Time for a more holistic approach to talent risk
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Time for a more holistic approach to talent risk

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Talent management consistently ranks among the top three concerns of the C-suite. Despite the increasing focus, research findings from the global talent risk survey reveal that many organizations take ...

Talent management consistently ranks among the top three concerns of the C-suite. Despite the increasing focus, research findings from the global talent risk survey reveal that many organizations take a narrow approach to talent risk management– one that is steadily weakening their organization’s competitiveness.

Conducted by KPMG International in partnership with research firm Brandon Hall Group, the survey reached out to more than 1,200 top management personnel across 54 countries to discover which talent risks are keeping them awake at night and which ones they’re working hardest to mitigate. In India, KPMG India solicited more than 150 CXOs, business and HR leaders who participated in the survey. This offered us a strong opportunity to reach out to the respondents with an India focused report.

The resulting report – Time for a more holistic approach to talent risk–India findings indicates that talent managers need to trade their current preoccupation with capacity and capability related talent risks in favor of a significantly broader, better-balanced and more holistic approach to talent management.

In detail, the report:
1. lists the talent risks that organizations are most and least worried about
2. shows which risks talent managers are working hardest to mitigate – and those they’re least likely to be managing
3. sheds light on the differing talent risk perceptions among HR leaders, business managers and executives
4. provides a picture of how the perception and mitigation of talent risk varies across seven industries viz.
• Business/Consulting services
• Consumer Goods & Retail
• Diversified Industrials (Aerospace, Defense Conglomerates and Automotive)
• Financial Services
• Infrastructure & Government Services
• Life Sciences (Pharmaceutical, Biotechnology & Healthcare) and
• Technology, Media & Telecommunications.

Packed with commentary from our industry experts, our report offers an opportunity to help your contacts take a more comprehensively planned– and much more effective – approach to talent management.

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Time for a more holistic approach to talent risk Time for a more holistic approach to talent risk Document Transcript

  • PEOPLE AND CHANGE ADVISORY Time for a more holistic approach to talent risk India findings kpmg.com/in © 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 1 Time for a more holistic approach to talent risk - India findings Table of contents Foreword 2 About this research 3 Executive summary 5 Introduction 6 Key findings - Capability and Capacity 7 Key findings - Cost related talent risks 11 Different perspectives 13 Additional insights 15 Industry comparisons 21 Call to action - Conclusion 33 Appendix 35 © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • Time for a more holistic approach to talent risk - India findings 2 Foreword The topic of talent management has transcended from being just the ‘next inthing’ that business leaders and HR practitioners talk about to a burning issue on the C-suite’s agenda. Organisations consistently rank providing the right people or ‘talent’ to the right tasks at the right time as one of their biggest worries. If sidestepped, talent-related risks will only intensify as organisations face increased cost pressures and heightened competition but, tackled head-on, effective talent management can serve as a key strategic differentiator. Our report reveals that despite the increasing focus on talent related issues, organisations in India adopt a siloed approach to talent management- focusing on a couple of talent-related risks while ignoring the others. Such an approach does little to tune into the needs of the workforce and the business. Time for a more holistic approach to talent risk-India findings. The findings of our report revealed that for many organisations the top concerns remain around recruiting and retaining top talent - i.e., the ‘war for talent’ is far from over. Organisations are also worried about whether they can build and maintain the workforce needed to meet business targets. However, there is a need to look beyond the silos of capacity and capability-related talent risks and adopt a holistic talent management framework, incorporating elements such as the cost of the workforce, performance management as a business critical process and an organisation’s ability to engage talent. The survey also sheds light on organisations mitigating talent risks in a piecemeal way – implementing ‘quick fixes’ rather than carrying out talent management interventions in a more integrated and sustainable way. It is pertinent that organisations break away from this constricted view of talent and develop talent management programs that are systemic and customised to the strategic needs of their business. Not doing so now, would mean organisations are setting themselves up for a future that is riddled with problems of decreased competitiveness, lower productivity and high labour costs. Nishchae Suri Partner and Head - People and Change Advisory © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 3 Time for a more holistic approach to talent risk - India findings About this research In today’s economic environment, one of the key concerns facing organisations in realising their business strategy and cutting above competition is managing, nurturing and retaining talent. Between May and August 2013, KPMG International collaborated with global research firm Brandon Hall Group to get a comprehensive view of talent-related risks across the world’s public and private industry organisations. In India, 150 organisations (Human Resource (HR) leaders, business managers and CXOs) responded to our survey. Between them, they represented sixteen different industries. Our survey asked about the talent risks within respondents’ organisations including how these were perceived and mitigated. Specifically, the questions in the survey were focused on five critical talent risk categories: capability, capacity, compliance, cost and connection. Within each category, we looked at the impact level of each risk as well as the current mitigation efforts in place. Talent risks in each category Capability Capacity Compliance Cost Connection Inability to define new skills for future Insufficient pipeline of future leaders Employee relations hinder talent processes Cost of the workforce unsustainable Business leaders’ reluctance to share talent Skills and capabilities not developed Lack of clarity over roles Managers view performance management as processes not critical Cost of top talent unsustainable Business leader and HR inability to work together to manage talent Lack of development opportunities for top talent Lack of depth of internal candidates for critical roles Talent management processes noncompliant Salary expectations of critical talent too high International mobility policies make it difficult to transfer talent Difficulties in recruiting top talent Lack of diversity in workforce Insufficient talent budget Business leaders’ inability to engage critical talent Difficulties in retaining key people © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • Time for a more holistic approach to talent risk - India findings Capability Risks associated with building the skills an organisation needs to compete now and in the future – the breadth and depth of skills and capabilities present within a workforce, and how well aligned these are to an organisation’s needs. Capacity Risks around the succession into critical roles and retention of critical people and teams. In other words, will an organisation be able to create and maintain the size and shape of workforce needed to deliver its business plan? Compliance Risks relating to employee behavior, regulations and laws. This category covers both the need to ensure talent processes comply with local laws and regulations, as well as whether talent management is seen as a business critical process or an administrative process simply to ‘be complied with.’ 5Cs The five talent risk categories Cost What is the risk of a workforce becoming unaffordable? What will it cost an organisation to recruit and retain the people it needs? Will it be able to afford the overall cost of its workforce? Connection What is the risk of an organisation’s top talent becoming disengaged? In addition, will an organisation’s talent-related processes remain sufficiently integrated? Will it be able to share talent between units in the way it needs to? Is it able to connect groups of high potential people together? Are leaders able to create an emotional connection between high potentials and the business? © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 4
