Us Talent Managing Talentina Turbulent Economy Part3


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Deloitte report tracks the way business leaders were shifting their talent priorities and strategies to meet the challenges of today’s economy and their plans to clear the hurdles to economic recovery.

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Us Talent Managing Talentina Turbulent Economy Part3

  1. 1. Managing talent in a turbulent economy Clearing the hurdles to recovery July 2009 Talent
  2. 2. Contents 2 Key findings 3 Preparing for an economic upturn? 4 More issues competing with cutting costs for management’s attention 6 Layoffs and headcount reductions still prevalent 8 Talent priorities shift toward retention and training and development 10 Talent managers emphasize experience and leadership 11 Spotlight on talent retention 16 Clearing the hurdles 17 Implementing effective retention tactics 18 Survey participants/demographics 20 Contacts Managing talent in a turbulent economy – July 2009 1
  3. 3. Key findings Many business executives around the world cautiously • This budding optimism is reflected in the actions believe the worst of the economic crisis has passed, these executives are taking to prepare for an based on a recent Deloitte survey. With a more optimistic eventual upturn in the economy. While headcount outlook on their horizon, they now have new concerns reductions and other cutbacks remain prevalent, that a “resume tsunami” may be building, ready to hit many surveyed executives are sharpening their once the economy turns and their employees begin to focus on retention and employee development consider new opportunities. Are companies devising and initiatives so they can be prepared when the implementing effective retention strategies to hold onto turnaround begins. the key talent they will need to prosper when the eventual recovery comes? • Once the recovery begins to take hold, these business executives and talent leaders can expect a To understand how the current economic crisis has “resume tsunami” as unemployment declines and affected talent, Deloitte has been conducting a voluntary turnover rises. While many of the surveyed longitudinal survey to gauge how top executives and talent managers appear to be updating retention talent managers across the global economy are reshaping plans and devising retention strategies in anticipation their workforces as they confront the most challenging of a turnaround, Deloitte believes the depth and operating environment in generations. The May 2009 quality of these moves will separate the talent survey, similar to the January and March editions, tracked “winners” from the talent “losers” when the the ways select business leaders are shifting their talent economy improves. strategies and priorities to meet the challenges of today’s sideways economy and how they plan to clear the hurdles • Surveyed talent managers and executives are most to economic recovery. The results of the May survey concerned about losing younger employees revealed the following key findings: from both Generation Y (under age 30) and Generation X (ages 30-44). To retain these future • Pessimism about the broader economy has given leaders, many are considering a mix of retention way to the first hints of optimism. Senior corporate initiatives, including greater financial incentives leaders surveyed still expect economic conditions to and flexible work arrangements. remain difficult but, for the first time this year, the number of executives who predict “the worst is yet • Although retention planning is widespread, one fifth to come” declined, while those who report “the of executives surveyed report they are doing nothing worst is behind us” increased significantly. to revise their workforce strategies to prepare for an eventual recovery. And few of these executives have a clear understanding of the negative impact that increased turnover will have on their company’s ability to perform or on their bottom line. Managing talent in a turbulent economy – July 2009 2
  4. 4. Preparing for an economic upturn? In May, 319 senior business leaders—both HR and non-HR For the first time in this longitudinal study, the number of executives—participated in a survey conducted by Forbes executives who reported the worst is yet to come in terms Insights on behalf of Deloitte. These executives serve at of the economy declined—and significantly, from 32% in large businesses (annual sales of $500+ million) across a March to 18% in May (Figure 1). At the same time, the range of industries and the three major economic regions: group that believes the worst is behind us doubled to 16% the Americas, Asia Pacific (APAC), and Europe, the Middle from 8% in March and 5% in January. These executives East, and Africa (EMEA). may not be ready to predict an economic upturn, but more seem to think they can see the bottom from where As in the January and March surveys, participants clearly they are today—a decisive departure from previous recognize the challenges their companies continue to face surveys. in the broader economy. However, despite a generally sober economic outlook, there was a marked shift in the May survey toward a more optimistic view of the future. Figure 1. Executive outlook on the economy: May vs. March vs. January 66% Things are tough and will be for a while 58% 64% 18% The worst is still ahead 32% May 30% March 16% The worst is behind us 8% January 5% As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Managing talent in a turbulent economy – July 2009 3
