Industry and Institutions: Collaborating on the Talent

Industry and Institutions: Collaborating on the Talent

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September/October 2014

Industry and Institutions: Collaborating on the Talent Challenge

Talent Challenge


Organizations seeking to grow and remain competitive in today’s fragile economy are placing a greater emphasis on talent management. But they can’t do it alone. 

The good news is that they don’t have to. Concerned about their own economic development, many state and federal governments as well as countries around the world are partnering with industry and education to create strategic workforce programs that make it easier to find and build the skill sets needed by business.

Mercer’s research and client work, including the efforts of the firm’s Workforce Sciences Institute, are often at the heart of this global collaboration and challenge — one that differs by industry and by nation. Emerging regions, for example, which have been experiencing double-digit economic growth, are starved for skilled workers to fill talent pipelines and improve worker productivity.

In the developed world, companies have often responded to the economic downturns by cutting workforces as a way to cut costs. They have also often reduced their investment in training and leadership development programs. Still, even with single-digit growth, there is a glaring and growing need for highly skilled workers.

According to Mercer’s recent Global Oil & Gas Talent Outlook and Workforce Practices Survey, nearly threequarters (74%) of organizations cited “technical skills gap” as a critical problem. In addition, leadership, management, and supervisor skills are also in short supply. (See Figure 1.)

Yet, even as the oil and gas industry intends to add more than a half-million positions in core professional and technical jobs over the next five years, only about 19% of companies say they have a workforce-planning process that provides solutions to close gaps.

In addition, Mercer’s research indicates that many large employers in the US may lose between 50% and 80% of their retirement-eligible population in the next five years.

Many oil and gas companies — about two-thirds — plan to poach talent from competitors, but that will not only be insufficient to fill the talent gaps, it is also not a long-term solution to the talent problem.

Skills development and education are often a long-term process. Large educational institutions, like large ships, can’t turn on a dime and revamp curricula. And even when a consensus is reached, it can take years to educate, train, and develop proficient workers.


Unlike other markets, the labor market is inefficient and does not self-correct. There is a persistent imbalance of talent supply and demand. The difficulty with filling jobs requiring highly skilled workers, especially in science, technology, engineering, and mathematics (STEM), remains a constant. Plus, there is an ever-growing inability to find workers skilled in other competencies, such as machinists, technicians, and other skilled trades.

Organizations seeking to meet current and future workforce needs must look at both their internal and external labor markets. According to a study of location investment done by Mercer’s Workforce Sciences group, 99% of location decisions were based on labor availability. Future labor supply factored into 62% of the site selections, while labor quality was a factor in 52% of the selections.

In the insurance industry, the sector’s global growth is being challenged by a lack of talent. As incomes rise, populations age, urban development increases, and middle classes grow in emerging markets such as China, India, and Brazil, the demand for insurance products is forecast to grow as well.

Yet according to Mercer’s 2013 Insurance Industry External Labor Market Analysis, the number of individuals available to fill those positions is considerably shy of what is needed. China, for instance, has an estimated shortage of 10,000 insurance sales agents to meet demand projected for 2018. In Brazil, that gap is 18,000 agents.


There is a growing consensus that fixing the imbalance of talent supply and demand requires the collaboration of governments, educational institutions, and industry. One stakeholder alone is unable to bridge the gap — not when there are persistent difficulties in finding workers with critical skills all over the world.

A key aspect of the collaborative approach is a focus on information. As employers search for the skilled workers they need to grow their business, prospective employees all too often lack the information they need to pinpoint the skills they should develop in order to fill talent pipelines.

What is needed is a way to match education, competencies, and employer needs — and that need is starting to be filled both in the US and in countries around the world.

In Texas, for instance, Mercer’s input was part of a collaborative effort among government, educators, and industry that resulted in the identification of six industry clusters and the key jobs in each of those clusters, as well as the skill-development needs associated with those positions.

Furthermore, about a dozen US states maintain labor data on students who graduated from public universities and other institutions. The data pertain to the students’ entry-level jobs and compensation, including what studies were undertaken, what universities were attended, and where those students landed five years after graduation.

Immigration remains a barrier to talent mobility — and not just in the US, where the issue provokes much heated controversy. Even in the European Union, where there are no formal constraints to talent moving from one country to another for employment, political pressure constricts the free flow of labor.

Critics of immigration say that increasing the flow of foreign workers hampers the ability of unemployed native workers to obtain employment. Proponents note that such workers often do not have the skills needed to get a job.


Even in Singapore, where foreign workers have played an important role in the growth of that country’s economy, immigration is a concern. Critics say foreign workers not only take jobs from natives, but they also depress wages for low-skilled jobs, according to a report by The Conference Board, Addressing National Talent Shortages, to which Mercer contributed.