  • 5 Time for a more holistic approach to talent risk - India findings Executive summary All about capacity and capability Our survey findings have revealed that respondents were most concerned about talent risks relating to capacity and capability. That said, organisations believe that they also are doing the most to mitigate capacity and capability–related talent risks and have seen progress on this front. Capability and capacity-related talent risks include: • a lack of depth of internal candidates for critical roles • an insufficient pipeline of future leaders • difficulties in retaining key people • difficulties in recruiting top talent • a failure to develop the skills and capabilities required by the business in the near future • a lack of compelling development opportunities for top talent. Cost At the same time, our report reveals talent managers are relatively unconcerned about certain cost-related talent risks, namely: • insufficient talent budget • sustainability of workforce cost • sustainability of cost of top talent. Different perspectives The survey also showed differences in opinion on talent risks between HR on the one hand, and business leaders and frontline managers on the other hand. The survey showed business leaders were most concerned about capacity-related talent risks, HR leaders were more concerned about capability risks whereas frontline managers were concerned about connection related risks. Finally, the report shows subtle variations exist, in perception and mitigation of talent risk-related issues, depending on organisational size and industry. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • Time for a more holistic approach to talent risk - India findings Introduction A profile of talent-related risks Our research attempted to answer which talent-related risks organisations across India dread most and are mitigating against. Which talent-related risks are leaders most worried about? Which talent-related risks are organisations managing well? Additionally, we attempted to gain an insight of how perception and mitigation of talent risks varies based on the role held by the respondents (i.e. executives, frontline managers and human resource professionals). Comparisons and detailed findings have also been provided for seven industries including business/consulting, consumer goods and retail, diversified industrials (aerospace, defense conglomerates, automotive), financial services, infrastructure and government services, life sciences and technology, media and telecommunications. Finally, an understanding was sought if size of the organisation has an impact on which talent-related risks organisations are concerned about i.e. is there a difference in how small-sized organisation (with less than 3,000 employees), mid-sized organisations (3,000-10,000 employees) and large-sized organisations (more than 10,000 employees) view talent-related risks. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 6
  • 7 Time for a more holistic approach to talent risk - India findings Key findings Capability and Capacity © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • Time for a more holistic approach to talent risk - India findings Our survey has clearly shown that respondents focused on capability and capacity-related talent risks, both in terms of perception and mitigation of risks. Capability and capacity-related talent risks include problems in filling key positions, a lack of pipeline of future leaders due to poor succession planning , a loss of top performers and a disconnect between business leaders and their workforce. In particular, when respondents were asked as to which talent risks they perceived as posing the biggest danger to their organisations, capability or capacity-related risks dominated our top 10, constituting more than half the list. 8 Capability-related risks These are risks associated with building the skills an organisation needs to compete now and in the future— the breadth and depth of skills and capabilities present within a workforce, and how well aligned these are to an organisation’s needs. Capacity-related risks These are risks associated with succession into critical roles and retention of critical people and teams. In other words, will an organisation be able to create and maintain the size and shape of workforce needed to deliver its business plan? Which talent risks were respondents most worried about? Source: KPMG International 01 : Capacity 02 : Capacity 03 : Capability An insufficient pipeline of future leaders A lack of depth of internal candidates for critical roles Difficulties in retaining key people Respondents’ biggest talent management worries right now? Concern over leadership pipelines. Around 80 per cent of the respondents ranked ‘insufficient pipeline of future leaders’ as medium to high risk Organisations are leaning heavily on employees with critical skills, stretching them to near-breaking point in a bid to meet goals in new products and growing markets. These roles are now in high demand and on the move Retaining top talent remains a critical issue for most talent managers as employee turnover is often a symptom of deeper issues that have not been resolved Organisations with 3, 000 – 10,000 people in particular see this as critical Not surprisingly, more than 80 per cent of organisations with less than 3,000 employees ranked lack of internal depth as a key concern 04 : Cost 05 : Capability 06 : Compliance Salary expectations of candidates with critical skills become too high Difficulties in recruiting top talent Managers view performance management / talent reviews as processes to comply with, not business critical activities Salary expectations among top talent have started to trend upward as of late—and senior executives and organisations operating in the Infrastructure, Building and Construction industry seem particularly worried about this talent risk Key metric that recruitment teams are being tracked by is their ability to quickly recruit people with the most in-demand skills 76 per cent of all respondents identified this area as a medium to high risk group 75 per cent of all respondents identified this area as a medium to high risk group It is the only compliance-related risk to make it into talent managers’ top 10 worries. This appears as a concern particularly in Financial Services organisations 07 : Capability 08 : Capability 09 : Connection Skills and capabilities required by the business in the near future are not developed A lack of compelling development opportunities for top talent Business leaders’ inability to engage with, motivate, and nurture business critical talent More than 70 per cent respondents working at organisations with more than 10,000 employees have highlighted this as an issue Area of concern highlighted by managers working within organisations with less than 3,000 employees. The data shows senior executives and talent managers working in Transport and Leisure industry fear this risk in particular It is the only cost-related risk to make it into the top 10 worries 10 : Connection Business leaders’ reluctance to share talent across the organisation More than 70 per cent respondents representing organisations of more than 10,000 employees expressed this as an area of concern © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 9 Time for a more holistic approach to talent risk - India findings In terms of capability and capacity-related talent risks, a similarity was observed in the findings of respondents from across the world. Meanwhile though, business leaders’ reluctance to share talent across the organisation appeared as a big worry for Indian organisations, this did not seem to be the case for organisations in other geographies. It is also useful in this context to look at where respondents say their organisation is putting in effort when it comes to talent management. A glance at the table below shows that there is only one talent risk - Business leaders’ reluctance to share talent across the organisation - that appears in the list of top 10 risks identified, but does not feature in the list of top 10 risks actively being managed. The data illustrates that not only are Indian talent managers aware of the prevailing talent risks, but they are also taking steps to manage and mitigate these issues. Which talent risks were respondents actively managing? Source: KPMG International 01 : Capability 02 : Capacity Difficulties in retaining key people An insufficient pipeline of future leaders 03 : Capacity 04 : Capability A lack of depth of internal candidates for critical roles Difficulties in recruiting top talent 05 : Capability 06 : Capacity Skills and capabilities required by the business in the near future are not developed A lack of clarity over which roles are ‘critical’ to deliver business value 07 : Compliance 08 : Capability Managers view performance management/talent reviews as processes to comply with, not business critical activities A lack of compelling development opportunities for top talent 09 : Cost 10 : Connection Salary expectations of candidates with critical skills become too high Business leaders’ inability to engage with, motivate, and nurture business critical talent Again, a broad congruence emerged between findings of Indian respondents and those in other geographies in terms of the top 10 talent related risks organisations are managing. However, mitigation of connection talent-related risks was seen among the top 10 in India, but not for other geographies. