Impending baby boomer retirements, a widening skills gap and outdated approaches to hiring and retaining talented workers are combining to produce a "perfect storm" that threatens long-term business performance, a study has suggested.
The global survey of 1,396 HR professionals by the Irish arm of consultancy Deloitte found nearly seven out of 10 felt attracting new talent was the greatest threat to their competitiveness.
This was followed by the inability to retain key talent (66 per cent) and incoming workers having inadequate skills (34 per cent).
"Deloitte's new research points to an inescapable conclusion: the widening skills gap is a global phenomenon, particularly among the categories of key workers who disproportionately drive an organisation's performance," said Deloitte partner Cormac Hughes.
"This trend will leave behind companies that do not begin to rethink their approach to talent management," he added.
Ireland's economy is currently operating close to full employment, meaning that talent shortages are not only a concern for the HR departments in Irish businesses but are also a top priority for senior management as a whole, said Hughes.
Organisations were offering money, perks and new challenges in order to attract and retain staff.
But such knee-jerk measures were often ineffective because there was inadequate medium and long term resource planning, he added.
"Rather than fight a futile 'war for talent', business leaders should 'build talent' by looking within their organisations for the critical skills, knowledge and attributes required to execute their company's most important roles, while continuing to seek to attract the best people," said Hughes.
"Irish companies can avoid sustaining a direct hit from the looming talent crisis by rethinking and reinventing their talent management processes into a well-designed talent strategy that drives productivity and differentiates a company from its competitors," he added.
More than 70 per cent of those surveyed confirmed they were experiencing or expected to experience a shortage of white-collar workers.
Worryingly, just 13 per cent identified approaching baby boomer retirement as a concern, despite overwhelming evidence indicating a large exodus of experienced staff from the labour market in the next three-five years.
"Retirement legislation is under review in some countries but the current situation sees skilled workers continuing to leave their profession or trade around late middle age and too few people are joining the workforce to fill their place," said Hughes.
"Governments are able to partially alleviate the depth of talent pools through policies on immigration, taxation and education but their impact is likely to be superficial in the face of global working population forecasts," he added.
The survey found the level of significance accorded to recruitment and retention of able staff was consistent across every region surveyed, irrespective of the size of the organisation.
Almost half stated demographic changes and the impending skills shortage had been discussed at board level and most identified a clear link between talent management and business performance.
A total of 54 per cent believed talent management issues would have an impact on their overall organisational productivity and 40 per cent felt it affected the firm's ability to innovate.
Three out of 10 acknowledged it would limit their ability to meet production requirements and fulfil customer demand.
"It is encouraging to see that so many organisations have discussed the impending skills shortage at board level," concluded Hughes.
"Given the potential impact on business performance, it is essential that board-level commitment is gained to help drive rapid change to talent management strategies," he added.