Global talent & skills race
Although the global talent and skills race constitutes a risk megatrend in itself, talent shortages add to other exposures, notably including efforts by TMT companies to make the digitalization and technological advances they need to remain competitive and profitable.
TMT executives say that inadequate or badly trained talent can contribute to operational vulnerabilities, regulatory and legal exposures, and even business model and strategy shortcomings.
Talent gaps have long haunted the TMT industry, particularly when it comes to digital types, and the problem will worsen as rapidly changing technology becomes more complex and expands to new areas of the business. TMT executives will also be facing competition from wholly unrelated industries that are embracing digital, such as department stores and shipping companies, that will heat up the battle for top talent.
What talent-related risks lie ahead? TMT executives share these concerns:
Talent identification & recruitment
Traditional talent pipelines are limited or obsolete and companies need to deploy more creative and effective solutions to identify and attract key (digital) talent.
Compensation is important but hardly enough as potential hires often are more concerned about skills development and personal satisfaction.
Brand matters: Your company’s values, image and culture can be an asset or a liability.
Employee engagement & retention (The employee experience)
Employees want more lifestyle choices, including remote working opportunities that many came to value during the pandemic.
More meaningful work and robust succession planning are needed to discourage talent losses for non-monetary reasons.
Companies must provide more creative, effective solutions for rapid technical up-skilling of existing staff to keep pace with technological change.
Diversity & inclusion
Traditional technology company cultures linger, hindering recruitment and retention of talented people, including staff that identify as neurodivergent, women and minority groups.
Failure to diversify workforce shuts off potential pools of fresh ideas and creativity.
Diversity and inclusion efforts need to be linked to improved operational effectiveness – and the positive impact on profits.
Technology-dependent and engulfed by digital transformation, TMT companies have an unending need for talent. Yet, recent Willis Towers Watson research suggests that comparatively few companies feel they have found the secret to effective recruiting and retention of key talent. This is particularly the case when it comes to meeting new and emerging digital requirements.
Many executives sense their recruitment efforts have focused excessively on compensation when potential hires may want an assortment of non-financial benefits, such as a clear career path, skills and cross training opportunities to stay abreast of technological change, and a congenial and responsible corporate culture. They want the feeling they are contributing to enterprise success, perhaps in a variety of corporate functions. Importantly, they also want more lifestyle choices – something that COVID-19 has opened the lid of the box on and given staff a taste of flexible working.
While these issues can lurk under the radar of Boards, recruiting shortcomings are exposed when key talent is in short supply. Today’s talent competition has encouraged a number of creative recruiting efforts aimed at previously unrecognized or undervalued pools of talent. Some companies are recruiting professionals with little or no technical training but have an aptitude for thinking creatively. Others are hiring talent on the autism spectrum, recognizing the unique skill-set potential that colleagues on the spectrum can bring to certain technical positions or roles.
Diversity and inclusion, with the hiring and promotion of groups such as women and minorities, are also gaining an important role as TMT companies increasingly see a link between diversity and superior operational and financial outcomes. There is also a creativity dividend and a tighter relationship with customers when a workforce more closely resembles its surrounding culture or a diverse global customer base.
How can we hire the people we need to hire at the speed we need to hire?
Senior TMT Executive
Talent hurdles grow as significant TMT risk concern & complicate mitigation of other business exposures
In a previous study, Willis Towers Watson identified the talent and skill shortage as a distinct risk megatrend in its own right. However, talent gaps pose risk management challenges across the whole spectrum of a business, from regulatory and geopolitical exposures to operational vulnerabilities and business strategy.
Factors behind today’s global scramble for talent include the digital transformation of non-tech companies and market distortions created by the 2020 emergence of COVID-19. But these external factors only partly explain the talent shortage that an organizational consultancy, Korn Ferry, expects to reach 4.3 million TMT workers by 2030.
Despite many creative efforts to win the competition for talent, comparatively few companies have holistic talent management programs in place. They may do a wonderful job identifying and recruiting the best and brightest digital talent but then they lose the talent to a competitor who is better at keeping the employee engaged and on a promising career path.
In other cases, we see companies that seem trapped by corporate cultures that discourage new ideas and innovation. There is no better example than the fabled “tech bro” corporate cultures that leave companies blind to talent options that are emerging through workplace diversity and inclusion (D&I). While there may not be one, common, definition of what constitute a ‘tech-bro’ culture, respected sources such ass BreatheHR , Inc.com Wired.com have all provided a perspective.
If they are to win the talent race, business leaders need to support the process of recruiting, engaging and retaining top quality talent with the same level of attention they would give to a groundbreaking new product or service. This is an area we are seeing forward looking businesses embrace as they consider the talent they have as an intangible asset, often using technology as a connector between talent and employee experience.
