the amount of work currently offshored, there were significant differences across the ICT and Banking and Financial Services sectors. Those respondents from the Banking and Financial Services sector who responded that they currently offshore work indicated that they had no current plans to increase the amount of work offshored. This compares with ICT companies who currently offshore, 57% of whom indicate an intention to increase the level of work offshored. Figure 24 Do you plan to increase the amount of work you offshore? Companies Planning to Increase Offshored Work Banking and Financial 0 Services ICT 57 Overall 42 0 20 40 60 80 100 Source: Talent Partners, 2008 © Talent Partners 2008 www.talentpartners.ie 28
  29. 29. The Competition for Talent in Ireland: Local Trends and Offshore Practices Plans to Commence Offshore Activities Companies who indicated that they do not currently offshore business were asked to state whether offshoring might form part of the future plans for their business. Currently 68% of respondent companies do not offshore any of their work outside of Ireland. Of those companies not offshoring, an average of 30% overall are currently considering offshoring as a business strategy. However, this is more interesting when broken down by sector, as Figure 21 below illustrates. If future work leaves Ireland to be offshored, then that loss is most likely to come from the ICT sector. Figure 25 Results by Sector: If you are not currently offshoring work, has your company discussed offshoring some of its future business functions? Companies Discussing Offshoring by Sector Banking and Financial 12.5 87.5 Services ICT 33 67 Overall 30 70 0% 20% 40% 60% 80% 100% Yes No Source: Talent Partners 2008 While the majority of respondents across all sectors indicated that they were not currently considering offshoring, those who are having such discussions are actively considering offshoring in the immediate term. In effect, 30% of respondent organisations are actively considering offshoring and the greater majority of those (60%) are considering doing so within the next 12 months. © Talent Partners 2008 www.talentpartners.ie 29
  30. 30. The Competition for Talent in Ireland: Local Trends and Offshore Practices IMPACT OF CURRENT ECONOMIC CLIMATE ON BUSINESS There is no getting away from the fact that the credit crunch, sub-prime lending, and the collapse of the property market have led us into a recession. And there is no doubting the fact that this is having a clear and considerable impact on Irish-based businesses across all sectors. We were interested to know in more specific terms, what aspects of business, and to what extent, current economic forces are impacting on the businesses who participated in our survey. Business Activities Impacted Survey participants were asked to identify those aspects of business affected by the current economic climate, including impact on market opportunities, profitability and future plans regarding workforce and investment. There are few companies in Ireland unaffected by the recent credit crunch and subsequent recessionary downturn. Specifically, Figure 22 illustrates those areas impacted, as identified by our survey respondents: Figure 26 How has the economic climate of 2008 affected your business? Business Activities Impacted by Economic Climate Reduced workforce 22 Increased work force 10 Stopped/curtailed expansion plans 26 Reduced revenue/profits 45 Reduced market opportunities 44 Created more market opportunities 23 0 20 40 60 80 100 Source: Talent Partners, 2008 Not surprisingly, many areas of business were reported to be impacted by economic events. 45% of survey respondents have noted a reduction in revenue/profits, and 44% have experienced reduced market opportunities. On the positive side however, almost one quarter of respondents indicated that events had created more market opportunities for them. Only 22% indicated that a reduced workforce was likely, with 10% reporting an increase in workforce – this would seem to balance out each other and indicate less impact overall on workforce than predicted in media. What is not possible to assess, however, is the actual number of jobs lost, as level of reduction naturally will vary from company to company. © Talent Partners 2008 www.talentpartners.ie 30
  31. 31. The Competition for Talent in Ireland: Local Trends and Offshore Practices Regarding curtailment or expansion plans, only 25% of companies noted an impact here. That might indicate that for the other 75% of respondents, expansion plans are going ahead as normal. However, it may also suggest that those other respondents do not have current plans to expand and will simply maintain the status quo throughout the economic downturn. Comparison by Sector When compared industry sector by sector, the impact of the credit crunch on the Banking and Financial Service sector is clearly evident. 80% of respondents from that sector noted a reduction in revenue/profits in their businesses, and 70% noted reduced market opportunities. Figure 27 Comparison by Industry Sector: How has the economic climate of 2008 affected your business? Economic Impact by Sector 40 Reduced workforce 14 22 Increased work force 12 10 Stopped/curtailed expansion 40 28 plans 26 80 Reduced revenue/profits 39.5 45 70 Reduced market opportunities 37 44 Created more market 28 opportunities 23 0 20 40 60 80 100 Overall ICT Banking and Financial Services Source: Talent Partners, 2008 © Talent Partners 2008 www.talentpartners.ie 31
