Published on November 5, 2008
Flying Into A Perfect Storm The War for Talent - An Aerospace Perspective Based on a global Heidrick & Struggles Survey presentation by: Torbjorn Karlsson to: Asian Aerospace Symposium, Hong Kong on: September 4, 2007
Introduction to Heidrick & Struggles 1
Introduction Founded in 1953, Heidrick & Struggles is one of the world’s leading executive search firms. With offices in the principal cities in the world, we help our clients to address strategic issues with human capital solutions. We have existing relationships with, and immediate access to, some of the world’s most talented people. Our executive search, leadership services and interim management capabilities seamlessly integrate a bespoke programme to meet the diverse leadership challenges facing our clients. We help our clients build the most powerful leadership teams in the world. 2
Introduction • Heidrick & Struggles is today the leading global executive search firm with revenues of over US $450 million • Global network of over 1400 search professionals and employees in 64 offices across 5 continents • 4,077 confirmed executive searches worldwide in 2005 • Pioneered the concept of industry practices • Unparalleled commitment to technology as a productivity enhancing tool • A “one firm” – single Profit & Loss with a collaborative culture • Retained executive search is our core business 3
Our Approach Heidrick & Struggles is organized along practice lines (Communications, Software, Industrial, Healthcare, etc.) and functional responsibilities (Board of Director, Chief Financial Officer, Legal, Chief Information Officer/Chief Technical Officer, Human Resources). This allows us to focus on and be knowledgeable about competition, key trends, and players/candidates of a particular industry and in various functions. We are a truly global company and work collaboratively across our partnership to serve our clients effectively. We hire people with at least 15 years of business experience in an industry that they will then serve on behalf of H&S. We have an operator’s mentality, always approaching searches from the client’s perspective. We are proactive and solutions-oriented. H&S partners with our clients on business issues. We take a talent management approach, allowing us to know and advise candidates over the course of their careers, not “getting to know” them on a search—preventing putting square pegs in round holes. 4
Services Portfolio: Brief Description Executive Search Interim Management Leadership Review Coaching • Focus on top-level • Supply with • Audit/assessment of • Expansion of the positions experienced senior leadership skills executive's applied executives for leadership potential • Reliable quot;Direct • Empirically-founded limited time periods Searchquot; method methodology • Flexible, tailored • Firm, well-structured • Large pool of service to match the • Semi-structured 3- available executive's specific process hour-long in-depth experienced senior needs interviews • Method of resolution managers • Worldwide network applied in • Individual & organi- • Fast allocation in of certified coaches partnership zational bench- pressing times marking / feedback Integrated Corporate Governance Services • Participation in the public debate on corporate governance through several commissions/round- tables • Systematic evaluation of board work and board member skills • Training of board members and/or search for board members 5
Integrated Services Offered Acquire Executive Search Interim Management Integrated Leadership Services (incl. Corporate Governance) Assess Amplify Leadership Review Coaching 6
The War for Talent 7
The War for Talent – A Global Issue • All over the world we are facing a shortage of talented people who have the transferable technical skills to compete in global business • Today, only 20% of Americans have passports, yet American companies are looking to aggressively expand into Europe and Asia • Meanwhile European businesses are searching for footholds in Asia and also further expansion in North America • The Japanese, for the first time in 15 years, given their economic upturn, are looking to expand outside of their borders yet are finding they don’t have the senior management to get them there • Chinese companies are following this trend and are increasingly committed to gaining a place on the international stage. In particular, Chinese organizations which were once state owned want to know if they have the same talent to compete against a General Electric, a Pepsi Cola, a Dell • Indian companies are rapidly going global and as seen in their airlines, among other industries, are rapidly tapping into the global talent pool 8
