The looming talent crunch will have a devastating effect on the competitiveness of organisations which cannot rethink their approach to talent management, a new report has warned.
Impending baby boomer retirements, a widening skills gap and outdated approaches to talent management are combining forces to produce a "perfect storm" that threatens long-term business performance, according to a new survey conducted by the Human Capital practice of Deloitte.
In a global survey of 1,396 HR practitioners, seven out of 10 said that attracting new talent poses the greatest threat to competitiveness. Two-thirds put the inability to retain key talent as their greatest challenge, while a third pointed to workers with inadequate skills.
"Deloitte's new research points to an inescapable conclusion: the widening skills gap is a global phenomenon, particularly among the categories of key workers who disproportionately drive an organisation's performance" said Deloitte's Ashley Unwin.
"This trend will leave behind companies that do not begin to rethink their approach to talent management."
More than seven out of 10 respondents confirmed they were experiencing, or expected to experience, a shortage of white-collar workers.
Global demographic changes show that the number of 15-29 year olds entering the job market is steadily contracting, while growing life expectancy is further contributing to the problem.
Yet despite this, only one in seven identified approaching baby boomer retirement as a concern, despite overwhelming evidence indicating a large exodus of experienced staff from the labour market in the next three-five years.
"Retirement legislation is under review in some countries but the current situation sees skilled workers continuing to leave their profession or trade around late middle age and too few people are joining the workforce to fill their place," Unwin added.
"Governments are able to partially alleviate the depth of talent pools through policies on immigration, taxation and education but their impact is likely to be superficial in the face of global working population forecasts."
The survey found the level of significance accorded to recruitment and retention of able staff was consistent across every region surveyed, irrespective of the size of the organisation.
Almost half (46 per cent) of those surveyed said that demographic changes and the impending skills shortage had been discussed at board level and most identified a clear link between talent management and business performance.
More than half (54 per cent) believe talent management issues will impact their overall organisational productivity and four out of 10 say it affects the firm's ability to innovate. A third also acknowledge it will limit their ability to meet production requirements and fulfil customer demand.
Deloitte's Sabri Challah said it was encouraging to see that so many organisations have discussed the impending skills shortage at board level.
"Given the potential impact on business performance, it is essential that board-level commitment is gained to help drive rapid change to talent management strategies," she said.
"Firms must adapt their talent-management strategies quickly, so that they can continue to attract the best people, nurture them to help maximise their contribution, and retain them, rather than lose them to competitors."
Ashley Unwin added: "Companies can avoid sustaining a direct hit from the looming talent crisis by rethinking and reinventing their talent management processes into a well-designed talent strategy that drives productivity and differentiates a company from its competitors."