Entrepreneurial Challenges

Corporate culture and leadership in particular are becoming increasingly important. They are responsible for employee retention. Fluctuation due to personnel mistakes is a major issue, especially since high monetary losses (five to six digit euro amount) must be expected.

The so-called “soft” topics such as culture, leadership, working atmosphere and willingness to change also affect the success of a company.

According to a study by the Federal Ministry of Labor and Social Affairs with the Great Place to Work Institute, an employee-oriented corporate culture accounts for almost one third of a company’s profitability. There is also a significant correlation between employee commitment and corporate success.

Profitability and corporate culture

A culture of trust is once again becoming a challenge and a direction for companies in complex and fast-moving times, because without trust there can be no innovation. “Where there is trust, there are more possibilities for experiencing and acting, the complexity of the social system increases, i.e. the number of possibilities that it can reconcile with its structure, because trust provides an effective form of reducing complexity” (Schiel 2013).

So, this was the fourth part of the biggest challenges of today’s War for Talent overview.

And here’s a tip for you: The War for Talent gets a different perspective thanks to the latest findings in neuroscience. Professional Fit and Cultural Fit are no longer enough…

Generation change and change of values.

In addition to cultural changes in society, another gradual generational change is imminent: Generation Z (born after 1995) is moving in. Most companies have only just adapted to Generation X (born 1961-1980); Generation Y (born 1981-1995) has been with the company for a long time, and Generation Z is already on its way.

Lifestyles and social values are constantly changing. While Generation X “accepts hard work as a means to an end”, Generation Y “wants to live first and only work second” (Hesse 2015). Especially members of Generation Y and Z are exposed to many areas of tension, e.g. performance orientation versus enjoyment of life, career versus family, stability versus flexibility. Work-life balance, for example, is no longer a desired model for these generations.

Generation Z is again more balance-oriented and relies on security and stability both at work and in private life (for further details see the following figure).

Generation overview

The challenge for companies at this point is to adapt processes, such as working time models, but above all also communication to specific target groups. “The younger generations are exemplifying open and critical communication, combined with a strong feedback culture and the use of new social media” (Hays 2016).What does the whole thing have to do with “brain justice”? We’ll get to that later, stay tuned.

Increasing demands

In addition to the shortage of skilled workers and demographics, the constantly increasing demands should not be ignored. Our world has become fast moving, uncertain, unpredictable and complex, not least due to digitalization.

Meaning of VUCA

Core competencies include skills such as agile project management, entrepreneurial thinking and acting, willingness to change and resilience. Employers now have other issues on their agendas: deceleration, stress prevention and health care.

The topic of salutogenesis (health as a process) by Aaron Antonovsky is increasingly coming to the fore with the employee’s three-part question: “Is what I do understandable, manageable, and meaningful? Only if all three parts of the question can be answered with yes (sense of coherence – feeling of coherence) is a person healthy in the long run and thus able to work.

Unemployement Rate

The entire corporate world speaks of the war for talent, but paradoxically the unemployment rate is still usually high; in Germany it is 5.8% (2.54 million people), although only 29.8% of them are absent from the first labour market in the short term up to a maximum of 18 months (SGB III) (cf. BMAS (2016), Figures October.).

But what is this war for talent?

“In order to keep the pipeline full of talented people, almost all of the companies are starting to take nontraditional approaches to recruiting.” (Gazdar 2008). Ed Michaels, American director of the management consultancy McKinsey, was the one who coined the term War for Talent with and in his book of the same name in 1997.

Originally it was about the “battle for the best”, the talents or the so-called “high potentials”, which today represent the most important and at the same time scarcest resource of a successful company (human capital). Ambitious companies use not only the idea, but also the slogan War for Talent for the increasing and sophisticated recruiting efforts.

Already at the beginning of the 21st century Ronan Palan summarized this in the foreword to the book “The Talent War” by Kerry Larkan: “Changing demographic trends in a manifestly different workforce with different value systems are the context within which 21st century companies must operate” (Palan, Ronan, in Larkan 2006, foreword).

What are the biggest challenges facing companies today in the War for Talent?

Culture and society are changing due to topics such as generational change, digitisation, Open Access (knowledge), scientific knowledge and globalisation. And this has consequences for the economy and companies.

A major challenge facing companies today and in the future is the shortage of skilled workers and the issue of demographics. While the German and thus also the working German population is shrinking and ageing, the proportion of ethnic minorities is growing. An annual net immigration of 200,000 persons is predicted from 2020 (BMAS 2013).

In its Leadership 2030 study, the Hay Group made the following statement: “[Organizations] will have to work hard to attract, integrate and develop international migrants [and] older people. (HayGroup 2014).

The heterogeneity of the workforce is thus increasing more and more, which on the one hand offers many opportunities due to diversity and perspective, but on the other hand also entails the danger of conflicts due to different values and ways of working for which it is necessary to prepare.

Study highlights challenges

In order to react quickly to the emergence of new business models or to develop new business models, a collaborative and agile process structure must be in place in which all participants can find their way and contribute their competencies. This has the advantage that only the framework has to be modelled in advance and the rest is created during operation.