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • Time for a more holistic approach to talent risk - India findings © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 10
  • 11 Time for a more holistic approach to talent risk - India findings Key findings Cost related talent risks © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • Time for a more holistic approach to talent risk - India findings Another of our survey’s more interesting findings concerns leaders’ apparent lack of interest in assessing and managing talent costs. 12 were least worried about; organisations across geographies considered it to be one of its top 10 risks. Increasing costs Cost-related talent risks The survey’s cost-related questions refer to the cost of hiring or retaining individuals, as well as the overall cost of the workforce. The survey asked respondents how they perceived as well as the degree to which they were managing - ‘Total Cost of Workforce’ as a key metric. Findings In this context, our survey revealed that respondents were least worried about the following cost-related talent risks: • insufficient talent budget • sustainability of the workforce cost • sustainability of the cost of top talent. It was interesting to see that while ‘insufficient talent budget’ was among the talent-related risks Indian organisations Average salary across Asia Pacific is set to rise seven per cent in 2014. It is also noted that employees in India are expected to get an average 11 per cent hike in their salaries in 2014 as companies deal with challenges such as attracting and retaining critical talent. Along with increase in salary costs, corporate training budgets have also increased indicating a steep rise in HR budget and a necessity to measure and manage it. Using total cost of workforce as a key metric It is interesting to observe that while ‘cost’ concerns do not feature as a key talent risk, 39 per cent respondents admitted to extensively using ‘total cost of workforce’ as a metric. While, only 15 per cent respondents from the Energy and Natural Resources industry mentioned that they used the metric extensively. Does your organisation use ‘Total Cost of Workforce’ as a key metric? 9% 39% 39% 13% No Yes, in a limited scope Yes, extensively I don't know Source: KPMG International Which talent risks were respondents least worried about? Source: KPMG International 01 : Compliance 02 : Connection 03 : Compliance Talent management processes non-compliant International mobility policies make it difficult to transfer talent Employee relations hinder talent processes 04 : Capacity 05 : Capability 06 : Capacity Lack of diversity in workforce Inability to define new skills for future Lack of clarity over roles 07 : Cost 08 : Connection 09 : Cost Insufficient talent budget Business leader and HR inability to work together to manage talent Cost of the workforce unsustainable 10 : Cost Cost of top talent unsustainable © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 13 Time for a more holistic approach to talent risk - India findings Different perspectives © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • Time for a more holistic approach to talent risk - India findings 14 Our survey shows that there are clear variations when it comes to the attitudes and perceptions of HR leaders and executives frontline managers across geographies as compared to India. For frontline managers and executives across geographies, costrelated talent risks take priority. However, HR leaders were more concerned about capacity related talent risks. When questioned about mitigation of talent related risks, HR believed that all risk categories were being managed effectively except workforce cost. The below sections outline the picture that emerged for organisations surveyed in India. Comparing risk categories The survey showed business leaders were most concerned about capacity-related talent risks. HR leaders were more concerned about capability risks and frontline managers were concerned about connection related risks. Graph 1: Perceived level of risk impact by roles 4.00 3.50 3.00 2.50 2.00 Scale: 1 = No risk 2 = Low risk 3 = Some risk 4 = High risk 5 = Critical risk 1.50 1.00 0.50 0.00 Cost Capacity Capability CEO Connection HR Compliance Manager * This data is based on averages to a five-point scale. Half a point difference is equivalent to a 10–20 per cent difference in perception, given the sample group’s distribution. Source: KPMG International Meanwhile, we saw differences in the three groups when asked about how effectively they felt the various risk categories were being mitigated. Overall, HR felt that areas of capability and cost were being mitigated more effectively than both executives and managers. Graph 2: Perceived level of risk mitigation by roles 3.50 3.00 2.50 2.00 Scale: 1 = Not managing 2 = Identified, no plans 3 = Plans to manage 4 = Managing seeing progress 5 = Managing and mitigating risk 1.50 1.00 0.50 0.00 Capacity Cost CEO/Exec. Capability HR Connection Compliance Manager * This data is based on averages to a five-point scale. Half a point difference is equivalent to a 10–20 per cent difference in perception, given the sample group’s distribution. Source: KPMG International Drilling deeper HR respondents were more concerned about risks related to capacity - specifically, insufficient leadership pipelines and a lack of depth of internal candidates. Frontline managers were most worried about ‘a lack of depth for internal candidates’ and ‘business leaders’ inability to engage critical talent’ (capacity risk and connection risk respectively). However, one risk that HR and frontline managers agreed as critical, yet very poorly managed, centered on salary expectations becoming too high. Both frontline managers and HR respondents agreed this was a risk that was being mitigated very poorly. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 15 Time for a more holistic approach to talent risk - India findings Additional insights © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • Time for a more holistic approach to talent risk - India findings Succession planning The top talent risk identified by respondents was ‘an insufficient pipeline of future leaders’. This was also ranked as the second highest talent risk which organisations were mitigating. However, when questioned on how effective organisations felt their current succession planning processes were, 28 per cent of organisations stated that they either had no succession planning process or that their existing process was not at all effective, while 39 per cent believed that it was somewhat effective. Only seven per cent of the organisations felt that their succession planning process was extremely effective. When looking at effectiveness of succession planning based on the size of the organisation, it was seen that organisations under 3,000 employees had the most problems with their succession planning process. Nearly 30 per cent of them either don’t have a succession planning process or believe their succession planning efforts are not at all effective. On the other hand, 28 per cent of organisations with over 10,000 employees believe their succession planning processes were very or extremely effective. Effectiveness of succession planning 11% 17% 39% We do not have succession plans Not at all effective list with no action Somewhat effective list with regular action 21% 7% 5% Very effective, succession planning discussion Extremely effective, actively work with successors I don’t know Source: KPMG International © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 16
