Business Implications of the New Reality 2008: - Stanton Chase ...

1 

The New Reality 2008 

Business Implications of the New Reality 2008: 

How the War for Talent Is Impacting Organizations 

Throughout North America and What to Do About It

2 

Executive Summary 


The War for Talent has been discussed, examined, quantified, documented and accepted 

since shortly after McKinsey & Co. coined the phrase almost ten years ago. 1 Now, several 

forces have brought the intensity and urgency of McKinsey & Co.’s predictions and 

forecasts to the forefront as the most pressing talent management challenge of 2008. The 

War for Talent is the theoretical forecast; the New Reality is the all-too-accurate 

condition currently faced by business leaders. The New Reality is simply the fact that for 

an organization to survive (and thrive), it must face these challenges head-on. The New 

Reality is that The War for Talent is not some far-off suggestion for what the future might 

hold—The War for Talent is real, and it is here. 

Economic trends and generational issues are the leading causes, but the confluence of 

these challenges is what has accelerated this talent shortage into the New Reality now 

facing North American organizations. In fact, many economic trends and generational 

issues now overlap and affect one another, increasing the impact of these forces. It is 

obvious that highly talented employees are going to be in short supply sooner rather than 

later. 2 

In response to this, executives and managers across the United States and Canada were 

queried to determine their thoughts and perceptions in regard to generational gaps, talent 

shortages and, most importantly, the New Reality. This report focuses on how companies 

are preparing to fight The War for Talent that is already upon them and how they are 

coping with this New Reality. It also examines the concerns they have, the effects they 

have already experienced and their expectations for the future. Most importantly, this 

report offers an outline of strategies and tactics to thrive and win. 

Key findings examined in this report include: 

• Talent acquisition planning is sorely lacking—just 18 percent of respondents report 

having a plan implemented. 

• The New Reality affects all levels within organizations. 

• Identifying and developing leaders within organizations is as important as 

attracting new, top-flight talent. 

• Retention is a major challenge for 71 percent of respondents and their 

organizations. 

• Levels of awareness and concern are greater in Canada than in the U.S. Likewise, 

Canadian organizations report being more prepared for the New Reality than do 

those in the U.S. 

These findings are based on the “Talent Shortage Survey” conducted by Equation Research 

on behalf of Stanton Chase International and Birkman, International in Q3, 2007. 

1 

Fishman, Charles. “The War for Talent.” Fast Company, July 1998. 

2 

Bersin, Josh. “The War for Talent.” Elearning, Winter 2007. 

http://www.elearning.b2bmediaco.com/issues/winter07/winter07_featuredstory_2.html

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Table of Contents 


Methodology ......................................................................................... 4 

Demographics........................................................................................ 4 

The New Reality..................................................................................... 6 

Perceptions of the New Reality................................................................ 6 

Preparations for the New Reality ............................................................. 9 

Leadership Development ......................................................................... 12 

Value Proposition ............................................................................... 12 

Identifying and Developing Leaders.......................................................... 12 

The Role of Emotional Intelligence ....................................................... 16 

Retaining in the New Reality..................................................................... 17 

Thriving in the New Reality and Winning The War for Talent .............................. 18 

How to Win.................................................................................... 19

4 

Methodology 


Because of the large number of respondents that participated in this survey, we are 99 

percent confident that the responses of the population to the survey questions would 

be within a 5 percent margin of error from the figures stated herein. 

The survey was sent via email to nearly 37,000 executives and managers. The survey 

was live for 30 days, and a response level high enough to drive the statistical 

confidence stated above were recorded and drive the results and conclusions of this 

report. Each respondent answered the questionnaire via an online survey tool and was 

assured of his or her confidentiality. Their responses will be used only in this 

aggregate analysis. 

Demographics 

A statistically relevant number of Canadian and U.S. organizations make up the 

respondent populations. Almost half of all respondents (49 percent) work for 

companies with less than 1,000 employees, and 16 percent each are from 

organizations with 1,001-2,999 employees and 20,000 or more employees. 

Size of enterprise by number of employees 

The broad, representative sample of company 

sizes supports the data and the validity of our 

findings. 

7% 

16% 

6% 

6% 

16% 

49%

5 


All respondents are involved in formulating or implementing their companies’ 

recruiting, hiring and retention strategies. The largest faction of respondents is very 

involved (65 percent) and 35 percent are somewhat involved. 

The largest faction of respondents represents companies with less than $50 million in 

revenue in 2006 (34 percent), followed by companies with $1-5 billion in 2006 revenue 

(16 percent). 

