White Paper 2008 Competition For Talent Talent Partners

The Competition for Talent in Ireland – Local
Trends and Offshoring Practices

White Paper
December 2008

Sponsored by:

The Competition for Talent in Ireland: Local Trends and Offshore Practices

Table of Contents

Executive Summary ................................................................................... 3

Identifying and Attracting High Performers ................................................ 5

Retention and Turnover of High Performers ............................................ 15

Organisational Approach to Talent Management..................................... 20

Offshoring Practices in Irish-based Organisations ................................... 25

Impact of Current Economic Climate on Business ................................... 30

Methodology ............................................................................................ 34

Recommendations ................................................................................... 35

© Talent Partners 2008 www.talentpartners.ie 2


Executive Summary

A total of 82 leading Irish and multinational companies took part in this year’s Competition for Talent
Survey sponsored by Talent Partners. These were drawn from a range of industry sectors, including
ICT, Banking and Financial Services, Construction and Engineering, Utilities and FMCG. Of these, 62%
of responses were from the ICT sector, and 13% from Banking and Financial Services industries – two
groups that were specifically targeted in last year’s White Paper and will again this year be presented for
the purposes of comparison where appropriate.

Identifying and Attracting High Performers

Respondents continue to experience difficulties year on year in identifying and attracting high
performers to their organisations. 90% of Irish organisations surveyed stated that it is ‘difficult’ or
‘extremely difficult’ to identify high performers, and 30% consider it to be more difficult to do so this year
than last.

The functions for which respondents find it most difficult to identify or source high performers are in
Sales, Technical/IT and Finance/Accounting roles.

There is a noted growth in the use of social and business networking sites as a means of sourcing high
performers, and there has been an increase since 2007 in the numbers of companies using specialist
executive search agencies and headhunters to source high performers.

The majority of Irish businesses confine their search for talent to the Irish marketplace, with only about
one quarter extending that search to the European marketplace.

From the employers’ perspective, role content, corporate reputation and financial package are the three
most significant factors in attracting high performers to the company.

Retention and Turnover of High Performers

Levels of turnover of high performers in 2008 have been ‘as expected’ by survey respondents, with the
loss of a high performer potentially signalling a high economic cost to the business – anywhere from
€25,000 to €400,000 per any individual high performer lost to an organisation.

Factors cited by survey respondents as contributing to the loss of high performers include lack of
internal opportunities, financial packages offered elsewhere, a perceived ‘time for change’ on the part of
the high performer, as well as the general economic climate.

Factors, in the respondents’ views, which assist in the retention of high performers, include training and
development opportunities, as well as salary and compensation package.



Organisational Approach to Talent Management

Despite the recognition of the potential cost to the business of losing a high performer, only 44% of
companies surveyed have a talent management programme or policy in place. Just over half of survey
respondents rated that their talent management programme as effective.

34% of respondents have a clearly defined policy to attract and retain high performers and 52% have a
policy or programme in place to manage high potentials within the business.

The key criteria used by survey respondents’ organisations to identify high potential individuals is
‘performance to date’, followed by ‘desire to succeed.’

Offshoring Practices in Irish-Based Organisations

32% of survey respondents currently offshore work which was previously done in Ireland. The stated
benefits to them of this activity are cost savings and availability of skilled staff, and just under half of
these companies plan to increase their offshored activities.

Of the 68% of survey respondents who do not currently offshore, 30% are actively considering this as an
immediate term business strategy (i.e. within the next 12 months).

Impact of Current Economic Climate on Business

The key areas of business activity impacted by the current economic climate, as experienced by our
survey participants are on reductions in revenue and profits, as well as reduced market opportunities.
The sector most impacted, as identified by our survey, is unsurprisingly, the Banking and Financial
Services sector.

The top three key factors for securing competitive advantage for our participating companies are people,
leadership and technology.

47% of survey respondents expected to be employing more people in their business at 31/12/2008 than
they did at 31/12/2007.



IDENTIFYING AND ATTRACTING HIGH PERFORMERS

While the Celtic Tiger economy boomed, employment levels in Ireland soared and it was to a large
extent a candidates market in recruitment terms. More recently, events at home and internationally
have seen the Western economies plunge into recession. The impact that this is having on Irish
industries, across public and private sectors, is an extreme focus on cost management, particularly in
the area of headcount. News of plant closures, industry consolidation and reduction in headcount
feature in media reporting on an almost daily basis. The 2008 Competition for Talent in Ireland survey
presents statistical evidence of the impact of these factors on the management of high performers within
Irish-based industry.

