KPMG Talent Management Research a wake-up call for HR

Little evidence that a focus on high performers improves business performance.

Companies that rely on outdated approaches to talent management, those whichocus on attracting and retaining high potential employees, may lack competitive advantage as the war for talent ramps up.

According to a global survey of HR professionals by KPMG, addressing skills shortages is a higher priority than it was two years ago and will become critical in the next two years as globalisation and competitive pressures take hold and improving economic conditions prompt employees to look for new jobs.

But report author Robert Bolton points out there is little evidence that focusing on high performers, a strategy that has become deeply entrenched for many companies since the 2001 publication of The War for Talent, actually contributes to business performance.

Analysis of more than 100 adopters of typical “war for talent” practices, carried out last year by AM Azure Consulting, shows only 25 per cent could be said to be performing well in their marketplace and a third have disappeared entirely.

“In 2001, the focus was on attracting and retaining ‘high potential’ and ‘high performing’ employees,” said Bolton, co-leader of KPMG’s Global HR Centre of Excellence. “In 2014, however, 66 per cent of respondents [to our survey] are telling us it’s much more important for organisations to have a holistic approach to talent management that addresses the needs of all employees as well as those in critical roles.”

Just over half of the survey respondents agree or strongly agree that pursuing high potential talent at the team’s expense puts the business at risk and the majority (59 per cent) believe there is a new war for talent that is different from the past.

The most common causes of talent and skills shortages given are generational, with younger skilled workers less interested in traditional roles.

Scarcity of people with skills for emerging roles is seen as the most critical market shortage.

“These findings should serve as a wake-up call to HR managers who may still be clinging to outdated approaches to talent management,” said Bolton.

“Addressing skill shortages throughout the entire organisation, and not just at the most senior levels, should be a top priority in 2014.”

Bolton added that leading companies are putting “powerful new data analysis capabilities to work to help gauge their performance and fine-tune their people practices over time”.

The War for Talent, written by McKinsey consultants Ed Michaels, Helen Handfield-Jones and Beth Axelrod, argued that winning the war for leadership talent is about more than frenzied recruiting tactics and advocated strengthening the talent pool by “investing in A players, developing B players, and acting decisively on C players”.