Corporate Boards May Be Underestimating the Talent Challenges Ahead

Company leaders and institutional shareholders aren’t on the same page about how much to prioritize talent acquisition and retention, a new study by the EY Center for Board Matters warned.

EY said that its survey of institutional investors who represent $50 trillion in assets found that most want companies to focus on attracting and retaining talent in 2024, with nearly two-thirds saying that should be the top priority for company boards.

“A few of these investors cited the recent strikes and collective bargaining efforts in various industries and suggested they are a signal that the paradigm of maximizing profits at the expense of worker satisfaction is being significantly challenged,” wrote Jamie Smith, the investor outreach and corporate governance director for the EY Americas Center for Board Matters.

“They believe that these developments are creating higher stakes for companies in a tight labor market and a higher inflation environment, and underscore the importance of company leaders being in touch with employee sentiment,” Smith wrote.

But company boards don’t see the same urgency. Another survey from EY, this one polling 350 corporate directors in the Americas, ranked talent as their fifth-highest priority.

Just 56 percent of directors identified talent as among their top five priorities, down from 70 percent a year earlier. Instead, the top priorities for directors were economic conditions (cited by 82% of respondents), capital allocation (74%), cybersecurity and data privacy (68%), and innovation and evolving technologies (64%).

The report, written by Smith and her EY colleagues Kris Pederson and Barton Edgerton, cautioned that employers may be overestimating how much leverage they have to attract and retain talent.

It noted that EY’s recent Work Reimagined Survey found that 31 percent of respondents believe employees hold the balance of power. Although that’s down from last year’s 36 percent, it is far higher than the 23 percent reported before the pandemic.

Notably, high-profile strikes across industries, from Hollywood actors to auto and healthcare workers, have reinforced employees’ belief in their power and willingness to exercise it, the report said.

The Work Reimagined Survey found 34 percent of employees expressed a willingness to leave their current job within the next 12 months, a finding that suggests “employers may be underestimating the fluidity of the labor market,” the trio of authors wrote.

EY’s research also found that employees have a more negative view of their employers than companies realize. While 76 percent of employers believe their company’s leadership is in tune with the experience of the workforce and cares about employees as people, just 54 percent of employees feel that way.

From: Corporate Counsel