FTdynamo present organisations taking a different approach in attracting and retaining talent as skills shortages increase.

Despite a continuing catalogue of lay-offs and downsizing, particularly in the high-tech and telecoms sector (the UK’s troubled Marconi group has recently announced new global cuts of 4,000 jobs), corporate interest in the so-called “war for talent” – how to attract and retain the best managerial talent – apparently continues unabated.

Consultants McKinsey & Co, which launched the talent war concept with a 1997 survey, recently updated it with a poll of nearly 7,000 managers in 56 US companies. The survey found that 89 percent of those surveyed thought it is more difficult to attract talented people now than it was three years ago, and 90 percent thought it is now more difficult to retain them. Just seven percent of the survey’s respondents strongly agreed that their companies had enough talented managers to pursue all or most promising business opportunities.

Now another study (Exploring the New Psychological Contract) from Henley Management College, a UK business school, claims that companies will have to provide a “new psychological contract” to attract and keep good managers. Based on a survey of nearly 500 managers who attended development programs at Henley, the study says that “the traditional psychological contract, long-term employment of employee loyalty, is now widely undermined”. It adds that a new approach is needed since quantitative solutions such as increased pay are easily matched by competitors.

The study’s key findings are that: managers’ commitment to an organisation is largely driven by emotional attachment; managers expect to achieve self-fulfilment from their job, a sense of accomplishment, and fun and enjoyment. The traditional psychological contract has to be replaced by a more complex mix of factors that includes values, attitudes, terms and benefits.

For example, Royal Dutch Shell believes that talented people will choose an organisation because of its values, beliefs, and culture. To this end, Shell claims to have developed a set of business principles that stress honesty, integrity, and respect for people.

The Pentland Group, producer of sports brands such as Speedo and Ellesse, is focusing on attracting creative designers and looking for ways of rewarding talent beyond simple promotion.

Chris Matcham, group human resources director at Pentland, which has abandoned salary structures and grading schemes, says in the study: “what we do is try to help people get excited by helping them to understand what they are good at and then letting them do it”.

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