Chief executives are increasingly concerned with the availability of talent around the world, a problem that is especially acute in emerging markets.
The skills gap, combined with rising labour costs, is forcing CEOs and their companies to look for new talent markets, according to PwC’s 17th annual Global CEO Survey.
Sixty-three per cent of CEOs say the availability of key skills is the biggest threat to their organisations’ growth, a rise from 58% last year and 53% two years ago.
And, with half of CEOs planning to add staff in the next 12 months, the competition for talent is expected to intensify, the report said.
“The gap between the skills of the current workforce and the skills businesses need to achieve their growth plans is widening,” Michael Rendell, global HR consulting leader at PwC, said in a news release. “Despite rising business confidence equating to more jobs, organisations are struggling to find the right people to fill these positions.”
The report points out that talent concerns have been around for years but that CEOs haven’t always acted on those concerns. This year, for instance, 93% of CEOs said they recognise the need to make a change, or are already changing, their strategies related to attracting and retaining talent. However, 61% have yet to take that first step.
PwC’s report is not the only evidence of an imbalance in the global labour market. A recent CGMA report details how talent is projected to be in short supply in several major economies and finds that, in countries with relatively high unemployment, there are also skills shortages.
In the PwC report, CEOs in Africa (96%) and Southeast Asia (90%) are most concerned about the lack of skills.
Other findings in the survey, which drew the responses of 1,344 CEOs in 68 countries:
- 44% of CEOs feel the global economy will improve in the coming 12 months, compared with 18% who felt that way in 2013.
- 64% plan to make cost reductions, compared with 70% who planned reductions the previous year.
- The 50% who plan to hire in the coming year signifies an increase of five percentage points from 2013. But, the growth is not evenly spread across the globe: 77% of Middle East CEOs plan to hire, compared with 33% in Central and Eastern Europe.
- 41% say creating a skilled workforce should be a top-three priority for governments, but just 21% believe their governments have been effective in improving workforce skills.
The report lists five priorities that can help CEOs, HR, and governments tackle the talent issue:
- Emphasise HR: CEOs must make HR a priority in their organisations, and HR must be ready to supply insight related to training and reward strategies.
- Be digital: HR in particular should make full use of sophisticated analytics to spot talent trends and skills gaps.
- Embrace adaptability: Organisations should be more flexible in their approaches to talent, seeking out bright, adaptable people and teaching them the needed skills.
- Trust and be trusted: CEOs cited rebuilding trust as a priority in the survey. While pay raises seem to be rising, companies can’t keep upping the ante. Establishing trust and keeping employees engaged with meaningful work will be critical.
- Explain and collaborate: CEOs in general believe their governments are not doing enough to develop talent. The PwC report says companies should reach out to governments about what training is needed.
Related CGMA Magazine content:
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“The World’s Most Cost-Competitive Export Nations”: The Boston Consulting Group has tracked manufacturing costs in the 25 biggest export nations for about a decade. Find out which nation tops BCG’s 2014 manufacturing cost-competitiveness index.
—Neil Amato (namato@aicpa.org) is a CGMA Magazine senior editor.