Autumn 2008 Newsletter Welcome to the autumn edition of the Futureboard newsletter - our seasonal round-up of marketplace trends, best-practice and an opportunity to share perspectives of both candidates and employers. Click on the links below:
The war for talent continues despite economic slowdown The economy is in the first throes of recession. The Bank of England has cut interest rates and according to the IOD's recent business-opinion survey, confidence among firms has slumped to a record low, despite many businesses continuing to perform well for now. Not surprisingly, the national rate of unemployment has increased in the past quarter and the overall employment rate declined, meaning companies on the whole are recruiting fewer people (Office for National Statistics, Oct 2008). Such changes to the labour market might lead people to think that hiring graduate talent becomes easier as a result - fewer jobs surely mean the balance of power shifts from candidate to employer? So what is the reality at the graduate level where the competition for the best candidates has been increasing over recent years and employers have been frustrated at the lack of calibre. We spoke to a number of the biggest graduate recruiters, careers services and students to get their take on how the downturn is impacting the job market and what we can expect from the next 12 months. The Careers Service's Perspective With Fresher's Week complete and the autumn term well underway, we talked to in excess of 20 careers services from a selection of the best universities in the UK to find out if they had noticed a difference to the normal milk-round activity. The consensus is, apart from a small number of banks that have gone into administration (Lehman Brothers), all other companies are visiting campus as normal. Tammy Goldfeld, Assistant Director at Manchester University Careers Service (the most targeted university in the country) claims that their two big careers events have been close to selling out and the message she is passing on to students is "companies envisage no change to their strategy this year because stopping graduate recruitment would be damaging to their business longer-term." Matt Deakin, Employer Relations Manager at Durham University is of a similar opinion, he told us "it's very much business as usual...we remain positive despite the bleak picture in the mainstream press". He thinks many of the big graduate recruiters, including the banks, have learnt from previous experiences: "after 9/11 a number of companies froze graduate hiring but felt the pain two years later when they started experiencing skills gaps within their orgnaisations." This paints the picture that competition for the best students may be as high as ever; but what is happening at the lower-ranking universities? According to the University of Brighton, the level of activity (job postings, presentations etc) has remained the same as last year; apparently the investment banks and many of the other big recruiters did not visit them previously anyway. Wayne Clarke, Senior Manager, Westminster University Careers Service said "we haven't noticed any difference yet, but it can take a while to filter through, so we may not know until next year" and Greenwich University agreed. Another consideration is that many of the SME recruiters have a shorter recruiting cycle and tend to post roles in the spring term; it's possible that universities will notice a difference at this point. At Futureboard, as many as 20% of our clients have reported a reduction in target hires this year and a small number have delayed the start of their campaigns until the new year, this includes companies in insurance, construction, retail and banking. So while companies are still visiting campus they are not necessarily recruiting at the same level. The Employer's Perspective In line with the view of the highest ranking university's careers services, little has changed for many of the classic graduate recruiters. The Director of Development Recruitment for a major ICT organisation claims "our spend on attraction is up slightly this year and the forecast for our business in EMEA is up by nearly 25% and although our UK forecast has dropped slightly this is due to greater scrutiny as to whether roles are really graduate roles offering development opportunity and stretch. The roles that have been dropped are either roles that have historically been graduate roles or very technical roles that do not align with a graduate programme aimed at attracting future leadership potential." The Graduate Recruitment Manager of a Big 4 professional services firm stated: "we are still very much maintaining our presence on campus with our overall graduate numbers in line with those that joined us last year, although certain areas of the business have understandably lowered their numbers slightly." She also claimed they've noticed an increase in the level of student uncertainty with some presentations attracting record numbers, which in some ways is good brand reinforcement. Unsurprisingly, their intern-graduate conversion rate is above its normal level. A City source stated "we understand that a number of Investment Banks have reneged/withdrawn offers either significantly reducing their hiring numbers or in some cases not recruiting at all. That said, my understanding is that our bank has not reduced numbers and still see graduate recruitment as a long term investment in the organisation. We have certainly seen a reduction in students attending events and reduced applications, possibly as an indication that banking is not seen as a career of choice currently (a direct effect of the economic situation). We are still managing to hire successfully as people with offers from places like Goldman's or Lehman Brothers are looking for alternatives." The Student's Perspective Mike Perara, second