72% of Businesses Consider Lack of Skilled Talent Availability Top Challenge

One of the major effects of the COVID-19 pandemic on businesses was that it forced them to digital transform at an astronomical rate to survive. According to McKinseyOpens a new window , the pandemic accelerated the adoption of digital technologies by several years, and many of these changes are here to stay for many years. Further, the new business landscape demanded new skills to help companies survive and thrive. This resulted in companies placing more value on employees and job candidates with the knowledge and skills required for the new era of business.Â

However, according to a recent study by Russell Reynolds, the lack of availability of skilled talent has become a major challenge for many businesses. And a significant number of companies are not prepared for this threat.Â

The study surveyed close to 1,600 C-level leaders, next-gen leaders, CEOs, and non-executive directors to track the critical threats to their organizations’ health, their readiness to face them, and the indicators of confidence in leadership. Here are the study findings in detail.

Lack of Availability of People With Skills Will Impact Business

The study wanted to know the factors that would impact businesses in the coming year. About 72% of the surveyed global business leaders believed that the top issue for them was the lack of availability of leaders and employees with key skills. And this was up from 59% last year. The battle for talent superseded other challenges, such as health threats, uncertain economic growth, and geopolitical uncertainty as the top concern. Progressive leaders understand that they need adaptable and resilient people at all levels to navigate the geopolitical and economic uncertainties.

Top external factors impacting business health in next 12-18 months

Source: Russell Reynolds Associates’ 2022 Global Leadership Monitor SurveyOpens a new window

The study also found that 59% of the respondents who cited lack of talent and skills as the top challenge are not prepared to face this threat.

Challenge Exists Both in Hiring and Retaining Employees

The study found that the challenge of this lack of availability of skills is not just related to attracting talent but also to engaging and retaining existing talent. We now live in an era where employees have the upper hand, more power and voice. Companies under-investing in understanding and engaging their employees are at a massive risk of losing people with valuable skills.Â

The study also found that employees have become important stakeholder groups in a company. About 51% of the respondents agreed with it and also believed that they would impact the organizational strategy the most over the next five years. This figure was up by 10% compared to last year. Further, employees are in the second spot, just behind customers/consumers as important stakeholders, and the gap is significantly narrow. According to the study, this gap closed by 18 percentage points in one year.

Top stakeholders most impacting organizational strategy over next five years

Source: Russell Reynolds Associates’ 2022 Global Leadership Monitor SurveyOpens a new window

Turnover Risk at Senior Levels Is Real

One often overlooked fact when talking about competition for skills and a tight labor market is the turnover of senior leaders. About 45% of respondents said that turnover at executive levels had increased in the last year. Further, 56% of next-generation leaders intend to join another organization if the opportunity is right. This means that attrition at this level creates an operational challenge and a risk to future leadership succession. Simultaneously, losing a next-gen leader, who acts as a bridge between the employees and C-suit, amplifies the problem of engaging with a purpose-driven employee base.

What would convince these leaders to stay? A more transparent career advancement plan and a succession path to a higher leadership position is a good place to start. For 55% of the respondents of this generation who changed jobs last year, career advancement was the top driver of attrition. This may be in part due to succession planning problems. Over 70% of C-suit and next-gen leaders are not confident about their companies’ succession plans; even 57% of CEOs lack confidence.

Companies cannot forget the needs of their top-level executives as well, as 44% of them are planning to change companies today. One critical lesson for HR leaders and CEOs is that among the top-level executives who changed jobs recently, finding better organizational culture and a different leadership type were the top reasons for quitting.

Top reasons for changing employer in past year

Source: Russell Reynolds Associates’ 2022 Global Leadership Monitor SurveyOpens a new window

See more: Data Driven HR: The Key To Retaining Talent and Enhancing Employee Experience

The Key Implications for Leadership

Two critical implications for leadership come to the fore due to the talent availability challenge. The first is that it is necessary to ensure the capacity and capability of leadership teams to engage in people leadership to create the deep engagement required to retain and make use of the talents and skills of an empowered workforce. Secondly, next-gen leaders are key to achieving this. Retaining and engaging them depends on having more transparent succession practices and robust and engaging development plans.

This means organizations will have to explore new strategies and approaches to cultivating a desirable working environment if they haven’t already done it to retain and attract talent with the right skills in the wake of the Great Resignation. Further, they should also put efforts into training existing talent in the required skills to keep up with the rapidly changing business environment. After all, 38% of respondents of the Eagle Hill studyOpens a new window said they were not confident that they were getting the right skills training for the future.

Ultimately, organizations must focus on creating a culture that inspires the most valuable talent to stay, provide them ample opportunities for growth, and create strategies that attract people with the right skills, thus alleviating the concern about the lack of talent availability.

What steps have you taken to attract your most skilled employees and important leaders? Let us know on FacebookOpens a new window , TwitterOpens a new window , and LinkedInOpens a new window .