Recessions and talent management

by 27 May 2008

Business performance is dependent on talent in all economies, and retention of top performers is especially important during times of economic challenge, write Alice Snell and Allan Schweyer

The currency of business success today is talent – an organisation’s key people, from its current and future leaders to its critical frontline employees. Yet rarely do organisations have an overarching “talent strategy”. When strong business cycles create more intense workforce challenges, management demands aggressive responses. Conversely, when strong economies turn weak, talent strategies and workforce expenditures may seem non-essential. However, business performance is dependent on talent in all economies.

The Human Capital Institute (HCI) and Taleo Research conducted a poll of HCI members in April 2008 to get a sense of what organisations are doing to address strategic talent management challenges and whether the economic downturn (cum recession) is impacting plans or reducing today’s unprecedented urgency around talent management. The emphasis of the poll was on large companies of 10,000 or more employees.

More than 70 per cent of organisations perceived that talent management was essential for business success and an important component of a compelling employee value proposition. Among the large organisations represented in the survey (25,000 employees and above) this number increased to 80 per cent.

Despite the US economic slowdown, the majority of respondents (86 per cent) predict that talent shortages will remain the same or increase over the next 12 months. In response to economic challenges, respondents emphasised the need to drive a focus on performance management in order to retain top performers (67 per cent). Career planning was considered one of several important ingredients in improving top talent retention.

A full 80 per cent of respondents believe that talent shortages are still impacting their growth plans – downturn or not. Where hiring is taking place, almost 70 per cent emphasise a focus on quality of hire.

Development of talent strategy

According to more than 65 per cent of respondent organisations, executive leadership is driving their development of talent strategies.

Because many challenging workforce issues confront HR – including heightened competition for skilled workers, impending retirement of the baby boomers, low levels of employee engagement, etc – sharing talent management responsibility with line managers is seen as essential. Sixty-nine per cent of respondents already share at least some talent management responsibilities between HR and line management; this rises to 80 per cent among organisations of 25,000 employees or more.

Given the uncertain future and a general belief that the competition for talent will continue unabated, organisations are actively pursuing the identification and development of high-potential pools to eventually fill top-tier jobs and build a strong management team.

Investment in infrastructure

Results suggest an increasing trend in the use of HR/talent management solutions and most respondents have plans to acquire more.

When asked about the barriers to the successful implementation of talent management, respondents chose the lack of a unified talent management solution (49 per cent); and weak line management buy-in (35 per cent) as the top two inhibitors.

Metrics and measurement

Overall, increasing the performance of individual employees (72 per cent), improving retention levels (68 per cent) and “business goal achievement” (61 per cent) are the three most important measures and expected outcomes of investment in talent management.


In general, respondents do not expect the economic downturn to impact the competition for talent or their talent management plans, urgencies and expenditures.

With this perspective, it is likely that a downturn (even a mild recession) will not impact the progress organisations (particularly large ones) are making in their talent management preparedness – nor the challenges they face.

This research and survey will be re-conducted for Australia in June/July 2008. The results will be shared in this column.

By Alice Snell, Taleo Research and Allan Schweyer, Human Capital Institute