year Business Studies student at Royal Holloway University and President of the Management & Internship Society has had a change of heart about his career direction. A year ago Mike was seriously considering a career in investment banking and completed an internship with HSBC to develop his knowledge of this sector. However, the possibility of reduced job security and further research into the disproportionate work/life balance within this environment has put him off, he is considering marketing instead. Despite Mike's about-face, he estimates that 80% of the M&I Society remains fixed on a career in investment banking. Mike thinks "the lure of high salaries and possible international careers appeals, and people perceive the downturn to be temporary". According to the President, students have noticed a decline in the number of organisations on campus this term. Events have been cancelled by Credit Suisse, Deloitte and Lehman Brothers. Understandably this has led to greater uncertainty amongst students, which he claims will result in individuals planning more applications to a broader set of companies, including SMEs which don't necessarily offer the same structured schemes as the blue-chips. The other trend emerging is the increase in final year students contemplating post-graduate study, Mike Perara thought as many as 50% of the society are intending to make applications and Todd Vickers of Nottingham's Business Society agreed with this upward trend. It would seem that the graduate job market has only been hit in a marginal way and the forecast for the next 12 months is reasonably positive. It's true that we will not know the full impact until July 2009 when the academic year is complete. At this stage, and given reported short-falls in hiring numbers in previous years, it is prudent for firms to stay proactive in attracting graduate talent and to expect a sustained level of competition for candidates at the Top 20 universities.  back to topTime to freshen up the traditional assessment centre? Are you tired of assessing the same set of assessment exercises? Do you think you see the best of candidates in role plays? Are you concerned that candidates are becoming increasingly rehearsed and share their case study materials on social networking sites? We believe that there is an opportunity to freshen up your assessment process, better reflect your company culture and at the same time evaluate a candidate's potential. The traditional model for assessment design was originally developed by the military in the 1940s. Our work place has changed dramatically since this time but too many assessment processes and exercises have not adapted to reflect these changes. Jobs are no longer static; organisations invest in training to keep pace with the speed and complexity of technological innovation. People need to connect across businesses, divisions and regions in ways that promote high quality decisions. There is less hierarchy, more cross-cultural communication and virtual working. The Traditional Assessment Centre Traditional assessment centres identify individuals that have performed well at the centre, but their performance once on board does not necessarily match these observations. The opposite is also true, people that have not necessarily performed as well at AC, have gone on to surprise managers. One of the limitations of the traditional AC is that exercises do not reflect the change in working environment described above; they fail to reflect the way people actually communicate and interact in the workplace. The typical graduate assessment centre includes a group discussion, a role play, a presentation, structured interview and psychometric questionnaire. The majority of companies are doing the same thing. The dominant approach to design focuses on practical considerations such as time constraints and assessor availability rather than the goal of collating valid evidence. If you take the example of a business case study exercise, candidates are asked to digest several pages of data regarding a fictitious company that is looking at expansion or relocation into a new market. The group is then asked to discuss their thoughts and provide meaningful insight. The obvious weakness is that more often than not in normal life we would digest information, read alternative opinions or sources of information, compare to other businesses using the internet, discuss with other experts, reflect, revisit the information and then draw conclusions. All too often assessors are heavily influenced by personal style and the overall impact the person has in the group. The Need for Change The question is, how can we adapt the assessment experience to better reflect modern organisational life? We spend much more time on the phone, using email and video-conferencing. When we want things done, we don't compel or control but we influence and encourage. So think about how you can incorporate such aspects into your exercise design. Unfortunately, many off-the-shelf exercises are bland mock scenarios that will not reflect your organisation. If you can invest in bespoke activities it will be to your advantage. Think about incorporating virtual elements to the process - this will save on assessor time. Many processes place emphasis on testing intellectual horsepower - if you are looking for leadership potential, raw intelligence is often necessary for success in a role but does not act as a differentiator. An individual's emotional intelligence or humility will dictate whether someone can achieve results. Is your assessment process balanced in the assessment of IQ and EQ? In thinking about assessment in an innovative way, we believe that there is an opportunity to differentiate yourself in a crowded market, better reflect your corporate culture and save time and money on travel/accommodation costs. How about