  • 17 Time for a more holistic approach to talent risk - India findings Critical roles filled with internal candidates Effective succession plans are interconnected to the extent to which respondents indicated how many critical roles are filled with internal candidates. Of the respondents who indicated that succession planning at their organisation was very to extremely effective, 70 per cent were successfully filling more than 50 per cent of their critical roles with internal candidates. 25% 17% 19% Less than 25% 26-50% 51-75% 11% 16% 12% 76-90% More than 90% I don’t know Source: KPMG International Strategic workforce planning Respondents were also asked about their approach to strategic workforce planning – i.e. that they had the right people and skills in the right roles to meet the needs of their business; the results were not very reassuring. Nearly half of the organisations take a basic approach or plan for a small group of critical roles within the organisation. Company size appeared to be a factor in an organisation’s approach to strategic workforce planning with companies over 10,000 employees more likely to conduct detailed workforce planning than companies with less than 3,000 employees. Approach to strategic workforce planning 4% 19% 30% No Strategic work force planning Basic approach Simple approach 35% 5% 7% Detailed approach Complex approach I don’t know Source: KPMG International When we asked organisations about their effectiveness at assessing the critical skills and capabilities of their workforce, a key element of effective workforce planning – we observed that only 13 per cent of organisations feel they are extremely effective at assessing critical skills and capabilities, assessing employees every 6 to 12 months. The findings revealed that 43 per cent of the respondents indicated that they measure skills and capabilities only for specific projects or for some employees every couple of years. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • Time for a more holistic approach to talent risk - India findings 18 Effectiveness of assessing critical skills and capabilities of workforce 10% 9% 34% We don’t conduct regular assessment Not at all effective Somewhat effective 28% 13% 6% Very effective Extremely effective I don’t know Source: KPMG International Performance management The survey also asked respondents on how their organisations viewed performance management. Specifically, the survey asked about the extent to which ‘managers viewed performance management only as a process to comply with, rather than a business critical activity.’ This was indicated to be a high to critical risk area by 43 per cent respondents. Managers view performance management as processes not critical to business 9% 25% 23% No risk Low risk Some risk 30% 13% High risk Critical risk Source: Source: KPMG International When we asked how much time senior leadership teams spent together formally reviewing talent each year, 66 per cent of respondents stated two or more days per year – and 12 per cent stated that they lacked a formal talent review process. In addition, we asked respondents about the effectiveness of their talent review processes. It was found that 52 per cent of respondents said that their organisations either had no talent review processes, or that their leaders take no action or lose momentum, once talent reviews have been concluded. On the other hand, 44 per cent of organisations have talent review processes where leaders stay actively involved throughout the year. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 19 Time for a more holistic approach to talent risk - India findings Do your organisation’s formal talent review meetings result in development plans for which leaders take responsibility? 5% We don’t have a formal talent review process 6% No - very few actions are taken as a result of the talent review process 41% Yes - but they tend to lose momentum soon after the talent review process 44% Yes - and leaders remain actively involved throughout the year 4% I don’t know Source: KPMG International © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • Time for a more holistic approach to talent risk - India findings © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 20
  • 21 Time for a more holistic approach to talent risk - India findings Industry comparisons © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • Time for a more holistic approach to talent risk - India findings Does talent risk vary across industries? Apparently so. In particular, a comparison of the way talent risk is perceived and identified within financial services, consumer goods and life sciences makes for some interesting reading. Identified risks - a comparison of seven industries The two risks that appeared in the top five risks for at least five industries were • Meanwhile, salary expectations being too high and a lack of depth of internal candidates for critical roles were seen as the next most common critical risks for four of the industries. Consumer goods was the only industry to identify a lack of diversity in the workforce as a key concern area. Respondents working in diversified industrials (Aerospace, Defense conglomerates, and Automotive) were less concerned about the risk of retaining top talent. Furthermore, financial services respondents stood out as being concerned about business leaders’ inability to engage critical talent. Difficulties in retaining key people • 22 An insufficient pipeline of future leaders. Table 1: Top individual risks by industry Financial services Infrastructure and government services Life sciences (Pharmaceutical, Biotechnology, Healthcare) Technology, media and telecommunications Insufficient pipeline of future leaders Insufficient pipeline of future leaders Insufficient pipeline of future leaders Lack of depth of internal candidates Difficulties in retaining key people 3.43 3.70 3.73 4.00 3.56 3.35 Cost of top talent unsustainable Salary expectations too high Lack of depth of internal candidates Lack of depth of internal candidates Managers view performance management as processes not critical Insufficient pipeline of future leaders Insufficient pipeline of future leaders 3.53 3.29 3.30 3.73 3.58 3.33 3.26 Difficulties in retaining key people Difficulties in recruiting top talent Salary expectations too high Difficulties in retaining Key People Lack of depth of internal candidates Cost of the workforce unsustainable Salary expectations too high 3.53 3.29 3.10 3.53 3.38 3.22 3.22 Managers view performance management as processes not critical Cost of top talent unsustainable Cost of the workforce unsustainable Managers View performance management as Processes not critical Difficulties in recruiting top talent Salary expectations too high Managers view performance management as processes not critical 3.53 3.14 2.90 3.40 3.31 3.22 3.18 Lack of development opportunities for top talent Difficulties in retaining key people Skills and capabilities not developed Business leaders’ Inability to engage critical Talent Difficulties in retaining key people Difficulties in retaining key people Difficulties in recruiting top talent 3.47 3.14 2.90 3.33 3.31 3.22 3.17 Business / consulting services Consumer goods and retail Diversified industrials (Aerospace, Defense Conglomerates, Automotive) Skills and capabilities not developed Lack of diversity in workforce 3.82 Scale: 1 = No risk 2 = Low risk 3 = Some risk 4 = High risk 5 = Critical risk Capability Capacity Compliance Cost Connection * This data is based on averages to a five-point scale. Half a point difference is equivalent to a 10–20 per cent difference in perception, given the sample group’s distribution. Source: KPMG International © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 23 Time for a more holistic approach to talent risk - India findings Managed risks When looking at the top managed risks, the results were similar between these seven industries. Retaining top talent was a focus for six out of the seven sectors. We also saw a higher-level focus on providing development opportunities and on talent retention across industries. Financial services was the only industry that did not include a capacity risk within its top five managed risks. Table 2: Top individual mitigated risks by industry Life sciences (Pharmaceutical, biotechnology, healthcare) Technology, media and telecommunications Managers view performance management as processes not critical Insufficient pipeline of future leaders Salary expectations too high 3.60 3.33 2.78 3.04 Difficulties in retaining key people Cost of the workforce unsustainable Insufficient pipeline of future leaders Lack of depth of internal candidates Lack of clarity