  5. 5. More issues competing with cutting costs for management’s attention Both the challenges of the tough economy and the hints In May, more than half of executives (56%) ranked of optimism about a better future ahead are reflected in cutting and managing costs as their top strategic the strategic priorities that compete for attention among issue—still the highest of any category, but down seven the top executives and talent managers surveyed. Cost percentage points from March (Figure 2). In March, cost cutting remains a paramount concern, yet there are signs cutting outranked the next closest management priority, that austerity measures may be abating. acquiring/serving/retaining customers, by 23 points (63% to 40%); however, by May, the margin was down to 13 points (56% to 43%). Figure 2. Current strategic issues: May vs. March Cutting and managing costs 56% 63% Acquiring/serving/retaining customers 43% 40% 33% Managing human capital 30% Improving top and bottom 30% line performance 30% Developing new products and services 28% 21% Addressing risk and regulation 20% challenges May 16% March Expanding into global and new markets 16% 12% Capitalizing on M&A/divestiture/ 14% restructuring 12% Leveraging technology 12% 12% Investing in innovation/research 9% and development 7% Other 1% 1% Digging Deeper: Strategic priorities differ depending on whether a company has already taken steps to align its workforce with today’s economic realities. Surveyed executives who are not expecting more layoffs are more likely to be looking at new opportunities compared to those who are expecting more layoffs in the coming quarter—those who are not expecting more layoffs are more likely to be expanding into new and global markets (23% vs. 10%), investing in innovation and research and development (15% vs. 4%), and acquiring and serving new customers (52% vs. 38%). Managing talent in a turbulent economy – July 2009 4
  6. 6. In a sign that these executives are also focused on the Digging Deeper: Across a range of industries, future, developing new products and services rose by surveyed executives are predominantly focused on seven points on the management agenda, with 28% cutting and managing costs and acquiring and serv- of executives ranking it a top priority. Managing human ing customers. However, examining the full range capital has also been a consistent strategic priority for of strategic issues shows some significant variations these business leaders—ranging from 27% in January to (Figure 3). Executives at Financial Services firms were 30% in March to 33% in May. more than twice as likely to list “addressing risk and regulation challenges” as a top strategic priority (41% compared to 20% overall). Nearly one-third (30%) of Technology/Media/Telecom (TMT) Surveyed executives who are not companies are focused on expanding into new mar- expecting more layoffs in the quarter kets vs. 16% overall. ahead are more likely to be expanding into new markets, investing in innovation, and signing-up new customers. Figure 3. Current strategic issues by industry Consumer/ Life Sciences/ Technology/ Ranking Industrial Products Health Care Media/Telecom Energy/Utilities Financial Services 1 Cutting and managing Cutting and managing Cutting and managing Improving top Cutting and managing costs costs costs and bottom line costs performance 2 Acquiring/serving/ Acquiring/serving/ Acquiring/serving/ Cutting and managing Addressing risk and retaining customers retaining customers retaining customers costs regulation challenges 3 Developing new Managing human Developing new Acquiring/serving/ Acquiring/serving/ products and services capital products and services retaining customers retaining customers Managing human Managing human capital capital (2-way tie) (2-way tie) Managing talent in a turbulent economy – July 2009 5
  7. 7. Layoffs and headcount reductions still prevalent With layoffs continuing to capture headlines and for all three surveys and a 19-point jump over January unemployment rates rising worldwide, it is not surprising (42%) and 14 points higher than March (47%) (Figure 5). that reducing headcount remains a significant focus for For the first time in the three surveys, a greater percentage surveyed executives when it comes to managing talent. of executives see layoffs ahead (50%) compared to those When asked to rank their current talent priorities, 42% of who do not (43%). respondents in May put reducing employee headcount at the top of the list—on par with both March (39%) and As in past surveys, it seems that layoffs are difficult to January (38%) (Figure 4). Measured against other talent anticipate. In March, 42% of executives predicted layoffs priorities, reducing headcount outpolled the next highest over the next three months, yet 61% of executives report by an 18-point margin (42% to 24%). they actually experienced layoffs in May. Layoffs also appear to be concentrated among certain companies. Talent managers who are focused on reducing Three-quarters (75%) of those who report they had layoffs headcount usually report layoffs and the May survey in the last three months expect more layoffs in the next was no exception. More than six in ten executives who three months; however, only 11% of those who have not participated in the survey (61%) indicate their companies had layoffs