introducing real life business problems rather than the tired 'build a tower with match-sticks and paper exercise'? This way candidates gain an insight into your organisation. Do you really need to condense assessment centres into one day? By pacing the assessment process over a number of weeks instead of the immersive back to back assessment that takes place in traditional centres the assessors gain time and space to reflect, develop and test out hypotheses about individuals' capability, competence, emotional intelligence and learning potential. Mind the Gap Leadership remains at the top of the HR agenda, the combination of increased globalisation and changing world demographics means that there is an increasing demand from individuals in leadership roles and a decreasing supply of up and coming talent. Recruitment and development is receiving increased attention as the solution to the leadership gap but how effective are the methods being deployed at addressing the leadership requirements that exist? Our investigations show that while many companies are taking the subject of talent acquisition more seriously than a decade ago, not enough is being done to plan for the future. Why do we need to worry? If we have increasing numbers of students entering university each year then why do we need to worry about the scarcity of future talent? Firstly, great leaders are not grown overnight; it takes time and experience to develop even the most talented of individuals. Additionally the demands that we are making of our leaders are changing - globalisation, competition, the knowledge economy and degree of complexity are increasing in organisations. David Williams, CEO of people development organisation, Impact, claims "effective leadership is the responsibility of a group of individuals within an organisation; they need to be committed and capable of making things happen in an ambiguous environment. They have to inspire and create a sense of meaning for employees that expect much more from their careers." Such changes mean organisations are being forced to redefine leadership, it is not enough to give instructions. This changing profile of our future leaders highlights the need to develop a proactive way of identifying leadership potential and make the necessary investment to help those individuals reach the positions they are capable of. The earlier in a person's career a company does this the better. The second major consideration is the change in world demographics. The European population is ageing, the first wave of 'baby boomers' is set to retire from 2008 and the declining birth rate is impeding the number of people entering the workforce. Unfortunately the increase in global migration will not counter-balance such trends as countries such as China and India are likely to absorb the skilled graduates they are growing in their own universities. It is worth sharing some compelling statistics reported by Deloitte - in as few as five years time up to 40% of managers in automotive manufacturing will be eligible to retire. In Europe, the number of employees of 55 years of age or older is set to rise 47% of the total European working population by 2010 and in 2007 the number of people retiring in France is larger than the number of new workers joining the labour market (It's 2008: Do you know where your talent is? Deloitte, 2008). What impact is this having on the leadership pipeline? The results of a worldwide corporate leadership council survey showed that three quarters of companies are not confident in their abilities to fill leadership positions over the next few years (p85 The Leadership Advantage, Fulmer and Bleak, 2007). PwC records in its recent Managing Tomorrow's People report, 2008, "globalisation has led to a need for global leaders in a commercial world when there are not enough people with sufficient skills." While organisations have taken steps to address talent management since McKinsey's seminal report that documented 'The War for Talent', the focus has been more on talent acquisition rather than disciplined management and development. Joseph Bower states in the November 2007 issue of the Harvard Business Review that "60% of respondents from a poll of 1380 HR directors of large US companies said their firms had no CEO succession plans in place". According to a piece of research conducted by Taleo Research in May 2008, less than 30% of companies surveyed had a talent management strategy in place, and 34% have no plans for one in the next year. Companies need to undergo a sea change to their approach of managing talent so that they are in with a chance of filling their leadership gaps. Successful companies will be the ones that understand what's causing employee turnover and are able to mitigate its impact and cost to business. In an economic slowdown (and especially companies making redundancies) great talent can become disillusioned and disengaged and take advantage of a technology enabled job search right from their desktops. Today's high performing talent demands solid opportunities to advance within the organisation. To ensure a sustained leadership pipeline, in light of population changes and stiffer demands on those in leadership positions, an integrated approach to talent definition, attraction, retention and development and promotion of outstanding talent is required. Top ten tips for developing your future leaders? Companies adopt a wide range of techniques to develop graduates. What can you do to ensure that you give your recruits the best start to their careers? The following is a list of 10 practical ways in which you can differentiate yourselves in the market and build leadership capability.
If you would like to discuss issues covered in this newsletter in more detail, please contact: Katherine Travell at kt@futureboardconsulting.com or + 44 (0) 20 7 849 4565. |