over roles 3.71 3.10 3.47 3.08 2.67 3.00 Difficulties in recruiting top talent Difficulties in retaining key people Lack of depth of internal candidates Insufficient talent budget Difficulties in retaining key people Cost of the workforce unsustainable Difficulties in retaining key people 3.47 3.57 3.00 3.47 3.08 2.67 3.00 Lack of depth of internal candidates Business leaders’ inability to engage critical talent Cost of the workforce unsustainable Skills and capabilities not developed Inability to define new skills for future Lack of development opportunities for top talent Managers view performance management as processes not critical 3.41 3.57 2.70 3.47 2.77 2.67 3.00 Difficulties in retaining key people Managers view performance management as processes not critical Salary expectations too high Lack of development opportunities for top talent Difficulties in recruiting top talent Difficulties in recruiting top talent Lack of development opportunities for top talent 3.29 3.43 2.70 3.47 2.77 2.67 2.96 Business/consulting services Consumer goods and retail Diversified industrials (Aerospace, defense conglomerates, automotive) Financial services Cost of top talent unsustainable Lack of clarity over roles Insufficient pipeline of future leaders Difficulties in retaining key people 3.53 3.86 3.60 Lack of diversity in workforce Skills and capabilities not developed 3.47 Scale: 1 = Not managing 2 = Identified, no plans to manage 3 = Plans to manage 4 = Managing and seeing progress 5 = Managing and mitigating risk Infrastructure and government services Capability Capacity Compliance Cost Connection * This data is based on averages to a five-point scale. Half a point difference is equivalent to a 10–20 per cent difference in perception, given the sample group’s distribution. Source: KPMG International © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • Time for a more holistic approach to talent risk - India findings The following sections provide an in-depth account of the talentrelated risks - both in terms of perception and mitigation, in seven industries. 24 Top mitigated risks Cost Cost of top talent unsustainable 3.53 Business / consulting services Capacity Lack of diversity in workforce 3.47 Except connection and capacity, the other three talent risk categories were indicated as key concerns for this industry. . Capability Difficulties in recruiting top talent 3.47 Cost Lack of depth of internal candidates 3.41 Capability Difficulties in retaining key people 3.29 Capability Around 40 per cent respondents mentioned that their organisation is extremely effective at moving people to new roles in different countries. Capacity Only 30 per cent respondents indicated that their succession plans were very to extremely effective. Scale: 1 = Not managing 2 = Identified, no plans to manage 3 = Plans to manage 4 = Managing and seeing progress 5 = Managing and mitigating risk * This data is based on averages to a five-point scale. Half a point difference is equivalent to a 10–20 per cent difference in perception, given the sample group’s distribution. Source: KPMG International Cost Consumer goods and retail It was indicated by 58 per cent respondents that their organisation’s budget for talent management activities for the next budget period might increase. Consumer goods was the only industry to identify a lack of diversity in the workforce as a key concern area. While capacity-related talent risk was a top concern, capability and cost risk concerns were also highlighted by the respondents. Top risks identified Capability Skills and capabilities not developed 3.82 Cost Cost of top talent unsustainable 3.53 Capability Difficulties in retaining key people 3.53 Compliance Managers view performance management as processes not critical 3.53 Capability Lack of development opportunities for top talent 3.47 Scale: 1 = No risk 2 = Low risk 3 = Some risk 4 = High risk 5 = Critical risk * This data is based on averages to a five-point scale. Half a point difference is equivalent to a 10–20 per cent difference in perception, given the sample group’s distribution. Source: KPMG International It was seen that 3 of the top risks identified weren’t being actively mitigated Capacity Companies with more than 10,000 employees, highlighted the following as the top two concerns, both of which are capacityrelated risks • Insufficient pipeline of future leaders • Lack of clarity over roles. Furthermore, 70 per cent of the respondents highlighted that their succession planning process was not at all effective or only somewhat effective. Cost and Capability Only 40 per cent respondents believed that their talent management budget would increase next year, while only 28 per cent respondents indicated that their organisation was effective at assessing the critical skills and capabilities of leadership roles. Top risks identified Skills and capabilities not developed • Managers view performance management as processes not critical • Lack of development opportunities for top talent. Cost Only 35 per cent of the respondents indicated that they were using ‘Total Cost of Workforce’ as a key metric extensively. Connection HR respondents indicated connection risks as a key area being mitigated. Capacity Lack of diversity in workforce 3.43 Cost Salary expectations too high 3.29 Capability Difficulties in recruiting top talent 3.29 Cost • Cost of top talent unsustainable 3.14 Capability Difficulties in retaining key people 3.14 Scale: 1 = No risk 2 = Low risk 3 = Some risk 4 = High risk 5 = Critical risk * This data is based on averages to a five-point scale. Half a point difference is equivalent to a 10–20 per cent difference in perception, given the sample group’s distribution. Source: KPMG International © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 25 Time for a more holistic approach to talent risk - India findings When looking at the top managed risks, the results were interesting. Four areas which were identified as key risks, weren’t being mitigated actively: • Lack of diversity in workforce • Salary expectations too high • Cost of top talent unsustainable. In congruence with our overall survey results, capacity and capability emerge as key concern areas however, there was a focus on cost risks as well. Difficulties in recruiting top talent • Diversified industrials (Aerospace, Defense Conglomerates, Automotive) Capacity Companies with 3,000 to 10,000 employees identified ‘Difficulties in retaining key people’ as a key risk. The only key risk identified being actively managed was ‘Difficulties in retaining top talent’. Connection Companies with more than 10,000 employees, were more focused on mitigating connection related risks • Business leaders’ inability to engage with, motivate and nurture business-critical talent • Business leaders’ and HR/talent teams’ inability to work effectively together to manage talent. Top mitigated risks Capacity Lack of clarity over roles 3.86 Capability Skills and capabilities not developed 3.71 Capability Difficulties in retaining key people 3.57 Connection Business leaders’ inability to engage critical talent 3.57 Compliance Managers view performance management as processes not critical 3.43 Out of all the respondents, only 20 per cent suggested that their succession planning process was extremely effective and that they actively worked with successors to help them develop the skills and capabilities required for their next career move. Cost Of the overall respondents 50 per cent indicated that they used ‘Total Cost of Workforce’ as a key metric, out of which 60 per cent believed that their talent management budget would increase next year Of the respondents who did not use ‘Total Cost of Workforce’ as a key metric, only 40 per cent believed that their talent management budget would increase next year. Capability Only 20 per cent talent managers believed that their organisation was very effective at moving people to new roles in different countries, but on the contrary ‘International mobility policies and processes make it difficult to transfer talent between countries’ was 19th out of the 20 key risks areas identified. Scale: 1 = Not managing 2 = Identified, no plans to manage 3 = Plans to manage 4 = Managing and seeing progress 5 = Managing and mitigating risk Top risks identified Capacity Insufficient pipeline of future leaders 3.70 * This data is based on averages to a five-point scale. Half a point difference is equivalent to a 10–20 per cent difference in perception, given the sample group’s distribution. Capacity Lack of depth of internal candidates 3.30 Source: KPMG International Cost Salary expectations too high 3.10 Cost Cost of the workforce unsustainable 2.90 Capability Skills and capabilities not developed 