in the last three months expect to conduct had laid off workers during the last three months—a high layoffs in the next three months. Figure 4. Current talent priorities: May Reducing employee headcount 42% 16% 16% 26% Top priority Medium priority Training and development 24% 34% 30% 12% Low priority Retention 22% 34% 28% 16% Lowest priority Recruitment 12% 16% 26% 46% Figure 5. Organizations conducting layoffs: Digging Deeper: Participating companies in the May vs. March vs. January Energy/Utilities sector were least likely to 61% experience layoffs: 33% reported layoffs in the May past three months and 27% anticipate layoffs during March the next quarter. Consumer/Industrial Product compa- 50% January 47% nies were the most likely to experience layoffs in the 42% previous quarter (67%). Going forward, Financial 42% 38% Services executives were the most likely to anticipate layoffs with 53% reporting layoffs were likely in the coming quarter. Experienced layoffs Anticipating layoffs past three months next three months Managing talent in a turbulent economy – July 2009 6
  8. 8. A global perspective: Regional differences For a global perspective on talent trends and attitudes, This regional variance in strategies is also reflected in Deloitte’s study canvassed the views of top executives how international executives ranked their current talent and talent managers in the three major economic priorities. Reducing employee headcount remains the regions: the Americas, Asia Pacific (APAC), and Europe, top current talent concern for surveyed executives in the Middle East, and Africa (EMEA). the Americas (48%) and the EMEA region (51%), but ranks lower for APAC executives—only 26% of APAC While the May survey revealed cautious optimism talent managers called it their top concern, compared among business leaders that the worst of the economic to 38% of APAC executives who listed training and crisis is behind us, this opinion is not universally shared development. Less focused on headcount reductions, from region to region. Executives in the Americas, in APAC executives also foresee fewer layoffs, with only particular, appear somewhat more hopeful about 37% of APAC respondents predicting layoffs in the their economic futures than their counterparts in next quarter compared to 58% in EMEA and 54% in APAC and EMEA. According to the survey, only 11% the Americas. of EMEA executives and 15% of APAC executives believe the worst is behind us, compared to 21% of When it comes to trends in recruiting and hiring, Americas executives. EMEA executives appear to be trailing their colleagues around the world. Just 26% of EMEA executives who Executives in different regions of the global economy participated in the May survey expect to increase also appear to be employing different strategies to experienced hires in the year ahead, compared survive difficult times. By a 14-point margin (61% to to 47% in the Americas and 39% in APAC. EMEA 47%), executives in the Americas were more likely executives also report they are less likely than their to name cutting costs as a top management priority global counterparts to recruit more critical talent in compared to APAC executives. light of the economic climate, trailing both Americas executives and APAC executives by double digit margins (40% for EMEA vs. 50% for APAC vs. 51% for Americas). A major focus of the May survey is the “resume tsunami” that will likely hit when the economy eventually turns, resulting in heightened competition among companies to keep and recruit critical talent. The study suggests that APAC executives have already gotten a jump on their competitors: 48% of APAC talent leaders report their company has a retention plan ready for the economic rebound, a greater percentage than companies in both the Americas (30%) and EMEA (29%). Managing talent in a turbulent economy – July 2009 7
  9. 9. Talent priorities shift toward retention and training and development While the data suggests that surveyed executives cannot Almost two out of three executives surveyed (64%) expect predict with certainty when the recovery will take hold, training and development to be their number one or there are clear indications that their companies are putting number two talent priority during the coming quarter, plans in place to capitalize when the recession ends. compared to 50% who rank reducing headcount high One significant development in the May survey was how on their list. Nearly half of executives (47%) also report executives expect to shift talent priorities over the next that their companies plan to invest in building new skills three months. in their workforces, another sign that companies are preparing for the future. Looking forward to the coming quarter, surveyed executives and talent managers predict that employee Digging Deeper: Surveyed executives in TMT are development and training initiatives will rival headcount particularly focused on training and development as reductions as their top talent priority. When asked to a top talent priority in the next quarter: 47% list it anticipate their company’s talent priorities three months as their number one concern compared to 31% of from now, 34% of survey participants rank reducing overall respondents who report it is their number one headcount first, closely followed by training and concern. Financial Services executives rank training development at 31% (Figure 6). and development very low on their list of priorities— only 17% report it is a number one concern. Figure 6. Talent priorities: Next three months Reducing employee headcount 34% 16% 17% 33% Top priority Medium priority Training and development 31% 33% 26% 10% Low priority Retention 24% 30% 26% 20% Lowest priority Recruitment 11% 21% 31% 37% Managing talent in a turbulent economy – July 2009 8
