Generation Y those born between 1977 and 2005 will have had an average of 14 jobs available to them by the time they are 38, with the next generation more demanding, fickle and sophisticated than any other. Sophisticated talent demands sophisticated talent management. This revelation is an eye-opener for all employers of the world.

The successful organisations of the future will be those able to not just attract the brightest global talent, but also nurture, develop and retain it by offering a compelling work environment.

According to a survey by Heidrick & Struggles, talent follows where money leads. As a consequence, perhaps unsurprisingly, talent is most likely to be found in developed, wealthy economies, led by the US, followed by the UK and Canada and the two smaller, but open, economies of Sweden and the Netherlands.

Today's leading pools of talent may not be under pressure just yet, but companies that want to flourish in the future must adopt a global view of recruitment. China and India are emerging as significant players and cannot be ignored. All over the world, employees are behaving as consumers, able to pick and choose the companies they wish to work for; employers must do everything they can to cultivate a powerful, persuasive reputation for talent management if they are to safeguard their long-term talent resources.

The US' status as the world's biggest talent hotspot is under threat from the UK and China, according to the first ever Global Talent Index (GTI). The US will maintain its position as the world's leading country for nurturing and developing talent over the next five years, the Index developed by executive search firm Heidrick & Struggles and the Economist Intelligence Unit reveals. But it faces increasing competition from the UK, which rises to second place by 2012, and China, which moves from eighth to sixth.

Kevin Kelly, CEO of Heidrick & Struggles, says: "If talent is the oil of our future, we need to pinpoint the hotspots, identify the reserves and know how fast the pipelines can get up and running."

Middle East struggles
The survey maintains that competition for talent is fiercer than ever in the global economy, and the lack of available talent is the biggest challenge facing Middle East countries as they strive to attract and nurture the best employees. Saudi Arabia and Egypt rank in the bottom five of the Global Talent Index. Worse still, their position in the table is forecast to remain static over the next few years.

Ayman Haddad, Managing Partner for MENA of Heidrick & Struggles, says: "Regional economies have enjoyed significant GDP growth in recent years but this latest global research shows there is no room for complacency. The Middle East is losing out in the battle for talent and a strategic approach is required to ensure the region develops, attracts and retains the best people to maintain progress." He adds: "The good news for the region is that emerging markets are hot on the heels of developed nations. The situation in the Middle East is slowly improving."

Saudi Arabia will rank ninth in 2012 for the quality of its universities and business schools. The kingdom's relatively high disposable incomes are also a plus, and will help in attracting talent. Egypt is witnessing improved FDI and will move from 11th to seventh position based on this specific rating between 2007 and 2012.

Says Haddad: "FDI is important because with it comes technology imports and managerial best practice. Educational standards are equally crucial. The Index reveals that it is not the size of the potential talent pool that matters but how it is nurtured. With its young and rapidly growing workforce, this is an important lesson for the Middle East."

Talent for the taking
Fight for talent has become fiercer with salaries going up in the Gulf countries, as a report by GulfTalent.com shows. Private sector salaries in the six countries of the Gulf Cooperation Council increased at an average rate of 9 per cent over the last year, according to the survey.

Oman registered the biggest jump, from 5.6 per cent last year to 11 per cent this year, driven in part by a 15 per cent pay rise for public sector employees. The government's decision earlier this year to allow expatriates to change employers has dramatically increased staff attrition rates, further adding to the pressure on firms to increase salaries.

The UAE and Qatar, which are experiencing double-digit inflation this year, remain near the top of the rankings. The pay of UAE professionals increased by 10.7 per cent against 10.3 per cent last year, while in Qatar wages rose by 10.6 per cent, marginally lower than last year's figure of 11.1 per cent, the report said. Bahrain pay rises accelerated to 8.1 per cent from 6.4 per cent last year. Kuwait was virtually unchanged at 7.9 per cent against 8 per cent last year, while Saudi Arabia saw an increase to 7.7 per cent from 6.5 per cent the previous year.

Across the GCC, sectors enjoying the highest pay rise were construction, banking and energy consistent with the last two years' results and reflecting the sectors' continued strong growth. Healthcare and education registered the lowest increases.