The War for Talent – Going Forward • In industrial nations the shortage of talent will worsen • Japan alone will lose up to 60 million people over the next 30 years • In 30 years there will be 70-80 million fewer Europeans than there are today • 50% of the top people in US companies will leave in the next 3 years • We know the situation in China and India is different. Yet, in spite of the population wealth, the talent problem in China is just as pressing • The talent pool in China is shallow • Exacerbated by the Cultural Revolution which affected a large group of individuals who would be in management position now • In China, just as in the rest of the world, there is a severe shortage in globally experienced senior management • A recent report by Business Week showed there is shortage of 70,000 globally experienced Chinese managers and by 2010, McKinsey predicts India will face a shortfall of 500,000 staff capable of doing work for multinationals 9
An Engineering Perspective • The shortage of top executive and engineering talent is just starting to be noticed. • In the United States a presidential commission was established in 2003 and predicted a “devastating loss of skill, experience and intellectual capital”. • According to a study by Bain & Co. and Deloitte Consulting only half of the 68,000 military engineers due to retire by 2010 can be replaced. • According to a study by McKinsey Global Institute, young engineers coming forward in China may not be enough to meet even local demand. The number who are considered suitable for work in multi- nationals is just 160,000 – about the same number as are available in Britain. • The supply of graduates isn’t the only problem. It is the depth of experience that is lacking, as well as exposure to new and developing technologies. 10
What’s the implications for you? • To understand the impact on the Aerospace:OEM 3% Aerospace industry Hedrick & Aerospace: MRO Defense: OEM Struggles conducted a global 11% Defense: MRO survey in July 2007 Aviation: OEM 41% 11% Aviation: MRO • Majority of the respondents of Airlines: Full Service the survey are senior managers Carrier Airlines: Low Cost Carrier 10% Airlines: Regional Carrier • 37% are COO/Executive 3% 9% 9% Director/ General Manager • 34% are Functional/ Divisional/ Regional Heads 12% • And they are active across the 8% industry: 42% • 41% of the survey respondents are from OEM’s, 35% • 17% from airlines 1% • 23% from MRO’s NA Middle East Africa Western Europe 2% Central & Eastern Europe Asia Pacific 11
The impact is real… 1. In future, engineering leaders in my industry will have to possess and display high levels of commercial acumen. • 92% or respondents agree with only 2% disagreeing • 72% of the respondents believes their current General Management population understands engineering/technical issues well. 2. There is a potential shortage of engineering talent in my company and it may affect our ability to develop Engineering (Design, Manufacturing/Production, Support, Services etc.) leaders in future. • 65% or respondents agree with 23% disagreeing • 86% believes the complexity of the products and/or services designed/manufactured by my company has increased in the past five years. Only 18% disagree. • The majority (44% vs. 33%) agrees that reduction in the number of management layers has affected their ability to grow potential leaders to take larger responsibilities. 3. It is becoming increasingly difficult to recruit high quality engineers into my industry. • 64% or respondents agree with only 22% disagreeing 4. A shortage of quality entry level engineering talent today will adversely affect the competitiveness of my organization in the next five to ten years. • 64% or respondents agree with only 22% disagreeing • 61% or respondents agree that managing complex projects is becoming increasingly difficult in their company since engineering skills at senior levels are not widely prevalent. with only 24% disagreeing 12
What about MRO’s? Global Issue Study findings Talent Implication • Growing trends for MRO • All regions and functions • Need for formal to go global and airline STRONGLY AGREE to program to develop independent the risk of reduced own talent pipe-line. competitiveness of their • Need for multiple • Use Airline and OEMs organization in the next “anchor” Airline clients for different skills 5-10 years but, airlines have regional • Need to develop OEM much less concerned perspective relationships but not on • Asia less concerned - the back of an airline • Look outside industry 50% very confident vs. equipment selection for commercial ~60% fairly confident in engineers - train and • Diverging and blending the US & Europe. job-rotate to build airline models – no • HR is more confident the understanding of ”standard solutions” talent gap can be filled industry • Growing focus on nose- than functional leaders • LCC’s tap the same to-tail platform products • 82% of Airlines rely on talent pool – – different narrow- and job-rotation but 75% of consider comp. and wide-body solutions MRO say its in-house attractiveness of • Growing focus on RDE / training that is used MRO industry PMA to reduce costs most commonly MRO’s need to develop their own world global class talent MRO’s need to develop their own world global class talent pipe-line focusing on technical and commercial skills 13 pipe-line focusing on technical and commercial skills