  10. 10. As employee development efforts take on additional This renewed emphasis on developing employees can be importance over the coming months, many surveyed seen most clearly when comparing May’s survey results executives are ramping up specific training programs with past surveys. Compared to March, the percentage within their companies. More than four in ten executives of executives who anticipate an increase in leadership/ report they plan to increase training and development management development training jumped by 15 points programs related to high-potential employee development (42% to 27%), with double-digit increases also occuring (46%) and leadership/management development (42%), in high-potential employee development training (46% to while 35% are expanding onboarding initiatives and 33% 34%) and onboarding programs (35% to 25%). anticipate greater investments in regulatory, security, and risk training (Figure 7). Figure 7. Areas of increased focus on training and development over the next 12 months: May vs. March High-potential employee development 46% 34% Leadership/management development 42% 27% Onboarding, orientation 35% 25% 33% Regulatory, security and risk training 24% 30% May Job-specific – sales, customer service 24% March 26% Job-specific – operations 23% 24% Job-specific – IT, finance, HR 22% Digging Deeper: Faced with greater regulatory scrutiny, Financial Services firms are stepping up their training efforts, with 47% reporting they plan to increase regulatory, security, and risk training over the next year. One in four executives in Life Sciences/Health Care (39%) and Energy/Utilities (40%) sectors also plan to increase regulatory, security, and risk training. Managing talent in a turbulent economy – July 2009 9
  11. 11. Talent managers emphasize experience and leadership As training programs ramp up, surveyed executives are Looking at the numbers, 38% of executives surveyed in also looking to add experience and leadership to the ranks May plan to increase recruiting of experienced hires— of their workforces. While graduating college students, an 11-point jump from March’s 27% (Figure 8). In fact, part-timers, contract hires, and outsourced hires can all experienced hires are still the only category that can expect the tight job market to continue, employees with expect a net increase in recruiting attention by surveyed experience and leadership are in demand at many of the companies over the next year—a trend evident in all three surveyed companies. surveys. Overall, recruiters at these companies plan a net decrease of campus hires, contract hires, part-time hires, and offshore/outsourced hires. 47% of all executives surveyed plan to Nearly half of executives and talent managers (47%) surveyed report their companies plan to recruit recruit more critical talent to manage the more critical talent to manage the current economic current economic environment—up environment—a significant jump since March when the figure was 34%. About four in ten executives (41%) 13 points from 34% in the March survey. expect to acquire hard-to-find leaders, compared to 29% in March and 30% in January (Figure 9). Figure 8. Areas of increased focus on recruitment over the next 12 months: May vs. March vs. January 38% Experienced hires 27% 28% 26% Part-time hires 26% 26% May 25% March Campus hires 15% January 15% 25% Contract hires 22% 27% 25% Offshore or outsourced hires 16% 17% Figure 9. Actions anticipated due to economic climate: May Recruit more critical talent 47% Invest in building new skills 47% in your workforce Focus on product development 44% and innovation Recruit more critical leaders 41% None 14% Other 1% Managing talent in a turbulent economy – July 2009 10
  12. 12. Spotlight on talent retention The coming “resume tsunami” Nearly three out of four executives (73%) report that their Following previous recessions, many companies company either has a retention plan in place now or is experienced a “resume tsunami” as employees with actively developing one. Despite this strong evidence of the desire to move on took increased confidence from retention planning, a significant 20% of business leaders the improving economy. Voluntary turnover rises as and talent managers admit they are doing nothing to unemployment falls, and talent once again becomes a manage their workforces in preparation for better times scarce commodity.