Finding High Performers

We began the survey by asking participants how difficult it is to find high performers in Ireland today.
Overall, 90% of survey participants responded that it was ‘extremely difficult’ or ‘difficult’ to do so. In
fact, over 30% of respondents reported that they perceive it is more difficult to find high performers this
year than last year. This might indicate that, despite the recession, the market is not being flooded by
high performers who find themselves out of work. One hypothesis for this might be that if an
organisation is forced to reduced headcount, high performers would be among the last to be let go.
Another reason may be that, in uncertain economic times, high performers who in better circumstances
might consider themselves more mobile, are now staying in jobs that provide security of income, rather
than risking an uncertain future with a new employer. Just 10% of survey respondents stated that it was
‘easy’ or ‘extremely easy’ to identify high performers today.

Figure 1
How difficult is it to identify high performers for your business today? Is it extremely difficult, difficult, easy or
extremely easy?

High Perform ers - Degree of Difficulty in Finding

1.3%
Extremely easy
8.8% 20.0%
Easy Extremely difficult

70.0%
Difficult

Source: Talent Partners, 2008



Looking back

When we compare the survey responses from the 2007 survey with 2008, there is little difference in
statistical terms with those stating that it is difficult to identify high performers (93% of respondents in
2007 compared with 90% in 2008).

Figure 2
2007 and 2008 responses compared. How difficult is it to identify high performers for your business today? Is it
extremely difficult, difficult, easy or extremely easy?

Difficulty in Finding High Performers (2007 - 2008)

2008 20% 70% 9%

2007 25% 68% 7%

0% 20% 40% 60% 80% 100%

Extremely difficult Difficult Easy Extremely easy

Source: Talent Partners, 2007 & 2008

However, it is interesting to note the different perceptions that exist about the difficulties in identifying
high performers now compared to 12 months ago. 25% of today’s respondents believe that it has been
easier to recruit high performing candidates in 2008 and that may be attributed to the fact that there is
greater availability of candidates due to the economic slowdown, and the cut backs and redundancies
that have followed. But over 30% of respondents believe that it is even more difficult this year than last
year to attract high performing individuals. One possible explanation for this response is that, when
times get tough high performers tend to keep their heads down and are absolutely focused on their
existing role rather than looking for new opportunities. As economic times become more difficult,
companies are more discerning in who they employ, as the requirement to see a return on investment is
critical and the hiring of a new employee is made in expectation of delivery as opposed to hope. The
reality is that they are offering remuneration packages to candidates which are the same if not less than
their previous employments. We have to ask whether today’s candidates were swept along on the
economic wave of the past and somehow acquired a falsely elevated sense of their worth in the
marketplace, and whether their salary and performance expectations are realistic in the current market
conditions?



Comparing with Previous Year

Respondents were asked to rate their perception of the difference in finding high performers in 2008
compared with the previous year. The majority of respondents (43%) felt that it was ‘the same as last
year’. Interestingly, 56% of respondents from Banking and Financial Services sector stated that the
difficulty of finding high performers was ‘the same as last year’.

Figure 3
Based on your experience, how does the situation with regard to recruiting high performers for your business today
compare with 12 months ago? Is it much more difficult, more difficult, the same as last year, easier or much easier?

Ease of Recruiting High Performers Compared with 2007

1.3%
Much easier 2.5%
Much more difficult
24.1%
Easier 29.1%
More difficult

43.0%
Same as last year




Functional Areas for Which Hardest to Locate High Performers

Survey respondents were asked to identify those functional areas for which they found it most difficult to
identify or source high performers. The Sales (39%) and Technical / IT (21.5%) functions were reported
as most difficult, followed by Finance / Accounting (13%).

Figure 4
For which functional area does your company find the most challenging to recruit high performers?

Functional Areas - Hardest to Locate High Performers

Other 8.9

General Management 7.6

Research & development 6.3

Technical/IT 21.5

Finance/Accounting 12.7

Marketing 3.8

Sales 39.2

0 20 40 60 80 100




Year on Year Comparison

While there are statistical differences in the year on year numbers stated in 2007 and 2008, there is
consistency in the top three functional areas found most difficult to recruit for, namely Sales, Technical /
IT and Finance / Accounting.

Figure 5
2007 and 2008 responses compared. For which functional area does your company find the most challenging to
recruit high performers?

Functional Areas - Year on Year

2008
Technical/IT
2007

2008
Finance/Accounting
2007

2008
Sales
2007

0 10 20 30 40 50 60




Comparison by Industry Sector

The following figure illustrates the difference across industry sectors in locating high performers to fill
roles in these top three functional areas. Clear differences emerging between ICT and Banking and
Financial Services sectors, with 29% of ICT respondents stating difficulty in recruiting high performing
Technical/IT specialists, while 30% of Banking and Financial Services respondents stating difficulties in
recruiting high performing Finance/Accounting specialists. These are quite obvious differences, to be
expected based on the functional specialisms of these two industry sectors.

