As economic recovery heats up the competitive landscape, companies must hold onto top talent – and keep talent engaged in the pursuit of organisational goals.

While the global recession continues to play out, the signs of economic recovery have made UK companies mindful that they must emerge from the downturn more competitive than before. If anything, today’s changed business environment provides organisations with the perfect opportunity to reset their baselines and take a fresh look at the talent they have, the talent they need, and how to engage and reward that talent in the pursuit of company goals. For this reason, human capital planning is moving to the forefront of business planning for 2010.

Within the human capital domain, we understand that planning can occur at both strategic and programmatic levels. For UK companies and, indeed, many organisations worldwide, 2010 will be about both. Therefore, in September 2009 Mercer surveyed more than 150 organisations in EMEA regarding their 2010 human capital planning process for supporting business recovery and future business success.

Not surprisingly, almost two-thirds of employers expect the human capital planning process to be somewhat different for 2010, with cost containment being the primary driver of human capital decisions for 71 percent of respondents. Organisations are also realising that they need to be more flexible and prepare for a broader range of business scenarios as they consider their future workforce needs and associated costs. In addition, organisations are taking a close look at the employment value proposition they offer to employees, recognising that it must effectively attract, retain and engage the workforce needed to meet business requirements.

Figure 1. Several aspects of human capital planning will receive greater emphasis in 2010

Positions and people

This shift in focus invites us to take a look backward – to the pre-recession era of 2007, for example, when talent management was at the top of the corporate agenda and the key questions from CEOs were not about cost-containment but about workforce dynamics: Where is our existing talent? Have we got the right talent for the future? Where are the market hotspots to which we must deploy talent? Where are tomorrow’s leaders? How will we cope with globalisation, mobility and diversity? These questions still resonate, of course, but a few years ago they were at the core of a strategic talent management movement that was structured as a mix of positions and people – more specifically, a mix of critical positions and key people: mission-critical roles, hard-to-fill roles, specialist roles, and succession/pipeline priorities that required high performers, high potentials, emerging talent and key resources.

Indeed, distance (and cost) was no object, as talent mass-migrated to the US, the UK, Ireland, and western and eastern Europe from such emerging markets as China, India and elsewhere. But the recession has rather abruptly altered the focus of the talent management paradigm towards an emphasis on cost containment. Key talent is thus focussed on more operationally critical roles at the expense of customer-critical and strategically critical functions. But as economic recovery dawns, organisations must be ready to adjust their approach to talent management in anticipation of a recharged competitive context.

In light of a post-recession “new normal” – a business landscape that, while recovering, may be slower-growing than in pre-recession days – organisations face the challenge of rightsizing themselves, or rebalancing costs as corporate revenues may be reduced; rightshaping themselves, which requires a review of what constitutes core business and what does not, with a chance to reshape and refocus the organisation; and rightskilling themselves, or reassessing what skills and competencies will be needed for the recovery and to maintain competitive advantage.

Rightskilling looms as a strategic challenge, since the economic upturn isn’t going to be a uniformly strong recovery in all geographies. Already, signs of a solid rebound in Asia – amidst the roaring engine of Asia’s internal markets – foretell a talent flight from Western economies back to emerging markets. Skill shortages of engineers, project managers and sales/marketing professionals may result, with accompanying HR challenges.

Balance of value

Companies therefore must plan for 2010 – and well beyond – with a keen strategic sense not only of this shifting, post-recession landscape but of how to position their talent, and retain key talent, sustainably for the long term. Thus, the segmentation of talent becomes more vital than ever, as companies balance their value propositions to employees against employee value to the organisation. In terms, for example, of mobility and cost containment, international learning and development experiences for emerging and high-potential talents can have high value to both the employee and the employer, while opportunistic relocations for the sake of employee self-fulfilment (the rise in lateral-careering global nomads, in other words) do not. As for leadership, especially for multinational corporations, the careful segmentation of experienced local professionals with key skills in host countries is balanced by the segmentation of top strategic talents in corporate headquarters. 

At the end of the day, retaining key talent is more than a matter of properly segmenting workforces. There is also the increasingly complex challenge of managing multigenerational workforces – with four generations now in the workplace, representing different values. These include the waning percentage of “traditionalists,” borne between 1928 and 1945, whose focus is on stability and security; the Baby Boomer generation, with its idealism and need for personal expression; Generation X, with its focus on free agency and independence; and the fast-emerging cohort of Generation Y workers, born since 1980, whose social activism, tolerance of diversity, and propensity for social networking and collaboration are beginning to define the workplace more and more.

In planning for 2010, then, all the above-cited factors need to be carefully weighed as organisations face a recovering – though much-changed – economy. The new year brings a renewed imperative to grow and compete for both customers and talent while holding on to critical role players and rightskilling for the future. Companies that have learned the strategies for developing and deploying the right talent must take the next step in a post-recession economy, balancing cost, reshaping themselves, anticipating future demand for products and services – and engaging the next generation of employees by understanding their values and their value to the organisation.

This article is based on a presentation given by Jim Matthewman at the UK HR conference, held in London on 1 July 2009.

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