* Have business leaders learned from (Figure 10). past experience? That remains to be seen. Despite today’s tight employment market—where layoffs Figure 10. Updated plan in place to guide retention once the economy turns around remain prevalent and recruiting is down—many talent managers are currently preparing workforce plans to get Don’t know in front of the economic upturn that will eventually come. 7% Yet a surprisingly significant number are at risk of being Yes 35% blindsided when the talent market heats up again. No As part of the May survey, we shined a spotlight on talent 20% retention—the plans executives are making to retain key employees, the potential hurdles they see to keeping their core workforces intact, and the specific tactics they are using to meet their overall retention goals. These efforts will help determine whether a company is positioned to charge ahead during a recovery or whether that company finds itself on the defensive as its top talent and leaders head for the door. Working on one now 38% Digging Deeper: In the race for talent, many employers attempt to separate themselves by offering an employee value proposition that distinguishes the unique advantages of their companies. Yet 47% of survey participants report their organization either does not offer a specific employee value proposition or they do not know what an employee value proposition is. *Bill Chafetz, Robin Adair Erickson, and Josh Ensell, “Where did our employees go? Examining the rise in voluntary turnover during economic recoveries,“ Deloitte Review, Deloitte Development LLC, 2009. Managing talent in a turbulent economy – July 2009 11
  13. 13. Turnover concerns: The flip side of retention Digging Deeper: By a ten-point margin (17% to An effective retention plan calls for analyzing more 7%), companies that expect to conduct more layoffs than just what causes employees to jump ship—talent in the coming quarter are more likely than those managers must also understand which employees they not anticipating layoffs to believe their voluntary are most at risk of losing. Many talent managers know turnover rate will significantly increase in the year af- from experience that when the economy heats up again, ter the current economic downturn ends. 72% of ex- they risk losing key employees to competitors. About half ecutives at these companies are especially concerned (46%) of executives recalled that voluntary turnover at about losing critical talent—an 11-point margin over their companies either increased or increased significantly those who do not expect layoffs (61%). after the 2001-2002 recession ended. Looking ahead to the end of the current recession, 52% about retaining high-potential talent and leadership in the of surveyed executives predict an increase in voluntary year after the recession ends, and an identical number are turnover at their companies, while just 13% predict a either highly or very highly concerned about losing critical decrease. Not surprisingly, executives exhibited the highest talent. levels of concern about losing “high-potential talent and leadership” and “critical talent.” Specifically, 65% of Talent managers and business executives see greater executives report they have a high or very high concern turnover potential among younger employees. Generation Y (under age 30) workers are considered most likely to be on the move, with 63% of executives predicting an increase or a significant increase in turnover among this Nearly two-thirds of executives (65%) group, followed by Generation X (ages 30-44) at 46%. Only one in four expect an increase in departures by are highly or very highly concerned Baby Boomers (ages 45-64) or Veterans (over age 65) about losing high-potential and critical (Figure 11). talent in the year after the recession ends. Figure 11. Expected change in organizations’ voluntary turnover rates among different generations 12 months after recession ends: Increase/increase significantly vs. decrease/decrease significantly 24% 39% Gen Y (under age 30) 7% 1% 9% 37% Increase significantly Gen X (ages 30-44) 8% 2% Increase Decrease Decrease significantly 9% 16% Baby boomers (ages 45-64) 21% 3% 9% 16% Veterans (over age 65) 19% 12% Managing talent in a turbulent economy – July 2009 12
  14. 14. For some companies, this concern is becoming a reality, Digging Deeper: Post-recession, surveyed Life with many executives already seeing their competitors Sciences/Health Care executives appear to be much poach their best talent. More than one in four executives more concerned about voluntary turnover than any (26%) report an increase in turnover of high-potential other industry. 68% of these Life Sciences/Health employees during the last three months—the highest Care executives predict such turnover will increase or percentage in any edition of the survey by a ten-point significantly increase—12 points higher than the next margin (Figure 12). Overall turnover was also up, with closest industry (TMT at 56%) and 16 points higher 25% of survey participants reporting their companies than the overall average of 52%. experienced an increase—again the highest percentage in the three surveys. Turnover of high-potential employees is on the rise: 26% of executives report an increase, the highest response rate from previous editions of the Deloitte survey series. Figure 12. Impact of the economic climate on turnover: Companies reporting an increase in May vs. March vs. January 33% Retirements 25% 15% 26% May High-potential voluntary turnover (not including retirements) 16% March 16% January Voluntary turnover 25% (not including retirements) 18% 16% Managing talent in a turbulent economy – July 2009 13