Willis Towers Watson Insight Innovating around talent risk - The role of technology in ensuring
Jennifer Kelly - Willis Towers Watson Global Product Leader for Embark
Willis Towers Watson Insight Fredrik Motzfeldt – Willis Towers Watson Great Britain TMT Industry Group Leader
The last 12 months have shown how vital it is for employers to provide an ever improving, increasingly digital employee experience, with a premium on HR technology.
In recent years, competition for talent has driven a real shift from an administration-based experience toward a more consumer-like talent/employee experience. This trend has accelerated with COVID-19 and the transition to remote working. Employers are evolving how they connect with their employees to keep them both engaged and informed. How employees feel about their experiential benefits matters. A great employee experience translates directly to the quality of business performance and financial results.From a technology perspective, an employee experience platform can better connect the various employee applications used by organizations today. There is an abundance of information out there for employees to consume, and it can be
overwhelming. The focus of these platforms is to provide employees with the information that they need, when they need it, and to drive engagement, action and behavior.
Our work with clients through Embark suggests the following formula for a better employee experience:
Targeted and personalized communications that speak to employees about what matters to them. Ample, intuitive and user-friendly content on a wide range of topics across the employee lifecycle. Integration with other employee platforms to drive traffic and engagement to important sites and systems from one place (“single point of entry”).
Becoming the primary communication and engagement channel, bringing information to employees’ fingertips, no matter where they are, with a mobile app to create an important engagement touchpoint.
Simplifying and strengthening the employee user experience while unifying the entire work experience across wellbeing, benefits, pay, career and other factors, addresses the desire of employees to have access to a consistent, simple, high-quality user experience from a single point of entry. The move to an employee experience platform shouldn’t be complicated. It can start small, establishing a simple, quality baseline of digital communication. Focusing on the top priorities of your organization allows you to deliver a quality experience quickly and expand as needed.
Analysis
Our latest research reveals important differences. For one, TMT respondents are redefining “compensation” risks to include a widespread lack of lifestyle choices and investing in in-house development programs to engage and retain vital digital talent. This was closely related to risks associated with key talent attrition and increased talent mobility.
Heightened risks also include the lack of robust succession planning for digital talent and the absence of workplace-enabling technology and remote working set-up, the latter of particular concern in light of the COVID-19 pandemic that forced many employees to work out of the office.
Five years ago, risks associated with the talent and skills race ranked below regulatory and legal risks, digitalization and technological advances, business model and strategy pressures, and operational complexity and vulnerability. The relative priority appears to be changing.Flexible Work and Rewards Survey 202 1
Business models and strategies are changing rapidly. As we highlighted in the business model & strategy pressures trend, Sinclair Broadcast Group, originally focused on over-the-air broadcasting, quickly moved to scale up its digital services. This new business model required a whole new staffing approach to hire, retain and deploy employees and business partners with deep digital and technical skills.
Alongside these industry battles for talent, the TMT industry is also affected by changes in unrelated industries. Just look at how major retailers are scrambling to expand digital resources. TMT companies may not see retailers as business competitors, but the new retail business models further tighten the race for recruiting and hiring the best available digital talent.
Employers that create a flexible workplace with automation adaptable policies and an ehanced employee experience will be better positioned to compete in the new world of work.
This need for talent has been described as a “war” for talent by one executive, forcing new approaches to finding or developing the talent necessary in the age of digital transformation.
Some companies have begun recruiting employees without a digital pedigree, instead seeking employees who exhibit such traits as curiosity, creativity and a willingness to innovate. Disney and other companies are finding that these employees can be trained to gain digital skills while adding a higher level of creativity and innovation to the enterprise.
Technology employees are also being given opportunities to better integrate with other functions. CompTIA, in its Cyberstates 2020
Employee satisfaction must be part of the equation. It’s important that companies expand their tech talent pipeline. But this is of only short-term value – and an expensive mistake – if TMT companies fail to recognize that employees want more interesting work, better opportunities, and have little patience if they feel badly managed or unchallenged.
“It’s not just technical expertise,” as one TMT executive told us. “We need people who are curious.”
Consider for example Disney’s CODE: Rosie program to bring female employees with non-technical roles into new jobs within the company’s technical operations. A training program introduces the employees to computer science and programming languages before sending them into a yearlong apprenticeship within Disney’s technology teams.
The goal of the Disney program is explained in the CODE acronym -- Creating Opportunities for Diverse Engineers. “Rosie” is a bow to Rosie the Riveter, the U.S. symbol of the country’s working women in World War II. Other companies also are taking a broader view of the talent pool if not to the same degree as CODE: Rosie.
