- Talent Shortage was the Third Placed Risk in the Previous Emerging Risks Monitor Report
By: Yinka Okeowo
The survey of 137 senior executives in 4Q18 showed that concerns about “talent shortages” now outweigh those around “accelerating privacy regulation” and “cloud computing”, which were the top two risks in the 3Q18 Emerging Risk Monitor (see Figure 1):
“Organizations face huge challenges from the pace of business change, accelerating privacy regulations and the digitalization of their industries,” said the Managing Vice President and Risk Practice Leader at Gartner, Matt Shinkman. “A common denominator here is that addressing these top business challenges involves hiring new talent that is in incredibly short supply.”
Sixty-three percent of respondents indicated that a talent shortage was a key concern for their organization. The financial services, industrial and manufacturing, consumer services, government and nonprofit, and retail and hospitality sectors showed particularly high levels of concern in this area, with more than two-thirds of respondents in each industry signaling this as one of their top five risks.
Gartner research indicates that companies need to shift from external hiring strategies towards training their current workforces and applying risk mitigation strategies for critical talent shortages.
“Organizations face this talent crunch at a time when they are already challenged by risks that are exacerbated by a lack of appropriate expertise,” said Mr. Shinkman. “Previous hiring strategies for coping with talent disruptions are insufficient in this environment, and risk managers have a key role to play in collaborating with HR in developing new approaches.”
Talent Shortage May Exacerbate Other Key Risks
Beyond a global talent shortage, organizational leaders are grappling with a series of interrelated risks from a rapidly transforming business environment.
Accelerating privacy regulation remained a key concern, dropping into second place in this quarter’s survey.
Respondents indicated that the pace of change facing their organizations had emerged as the third most prominent risk, while factors related to the pace and execution of digitalization rounded out the top five emerging risks in this quarter’s survey.
Mitigation strategies to address this set of risks often come at least partially through a sound talent strategy. For example, a key Gartner recommendation in more adequately managing data privacy regulations is the appointment of a data protection officer, while both GDPR regulations and digitalization bring with them a host of specialized talent needs impacting nearly every organizational function.
“Unfortunately for most organizations, the most critical talent needs are also the most rare and expensive to hire for,” said Mr. Shinkman. “Adding to this challenge is the fact that ongoing disruption will keep business strategies highly dynamic, adding complexity to ongoing talent needs. Most organizations would benefit from investing in their current workforce’s skill velocity and employability, while actively developing risk mitigation plans for their most critical areas.”
Gartner recommends that enterprise risk teams and HR leaders collaborate to clearly define ownership of key talent risk areas that their organization is facing. “Different parts of the organization often have different pieces of information about what is actually going on from a talent risk perspective,” according to Brian Kropp, group vice president of Gartner’s HR Practice. “The best organizations are moving away from traditional engagement surveys to understand their talent risks. Building robust talent data collection and analysis techniques to better listen to their employees and identify real-time risks is a key part of this process.”