Skills shortages threaten to dent corporate growth: PwC study

Two out of three CEOs worry about competitors poaching their best talent as global competition heats up. One-third say skills shortages already are hurting innovation.
Written by Joe McKendrick, Contributing Writer

Sixty-five percent of CEOs participating in a recent survey worry about competitors poaching their best talent as global competition heats up over the next few years. The same number also express concern about a limited supply of candidates.

These are some findings from PwC's latest survey of CEOs from across the globe.

The results, based on the input of 1,258 business leaders, also indicate a hiring boom is imminent. A total of 81% say their corporate headcounts will increase over the next three years.

The survey also covered business leaders' approaches to attract and retain skilled employees. Many are changing benefits schemes and pursuing non-financial incentives, such as greater opportunity for international experience, to remain attractive employers. Others are redoubling measures to train employees with the skills their businesses need to compete, beginning with a greater emphasis on apprenticeships and internships.

The growing shortage of talent is also putting a crimp on growth prospects, the survey shows. Forty-three percent report increased personnel costs, and 31% say their capacity to innovate has been diminished as a result. Another 29% say they missed market opportunities as a result of scarce talent.

"Future prospects for the US economy are unlikely to improve without a long-term solution to talent shortages that exist today," the report says.  "Even in a weak labor market, more than 40% of US CEOs say their talent-related expenses rose more than expected, a reflection of the acute skills mismatch problem they face: talent shortages amid high unemployment."

The problem could worsen as baby boomers retire, the report adds. "Let’s face it. There are 80 million Baby Boomers who are going to retire over the next five to seven years, and they’re going to be replaced by 40 million Gen Xers," says Michael White, president and CEO of DIRECTV.

Still, companies need to cast a wider net across all age ranges. "We need to retain older people who have technical skills and want to continue to work," says Richard O’Brien, president and CEO of Newmont Mining Corporation. "Do we adopt new policies where people can work part time or work from home?"

The PwC survey finds 84% are making direct investments in workforce development. "But piecemeal measures won’t suffice," the report warns, urging measures "such as retraining workers left behind by the changing economy and easing restrictions on global workforce mobility."

Obstacles to global workforce mobility are a frustration to many CEOs. David Cote, chairman and CEO of Honeywell, is concerned about looming engineering shortages. "The US could have a much more open-minded immigration policy that allows foreign engineers to come here, or for foreign students studying engineering here to stay in the US to work and seek their fortunes. We ought to be encouraging that, not discouraging it."

While long-term company loyalty sees like something from a bygone era, one major company still makes it part of its corporate culture. "We want people who want to make Vanguard a career, and that has been an important element of our success," says F. William McNabb III, chairman, president and CEO of The Vanguard Group Inc. "We have very low turnover. We have people who spend 20, 30, 40 years with the organization. We think there’s great value in that."

This post was originally published on Smartplanet.com

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