  15. 15. Identifying the hurdles to retention According to survey participants, the economic downturn Effective retention planning starts with a hard-headed is clearly taking a toll on retention. When asked to list the analysis of a company’s assets and liabilities when it most significant barriers to retaining employees today, comes to attracting and keeping key employees— survey respondents rank financial issues highest, including including a catalogue of each company’s retention the lack of compensation increases (44%) and the lack barriers. The survey suggests that, at a time when of adequate bonus or other financial incentives (28%) executives are clearly worried about competitors poaching (Figure 13). Managers pressured to do more with less in a high-potential employees and company leaders, their difficult economy also cite excessive workload (30%) as a talent managers have a pretty clear idea where their significant hurdle to retaining employees. companies currently fall short. Figure 13. Top barriers to retaining employees: Today vs. 12 months after recession ends Lack of compensation increases 44% 27% Excessive workload 30% 21% Lack of adequate bonus or other 28% financial incentive 25% 28% Lack of job security 15% Lack of career progress 21% Today 22% 12 months after Inadequate or reduction in benefits 14% recession ends (i.e., health and pensions) 13% 14% New opportunities in market 39% Dissatisfaction with supervisor 13% or manager 14% 11% Lack of challenge in the job 15% Biggest retention barrier today: 10% Lack of compensation increases (44%) Lack of trust in leadership 12% Biggest retention barrier 12 months Poor employee treatment during 8% after recession: downturn 8% New opportunities in market (39%) 8% Too much travel 8% 8% Declining perception of company 8% Lack of training and development 7% opportunities 9% 7% Lack of flexible work arrangements 9% Limitations due to new government 6% regulations (e.g., TARP) 4% 7% Don’t know 8% Managing talent in a turbulent economy – July 2009 14
  16. 16. Interestingly, surveyed executives anticipate the barriers A red flag for talent managers and to retention will shift when the recession subsides. These business executives talent managers are evidently worried that employees are The retention spotlight raised one big red flag: simply biding their time until the upturn comes, with 39% Few surveyed executives seem to have a clear reporting that new opportunities in the job market will understanding of the negative impact that be the biggest hurdle to retaining employees in the 12 increased turnover will have on their company’s months following the end of the recession. ability to perform or on its bottom line. There was also significant concern that the lingering Replacing employees—particularly critical talent effects of a poor economy will make it difficult to offer and high-potential employees who are the biggest the financial incentives talent managers need to keep departure risks—is extremely costly. After taking employees on board: One-quarter of survey participants into account the loss of intellectual capital, client report lack of compensation increases (27%) and lack of relationships, productivity, experience, and other bonuses (25%) will pose a significant barrier to retention job skills, plus the cost of recruiting a new hire, after the recession ends. companies can expect the cost of replacing a lost employee to be 2-3 times that employee’s annual salary. Digging Deeper: Surveyed Energy/Utilities talent managers appear concerned that they will not be Despite these costs—or perhaps unaware of able to keep pace with other industries once the them—nearly half (44%) of surveyed managers recovery begins. More than half (53%) predict that believe voluntary turnover will actually increase new opportunities in the job market will be their their company’s profitability. Only 17% report number one barrier to retention—well above 39% it would decrease profitability. overall—and 43% of Energy/Utilities leaders report that an inability to provide adequate bonuses or Clearly retention will be a major focus as these other financial incentives will make it harder to companies prepare their talent strategies and retain employees, 18 points higher than the overall programs for an expected revival of economic response (25%). growth somewhere down the line. And just as clearly, the actions their executives take to retain critical talent over the next 12 months will have a significant impact on the companies’ financial performance. Managing talent in a turbulent economy – July 2009 15
  17. 17. Clearing the hurdles In the May survey, Deloitte asked the participating By a fairly significant margin, these executives believe executives (most of whom likely come from the ranks that Gen Y and Gen X employees would respond of the Generation X and the Baby Boomer generations) most favorably to financial incentives such as greater what retention tactics would be most effective in retaining compensation and larger bonuses (Figure 14). According employees from the Y, X, Baby Boomer, and Veteran to survey participants, workers from the Baby Boomer and generations. Veteran generations would prefer an increase in other benefits, such as health care and pensions. Interestingly, surveyed business executives and talent managers rank flexible work arrangements high on the list of retention Surveyed executives believe that tactics for all generations. retention priorities should be driven by generational differences. Figure 14. Executive perceptions of most effective retention initiatives by generation Gen Y Gen X Baby Boomers Veterans Ranking (under age 30) (ages 30-44) (ages 45-64) (over age 65) 1 Additional Additional bonuses Additional benefits Additional benefits compensation (46%) or financial incentives (i.e., health and (i.e., health and (37%) pensions) (42%) pensions) (36%) 2 Additional bonuses Additional Additional bonuses Flexible work or financial incentives compensation (33%) or financial incentives arrangements (26%) (30%) (30%) 3 Flexible work Flexible work Flexible work Additional arrangements (29%) arrangements (25%) arrangements (28%) compensation (22%) Managing talent in a turbulent economy – July 2009 16