2.90 “The biggest challenge in retail is talent retention and availability – as modern retail is still relatively new and growing, most retailers are growing by pulling talent from each other rather than from a talent pool. There are not too many reputed institutions that teach retail theory and practice, and as a result, the retailers are having to train people themselves, only to lose them to the others. For consumer goods companies, the biggest challenges in the talent space are around matching growth (job title and compensation) expectations to a slow down in the economy, and getting people to adjust to the changing work landscape, and the ability to coach and mentor teams as people move up the organisation. ” Rajat Wahi Partner and Head- Consumer Markets KPMG in India Scale: 1 = No risk 2 = Low risk 3 = Some risk 4 = High risk 5 = Critical risk * This data is based on averages to a five-point scale. Half a point difference is equivalent to a 10–20 per cent difference in perception, given the sample group’s distribution. Source: KPMG International When looking at the top managed risks, the results were more congruent. The only risk that was identified as top risk but not being actively managed was: • Skills and capabilities required by the business in the near future are not developed © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • Time for a more holistic approach to talent risk - India findings 26 Capability Another key capability risk that was being actively managed was ‘Difficulties in retaining key people’ by both medium and large organisations. Compliance Respondents rated ‘Managers view performance management as processes to comply with rather than as business critical activities’ as the sixth highest risk, but on the risk mitigation scale it was ranked 18th out of 20. Top mitigated risks Capacity Insufficient pipeline of future leaders 3.60 Capability Difficulties in retaining key people 3.10 Capacity Lack of depth of internal candidates 3.00 Cost Cost of the workforce unsustainable 2.70 Cost Salary expectations too high 2.70 Scale: 1 = Not managing 2 = Identified, no plans to manage 3 = Plans to manage 4 = Managing and seeing progress 5 = Managing and mitigating risk * This data is based on averages to a five-point scale. Half a point difference is equivalent to a 10–20 per cent difference in perception, given the sample group’s distribution. Source: KPMG International “The aviation sector in India is currently grappling with manpower shortage in terms of airline commanders, safety inspectors (at DGCA), pilots for general aviation (private jets and helicopters), ground handling experts, air-cargo experts, maintenance engineers; airport planners; revenue and yield managers; Air Traffic Control Officers (ATCOs), airport retail experts etc. The fructification of the 12th Plan vision of being the third largest aviation market, hinges upon the skills and competency of the aviation workforce. To realize this vision, aviation education and training capacity needs significant expansion and up gradation over the next two decades. If the required scale, and more importantly, the quality of education and training, is not achieved, then either the growth of the industry will be capped, operating costs will increase, or of much greater concern, we could have unsafe skies. The choice is ours. The Defence sector is at the cusp of an exponential growth phase. The biggest challenge for the sector is shortage of talent in Research and Development and Advanced Manufacturing. The research and development sector is researchintensive and requires researchers/engineers who are adept at carrying out advanced R&D in futuristic defence technologies. With regards to advanced manufacturing, the Indian defense industry lacks the capability to meet the advanced technological and quality requirements of the global defense equipment manufacturers. This is preventing the Indian companies to become suppliers to global OEMs. ” Amber Dubey Partner and Head - Aviation and Defense KPMG in India © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 27 Time for a more holistic approach to talent risk - India findings The only risk identified which was being actively managed was ‘Difficulties in retaining key people’. Financial services Amongst the top risks identified, only cost-related risks were missing. Capability Also, financial services was the only industry that identified connection as a key risk – ‘Business leaders’ inability to engage with, motivate and nurture business-critical talent’. This was similar to the KPMG global report on talent risks where the data shows that senior executives and talent managers working in financial services fear this risk in particular. Within capability risks: • Organisations with less than 3,000 employees rated mitigating ‘Lack of development opportunities for top talent’ as a key area • Organisations with more than 10,000 employees rated ‘Difficulties in retaining key people’ as a key area. Cost Capacity Out of all the respondents, only 40 per cent suggested that their succession planning process was extremely effective. Furthermore, 40 per cent of companies with more than 10,000 employees indicated that their succession planning was not at all effective. Out of all the respondents, around 33 per cent indicated that less than 25 per cent of critical roles within the organisation were filled with internal candidates over the last year. Another positive indicator was that 80 per cent respondents suggested that they used ‘Total Cost of Workforce’ as a key metric, which indicated the importance of managing and assessing workforce costs. Top mitigated risks Capability Top risks identified Cost of the workforce unsustainable 3.47 Cost Respondents rated ‘Managers view performance management as processes to comply with rather than as business critical activities’ as a critical risk, but they also indicated that more than 85 per cent of senior leadership teams spend two or more days together formally reviewing talent each year. 3.60 Cost Compliance Difficulties in retaining key people Insufficient talent budget 3.47 Capability Skills and capabilities not developed 3.47 Capability Lack of development opportunities for top talent 3.47 Scale: 1 = Not managing 2 = Identified, no plans to manage 3 = Plans to manage 4 = Managing and seeing progress 5 = Managing and mitigating risk * This data is based on averages to a five-point scale. Half a point difference is equivalent to a 10–20 per cent difference in perception, given the sample group’s distribution. Capacity Insufficient pipeline of future leaders 3.73 Capacity Lack of depth of internal candidates 3.73 Capability Difficulties in retaining key people 3.53 Compliance Managers view performance management as processes not critical 3.40 Connection Business leaders’ inability to engage critical talent 3.33 Scale: 1 = No risk 2 = Low risk 3 = Some risk 4 = High risk 5 = Critical risk * This data is based on averages to a five-point scale. Half a point difference is equivalent to a 10–20 per cent difference in perception, given the sample group’s distribution. Source: KPMG International When looking at the top managed risks, the results were more congruent. Similar to consumer goods, 4 elements which were identified as key risks, weren’t being mitigated actively are • Insufficient pipeline of future leaders • Lack of depth of internal candidates • Managers view performance management as processes not critical • Source: KPMG International “Banking industry is cognizant of the fact that it needs better qualified leaders to handle the new business realities effectively and deal with the ever changing market landscape. Currently, it is going through a talent scarcity phase especially in the PSU segment. Average age of senior management employees in the public industry is around 50 years. More than one-third of these employees are likely to retire in the current decade. With inadequate number of employees at the middle management level (majorly due to hiring freeze in the public industry organisations from 1990 to 2000), succession planning and leadership paucity is likely to emerge as the key area of concern. In fact, the Reserve Bank of India has termed 2010 to 2020 as the ‘decade of retirement’. Talent management would also be important for banks as they would be warding off competition for talent from the new private banks who would get their licenses in January 2014. ” Business leaders’ inability to engage etc critical talent. Akeel Master Partner and Head - Financial Services KPMG in India © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • Time for a more holistic approach to talent risk - India findings Infrastructure and government services Capability Similar to financial services, cost related risks were not present amongst the identified top risks in the Infrastructure and Government services either. 