Karen Cooperman

March 21, 2001
Talent War Shifts from Crusade for Acquisition to Battle for Retention

Accenture Study Finds Employee Mobility, "Real-Time" Performance Measurement and Skills Development Key to Retaining Talent

New York, March 21, 2001 — Despite recent corporate staff cutbacks, 80 percent of global business leaders believe that "people issues" are more important today than they were three years ago, and 68 percent believe that retaining talent is far more important than acquiring new blood, according to a study released today by Accenture.

Accenture’s study, titled "The High Performance Workforce: Separating the Digital Economy’s Winners from Losers," found that most companies continue to struggle with retention because they are relying on salary increases and bonuses to prevent turnover. Leading companies have discovered that providing employees with a comprehensive range of career and skills-development opportunities is the key to attracting and retaining the kind of flexible, technology-savvy workforce needed to succeed in the digital economy.

The findings are based on interviews with nearly 500 senior executives from companies in eight countries on three continents and spanning 10 major industry groups. Almost half of the survey participants — 47 percent — identified themselves as senior executives of traditional, or "brick-and-mortar" firms, 39 percent identified themselves as senior executives of "click-and-mortar" companies, and 14 percent identified themselves as senior executives of pure-play Internet businesses, or "clicks."

All the companies surveyed face similar challenges in retaining and boosting the performance of their talent bases, but their approaches to remedying the problem vary. Fifty-nine percent of respondents said their companies have made some changes to their recruiting and retention strategies in the past three years. "Clicks" companies were much more likely than "brick-and-mortar" and "clicks-and-mortar" organizations to have made such changes.

Regardless of the type of company, however, the majority of changes were compensation-related. More than half of the executives in the study said they altered salaries, bonuses or stock options in their quest to attract and retain talent, while only 27 percent reported that they adjusted their companies’ policies to provide employees with advancement opportunities within their organizations.

The ongoing retention problem suggests that money itself is not the answer. In fact, Accenture’s research indicates that companies can improve retention rates and improve employee performance by making it easier for workers to find new opportunities within an organization, and by developing the skills and knowledge of all talent, regardless of their position in the company. For example, leading companies in the area of talent retention are:

  • Using an inclusive approach to firm-wide strategy development by involving employees in company decision-making processes. In fact, 60 percent of executives who described their companies as "leader" in change said they use such an inclusive strategy-development method.
  • Moving to project-oriented approaches, in which all employees can work on diverse, limited-term assignments, rather than being sequestered within a single department or function.
  • Developing "talent exchanges," which connect employees and other resources with appropriate projects, roles and positions across the company.
  • Instituting "real-time" goal setting, performance measurement, and skills-development programs to ensure that people always know where they stand and to address performance issues and skills gaps before they become a problem.
  • Embracing a wide range of emerging information technologies — including personalized employee Web portals, business simulation, and relearning — to increase the efficiency and effectiveness of their training and development efforts.

"People have become the key competitive differentiator in today’s knowledge-based economy, but addressing these human performance or ’people issues’ is still a vexing management problem for many corporate leaders, regardless of location, industry, or type of company," said David Clinton, global leader of the Human Performance practice at Accenture and primary author of the study. "By using creative talent-sourcing and talent-management practices, and leveraging customized performance management and teaching tools, companies can better understand and maximize the role of their people in the digital economy."

Other findings of the study include:

  • Information technology (IT) is assuming greater importance in helping companies improve the performance of their workforces. Nearly 75 percent of all executives said the subject of IT "always" or "often" arises in management discussions of how to improve workforce performance.
  • With quality workers in short supply, organizations are focusing less on attracting "owned" employees and, instead, are building diverse talent networks comprised of contingent, part-time, or contract individuals; business entities that are part of the company’s partner or alliance network; freelancers or consultants; and even customers and suppliers.
  • Executives in more than half of the companies surveyed cited "training and development" as one of their top initiatives to improve human performance, but only 25 percent of the companies reported making any changes in their employee career growth and development programs. The changes they did make tended to be one-time quick fixes for an isolated problem, rather than developing and implementing proactive and integrated strategies for attracting and retaining talent.
  • While 80 percent of respondents believe that "people issues" are more important than ever, approximately one-third said not enough attention is being paid to such issues in their companies.

"The perception is that the war for talent has eased somewhat in the short-term wake of the dot-com fall-out. But the reality is that it is not going to be easier to retain and attract top talent in the coming year," said Clinton. "The dot-com market correction actually highlighted an underlying problem that has existed for years: employees have become increasingly impatient with employers’ promises to focus on people issues, and employees are assuming greater control over their own careers. Until senior executives effectively address these issues, their companies will continue to find it difficult to build and maintain high-performance workforces."

Accenture’s Human Performance practice helps its clients address their most critical people issues through new approaches in the integrated areas of Human Resource Process & Technology, Learning & Knowledge Management, Organization & Change Strategy and Workforce Performance.

About the Study
At the end of 2000, Accenture and NOP Global Research Limited completed an extensive study on human performance issues in companies worldwide (primarily the United States, Europe, Asia and Australia). Thirty-minute telephone interviews were conducted with 483 senior executives from companies in a range of industries, including manufacturers of electronics or high-tech products, retailers, automotive and industrial equipment suppliers and banking institutions. The companies vary from long-established corporations to newer dot-coms.

About Accenture
Accenture is a $10 billion global management and technology consulting organization. The firm is reinventing itself to become the market maker, architect and builder of the new economy, bringing innovations to improve the way the world works and lives. More than 70,000 people in 46 countries deliver a wide range of specialized capabilities and solutions to clients across all industries. Under its strategy, the firm is building a network of businesses to meet the full range of client needs — consulting, technology, outsourcing, alliances and venture capital. Accenture’s home page address is http://www.accenture.com.