Size of enterprise by annual revenue 

The broad, representative sample of company 

sizes supports the data and the validity of our 

findings. 

8% 

7% 

6% 

16% 7% 

9% 

9% 

4% 

Eighteen percent of respondents hold president, CEO, owner or partner roles in their 

organizations, and 14 percent serve as vice president of human resources. Most of the 

respondents who chose “other,” specified their roles within the director or manager 

categories, including senior director, senior manager and project manager, or as a 

senior role within a discipline other than human resources such as operations, finance, 

sales and business intelligence. 

34%

6 

The New Reality 


Economic trends and strong economic growth have led to this New Reality 

characterized by shorter job tenures, changing generational values, a surplus of vacant 

positions and scarce talent. With large numbers of baby boomers retiring around the 

same time and this trend accelerating rapidly in 2010, smaller, younger generations 

are unable to fill the amount of jobs left vacant. In addition, there is a shortage of 

skills and experience among younger generations, and for the first time ever, four 

generations comprise the workforce. With these different generations come varying 

values, work ethics, perceptions and priorities that, especially when combined with 

macroeconomic trends, produce startling changes in the workplace. 

Take, for example, the fact that the average tenure for baby boomer employees was 

15 years in 1980 and 10 years in 2000. The average tenure for Generation X in 2000 

was just five years. According to the U.S. Bureau of Labor Statistics, the average job 

tenure for employees today is just four years. 

These changes in job tenure can be attributed to both economic changes and 

differences among generations. Generation X and younger generations demand more 

from their employers. They require a reason to stay with their current employers 

(rather than leave), and they demand a work-life balance that allows them to pursue 

both professional and personal endeavors. Add to these statistics the prediction that 

there will be 11.5 million more jobs than workers by 2010, and it is obvious that 

organizations must face this New Reality now. 

Perceptions of the New Reality 

Almost 40 percent of business unit leaders, 52 percent of executives and 62 percent of 

CEOs understand the implications of the New Reality. More than half of respondents 

(54 percent) believe there is a current shortage of quality leadership talent in the 

workforce, while 40 percent believe there will be a shortage in the near future. Just 6 

percent said there is not a shortage in the foreseeable future. Further, 90 percent of 

respondents believe that when it comes to qualified leadership talent, there is a 

perceptible gap between baby boomers and younger generations. Of those, 34 percent 

believe the gap is significant, and 46 percent believe it is moderate.

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How well does each of the following leadership areas of your organization 

understand the business implications of the talent shortage? 

Human resources have been tuned in to the talent shortage problem for many 

years now, and CEOs and executive committees are also very aware because 

the current health and future growth of the organization rests with them. 

Business unit leaders, however, are more tactical and not necessarily focused 

on the “big picture.”

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Number of respondents who understand the shortage 


94.1 percent of 

respondents 

acknowledge 

there is or will 

soon be a talent 

shortage. 

Do you believe there is a “gap” between baby boomers and 

younger generations when it comes to qualified leadership talent? 

90.4 percent of respondents 

believe there is a talent gap.

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Respondents indicated that the current 

shortage of talent affects all levels of their 

organizations. Almost half of all 

respondents (48 percent) said that the 

current shortage of talent critically or 

significantly affects the senior management level in their organizations. Forty-five 

percent each reported the same effects on the executive level and in middle 

management. Overall, 37 percent reported critical or significant effects on the 

professional level (legal, accounting, medical, etc.) in their organizations. 

Respondents from the U.S. reported these effects more so than did Canadian 

respondents: 39 percent of U.S. respondents reported critical or significant effects on 

the professional level, compared to just 28 percent of respondents in Canada. 

The largest faction of respondents 

reported that their organizations are 

moderately concerned about The War for 

Talent and this New Reality (35 percent), 

and 32 percent said their organizations are significantly concerned. Respondents from 

the U.S. are less concerned about the New Reality than are their Canadian 

counterparts, with a quarter of respondents from U.S. companies reporting that their 

organizations are somewhat or not at all concerned, compared to just 16 percent of 

respondents in Canada. Likewise, 47 percent of Canadian respondents reported that 

their companies are significantly or extremely concerned with the New Reality, while 

just 41 percent of U.S. respondents did the same. 

Preparations for the New Reality 

Almost half of respondents (49 percent) indicated that their organizations are 

moderately prepared for the New Reality, meaning that they are currently in the 

process of planning and implementing a plan to address the talent shortage. Just more 

than a third of respondents (36 percent) reported that little or nothing is being done 

within their organizations. Just 1 percent said that their companies are totally 

prepared for the New Reality. While these numbers are not reassuring, they do 

indicate hope for successfully managing the New Reality: at the very least, these 

companies recognize the New Reality and realize they must take action.