28 Within capability risks Also, as compared to all the other industries, compliance risk - Managers view performance management as processes to comply with rather than as business critical activities - was rated the highest. Capacity Less than 25 per cent respondents suggested that their succession planning process was extremely effective and around 30 per cent respondents indicated that their succession planning process was somewhat effective. Around 60 per cent respondents mentioned that less than 50 per cent of critical roles within the organisation were filled with internal candidates over the last year. • Organisations with less than 3,000 employees rated mitigating ‘Lack of development opportunities for top talent’ as a key area • Organisations with more than 10,000 employees rated ‘Difficulties in retaining key people’ as a key area. Cost Only 38 per cent respondents indicated that they used ‘Total Cost of Workforce’ as a key metric. Organisations with 3,000 -10,000 employees rated mitigating cost risks higher than smaller and larger organisations. Top mitigated risks Compliance Managers view performance management as processes not critical 3.33 Capability Capacity Insufficient pipeline of future leaders 3.08 With respect to significant resistance to moving people to new roles in different countries, it was found that: Capability Difficulties in retaining key people 3.08 Capability Inability to define new skills for future 2.77 Capability Difficulties in recruiting top talent 2.77 • 30 per cent respondents from organisations with more than 10,000 employees indicated it as a key concern and • 25 per cent respondents from organisations with 3,000 10,000 employees indicated it as a key concern. Compliance 50 per cent respondents indicated that while leaders take responsibility for creating development plans, but they tend to lose momentum soon after the formal talent review. Scale: 1 = Not managing 2 = Identified, no plans to manage 3 = Plans to manage 4 = Managing and seeing progress 5 = Managing and mitigating risk * This data is based on averages to a five-point scale. Half a point difference is equivalent to a 10–20 per cent difference in perception, given the sample group’s distribution. Source: KPMG International Top risks identified Capacity Insufficient pipeline of future leaders 4.00 Compliance Managers view performance management as processes not critical 3.58 Capacity Lack of depth of internal candidates 3.38 Capability Difficulties in recruiting top talent 3.31 Capability Difficulties in retaining key people 3.31 Scale: 1 = No risk 2 = Low risk 3 = Some risk 4 = High risk 5 = Critical risk “Infrastructure industry saw a massive build phase and is currently in pause mode as government re looks at the policy and developers struggle to make existing projects viable, enhance asset management capability and restructure their portfolio of projects or divest part of it to de-leverage their balance sheets. In such an environment, the biggest talent risk for the industry is relating to building new capabilities in asset management and regulatory management/advocacy as well as cost related risks given the restructuring environment. ” Arvind Mahajan Partner and Head - Infrastructure and Government Services KPMG in India * This data is based on averages to a five-point scale. Half a point difference is equivalent to a 10–20 per cent difference in perception, given the sample group’s distribution. Source: KPMG International Similar to diversified industrials, only one risk which was identified as top risk but was not being actively managed was: • Lack of depth of internal candidates. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 29 Time for a more holistic approach to talent risk - India findings Life sciences (Pharmaceutical, Biotechnology, Healthcare) Top mitigated risks Capacity 2.67 Lack of development opportunities for top talent 2.67 Difficulties in recruiting top talent 2.67 * This data is based on averages to a five-point scale. Half a point difference is equivalent to a 10–20 per cent difference in perception, given the sample group’s distribution. Organisations with less than 3,000 employees indicated two more cost risks are key areas of concern: • Cost of the workforce unsustainable Scale: 1 = Not managing 2 = Identified, no plans to manage 3 = Plans to manage 4 = Managing and seeing progress 5 = Managing and mitigating risk Cost • 2.67 Capability Out of all the respondents, only 20 per cent suggested that their succession planning process was very effective whereas 33 per cent indicated that their succession planning process was not at all effective. Lack of depth of internal candidates Capability Capacity 2.78 Cost ‘Cost of workforce unsustainable’ was rated the highest risk by the life sciences industry. Insufficient pipeline of future leaders Capacity In congruence with our overall survey results, capacity, capability and costs emerge as key risk areas. Source: KPMG International Insufficient talent budget Cost of top talent unsustainable. Connection 75 per cent of HR respondents indicated ‘Business leaders’ inability to engage critical talent’ as a high risk area. Top risks identified Capacity Lack of depth of internal candidates 3.56 Capacity Insufficient pipeline of future leaders 3.33 Cost Cost of the workforce unsustainable 3.22 Cost Salary expectations too high 3.22 Capability Difficulties in retaining key people “The Life Sciences industry has to a large extent been insulated from the down turn seen in other industries, thereby seeing a sustained demand for talented professionals. Attrition rates have been fairly significant. The availability of experienced personnel in growing industries such as biotech and nanotech is also a challenge. The output from universities would also need additional industry relevant skill sets to enable fresh graduates to be readily employable. ” 3.22 Utkarsh Palnitkar Partner and Head - Life Sciences KPMG in India Scale: 1 = No risk 2 = Low risk 3 = Some risk 4 = High risk 5 = Critical risk * This data is based on averages to a five-point scale. Half a point difference is equivalent to a 10–20 per cent difference in perception, given the sample group’s distribution. Source: KPMG International Two risks that were identified as top risk but aren’t being actively managed are: • Salary expectations too high • Difficulties in retaining key people. An anomaly that was noticed was while one of the key risks identified was retaining people, the key risk being mitigated was recruiting people. Also, the overall scores indicated that none of the risks had an average rating of 3 or more than 3, which suggests there are no concrete plans to manage and mitigate these risks. In addition, while respondents suggested that ‘Cost of workforce unsustainable was being addressed, only 30 per cent respondents indicated using ‘Total Cost of Workforce’ as a key metric. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • Time for a more holistic approach to talent risk - India findings Technology, media and telecommunications 30 Top mitigated risks Similar to financial services and infrastructure and government services, the key compliance risk was ‘Managers view performance management as processes to comply with rather than as business critical activities’. Less than 20 per cent respondents mentioned that their organisation is extremely effective at moving people to new roles in different countries. Capacity Only 20 per cent respondents indicated that more than 75 per cent of critical roles within the organisation were filled with internal candidates over the last year. Salary expectations too high 3.04 Capacity Lack of clarity over roles 3.00 Capability Capability Cost Difficulties in retaining key people 3.00 Compliance Managers view performance management as processes not critical 3.00 Capability Lack of development opportunities for top talent 2.96 Scale: 1 = Not managing 2 = Identified, no plans to manage 3 = Plans to manage 4 = Managing and seeing progress 5 = Managing and mitigating risk * This data is based on averages to a five-point scale. Half a point difference is equivalent to a 10–20 per cent difference in perception, given the sample group’s distribution. Cost Source: KPMG International Also, only 40 per cent respondents have indicated that their organisation’s budget for talent management activities for the next budget period might increase. Larger organisations were more optimistic about a budget increase than organisations with less than 3,000 employees. Top risks identified Capability Difficulties in retaining key