Singapore put together an innovative workforce strategy designed to improve the country’s productivity, upgrade skills, increase the quality of jobs, and raise worker income.

The country’s Economic Development Board pursues long-term agreements with foreign companies that want to operate in Singapore, including the number and types of jobs that will be created. Other Singaporean government agencies forecast demand for specific sectors and industries, and Mercer has worked with a number of industry groups to identify workforce needs in the region.

With that information, the Ministry of Manpower is able to work with the country’s publicly funded universities and polytechnics on the sizes of academic clusters that will help the country meet future workforce needs. The ministry also tracks the number of students who enter postsecondary education, the number who graduate, how long it takes them to find jobs, and whether those jobs match the field of study at the educational institution.

Another collaborative effort has taken place in Brunei, where the Ministry of Education worked with professional societies to review and create a better focus for educational programs, including developing apprenticeship initiatives in partnership with business. Brunei’s finance ministry has also consulted with Mercer on workforce issues.

In Poland, Mercer has been part of workforce strategy efforts that include a program involving business and education designed to solve the problem of insufficiently qualified graduates, mostly in the technology sector. The changes included more internships created at companies, while the educational system added more access to practical learning in addition to theory.

In the US, the booming oil and gas industry has created many workforce challenges.

In North Dakota, for example, as of May 2014, more than 27,000 positions were available — nearly 6% higher than in the previous month. At the same time, the total number of active resumes was 15% lower than the prior year.

That sector simply cannot find enough workers to fill open and forecast jobs. A poaching strategy won’t be sufficient to fill the talent pipeline, yet Mercer’s survey of the industry found that only one-third (34%) of companies have a “build” strategy — and that reflects a 10% decrease from the number of companies that said in 2006 that they planned to build talent.

One reason for the focus on “buying” talent may be the length of time needed to build it. Petroleum engineers, for example, require three years to master job fundamentals, another four years to become fully proficient, and another 11 years to become experts.

The growth of complex technologies, such as hydraulic fracturing, as well as an aging workforce and a dearth of STEM graduates, add to the difficulties for oil and gas companies.

Other acute shortages for the oil and gas industry include geophysicists, project managers, and plant operators, according to Mercer’s research.


In Canada, most concerns have pertained to workforce gaps related to international trade, which accounts for 60% of Canada’s gross domestic product. The country lacked a strategy to meet workforce needs.

Using Mercer’s data-driven approach, the country’s Forum for International Trade Training developed quantitative and qualitative data to forecast workforce needs and then compared that to the available talent.

The research determined several trends affecting international trade, such as challenges resulting from regulatory compliance and longer supply chains. Those two challenges have workforce implications — such as an increasing need for workers more experienced in the complex regulations related to transportation, borders, safety, and environmental issues, as well as the need for employees who can successfully manage relationships with global suppliers.

But before potential talent imbalances could be determined, the project required pinpointing those jobs related to international trade from the 519 occupations listed in Canada’s National Occupational Classification (NOC). It required both bottom-up and top-down approaches.

The bottom-up approach involved labor market experts creating a list of NOC occupations that dealt with international trade and then having that list of 109 jobs vetted by other experts. The top-down approach began with the identification of 15 industry sectors related to international trade and then determining the 20 most common occupations within each sector. That resulted in a list of 112 occupations.

Eventually, the list was narrowed to 95 occupations, and after reviewing the data with companies, it was used to forecast talent gaps and actions that the government could take to fill those gaps. For example, the government proposed apprenticeships, paid internships, and grants to help develop individual skills.


Ultimately, strategic workforce planning is a global challenge. Collaborative efforts among government, educational institutions, and industry are beginning to result in increased efforts to identify job competencies and talent gaps, and to create programs that will develop skills to fill gaps in talent pipelines. But plugging those gaps takes time — up to a dozen years or more for an individual to complete academic programs and become experienced and productive in the workplace. And in today’s globally competitive business environment, time may be the most expensive thing that companies — and countries — must buy.


Learn more about Mercer’s 2013 Oil & Gas Talent Outlook and Workforce Practices Survey.

Learn more about Mercer’s Workforce Sciences Institute, advancing the science and practice of evidence-based human capital management.



Haig Nalbantian (New York)
Senior Partner, Talent/Workforce Sciences Institute
+1 212 345 5317
Jay Doherty (Chicago)
Partner, Talent/Workforce Sciences Institute
+1 804 344 2614
Matthew Stevenson (Washington, DC)
Principal, Talent/Workforce Sciences Institute
+1 202 331 5291
Rick Guzzo (Washington, DC)
Partner, Talent/Workforce Sciences Institute
+1 202 331 3695

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