Canadian companies poorly prepared to manage future talent needs

Sixty-three per cent of Canadian executives agree that having talent management processes closely linked to business strategy is critical to help an organization achieve its goals, according to a recent survey by Towers Perrin. However, only 22 per cent of those same respondents have integrated their current talent management processes. And fewer than half rate many of their current talent management practices as effective.

If a connection between business strategy and talent management is so important – particularly in today’s environment – why are so many companies slow to execute it in an integrated and effective way? The answer may lie in the fact that almost half (49 per cent) of those surveyed also believe full integration with business needs is one of the most challenging parts of the entire talent management process to implement and sustain.

“Companies are making strides in connecting talent management activities with business strategy, though admittedly the obstacles can be daunting,” says Kevin Aselstine, managing principal of Towers Perrin’s Toronto Office. “Implementation challenges arise from all corners as companies deal with current recessionary pressures – from cost concerns, to lack of senior leadership commitment and focus, to constantly shifting business priorities. Yet, as organizations emerge from this downturn and the fight for talent intensifies, companies that are doing talent management ‘right’, via an integrated approach, will have a significant competitive advantage.”

The results of Towers Perrin’s recent talent management survey affirm that the positive impact of effective integration is worth the effort. Those organizations with fully or mostly integrated talent management approaches are far more confident about the effectiveness of various processes than those without integrated approaches.

For example, Canadian organizations with more integrated systems are far more effective in their Performance Management processes (86 per cent are effective, versus only 54 per cent for those with less integrated systems).

“These differences can put companies at a significant disadvantage as the economy strengthens and the labour market begins to follow suit,” Aselstine says. “Those without effective talent management processes, especially around high potentials and top talent, will not only have to worry about losing those individuals to other organizations, but are likely to have a harder time attracting new talent and bringing people on board fast enough to effectively support their growth focus. Time can become the enemy here if a company finds itself behind competitors because it can’t source, hire and deploy the right people fast enough to make a difference in results.”

Who Is “Talent”?
The very definition of talent is also evolving and expanding, according to the Towers Perrin survey results. Specifically, respondents now view talent as including critical contributors at all levels – a significant shift from the traditional focus on current and emerging leaders. While senior leadership was highlighted as a key talent segment by the largest number of respondents (67per cent), other employee segments followed closely behind: 

  • Mid-level potential leaders (cited by 61per cent)
  • High performers (cited by 59 per cent)
  • Key contributors/technical experts (cited by 55 per cent)
  • Those in roles critical to delivering the business strategy (cited by 48 per cent)
  • Those with skills in short supply and high demand (cited by 36 per cent).
“We’re encouraged by this expanding view of talent, since cultivating and managing people with critical skills at all levels are key components in any business’ long-term success,” said Aselstine. “It’s interesting, however, that so-called ‘hot-skills workers’ – those with skills in short supply and high demand – actually fall lower on the list of defined talent segments. This suggests companies currently may be focusing on buying, not building, such talent, recognizing that they are the least likely to stay put in a job anyway, and therefore are more of a short-term ‘rental’ than long-term investment.”

Talent Management in the Economic Recovery
Canadian survey respondents expressed cautious optimism about the economic rebound; just about three-quarters expect to see the economy turn around in 2010, with the group evenly divided about recovery in the first versus second halves of the year. And while 60 per cent indicated their top strategic action over the next 18 months remained expense reduction, a smaller portion of the group saw growth in their immediate futures, with 41 per cent citing expansion into new product lines, 35 per cent citing expansion into new markets, and 31 per cent forecasting medium-scale acquisitions. Optimistically, 80 per cent of respondents do not foresee large scale workforce reductions on the horizon.

In outlining their talent management priorities, the respondents focused chiefly on the “tried and true” – core practices they felt they did well, including performance management and assessing and developing high potentials and top talent.

They were less likely to emphasize a number of other practices that will arguably become more important to success over time, including manager training, mentoring of key talent, and career development and deployment. More disturbing, these were all areas that survey respondents saw as points of weakness in their current talent management practices, suggesting that their adherence to the status quo in setting talent management priorities could set them back significantly in building up a broader and more leading-edge set of processes for the future.

“As economic recovery speeds up, companies are likely to find themselves supporting a leadership team and workforce with new expectations and priorities,” says Aselstine. “Building efficiency in the more challenging areas of talent management, like onboarding, mentoring, competency identification and manager training, will be critical in effectively supporting the emerging new employee deal and long-term business priorities.”

This survey was conducted online in both the US and Canada, with over 400 HR and business executives, including 191 Canadian respondents in a cross-section of large and medium-sized organizations across all industry sectors.

Towers Perrin is a global professional services firm that helps organizations improve performance through effective people, risk and financial management. More information about Towers Perrin is available at