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A recent report from Korn Ferry shows that when it comes to the global talent shortage, business leaders have their rose-tinted glasses on.
From a survey of 1,500 business leaders around the world, 66% agreed that there would be a shortage of talent by 2020, and more than half thought there would still be a shortage by 2030. However, the survey revealed an eye-opening statistic: a whopping 95% of leaders were confident that their own organisation will be able to meet its future talent needs.
Due to shifts in the nature of work brought about by technological advancement, 91% of business leaders agree that they will need more highly skilled workers in the near future, but only 13% say that people are their top priority. Clearly there’s a massive disconnect between perception and reality.
How bad will the talent shortage really be?
The best estimates show that the talent shortage could cost businesses almost $8.5 trillion in lost revenue by 2030. China is predicted to be the worst affected, with a deficit of 6.7 million workers by 2030. The USA follows closely behind; they’ll lack 6.6 million workers. Globally, we’ll be 85.2 million workers short.
The technology sector alone is predicted to account for 10% of the US economy by 2030 and will require roughly 4x the number of workers it currently has. As a result of the talent shortage, it will suffer $449.7 billion in unrealised output. It may sound dramatic, but unless organisations can develop a talent pool of skilled workers, the talent shortage is a very real threat to not only individual companies but to technological progress and accompanying economic growth.
What can be done?
Experts estimate that if organisations don’t make workforce planning a priority, they’ll find that their business functions will be significantly impacted. Unfortunately, the result of overconfidence in business leaders and the prioritising of technology over people means that companies are likely to be underinvesting in talent strategies and future talent planning. What’s more, the talent that is hired will demand a premium wage; the talent shortage is likely to inflate salaries by $25 trillion by 2030.
To reduce the impact of the talent shortage, organisations should be acting now. Leaders need to understand the financial imperative of proactive workforce management and empower HR leaders with a seat in the boardroom and realistic options for taking the crisis in hand today.