people 3.35 Capacity Insufficient pipeline of future leaders 3.26 Cost Salary expectations too high 3.22 Compliance Managers view performance management as processes not critical 3.18 Capability Difficulties in recruiting top talent 3.17 Scale: 1 = No risk 2 = Low risk 3 = Some risk 4 = High risk 5 = Critical risk * This data is based on averages to a five-point scale. Half a point difference is equivalent to a 10–20 per cent difference in perception, given the sample group’s distribution. Source: KPMG International “Talent wars in the Indian technology industry will only intensify over the next decade, as it strives to meet the USD 225 billion target by 2020. With several multi-national corporations and Indian companies expanding their presence in the country, retaining talented employees with vital skills is getting critical. Moreover, there is also a pressing need to have a steady line of leaders in place who have the required experience and skills to overcome the challenges related to expanding reach and simplifying organisational complexities. Given the increasingly global nature of the industry, maintaining an optimal mix of onsite and offshore resources will continue to be a challenge, and with the recent surge in new visa immigration policies in the US and Europe, this problem has only become more challenging. To overcome these talent-related risks, technology companies must adopt an innovative and futuristic workforce strategy that balances talent aspirations with organisational needs. ” Pradeep Udhas Partner and Haed - Technology KPMG in India Two risks that were identified as top risk but aren’t being actively managed are: • Insufficient pipeline of future leaders • Difficulties in Recruiting Top Talent. Looking at plans to mitigate risks • Organisations with less than 3,000 employees rated mitigating ‘Lack of Depth of Internal Candidates’ as a key area • Organisations with more than 10,000 employees rated ‘Lack of Diversity in Workforce’ as a key area. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 31 Time for a more holistic approach to talent risk - India findings Talent risk by organisational size With respect to talent-related risk, does organisational size matter? Our survey showed some interesting findings vis- a-vis size of the organisation. Organisations with less than 3,000 employees felt that their capacity and capability risks were higher than any of the remaining three categories. In addition, these organisations felt they were the least effective at mitigating those risks. Furthermore, these smaller organisations were also struggling more with mitigating compliance and connection risks. Graph 1 : Less than 3,000 employees Less than 3,000 employees High Risk, High Mitigation 4.0 Average Risk Mitigation Level 3.5 3.0 Capability Cost 2.5 Scale: 1 = No risk 2 = Low risk 3 = Some risk 4 = High risk 5 = Critical risk Capacity Compliance Connection 2.0 Low Risk, Low Mitigation 2.5 3.0 3.5 4.0 Average Risk Impact Level * This data is based on averages to a five-point scale. Half a point difference is equivalent to a 10–20 per cent difference in perception, given the sample group’s distribution. Source: KPMG International © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • Time for a more holistic approach to talent risk - India findings 32 By contrast, mid-sized organisations (those with between 3,000 and 10,000 employees) felt they were less effective at mitigating cost issues - but were less worried about cost-related risks than small and large organisations. Graph 2 :3,000 - 10,000 employees 3,000-10,000 employees High Risk, High Mitigation 4.0 3.5 Capability Average Risk Mitigation Level Capacity Connection 3.0 Compliance 2.5 Scale: 1 = No risk 2 = Low risk 3 = Some risk 4 = High risk 5 = Critical risk Cost 2.0 2.5 Low Risk, Low Mitigation 3.0 3.5 4.0 Average Risk Impact Level * This data is based on averages to a five-point scale. Half a point difference is equivalent to a 10–20 per cent difference in perception, given the sample group’s distribution. Source: KPMG International Large organisations, meanwhile, felt they were the most effective at mitigating capacity, capability and cost risks - risks they rated as critical. In addition, large organisations also felt that connection risks - those relating to employee engagement - were greater than any other group. More than 10,000 employees Graph 3 : Morethan 10,000 employees High Risk, High Mitigation 4.0 Average Risk Mitigation Level 3.5 3.0 Capability Capacity Cost 2.5 Connection Scale: 1 = No risk 2 = Low risk 3 = Some risk 4 = High risk 5 = Critical risk Compliance 2.0 Low Risk, Low Mitigation 2.6 3.0 3.6 4.0 Average Risk Impact Level * This data is based on averages to a five-point scale. Half a point difference is equivalent to a 10–20 per cent difference in perception, given the sample group’s distribution. Source: KPMG International These results bear sharp similarities to findings from organisations of different sizes across countries – both in terms of talent related risk perception and mitigation. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 33 Time for a more holistic approach to talent risk - India findings Call to action Conclusion © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • Time for a more holistic approach to talent risk - India findings Time for a more holistic approach to talent risk India findings Talent management is a process that most organisations are well versed with. Yet, it was somewhat startling to see that organisations adopt a narrow, limited approach to talent management. Our survey has shown that organisations focus on sourcing and retaining high performing individuals as well as a lack of a pipeline of leaders for tomorrow. While relevant, this apparent obsession with some of the capacity and capability related talent risks has led business leaders and human resource (HR) professionals to pay less heed to cost, compliance and connection-related talent risks. Business leaders’ not engaging and motivating talent along with organisations’ view of performance management as a box ticking exercise is quite detrimental. It is well-known that effective performance reviews can help top and poor performers alike by providing constructive feedback and aligning their goals to those of the business. Moreover, performance reviews aid employees to be more passionate and committed towards work. Hence, it is pertinent that organisations do not miss this advantage that performance management has to offer. Additionally, in today’s times, when all enterprises have an eye on spend, they need to concern themselves with whether the cost of the workforce is becoming too expensive. Isolating and addressing all risks shall ensure that the effect of talent management activities doesn’t get dissipated or remain superficial. Hence, going forward, organisations need to look at talent risks more holistic manner by centring on all the five Cs – capacity, cost, capability, connection and compliance. Such an integrated approach is likely to make talent management more facilitative and impactful in nature. Nishchae Suri Partner and Head - People and Change Advisory © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 34
  • 35 Time for a more holistic approach to talent risk - India findings Appendix © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • Time for a more holistic approach to talent risk - India findings Which talent risks were respondents doing least about? 36 Source: KPMG International 01 : Compliance 02 : Connection Talent management processes non-compliant International mobility policies make it difficult to transfer talent 03 : Capacity 04 : Compliance Lack of diversity in workforce Employee relations hinder talent processes 05 : Cost 06 : Connection Insufficient talent budget Business leaders’ reluctance to share talent 07 : Capability 08 : Cost Inability to define new skills for future Cost of the workforce unsustainable 09 : Cost 10 : Connection Cost of top talent unsustainable Business leader and HR inability to work together to manage talent © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 37 Time for a more holistic approach to talent risk - India findings © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • Time for a more holistic approach to talent risk - India findings © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 38
  • Contact us: Nishchae Suri Partner and Head People and Change Advisory T: +91 124 307 4888 E: nishchaesuri@kpmg.com kpmg.com/in Latest insights and updates are now available on the KPMG India app. Scan the QR code below to download the app on your smart device. Google Play | App Store The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. Printed in India.