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What is your organization’s readiness for the New Reality? 

The bell curve shows that 

while organizations are 

not fully prepared for the 

New Reality, they are 

aware of it and taking 

steps to ready themselves 

for its effects. 

Respondents from the U.S. reported that their organizations are less prepared for the 

New Reality than did their Canadian counterparts. Thirty-seven percent of respondents 

from U.S. companies reported being somewhat or not at all prepared, compared to 

just 29 percent of Canadian respondents. 

Overall, 41 percent believe the leadership of their organizations somewhat understand 

what needs to be done to attract, assess and retain the new generation of employees. 

About a quarter indicated that their leadership understands a significant amount, and 

another quarter reported that their leadership understands a little (24 and 26 percent, 

respectively). Just 4 percent believe their leadership understands completely, and 5 

percent said their leadership does not understand at all.

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How well does the leadership of your organization understand 

what needs to be done to attract, assess and retain the 

new generations of employees? 

Again, the bell curve 

demonstrates that there is 

hope for attracting, 

assessing and retaining the 

new generations of 

employees in this New 

Reality. 

Respondents from Canada reported that their leadership understands what needs to be 

done to attract, assess and retain the new generations of employees more so than did 

their counterparts in the U.S. Just a quarter of Canadian respondents reported that 

the leadership in their organizations understands a little or not at all, compared to 

almost a third of U.S. respondents (32 percent). Again, the bell curve shown in the 

graph above demonstrates that there is hope for attracting, assessing and retaining 

the new generations of employees in this New Reality. 

More than half of all respondents (55 percent) reported that the CEOs of their 

organizations are very or completely willing to embrace the strategies necessary to 

compete. 

However, respondents in Canada indicated that their CEOs are willing to do this more 

so than did U.S. respondents. Sixty-one percent of Canadian respondents said their 

CEOs are very or completely willing to embrace these necessary initiatives, compared 

to just 53 percent of respondents in the U.S. Likewise, 18 percent of U.S. respondents 

reported that their CEOs are a little or not at all willing to do so, compared to just 10 

percent of their Canadian counterparts.

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Leadership Development 

Value Proposition 


Overall, 46 percent of respondents’ organizations do not have an employment value 

proposition that differentiates them from competitors. While respondents from the 

U.S. and Canada had similar responses, the largest discrepancies reported were among 

companies with different revenues in 2006. Just 50 percent of respondents from 

companies with less than $50 million in 2006 revenue reported having an employment 

value proposition, compared to 58 percent of respondents from companies with more 

than $1 billion in revenue in 2006. 

Identifying and Developing Leaders 

Developing talent that is already resident within the organization offers the greatest 

long-term advantage in winning the War for Talent. 3 Overall, 57 percent of 

respondents reported that their organizations measure personality characteristics 

when identifying leaders. 

Identifying leaders is fundamental to both the recruitment and retention of valuable 

human capital, yet 43 percent of organizations do not avail themselves of validated 

scientific personality assessment instruments. Why? Perhaps it is a prejudice against 

valuing softer, yet powerful leadership skills like emotional intelligence and placing 

too much emphasis on hard skills. 

Respondents indicated that the three most important personality characteristics to 

measure when identifying future leaders are the ability to be strategic and futureoriented 

(66 percent), the ability to inspire and be emotionally positive (43 percent) 

and the ability to be resourceful and adaptable (34 percent). 

Canadian respondents indicated that the 

ability to be strategic and inspiring is more 

important than did their American 

counterparts. Seventy-eight percent of 

Canadian respondents selected the ability 

to be strategic as the top personality characteristic for leaders, compared to just 63 

percent of U.S. respondents. Likewise, 54 percent of respondents from Canada 

reported that inspiration in the second most important personality characteristic, 

compared to just 41 percent of respondents from the U.S. 

3 Hsu, Vanessa. “Diamonds in the Rough: Manager Accountability to Develop Tomorrow's Talent.” Human 

Capital Institute, Feb. 6, 2007.

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Which personality characteristics do you feel are most 

important to measure when identifying future leaders? 


Sixty percent of respondents reported that 

their organizations have not implemented 

an adequate leadership development plan. 

