As Australia returns to economic growth, and consumer confidence rebounds, increased competition for skilled workers has forced many organisations to rethink their talent strategies for 2011.

The need to nurture and retain existing employees while attracting new talent is again high on the agenda for Australian businesses, with new data from Mercer confirming that Australian employers are planning to reshape their talent programs to keep up with new demands in a GFC environment.

Mercer's Future of Talent Management Survey includes responses from HR and talent management leaders representing almost 500 organisations across the Asia-Pacific region and covers a broad spectrum of industries, with technology, telecommunications, manufacturing, healthcare, and finance representing the largest industry segments.

The survey reveals the majority of organisations in Australia have emerged from economic turbulence comfortably and are either beginning to enter, or are already in, growth mode, with only 8% of organisations stating they are still suffering from the downturn.

Shifting gears as the economy drives ahead
More than 90% of Australian organisations are expecting the competition for talent to increase over the next three to five years - just 3% expect no increase.. Reaffirming this view, 84% of Australian organisations who responded to the survey believe talent management will become a high priority in three to five years.

Unlike gloomier times where excess employees were being retrenched from the workforce, a skills deficit is rapidly emerging across multiple industries and organisations are now reporting they cannot recruit or grow their own employees fast enough to support expected business growth.

Some organisations are experimenting with new coping strategies to manage their need for talent. For instance, many are opting for partnering arrangements with other companies which can supplement skills and transfer knowledge to their teams. Others are resorting to outsourcing or offshoring the work to organisations or areas where large numbers of skilled individuals reside and can deliver a service to the organisation at a lower cost.

Australian organisations need to consider what strategy will work best for their business environment, as different sectors will have growth opportunities and demand that are unique to them. By recognising these well ahead of time, organisations can avoid skills shortages by nurturing and developing talent specific to these areas.

Looking to the future
Mercer's survey found most organisations are planning to make changes to their talent programs, despite being at different stages of identifying and implementing these changes. For those who have more time to take stock and identify their potential skills and knowledge gaps, development programs that address the gaps are being accelerated.

The planned changes that top the list include leadership training (87%), workforce training (83%), employee engagement (83%) and succession planning (80%).

It should come as no surprise that leadership tops the list of priorities. The impact leaders have on business success and organisational effectiveness is huge, and right now organisations are not confident they have the quantity and quality of leaders they will need to succeed in the future.

The priority for Australian employers should also be to focus on the people that impact the organisation's ability to perform. Many talent pipelines currently reflect only the leadership potential of the organisation and do not include the core, critical and technical pipelines that deliver operational excellence.

Loss of talent, due to not recognising individual talent and functions in your pipeline, can make organisations extremely vulnerable. Australian organisations must develop effective support networks and initiatives to groom individual talent throughout the leadership pipeline. This includes the introduction of mentoring programs, flexible work arrangements, and coaching.

The Future of Talent Management Survey found that 53% of Australian organisations expressed confidence in their ability to link employee performance to business goals. However, there is room for improvement when it comes to implementing talent strategies in line with business goals. HR respondents also said they lack confidence in their ability to measure talent management decisions and return on investment with 39% hesitant in their ability to use quantitative analytics when measuring talent investments - and the latter approach is generally more effective.

Taking a more quantitative, fact-based measurement approach to tailoring talent management practices to fit your own business model will prove successful. This can include introducing KPI's into an individual or team, or through engagement data collected over the course of a longer period of time.

Australian organisations are potentially facing a very different business environment in 2011 and beyond. After weathering the storm of the past couple of years, employers are looking ahead to a period of strong positive growth, but this will place new constraints on their workforce.

Talent programs that were effective 12 months ago are being reviewed and tailored to support new business growth opportunities. However, ensuring an adequate pipeline of future leaders and tying talent management decisions to desired business results are two areas which Australian organisations are challenged with, but will need to get it right to thrive in the new business environment.Mercer's vision for success:

  • Plan ahead and create a strategy that works for your business
  • Support individual talent through the leadership pipeline
  • Take a quantitative approach when developing and managing talent