  18. 18. Implementing effective retention tactics The survey also suggests that some talent managers are Digging Deeper: Nearly half (48%) of Consumer/ already looking at ways to reshape retention initiatives Industrial Products executives report they will focus as part of an overall effort to prepare for an eventual on flexible work initiatives in the next 12 months, economic recovery. closely followed by 44% of Life Sciences/Health Care talent managers. For the first time since this longitudinal study began in January, more executives report they are focusing on Deloitte believes the actions companies take today will increasing rather than decreasing compensation levels. separate the talent winners from the talent losers once the While the majority (59%) expects compensation levels economy begins to rebound. Retention promises to be a to remain unchanged, talent managers who anticipate growing challenge when more employees feel confident raising compensation levels outpoll those planning to enough in the economy to test the job market again. reduce compensation by 11 percentage points (25% Ultimately, the effectiveness of your company’s retention to 14%)—a near reversal from March when 15% strategies will determine whether your high-potential predicted compensation increases vs. 25% who predicted employees become your future leaders—or the future compensation decreases. The number of executives who leaders of your competitors. are looking to increase benefit levels has also been on the rise—from 13% in January to 21% in May—although slightly more still anticipate decreasing benefits (23%). Digging Deeper: Leaders in a range of industries reported that they are more likely to increase compensation than decrease compensation in the year ahead, including Consumer/Industrial Products, Life Sciences/Health Care, and even the hard-hit Financial Services industry. Few surveyed executives ranked flexible work arrangements as a major hurdle to retaining employees, with just seven percent reporting it is currently an issue at their company. Nevertheless, surveyed talent managers believe that each generation highly values flexible work arrangements such as telecommuting and reduced workweeks. This may explain why 37% of executives plan to increase their focus on workplace flexibility in the year ahead, compared to just 23% in March. Managing talent in a turbulent economy – July 2009 17
  19. 19. Survey participants/ demographics In this third edition of Deloitte’s longitudinal study of All respondents served at large organizations (all above talent trends and strategies, 319 international executives $500 million in annual revenue, a majority with more than participated in an on-line survey conducted by Forbes 5,000 employees, and 34% more than 10,000) (Figure Insights. Survey participants were typically senior leaders 16). These executives came from a mix of publicly traded, in their companies, with 40% occupying the CEO, CFO, or privately owned, and non-profit organizations. other C-suite position (Figure 15). Figure 15. Respondents by job titles SVP/VP/director 19% Head of department 17% Other HR or talent executive 11% CIO/technology director 10% Head of business unit 10% CEO/president/managing director 9% CHRO/human resources director 9% CFO/treasurer/comptroller 7% Other C-level executive 5% Board member 3% Figure 16. Company revenues 29% 21% 19% 18% 14% $500 million – $1 billion – $5 billion – $10 billion – Greater than $999 million $4.9 billion $9.9 billion $20 billion $20 billion Managing talent in a turbulent economy – July 2009 18
  20. 20. The survey was well balanced geographically, with 37% of Figure 18. Company industries participants located in the Americas, 33% in Europe, the Other Middle East and Africa, and 30% in the Asia Pacific region 17% Consumer/ (Figure 17). Industrial Products 28% A wide range of industries were represented, including Consumer/Industrial Products (28%), Financial Services Energy/ Utilities (22%), Technology/Media/Telecom (14%), Life Sciences/ 9% Health Care (10%), Energy/Utilities (9%) (Figure 18). The fourth edition of Deloitte’s longitudinal Life Sciences/ Health Care survey will be published in October. Deloitte also 10% plans to publish a fifth edition in January 2010 Financial in order to complete a year-long study designed Services to track talent trends and attitudes through the Technology/Media/ 22% depth of the recession and into the first hints of Telecom 14% economic recovery. Figure 17. Respondents by region Americas Europe/Middle East/Africa Asia Pacific 37% 33% 30% Managing talent in a turbulent economy – July 2009 19