While respondents from the U.S. and 

Canada had similar responses, the largest discrepancies reported were among 

companies with differing numbers of employees. Companies with more employees 

reported implementing adequate leadership development plans more so than did 

companies with fewer employees. Sixty-one percent of companies with more than 

20,000 employees indicated that they have implemented an adequate leadership 

development plan, compared to just 32 percent of organizations with less than 1,000 

employees. Likewise, 56 percent of companies with more than $1 billion in 2006 

revenue reported implementing a leadership development plan, while just 33 percent 

of companies with less than $50 million in 2006 revenue did the same. 

Seventy-three percent of all respondents indicated that their organizations have a 

strategy for instituting an adequate leadership development plan. Respondents from 

Canada and from companies with more employees and larger 2006 revenues reported 

having a strategy for instituting an adequate leadership development plan more so 

than did respondents from the U.S. and from companies with fewer employees and 

smaller revenues. Thirty-seven percent of Canadian respondents reported having a 

strategy, compared to just 25 percent of their American counterparts. Similarly, 42 

percent of respondents from companies with more than 20,000 employees reported

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having a strategy, while just 23 percent of respondents from companies with less than 

1,000 employees did the same. Forty-two percent of companies with more than $1 

billion in 2006 revenue reported having a strategy, compared to just 17 percent of 

respondents from companies with less than $50 million in revenue. 

It is shocking to see that while respondents from various company sizes in both the 

U.S. and Canada acknowledge the necessity for bridging the leadership talent gap 

through the implementation of an adequate leadership development plan, most of 

them still lack any sort of plan to do so. 

Strategy for instituting an adequate leadership development plan: 

Segmented by country 

Most companies in both the U.S. and Canada do not have a 

strategy for instituting a leadership plan.

15 

Segmented by number of employees 

Most companies, regardless of the number of employees, do 

not have a strategy for instituting a leadership plan. 

Segmented by annual revenue 

Most companies, despite differences in annual revenue, do 

not have a strategy for instituting a leadership plan. 


According to a recent report from The Waters Consulting Group, 40 percent of 

employees 50 years or older and 7 percent of those with 20 or more years of 

experience would like to be coached, mentored or otherwise helped in their careers. 

The study also reported that the progress of the demographic shift due to retiring baby

16 


boomers is well underway and that robust, documented and well-accepted succession 

planning practices are rare. 4 

More than half of all respondents (51 

percent) report that their organizations do 

not have a talent acquisition map in place 

or planned for the next five years. Almost 

a third (31 percent) said their 

organizations have one planned but not implemented, and just 18 percent indicated 

that their companies currently have a talent acquisition map in place. While more U.S. 

respondents reported having a map in place (20 percent, compared to just 13 percent 

of Canadian respondents), more Canadian respondents indicated having one planned 

but not implemented (37 percent, compared to 29 percent of U.S. respondents). 

The Role of Emotional Intelligence 

The term emotional intelligence is often misunderstood and maligned as unscientific 

or a concept inappropriate for the talent management field (and even less appropriate 

for the corporate world). Nothing could be further from the truth. Keep in mind that 

emotional intelligence comprises a large set of abilities that have been studied by 

psychologists for many years. Thus, the way to measure emotional intelligence or 

competence is through tests of specific abilities. 5 

A valuable place to start when discussing 

emotional intelligence is the review of 

academic studies and psychological 

publications on the subject. Emotional 

intelligence, according to psychologists 

John D. Mayer and Peter Salovey, is the 

ability to perceive emotions, to access and 

generate emotions so as to assist thought, 

to understand emotions and emotional 

knowledge and to reflectively regulate emotions so as to promote emotional and 

intellectual growth. 6 Highly rational executives may find the term and the concept 

itself too soft for the business world—something more fitting for a Dr. Phil broadcast 

than a discussion of talent management. This is shortsighted. In his book, At the Heart 

of Leadership: How to Get Results with Emotional Intelligence, Joshua Freedman 

describes emotional intelligence as the ability to integrate thinking and feeling to 

make optimal decisions. 7 Integrating the rational with the emotional reality of 

associates and subordinates is one of the key attributes of successful leaders. 

4 

The Waters Consulting Group, Inc. “A Gathering Storm: Succession Planning in the Public Sector.” June 

2007. 

5 

Cherniss, Cary. “Emotional Intelligence and Why It Matters.” Paper presented at the Annual Meeting of 

the Society for Industrial and Organizational Psychology, April 15, 2000. 

6 

John D. Mayer and Peter Salovey, 1997. 

7 

Freedman, Joshua. At the Heart of Leadership: How to Get Results with Emotional Intelligence. June 

2007.