Key drivers
The study highlighted continued economic growth and intense competition for talent as key drivers of pay rises, along with spiralling living costs in parts of the region, particularly Qatar and the UAE, as well as large pay rises awarded to government employees in some GCC countries. Other drivers of pay increases highlighted in the report were continued economic growth and rising salaries in India, traditionally the main supplier of expatriate workforce to the Gulf countries, as well as the easing of laws in some GCC states regarding expatriates changing employment. With government controls no longer protecting employers against staff attrition, many are forced to raise pay levels to retain their staff.

Employers across the region feel that while market demand is extremely healthy, skills shortages are limiting their companies' ability to grow, forcing them to turn down new business or, in some cases, causing them to miss targets on their existing projects. If this trend continued, it could limit overall growth in the non-oil sector of the economy, hampering the region's plans to diversify away from oil.

Obviously, smaller, less well established companies face the greatest pressure, often unable to compete with pay packages offered by larger firms. The long-term impact for the market could be to impede growth of start-up companies, lead to smaller companies merging with larger enterprises and discourage new entrepreneurial ventures.

The supply of skilled staff from traditional markets such as India and Egypt diminishes, many employers were looking to new sources such as China, Eastern Europe and Latin America. At the same time, staff shortages are forcing companies to outsource more of their operations or to switch to other processes and technologies that are less manpower-intensive.

Gary Thompson, Director, Regional Practice Leader, Financial Services, EMEA Dubai Office, Stanton Chase InternationalStanton Chase International, says that, generally, there has been a degree of consternation associated with salary rises. Companies have responded to salary surveys only to find the data is out-of-date by the time it is published. And salary pressure is one thing but there is also pressure on allowances, particularly housing and education, to bring them in line with actual market conditions.

He maintains that in the past companies would pay a premium to an expatriate employee based on home salary adjusted for tax etc. Employers now have to pay market, regardless of nationality, or face the prospect of losing the employee in the short term once he discovers his true market value.

Abdulaziz Al Ali, Executive Vice-President, Human Resources of Emirates airlineEmirates airline, says that the airline is "working harder across the board due to our dynamic growth strategy and resultant workforce expansion across the airline and group."

However, he adds that "despite exchange rate differentials brought on by the falling dollar and rising local inflation, EmiratesEmirates continues to attract over 20,000 applications a month from around the world".

Says John Alexander, General Manager of DulscoDulsco. "We found it somewhat difficult to recruit people in 2007 due to a host of factors. With the accelerated pace of growth around the world, especially in the Asia-Pacific, including regions and countries such as the GCC and the UAE, China and India, the search for talent is more competitive than ever before. This growth in the region, coupled with the arrival of aggressive organisations such as multinationals, banks, financial services, consultancy and a host of other businesses means the region will need a large pool of professionals.

"Salaries in the UAE, based on information appearing in the media as well as through surveys, rose on an average by 14.5 per cent during 2007. Though the inflation as per government statistics is at around 9.3 per cent, unofficial estimates say the figure could be anywhere between 12 and 18 per cent.

Shortage of talented professionals will be there in 2008 as the region continues to grow at the same, if not at a higher pace," he adds.

Professor Nick van der Walt, CEO, University of Wollongong, DubaiUniversity of Wollongong, Dubai, stresses that the region needs to identify the skills and talent that are required and relevant to the region during these times of dramatic growth and upheaval, exploring the factors that contribute to the enhancement of the capital base of the GCC countries and the relation between employers' needs, the motivations of national and expat staff, education providers, and the overall goals of the nations in which they are functioning.

Magdy El Zein, Managing Director Boyden Middle East, says there are several factors contributing to regional talent shortage including the pace of development and lack of planning, which have led to the implementation of projects that require skills currently in short supply in the region, as well as an education system that is not aligned to the region's requirements.

Listing the rising costs of importing talent and talent retention as the main challenges facing CEOs, Boyden's El Zein says he said that in order to retain and attract talent. "[Employers] need to develop long term pay incentives that go hand in hand with financial performance, especially as IPOs become more common in the region."

He says with the current economic boom, the region has no choice but to continue importing the majority of its executive talent as "the high demand and low supply of qualified GCC executive talent is here to stay for at least the next five years". The long-term outlook, he adds, shows continued shortages due to the pace of development, but that positive signs are emerging in countries such as Saudi Arabia and the UAE, who are developing a group of talented executives.

© Gulf Business 2008

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