  21. 21. Contacts Global Human Capital Human Capital–Asia Pacific Human Capital–EMEA Petr Kymlicka Dr. Sabri Challah* Richard Kleinert Brett C. Walsh National Practice Leader Global Practice Leader Regional Practice Leader Regional Practice Leader Human Capital Human Capital Human Capital Human Capital Deloitte Advisory s.r.o. Deloitte MCS Ltd. Deloitte Consulting LLP Deloitte MCS Limited Central Europe United Kingdom United States United Kingdom + 420 2 246042260 +44 20 7303 6286 +1 213 688 3368 + 44 20 7007 2985 Gilbert Renel* Jeff Schwartz* Lisa Barry* Dr. Udo Bohdal* National Practice Leader Global Practice Leader National Practice Leader National Practice Leader Human Capital Organization and Change Human Capital Human Capital Deloitte S.A. Deloitte Consulting LLP Deloitte Consulting Deloitte Consulting GmbH Luxembourg United States Australia Germany +35 24 5145 2544 +1 703 251 1501 +61 3 9208 7248 +49 69 97137 350 Ardie van Berkel Tim Phoenix* Kenji Hamada Gert De Beer National Practice Leader Global Practice Leader National Practice Leader National Practice Leader Human Capital Total Rewards Human Capital Human Capital Deloitte Consulting B.V. Deloitte Consulting LLP Tohmatsu Consulting Co., Ltd. Deloitte Consulting The Netherlands United States Japan South Africa +31653733271 +1 512 226 4272 +81 3 4218 7504 +27 11 806 5995 David Yana Margot Thom* Byung Jeon Kim Enrique de la Villa National Practice Leader Global Practice Leader National Practice Leader National Practice Leader Human Capital HR Transformation Human Capital Human Capital Deloitte Consulting Deloitte Inc. Deloitte Consulting Korea Deloitte S.L. France Canada Korea Spain +33 1 58 37 96 04 +1 416 874 3198 +82 2 6676 3830 +34 9151 45000 Alexander Zabuzov* Human Capital–Americas P. Thiruvengadam Rolf Driesen National Practice Leader Michael Fucci National Practice Leader National Practice Leader Human Capital National Practice Leader Human Capital Human Capital Deloitte CIS Human Capital Deloitte Touche Tohmatsu Deloitte Consulting Russia Deloitte Consulting LLP India Pvt. Ltd. Belgium +7 495 787 0600 Americas and United States India +32 2 749 57 21 +1 973 602 6870 +91 80 6627 6108 Christian Havranek* Margot Thom* Hugo Walkinshaw National Practice Leader National Practice Leader Practice Leader Human Capital Human Capital Human Capital Deloitte Consulting Deloitte Inc. Deloitte Consulting Singapore Austria Canada Pte. Ltd. +43 1 537 00 2600 +1 416 874 3198 Singapore and South East Asia +65 6232 7112 Feargus Mitchell Vicente Picarelli National Practice Leader Regional Practice Leader Jungle Wong Human Capital Human Capital National Practice Leader Deloitte MCS Limited Deloitte Consulting Human Capital United Kingdom Latin America and Caribbean Deloitte Touche Tohmatsu +44 20 7007 3698 +55 11 5186 1043 CPA Ltd. China +86 10 8520 7807 *Member of Deloitte’s Global Talent Steering Group Managing talent in a turbulent economy – July 2009 20
  22. 22. Global Talent Steering Global Talent Steering Global Mobility Talent and Risk Group–Americas Group–Asia Pacific Gardiner Hempel Michael Fuchs Robin Erickson Satoshi Ota Global Mobility Transformation Human Capital Human Capital Human Capital Leader, Global Employer Deloitte Consulting LLP Deloitte Consulting LLP Deloitte Tohmatsu Consulting Services United States United States Co., Ltd. Deloitte Tax LLP +1 212 618 4370 +1 312 486 5368 Japan United States +81 3 4218 7439 +1 212 436 2294 Timothy Lupfer Marc Kaplan Human Capital Human Capital Global Talent Steering Andrew Hodge Deloitte Consulting LLP Deloitte Consulting LLP Group–EMEA UK Practice Leader United States United States Dr. Eddie Barrett Global Employer Services +1 212 618 4523 +1 212 618 4421 Human Capital Deloitte & Touche LLP Deloitte MCS Ltd. United Kingdom United Kingdom +44 207 007 2555 Workplace Transformation Alice Kwan +44 7789 006 243 George Bouri Human Capital National Practice Leader Deloitte Consulting LLP Anne Shih Capital and Real Estate United States David Conradie Deputy Managing Partner Transformation +1 212 618 4504 Human Capital Global Employer Services Deloitte Consulting LLP Deloitte Consulting (Pty) Ltd. Deloitte Touche Tohmatsu United States South Africa Hong Kong +1 973 602 5322 Andrew Liakopoulos +27 11 517 4207 +852 2852 1652 Human Capital Deloitte Consulting LLP Martin Laws United States Kees Flink Lead Partner +1 312 486 2777 Human Capital Real Estate Solutions Deloitte Consulting B.V. Deloitte & Touche LLP The Netherlands United Kingdom David Rizzo +31612344741 +44 207 007 7919 Human Capital Deloitte Consulting LLP United States Anne-Marie Malley +1 973 602 5348 Human Capital Deloitte MCS Ltd. United Kingdom Christie Smith +44 207 007 8075 Human Capital Deloitte Consulting LLP United States Gabi Savini +1 973 602 5430 Human Capital Deloitte Consulting (Pty) Ltd. South Africa Heather Stockton +27 11 517 4274 Human Capital Deloitte Inc. Canada +1 416 601 6483 Gregory Stoskopf Human Capital Deloitte Consulting LLP United States +1 212 618 4627 Managing talent in a turbulent economy – July 2009 21
  23. 23. About the survey This survey—the third in a five-part longitudinal study—was conducted for Deloitte by Forbes Insights. This third report features results from a May 2009 survey that polled 319 senior business leaders and human resource executives at large businesses worldwide in the Americas, Asia/Pacific, and Europe/Middle East/Africa. A more detailed demographic profile about the respondents can be found at the end of this report. This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication. About Deloitte Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in 140 countries, Deloitte brings world-class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte’s 150,000 professionals are committed to becoming the standard of excellence. Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Member of Deloitte Touche Tohmatsu Copyright © 2009 Deloitte Development LLC. All rights reserved.