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Retaining in the New Reality 


Seventy-one percent of respondents reported that retaining productive employees is a 

challenge for their organizations. The top challenges organizations face in retaining 

productive employees include maintaining competitive compensation (65 percent), 

lack of clarity about advancement opportunities (58 percent), keeping long-standing 

employees interested and challenged (55 percent) and the approaching retirement age 

of baby boomers (44 percent). 

Does your organization view the retention 

of productive employees as a challenge? 

Overall, retaining productive 

employees is a challenge for 

the majority of companies. 

Just 23 percent of all respondents report that their organizations have a talent 

retention plan in place or planned for the next five years. While 29 percent have one 

planned but not currently in place, almost half (48 percent) do not have one in place 

or planned.

18 

Respondents indicated that their organizations’ top needs include: 


Talent is the most important source of 

competitive advantage in the new 

economy, and market-leading companies 

are struggling to realize its potential 

rather than simply measure its cost. 

Effective talent practices are a fundamental competitive lever in the global knowledge 

economy. Human capital management is not a human resources function; rather, it is 

a critical new set of business skills for leaders throughout the enterprise. 

Thriving in the New Reality and Winning the War for Talent 

As the data has shown, The War for Talent is not a looming crisis for which we must 

prepare; it is upon enterprises and organizations of all sizes right now. The New 

Reality is that we are in the midst of talent management challenges at all levels of 

management. 

Almost 40 percent of business unit leaders, 52 percent of executives and 62 percent of 

CEOs have an understanding of the implications of the New Reality. Furthermore, 

more than half of CEOs are willing to adopt and implement necessary strategies to 

compete in The War for Talent, which are encouraging signs. Whether these 

challenges present themselves more as a result of a generational talent gap or a 

significant attrition of the management pool due to baby boomer retirement is, in 

some ways, irrelevant. The solutions coalesce around a few paths.

19 


The true foundation of an ability to compete in the New Reality is the actual and 

perceived value of working for the enterprise itself. If a company does not have an 

employment value proposition that differentiates itself from its competitors, 

candidates and employees will not join the company or continue working there. The 

employment value proposition can be called an employer brand. Companies can use a 

successful brand to tell a better story to attract and retain higher-quality talent. 

Branding also furthers employee engagement by aligning the values of the employee 

base with the messages and actions of the corporation. 8 

One problem is that many people do not discuss employer branding because they are 

not sure exactly what it is or how to create an authentic, strategy-relevant brand. 9 For 

almost half of our respondent population, that could well be the greatest obstacle of 

the New Reality. 

Moreover, the top three personality attributes enterprises seek in future leaders are 

not necessarily those one might expect, such as reliability, prudence, dominance, goal 

orientation or ambition. Rather, they are the ability to be strategic and futureoriented, 

the ability to inspire and be emotionally positive and the ability to be 

resourceful and adaptable—hardly the profile of the hard-driving, ruthless titan of the 

industry or the scion of a business empire. 

How to Win 

The next steps for enterprises that want to thrive in the New Reality and win The War 

for Talent include: 

• Engaging trusted advisors at the top levels of the enterprise for attracting and 

hiring talent from all age groups as a routine and ongoing process; 

• Making an enterprise-wide commitment starting at the executive level to: 

o attract new talent ahead of a crisis of exits 

o preemptively retain valuable top talent already in the organization; 

• Rapidly developing processes for recognizing and developing leaders within the 

organization; and 

• Utilizing deep and valid personality assessments to aid in both leadership 

identification and development and executive coaching. 

8 Schaffer, Janet. “Building an Authentic Employer Brand.” Human Capital Institute, Aug. 1, 2007. 

9 Ibid.

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About Stanton Chase 

Stanton Chase is ranked within the top 10 global retained executive search firms with 58 offices located 

in 37 countries. The company has 6 specialist practice groups that operate as international teams and this 

gives Stanton Chase a unique opportunity to listen carefully to their clients. Stanton Chase is owned by its 

partners who take individual responsibility for client assignments. Stanton Chase is a member of the 

Association of Executive Search Consultants. For more information, visit their website. 

About Birkman International 

The Birkman Method® has been in use for more than 50 years and has been used by more than 2 million 

people and 5,000 organizations worldwide, including corporations, not-for-profit organizations, 

governmental agencies and individuals. The assessment accurately measures social behaviors, underlying 

expectations of interpersonal and task actions, potential stress reactions to unmet expectations, 

occupational preferences and organizational strengths. For more information visit their website or call 1- 

800-215-2760.

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