  32. 32. The Competition for Talent in Ireland: Local Trends and Offshore Practices Key factors for a Competitive Advantage The clear challenge facing Irish business leaders is gauging how best to compete in today’s more straitened economic times. We asked our survey respondents to identify what, for them, are the key factors which give their company a competitive advantage in today’s marketplace. While no-one would discount any of the factors listed below as playing a critical role, interestingly, it was ‘people’, i.e. the organisations workforce and talent which survey respondents identified as playing the most important role in securing competitive advantage, followed closely by the calibre of their leadership. Figure 28 What are the key factors that give your company a competitive advantage in today’s marketplace? Competitive Advantage Financial Stability 35 36 1 Organisation's culture 26 42 3 Reputation of Company 49 27 People 67 10 Leadership 53 21 Technology 50 22 4 0% 20% 40% 60% 80% 100% Essential Important Unimportant Source: Talent Partners, 2008 © Talent Partners 2008 www.talentpartners.ie 32
  33. 33. The Competition for Talent in Ireland: Local Trends and Offshore Practices Expectation of Employment Levels at 31/12/2008 It would seem like a clear assumption that, if people and leaders are to play such a critical role in securing competitive advantage, that, going forward, Irish businesses ought to be paying more attention to their talent management behaviours and strategies. This seems particularly important, as 47% of survey respondents stated that they expect to be employing more people in their business at 31/12/2008 than they did at 31/12/2007. Figure 29 At the 31/12/2008, will you expect to have more employees in your business compared to 31/12/2007? More Employees At Year End '08 Compared with '07 Banking and Financial 30 70 Services ICT 57 43 Overall 47 53 0% 20% 40% 60% 80% 100% Yes No Source: Talent Partners, 2008 © Talent Partners 2008 www.talentpartners.ie 33
  34. 34. The Competition for Talent in Ireland: Local Trends and Offshore Practices METHODOLOGY The 2008 White Paper is a follow on from a 2007 survey of Irish organisations on The Competition for Talent, which was published by Talent Partners in July 2007. The 2008 Competition for Talent survey was conducted by Talent Partners using an on-line self completion questionnaire. A total of 27 questions (closed, rating scale and Likert scale) were used. 82 leading multinational and indigenous Irish organisations participated in the survey. These were drawn from the ICT, Finance, Utilities, FMCG, Engineering and Construction sectors. A mixture of job titles responded including the following:- CEO Financial Controller Sales Director / Manager Marketing Director / Manager Human Resources Director / Manager A total of 46 organisations from the ICT sector responded, among them many of the largest names in the Irish software, telecoms and IT hardware industries. 10 organisations from the Banking and Financial Services sector were represented – similar response levels to the 2007 survey. These represent some of the major banks, financial services and insurance industries in Ireland. Where the response rates allow, data is broken down by these two industry sectors. Responses from the other sectors were smaller in number and so specific data is not shown for these other industry sectors. Where possible, results from the 2007 survey are shown for comparative purposes. © Talent Partners 2008 www.talentpartners.ie 34
  35. 35. The Competition for Talent in Ireland: Local Trends and Offshore Practices Recommendations for Irish Organisations This research paper, commissioned by Talent Partners Ltd, shows that in the current economic times, the availability of skilled talent at employee and leadership level is critical to securing competitive advantage in the marketplace. This combined with technology capacity and investment will be what gives successful Irish businesses (indigenous and multinational) the competitive edge. Yet the research also shows that 90% of participating companies still find it difficult to identify and attract high performance talent for their organisations. In particular, with the increasing rates of unemployment, companies will be challenged in their recruitment and selection procedures to identify high performers with the right levels of skills and experience who is also a good organisational fit, from among the potential flood of job seekers coming onto the market. Our survey also shows that the majority of participating companies do not have a talent management programme in place. Nor do they have an effective programme to attract and retain high performers. Yet, as with our 2007 findings, the cost of losing a high performer from the business continues to be significant. Some of our survey respondents rated this cost at over €400,000 based on the loss of one high performer alone. Added to this is the recognition that companies, within the information and communications technologies sector in particular, are and will increase the practice of offshoring work previously undertaken in Ireland. With compensation package playing a strong role in attracting and retaining high performers, companies will be challenged to maintain cost competitiveness while, in parallel, securing the appointment and retention of high performers. The one factor which will help them in this will be the provision of a clear line of sight for high performing candidates and employees, of their career opportunities within the organisation, both from the perspective of existing job content and future path for development within the organisation. Our stated position