Credit crisis and talent crunch the themes for 2008

Dec 20 2007 by Nic Paton Print This Article

Go away, relax and enjoy this Christmas holiday while you can. Because next year looks like being a tough one economically for managers, but with still with plenty of opportunities for those ambitious and talented enough to succeed.

A raft of surveys published on both sides of the Atlantic have suggested that 2008 is going to be a stormy year, with businesses buffeted by the continuing fall-out from the credit crunch and tougher economic conditions.

But away from the economics the key management challenge will be the continuing shortage of good quality managers and other workers, although the upside is that this will also mean that, for talented managers, there may yet be opportunities aplenty.

In the U.S., a poll by executive recruitment firm ExecuNet has argued that, while American GDP will drift below two per cent next year, strong growth overseas will continue to boost revenues at multi-nationals.

This, along with the continuing departure of Baby Boomers and an ageing workforce, meant there would still be a steady stream of executive-level job opportunities in 2008.

Those with a strong record in business development and sales would be most in demand, it added.

Corporate executives now changed jobs on average once every 3.4 years, down from 4.1 years in 2002, yet next year there would be an increase in the number of six-figure job opportunities available to executives.

This, coupled with mounting pressure to meet short-term performance targets, would create a "spike" in voluntary turnover, it argued.

As the competition for executive talent escalated, succession planning would also increasingly be in the spotlight, it suggested.

At the same time a global study by consultancy Towers Perrin has projected just moderate salary growth in most countries next year.

In the U.S., salary increases were expected to average 3.9 per cent across all employee levels in 2008, it said, although for executives and senior-level managers the increase would be more like 4.1 per cent.

Next year would also see many organisations continuing to restructure their businesses, meaning employees would need to be excelling at their jobs if they were to survive, argued the consultancy Development Dimensions International and the Human Capital Institute.

Its survey of more than 700 HR executives, directors and managers in the U.S. and Canada found nearly three quarters were predicting an increased investment in training and development.

And nine out of 10 argued that "talent will be a primary differentiator of business success".

Report author Rich Wellins, senior vice-president at DDI, said: "Leaders need to be agile as organisations and industries change shape, creating a more critical need to have the right talent onboard."

Nearly three quarters of the leaders surveyed also expected to see an increase in organisational structuring, with one participant saying: "Everything we do now we will have to do faster, better and with fewer resources."

While organisations would be cutting jobs or restructuring, they would also still struggle to find talent.

In fact, nine out of 10 said competition for people with global skills would increase during 2008.

More organisations and countries would be competing for the same people, with 85 per cent predicting that India and China would become dominant players in world markets within the next three years.

Geographical borders, too, would continue to blur as the trade of knowledge and intellectual capital across countries increased, said 86 per cent of those polled.

"Limited resources and expanding global markets make training and developing the right individuals crucial for organisations to thrive. More and more organisations are filling leadership positions from the inside in response to the competition for global talent," said Wellins.

"In addition to trading knowledge internationally, teams themselves will be more geographically diverse. Leaders' roles will continue to expand with globalisation. They will have to manage more diverse teams and manage them over 'long distance'," he added.

Across the pond in the UK, a study published by the Chartered Management Institute argued that the key talking points during 2008 would be rising business costs, higher levels of debt and, again, a shortage of management skills.

Its poll of 513 individuals found the number of executives who were optimistic about the year ahead had decreased by a fifth compared with last year.

Asked specifically about business prospects for their organisations, four out of 10 claimed to be "optimistic", compared with 53 per cent last year.

Those who were "uncertain" about what next year would bring had risen from a tenth to a fifth.

More than half said rising energy costs would negatively affect their business, while more than one in three blamed the credit squeeze in financial markets.

A drop in consumer spending would hit businesses, too, with eight out of 10 predicting a rise in household debt and 40 per cent saying personal debt would increase.

Almost half pointed to the continuing shortage of management skills in the UK as posing a real challenge for the year.

One in five said they planned to seek promotion with their current employer and a tenth said they planned to learn a new language in 2008.

Nearly a third said they were aiming to make more money and nearly four out of 10 wanted to improve the balance between their personal and professional lives.

Jo Causon, CMI director of marketing and corporate affairs, said: "In the current climate, it is natural for employers to feel some degree of uncertainty.

"However, the decline in organisations developing their managers is a great concern. If employers fail to invest in the skills needed for long-term success, the UK will find it difficult to compete on a global scale in the future," she added.

The Confederation of British Industry, meanwhile, has downgraded its forecast for UK growth in 2008 for the third quarter running, because of the continuing credit market difficulties and record oil price rises, allied to weaker domestic and global demand.

In its latest quarterly economic forecast, it predicted an annual rate of GDP growth at two per cent down 0.2 per cent.

Nevertheless, Ian McCafferty, the CBI's chief economic adviser, said: "Whilst the 2008 slowdown may appear dramatic set against this year's strong growth, the fundamentals of our economy remain sound and talk of a full blown recession is overstated."

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