Lack of talent is turning out to be the "single biggest obstacle to growth", according to a new report by Ernst & Young. The consultancy firm has warned that too few companies are adapting their management and talent identification systems to compete in the current business environment.
The report, Paradigm shift: building a new talent management model to boost growth, found that more successful companies were more likely to have a decentralised management structure, and that fewer than half (45%) felt they were making effective investments in talent management. High-performing organisations, it found, gave greater decision-making freedom to their direct reports - 49% of high-performers compared with 36% of low-performing companies - and had redefined roles to be more flexible.
However, when it comes to building a pipeline of talent, the report identified a lack of confidence even among high-performing companies about the next generation of leaders: only 43% of high-performing companies feel they have a clear set of qualification metrics for leadership candidates; this decreases to 38% for low-performing companies.
Global mobility was also a key factor in talent development, Ernst & Young found. Only half of the 600 companies it surveyed said that they are creating opportunities for employees to work in other countries. This could affect the development of future leaders, the report argued, by not giving them exposure to different businesses and cultural environments.
Liz Bingham, Ernst & Young's managing partner for people, said: "Few companies have done enough to adapt their approach to meet the complexities of the current global economic and market environment. Companies looking for global growth will need to invest in developing an effective talent management strategy that successfully spans multiple geographies. They will need to change and flatten traditional organisational structures; encourage decentralised decision making; allow for a vast diversity of cultures, ages, backgrounds and geographical locations; and adopt new and more inclusive leadership styles."
She added: "The old hub-and-spoke model of a strong headquarters and a weak subsidiary that must look to the centre for all key decisions is no