What equips a leader to fight for global talent? • People have a natural aspiration to be part of a winning team and once the feeling of being essential is fulfilled you harness a great wealth of support and enthusiasm • This idea was powerfully explored by American psychologist Abraham Maslow. His Hierarchy of Needs extended the theory that humans have basic needs - breathing, food, water, sleep but once these have been satisfied, they seek security in their body, their family, their property and their employment • A sense of security and belonging in the workplace is critical • In terms of the key skills needed to keep you competitive in the global war for talent and so expand your market share, the following are important: • The need to develop a ‘distinct’ advantage • The ability to inspire a creative and innovative spirit in your business model • Engagement with the workforce; this includes the importance of communication - listening to their thoughts and ideas to inspire morale • The importance of training and development 14
The challenge is in finding talent… • So how does all this help attract and retain talent in this region and globally? • If you want to look like heroes, if not to your board, but potentially to your successor, you have to invest in human capital • That means making a decision to send high potential individuals abroad where they can gain the technical skill sets, organisational know-how and experience that will help your company grow, long term • The mistake most organisations make is that they send their Chinese nationals abroad for a short period of time, not allowing them to reap the benefits of this experience • …the other mistake is that they only send a couple • It’s a long term investment – you need to operate a talent pipeline with employees continually being sent abroad, to return a few years later • Human Capital is the oil of tomorrow – it’s in high demand and is often hard to find • In addition, most organisations think that once the talent has been acquired the hard work is over • The acquisition itself may not be easy but the retention and on-boarding is just as critical • Currently 40% of senior hires globally leave their firm or are fired within 18 months of joining • It is in all of our best interests to decrease this percentage 15
Torbjorn Karlsson Practice Leader, Industrial and Aerospace, Aviation and Defence Practices, Singapore Professional Profile Torbjörn Karlsson leads the Aviation, Aerospace and Defense practice in Europe, Middle East Africa and Asia. He is also involved in the transportation and supply chain sectors. Prior to joining Heidrick & Struggles, Torbjörn was Vice President, Commercial, Asia Pacific for Honeywell Aerospace. He is a seasoned marketing and sales professional with over 18 years experience in Asia Pacific based in Jakarta, Bangkok, Hong Kong and Singapore, promoting aviation-related products (including aircraft) and services for large aerospace companies such as Saab Aircraft, Rockwell Collins and Cathay Pacific. Torbjörn has a wealth of experience across the aviation sector. He has managed and designed logistics and sales management processes, identified and closed gaps in opportunities, developed sales campaigns that have returned significant value, and devised asset management strategies. Torbjörn has spent many years in the consulting, airport, aviation electronics and regional aircraft markets. His accomplishments include the management of European and American supplier relationships to develop new markets and identify new business opportunities and markets. He has managed Asian client relationships to grow business for multidisciplinary product ranges including hardware, software and integrated solutions, refocusing emphasis to match changed market environments-increased competition and revised purchasing criteria. In addition to handling all marketing and sales activities for commuter aircraft in China, Taiwan, Southeast Asia and Indochina leading to an increase in fleet of 100% over three years, Torbjörn also laid the foundation for consulting and hardware contracts increasing sales at major regional airports. Education Torbjörn studied Mechanical Engineering at the Royal Institute of Technology in Stockholm, Sweden and earned an MBA from European University in Jakarta and Brussels, Belgium. He also is a certified Six Sigma Black Belt. 16
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