The past decade saw uncertain economic times, with the world reeling under the effect of long-drawn post-recession impact and monetary factors. Developed economies have been engaging in trade wars, while emerging markets and developing economies (EMDE) have seen a steep slowdown since the global financial crisis. With a new decade ushering in, global growth is projected at 2.5 percent in 2020, a small rise from an estimated 2.4 percent in 2019*. Of course, these predictions are subject to the correction of financial stressors and trade tensions, and to the usage of the accumulated debt to finance growth-enhancing investments.
Regional assessment of economic outlook
The economic deceleration has manifested worldwide, with close to 90 percent of advanced economies and 60 percent of EMDEs going through varying degrees of deceleration in 2019. In 2020, growth in advanced economies is projected to slow to 1.4 percent this year, though we may see a few large emerging economies stabilizing. US (1.6 percent in 2020, from 2.3 percent in 2019), Euro Area (1 percent in 2020, from 1.1 percent in 2019) and Japan (0.7 percent in 2020, from 1.1 percent in 2019) are prime examples. On the other hand, emerging markets and developing economies are predicted to grow by 4.1 percent from 3.5 percent last year*. Euro and Central Asia (2.6 percent in 2020 from 2 percent in 2019), LATAM and Caribbean (1.8 percent in 2020 from 0.8 percent in 2019), Middle East and North Africa (2.4 percent from 0.1 percent), South Asia (5.5 percent from 4.9 percent), Sub-Saharan Africa (2.9 percent from 2.4 percent) are some of expected contributors to this expected growth in EMDE countries.
This surge shall happen provided there is continued monetary-policy support, steadfast commodity prices, and benign borrowing costs in the EMDE. Assuming this, favourable growth may further stabilize at an average of 4.4 percent in EMDEs in 2021-22. In effect, a 2.7 percent global GDP growth figure is predicted for 2021-22*.
Talent challenges in the face of economic unrest
The economic turbulence of the past decade has created a compelling talent paradox: amidst stubbornly high unemployment, employers still face challenges filling technical and skilled jobs. Today’s competition for quality talent stems from a number of factors, the changing employee expectations being a high contributor.
80 percent employees indicated that they planned to stay with their current employers in the next year, yet a significant 31 percent reported they were not satisfied with their jobs.
This situation throws the question, as to whether employees are truly engaged and productive in their jobs, or are they simply sticking to their jobs due to the difficult economic and talent environment? Some of the direct challenges that stem from this talent scenario are:
- Engaging employees through meaningful work: Lack of career progress (37 percent) and lack of challenge in the jobs (27 percent) emerged as the top two factors in driving employees to switch organizations**. A significant 42 percent of employees who have been seeking new jobs believed that their current jobs did not make good use of their skills and abilities. Hence, making work meaningful to people is a core talent-requirement, especially in the wake of newer and more diverse employee groups such as millennials, Gen Z, etc.
- Managing the “turnover red-zones”: Employees seem to be more likely to leave at certain career junctures, one critical red-zone being within 2 years of tenure completion (34 percent indicated that they planned to leave before 2 years). The increasing percentage of millennials in the workforce adds to this phenomenon- 26 percent of millennials indicated a wish to leave their organizations in the year to come- posing the highest risk amongst all employee generations. Moreover, unequal global economic conditions have created geographic turnover red-zones. For example, EMEA is facing low employee morale due to debt crises and the future of the Euro. Also, 54 percent** of EMEA workers reported layoffs compared to 32 percent in Americas and 38 percent in APAC. Naturally, the motivators differ by geography, EMEA employees are seen to be happier with their bonuses compared to APAC employees, and are vying for non-financial incentives like leadership opportunities.
- Developing apt and trustful leadership: Today’s talent is highly influenced by the people they see taking the lead. Trustworthy and engaging leadership that communicates and connects openly has emerged as a key talent retainer. 62 percent of employees who planned to stick on, reported high levels of trust in their corporate leadership, while only 27 percent of employees who planned to leave expressed that same level of trust.
Organizations must tackle these conundrums head-on, by not looking at them through a mere “turnover-prevention agenda”, but from an employee-mindset approach. It is the need of the hour to create a holistic talent strategy that focuses on engaging rather than merely retaining critical-skilled employees, and proactively building capable leadership to help advance the organization despite continuing global economic turbulence.
How can companies build a talent advantage?
Retaining top talent cannot result from direct retention initiatives, HR and business leaders must deep-dive to understand exactly what makes employees happy and productive, and accordingly design and deploy the apt talent offering. This means balancing financial incentives with non-financial incentives, which are increasingly of great value to rising employee segments such as millennials and Gen Z. Engagement and Retention strategies must be aimed at engaging high-turnover risk top talent, as well as high potential employees by addressing their real concerns. HR must build talent initiatives to fuel the top retention drivers, namely, additional bonuses or financial incentives (44 percent), promotion/job advancement (42 percent), additional compensation (41 percent), flexible work arrangements (26 percent), and support and recognition from supervisors or managers (25 percent).
HR must institutionalize processes for skill development, career pathing, career development etc. Effective training and onboarding for new joiners can help curb attrition in the high-turnover 0-2 year tenured segment, while training and support to new supervisors and their employees can help better the employee-supervisor connect. A critical success factor for engagement and retention is to tailor policies and initiatives to the diverse employee segments i.e. the four generations that work together. Inspiring and trustworthy leadership that “walks the talk” is a force to reckon with, in employee engagement and productivity.
Most importantly, HR must focus on creating a culture of belongingness, by helping employees connect and converse openly and transparently with their peers, leaders and organization. Cultivating the right culture is all about creating a compelling sense of purpose and shared commitment, which binds employees with one another and with the organization, and propel self and organization ahead in the right direction.