It’s Crunch time!

by From the Top on 2011-09-22

Darryl JuddIn India and across Asia today, the hottest topic at a board level is talent management. Across countries, industries and sectors we are hearing more and more about talent shortage.

None more so than in the Logistics and Supply Chain industry where the growth rate across India is outstripping the talent market.

With unprecedented manufacturing growth and a booming domestic economy, fuelled in part by a rapidly growing number of middle class consumers, the global talent shortage is now being seen in India, the world’s second most populated country.

In India, especially, there is nothing hotter or more urgent than talent management. The demand for talent far outweighs its supply. Due to the rapid growth that they are experiencing India is facing massive talent shortages.

While other Asian countries also face similar issues, there is a better balance between supply and demand. In India, there has been an explosion in the market place. There is a phenomenal increase in job requirements especially for people who have specific expertise and for people in mid and upper level management.

In Logistics Executive’s 2011-2012 Global Employment Market Report (due to be published November 2011) for the Supply Chain and Logistics sectors showed that India business leaders have faced unprecedented demands for talent with 59.4% having increased staff numbers to keep up with local growth.

Adding fuel to the already talent short market is the fact that 67.5% of Indian business leaders have forecast increases in head count for 2012 with over 65.6% of respondents claiming it is now harder to find quality staff in India than ever before.

“With the talent market being tight and good talent in demand, we are seeing a major inflation in salaries. The price that you have to pay for talent is increasing day by day” said the Managing Director of a multinational Logistics Service Provider in India.

However, what you pay for is not necessarily equivalent to the skill sets that you get and companies are tolerating this only because they are desperate for talent.

The survey results demonstrated the widening gap between Employer’s expectations of fair and reasonable annual pay increases and those demanded by Employees. None more so than in India, where 67.1% of Employees received an annual average salary increase greater than 10% (37.9% greater than 20%).

“Sooner or later the market will have to correct itself. We have seen it happen in many developed international markets simply because after a point, companies will not be able to support the high salaries” claimed Kajal Pandey, India Business Head for global search firm, Logistics Executive.

Ms Pandy, in advising a number of Multinational Supply Chain companies in India said “Companies will need to look at factors beyond immediate pay. It would then be about the work environment offered the career choices offered and a range of similar factors.”
“Right now, by using money as the key attraction strategy, companies are limiting themselves. More and more companies in India are fast realising this and are trying to compensate employees by other methods such as employee development or International opportunities”.

The annual survey which is sent to over 70,000 supply chain & logistics executives in 82 countries (with a 15% response rate) identified key trends including a greater willingness of candidates to move nationally and internationally to attain desired executive positions in at times challenging employment conditions. The survey also underlined the fact that career advancement continues to be a primary consideration for executives joining another organization. Although when it comes to leaving an organization, particularly in India, money still is the number one motivator as to why people depart.

The report revealed that whilst most Employees are not looking for another job the large majority would be open to offers from other companies. Given that external opportunities are rising and career preferences are tending towards career opportunism, what can organisations do to retain their top talent?

One of the best ways to retain local talent is to give Employees solid and defined career opportunities, including formalized learning and development programs, creating conditions that allow talent to try new challenges and of course, opportunities to move up to higher levels.

However, as expected, competitive pay is the key to retaining talent.  Further analysis shows that it is not only the amount of pay but ensuring reward systems are effective and transparent. 

As in other Asia markets, Indian employees are seeking more effective leaders in terms of people skills, bringing international knowledge and are committed to assisting internal development of staff groups. All of which combines to inspire the employee and to assist their management development.

With such growth and a fragmented HR market, many industries are having trouble finding the right employee and have so far muddled through by hiring less-skilled employees and trying to train them. Traditional generalist recruitment channels are proving non-effective as a means to reduce staff turnover and organisations are now turning to specialist, international search firms to bring wider, specific expertise and more robust selection processes than just an unscreened resume.

Likewise, private firms are starting to offer courses for everyone from demand planners to engineers. More and more private colleges are springing up and some 450,000 new students have enrolled in engineering schools this year, up from just 250,000 last year.   Educational alliances are being built with universities in the West and companies are offering staff placements outside of India so they can be exposed to best practice. "India has a huge educated workforce," says Ms Pandey. "As it gets equipped with new specialized skills, it will temper the current level of wage inflation."

Time is a challenge and with Government and Industry estimating that the Supply Chain and Logistics sector spend in India being approximately 13% of GDP (compared to around 9% in the US) and growing, its crunch time for a industry that relies heavily on people.
 
For a copy of Logistics Executive’s Global Employment Report, email darrylj@logisticsexecutive.com or kajalp@logisticsexecutive.com

Darryl Judd
COO, Logistics Executive
darrylj@logisticsexecutve.com
www.logisticsexecutive.com

With more than 20 years of executive experience in Aviation, Supply Chain and Logistics Transport Industry, Darryl has held executive positions within the airline & aircraft leasing/charter industry and major logistics organizations. He is regularly called upon to manage key human resources consulting projects and supporting business to drive changes, particularly around M&A activity and international executive management.