As a consequence, forward looking TMT companies are taking new approaches to employee retention. These actions include offering the professional experience of “moving around”, but within the business. The employees enjoy the experience and employers are reaping the benefits of the creativity dividend as they find these rotational programs are a good way to spread new ideas throughout an organization, ideas that might lead to product and service innovations, as well as operational efficiencies.
Let’s be clear: Employees will always value compensation and benefits. But it doesn’t all boil down to money. Many of the more talented employees might be lured to another company where they will feel they are making an impact on the business or find more opportunity for movement and growth.
Sensitivity to employee needs and expectations deserves at least as much attention as investment in a new technology. As one of our respondents noted, “It is a mistake when people management is less important than managing technology.” As new generations move into the workforce, they are expecting this as a standard, not a nice to have.
Diversity & inclusion
At the risk of overstatement, we find that U.S. companies too often apply simple metrics to measure the success of D&I programs. The thinking goes like this: “About half of our workers are women, and we have 20% minority employees. So we’re done.” Companies in Europe and Asia are less likely to apply specific metrics. They often take less formal steps, such as encouraging hiring managers to have an open mind about diversity and inclusion.
We offer extremes to illustrate a point: Neither approach leverages the operational and financial benefits
“Leaders should focus on the business results of diversity and inclusion rather than see it as a moral thing or something that amounts to window dressing,” noted one executive. “Diversity gives better business results. It’s that simple.”
There are many TMT standouts in the D&I space. For example, Microsoft puts its full corporate backing into a vigorous D&I program. Microsoft reports modest, but steady progress while leaving no doubt about its D&I commitment in the company’s Global Diversity & Inclusion Report 2020.
SAP, a leading software company, started its Autism at Work program in 2013 to foster innovation though the abilities and perspectives of people with autism. The company sees people on the autistic spectrum as an underutilized pool of talent. The Autism at Work
SAP’s Autism at Work (AaW) program leverages the unique abilities and perspectives of people on the autism spectrum to foster innovation in the company’s efforts to help customers become “intelligent enterprises.” The program, launched in 2013, now has nearly 200 SAP colleagues in 25 different types of jobs in 16 countries.
AaW was designed to connect with an underutilized talent source by reducing barriers of entry so that qualified individuals can fully develop their potential. SAP sees AaW as a force multiplier for autism acceptance, a differentiator with its customers, and evidence of SAP’s position as an employer of choice.
The program also is yielding financial and operational benefits. For example, Nicolas Neumann, an SAP employee from Buenos Aires who is on the spectrum, won the 2020 Hasso Plattner Founders’ Award , SAP’s highest employee recognition, for developing a groundbreaking tool to simplify accounting processes. Still in his early 20s, Nicolas devised a way to reduce processing times for complex cross-company invoices from three days to 20 minutes.
Pleased with the results of its program, the company started the SAP Autism Inclusion Pledge initiative to help other companies reshape their thinking about employment possibilities for individuals on the autism spectrum. Organizations
who take the pledge receive access to a variety of resources that help them start, expand, or enhance an autism inclusion program.
“When organizations provide a tangible (and psychological) safety net for workers to be themselves, and not have to pretend or blend in, then the result is more innovation and incredible value,” according to Lloyd Adams, east regional managing director at SAP. “The challenges brought about by the current global pandemic have only accelerated these trends and augmented the need for greater neurodiversity.”
For additional information on the work SAP is doing in this area, please visit: SAP Autism Inclusion Pledge
Unfortunately, too many TMT companies, and technology companies in particular, allow a culture that many women and minorities find uncomfortable. We’ve seen this culture up close and find that “tech bros” (as also discussed above) are oddly limited by their strong ideas and a preference for working with people who share similar views and prejudices. There is a correlation, to our thinking, between a lack of gender or racial diversity and a lack of innovative ideas.
It would be a mistake to think of D&I as a particularly American or European challenge. Even countries with homogeneous cultures and seemingly fixed social traditions are having to look at workforce diversity in a new way. Just ask Yoshiro Mori, the octogenarian head of the Tokyo 2020 Olympics organizing committee who was forced to resign after saying that women talk too much.
Willis Towers Watson has described D&I this way:
Innovation doesn’t happen in a silo. If inputs are limited, then outcomes are also limited.
To solve critical problems, we need to foster an inclusive culture that encourages diversity of thought, ensuring visibility for ideas and innovation on a global scale when faced with global challenges.
An inclusive culture is achieved when all colleagues have the chance to contribute.
“Diversity of opinions really helps to improve basic operations and efficiency,” a member of our TMT advisory group noted. “Different perspectives bring together different ideas. The worst thing a company can do is to have the same people with the same background coming to the same answers each time. This creates a flywheel effect.”
There are, to be sure, reputational benefits to be gained from a D&I commitment. Some companies leverage forms of diversity to define the brand. For example, Verizon Apple has taken a strong public stand for the U.S. immigration program known as Deferred Action for Childhood Arrivals, or DACA.