and our core recommendation continues to be based in our belief that an effective Talent Management strategy ought to be put in place, streamlined and integrated with business strategy, with clear methods for identifying and matching candidates for significant roles within the business, as well as tried and tested methods to manage employees’ career expectations within the business, in line with business needs. While responsibility for the management of talent within the enterprise tends to titularly rest with the training and development and/or the human resources function, their ability to respond to the needs of the business requires an integrated cross-functional approach to managing the acquisition and maintenance of talent right across the organisation. This requires commitment from all levels of leadership across the business. The following are the recommendations of Talent Partners based on the research we have carried out. © Talent Partners 2008 www.talentpartners.ie 35
  36. 36. The Competition for Talent in Ireland: Local Trends and Offshore Practices Practical Tip 1 – Implement a Talent Management Strategy within the organisation with clearly defined ownership at senior level within the business. Practical Tip 2 – Clarify with your operational management the role requirements and specifications for critical vacancies. Work closely with your internal and external recruitment partners to match strategies with role requirements, including approach to advertising, employer branding and job and candidate match. Practical Tip 3 – Brief all interviewers, internal and external, on the importance of consistency of message around role, career progression opportunities and organisation culture, to ensure best fit with candidates. Practical Tip 4 – Identify the key roles within your business and the key performers in your organisation who are capable of filling these roles. Benchmark the experience and potential of this “talent pool” against internal career opportunities with the company and grow and develop it through training and professional development, both internally and externally. Practical Tip 5 – Clarify your needs in terms of skills and experience of high potentials and communicate these to your ‘talent pool’ on a regular basis, providing them with opportunities to develop, and feedback on their performance in line with their progression within the company. Practical Tip 6 – Work closely with high performers in the business who may not become future leaders, but who are technical specialists and who can deliver at an operational level within the business. Consider ways to enhance the technical aspects of their roles in order to maintain their sense of challenge, interest and opportunity within the organisation. Practical Tip 7 – Partner with an external recruiter to gain a deeper understanding of the external market. This will also allow you to benchmark your internal talent against external market talent and make better hiring decisions. Your external recruitment partner should be seen as an extension of your company and your talent scout in the marketplace. It should be communicating a consistent message about your company and “employer brand” to potential hires and keeping you informed of key external market talent. Practical Tip 8 – Consider widening your search for talent to the international marketplace as a means of securing the best talent. Practical Tip 9 – Create an “Employer of Choice” value around your company. Position your organisation as the company to work for in your specific niche. Get your internal “talent pool” to support this positioning. Practical Tip 10 - The Company needs to share its goals and visions with this "talent pool" and create a clear line of sight between employee performance and corporate success. A compelling employee engagement programme, backed up by clear and consistent messages, will ensure the strategy will be delivered successfully. © Talent Partners 2008 www.talentpartners.ie 36
  37. 37. The Competition for Talent in Ireland: Local Trends and Offshore Practices About Talent Partners & MRINetwork Worldwide Talent Partners, founded in Dublin in 2003, is led by Stephen Kennedy who has over 10 years experience within the executive search field. Working at both a national and international level for both clients and candidates, their extensive knowledge of their industry sector allows them to operate in a highly specialised manner for clients predominantly within the IT, Telecoms and Financial Services sectors. Talent Partners were recently awarded for being one of the fastest growing offices within the MRI Worldwide Network in 2006. MRINetwork comprises over 1,000 offices and 3,500 search professionals in more than 35 countries specialising in mid to upper management/technical positions and offering a full range of customisable solutions including permanent placement, contract (interim) recruitment, advertised selection and recruitment outsourcing. External Publication of Talent Partners information and data – Any Talent Partners information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate Talent Partners Director. A draft of the proposed document should accompany any such request. Talent Partners reserves the right to deny approval of external usage for any reason. For further information regarding this document please contact: Stephen Kennedy Tel: +353 (1) 8397070 © Copyright 2008 Talent Partners Ltd. Reproduction without written permission is completely forbidden. © Talent Partners 2008 www.talentpartners.ie 37

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