While D&I is not a “metrics only” program, some metrics are highly illustrative. Women remain underrepresented in most technology jobs at TMT companies. One estimate puts female workforce participation at only about 25% of technology positions. A Disney-type CODE: Rosie program is one way to deal with the disparity and gain the business advantages of diversity.
As the TMT sector embraces the advantages of D&I, they should also consider the broader landscape and direction of travel. Many of these issues cannot be dealt with in isolation and considering D&I as part of the ESG strategies will be an important step to ensure ongoing commercial success.
Willis Towers Watson Insight Steve Becker – Willis Towers Watson U.S. Northeast TMT Industry Group Leader
Willis Towers Watson has long supported the strengthening of sustainable investments in the form of ESG strategies in business. Sustainable, ESG-driven investment has gathered significant momentum in recent years. While the reasons are familiar, importantly they show no signs of slowing. Amid regulatory pressure, reputational risks and opportunities, increased public awareness and media attention, sustainable investment has moved up institutional investors’ agendas and, indeed, many are applying specific ESG benchmarks in making investment decisions.
I nvestors place increasing value on the mutual relationship between economic success and sustainable commitment. Asset owners with truly long-term return mandates, in particular, are considering the impact of ESG and sustainability themes on their investment returns. The “stick” of regulation, supported by guidance from oversight and industry bodies, and (more recently) driven by
demand from shareholders, has given ESG-led investment strategies a growing sense of urgency and led to significant changes in Europe and beyond.
Companies that manage to ESG principles are more often seeing ESG as the basis for long-term economic success. Established business models are being replaced to reduce climate impact while delivering sustainable products and services that ensure growth.
Diversity and inclusion form part of the “S” in ESG. Creating a more inclusive workplace is the right and smart thing to do. When the workforce and leadership reflect society’s diversity, companies are better able to put their fingers on the pulse of the public they serve. As a business, this will enable smarter decisions and anticipate cultural shifts rather than react to them.
Why do investors value diversity? As organizations prepare
A recent BCG study suggests that increasing the diversity of leadership teams leads to more and better innovation and improved financial performance. In both developing and developed economies, companies with above-average diversity on their leadership teams report a greater payoff from innovation and higher EBIT margins.
Willis Towers Watson Insight Steve Becker – Willis Towers Watson U.S. Northeast TMT Industry Group Leader
Consistent with other research linking diversity to improved financial performance and higher stock prices, the BCG study saw companies with greater (gender) diversity as a better bet. Just as interesting were the value judgments behind this assessment. Participants felt that diverse companies were:
More ethical. More likely to think outside of the box. Less prone to political conflicts. More likely to avoid political or public policy missteps.
Diverse companies are seen as more desirable places to work. In our work with companies around the world, we have found that a diverse, inclusive approach to business can increase employee productivity and add to job satisfaction while contributing to better operational performance.
It’s no secret that the tech industry has stumbled, struggled, and in some cases outright failed when it comes to building inclusive workplaces where women, people of color, members of the LGBTQ community and other underrepresented groups are adequately represented. It doesn’t help matters when tech company boardrooms and C-suites are packed with men who may have climbed up a career ladder within a “bro” culture that many women and minorities see as hostile.
According to MarketWatch high-profile controversies related to how minority employees are treated. Unfairness, stereotyping and a lack of opportunity for professional growth are cited as some of the reasons why talented people from underrepresented groups voluntarily leave their jobs in the tech industry.
Until D&I is prioritized alongside other important business targets, attrition of talented folks is likely to continue. We take it as a positive sign that the influential Silicon Valley Leadership Group recently announced an initiative urging its member companies, which include hundreds and encompass Big Tech, to fill 25% of their executive positions with those from underrepresented groups by 2025.
“The numbers and data dispel the notion that diversity is not connected to a business case,” SVLG Chief Executive Ahmad Thomas told MarketWatch. He said that as a black person, he believes it’s “the right thing to do,” but that ultimately “business competitiveness drives this” new effort.
Willis Towers Watson Insight Steve Becker – Willis Towers Watson U.S. Northeast TMT Industry Group Leader
In addition, investor groups are pressuring companies in different sectors through lawsuits and shareholder proposals. Nasdaq Inc. has proposed diversity requirements for Boards of companies that list on its exchange. And as of this year, Goldman Sachs Group Inc. will only underwrite initial public offerings of companies with boards with at least two “diverse” Board members.
We find that everybody wins when diversity, inclusion and belonging becomes a top priority. Granted, D&I is not a “one size fits all” solution; it will vary widely among companies based upon the culture, value, and growth stage. But regardless of these different factors, all companies everywhere benefit from taking an intentional approach to integrating D&I strategies into every level of the business.