What is of more interest is that only 30% of Banking and Financial Services respondents stated difficulty
in filling Sales roles, compared with 42% of ICT respondents. It may be due to a number of factors,
including a difference in the volume of sales vacancies in the different sectors, or indeed a difference in
the approach to recruitment and/or reward for these roles across the ICT and Banking and Financial
Services sectors.

Certainly, the difficulty in filling Sales roles with High Performers has decreased marginally from 2007 to
2008 across all industry sectors.

Figure 6
Industry sector responses compared. For which functional area does your company find the most challenging to
recruit high performers?

Functional Areas - By Sector

29
Technical/IT
22

9
Finance/Accounting 30
13

42
Sales 30
39

0 10 20 30 40 50

Overall Banking & Financial Services ICT




Methods of Sourcing High Performers

Companies were asked how they go about sourcing high performers. New media, such as business
and social networking sites are increasingly playing a prominent part, with one third of survey
respondents stating that they use these to source high performers. However, the traditional methods,
such as employment agencies, executive search agencies and headhunters, as well as newspaper and
magazine advertisements continue to be the most used sources.

Figure 7
How do you normally go about sourcing high performers? (You may tick more than one answer)

Sourcing High Performers - Methods Used

Business/Social networking sites 33

Word of Mouth 48

Executive recruiters/headhunters 63

Employment agencies 63

Advertisement in newspapers/trade publications 27

0 20 40 60 80 100

Source : Talent Partners, 2008

Year on Year Comparison

Interestingly, when comparing the methods used to source high performers year on year, some
significant differences emerge. For example, there is an increase of over 40% in the use of ‘word of
mouth’ between 2007 and 2008. As the market contracts there is greater visibility of who is and isn’t
available and a direct approach can therefore be used, with many companies offering incentives and
internal referral schemes in order to source candidates from the contacts of their existing employees.
Similarly, while the use of traditional recruitment or employment agencies has decreased since 2007,
there is a decidedly greater increase in the use of specialist executive recruiters and headhunters. This
may be due to the more specialist services offered by executive recruiters and headhunters as distinct
from employment agencies. However, it also may be due to the fact that roles for high performers may
be filled at a more senior level in the organisation, typically the kinds of roles which are assigned to
executive recruiters and headhunters.



Figure 8
2007 and 2008 responses compared. How do you normally go about sourcing high performers? (You may tick more
than one answer)

Sourcing High Performers - Year on Year

Word of Mouth

Executive recruiters/headhunters

Employment agencies

Advertisement in newspapers/trade publications

0 20 40 60 80 100

2008 2007


Geographical Sources of High Performers

The survey then asked respondents to state where, that is, which geographies they focus on in terms of
their search for high performers. As might be expected, the majority of respondents across all industry
sectors focus their search for high performers in the Irish marketplace. Over one quarter of respondents
do search abroad, with the majority of those searching in Europe only, with significantly fewer searching
further afield.

When analysed by industry sector, of note is the fact that 90% of respondents from the Banking and
Financial Services sector confine their search for high performers to the Irish marketplace alone. This is
less so within the ICT sector. This may be due to the less geography or location specific nature of ICT
work, and the more regulated, legislative framework within which the Banking and Financial Services
companies operate here in Ireland, requiring more ‘local’ knowledge.

However, it is interesting to see the extent to which Irish organisations overall narrow their search to the
Irish marketplace, particularly as in recent years, there has been an increase in the numbers of Irish
immigrants returning from abroad, as well as significant growth in the influx of foreign migrant workers
across all sectors. In particular, one might question whether this is a useful approach to search,
considering the difficulties expressed by 90% of survey respondents in identifying high performers,
combined with the growing increase in the use of specialist executive search agencies and headhunters,
many of whom are part of international search organisations with extensive networks.



Figure 9
When recruiting high performers for your business, where is your primary geographic focus in your talent search?

Geographical Source of High Performers

15%
Overall 25%
68.80%

13%
ICT 26%
70%

Banking & Financial
20%
Services 90%

0% 20% 40% 60% 80% 100%

Irish marketplace European marketplace Worldw ide marketplace

Source : Talent Partners, 2008



Factors Attracting High Performers

Survey respondents were asked to consider those factors which they believe attract high performers to
their organisations. Overwhelmingly, ‘role content’ and ‘corporate reputation’ were named as the two
most important factors in attracting high performers. This suggests that, in order to overcome difficulties
in identifying and attracting high performers, organisations may be paying particular attention to the
presentation of both their organisation (employer branding, for example) and the quality of their role
description materials.

Figure 10
What are the key factors that attract high performing individuals to your organisation? (Please rate each option in
order of importance from Very important, important, somewhat important to unimportant)

Factors Attracting High Performers

Work/Life Balance

Location

Calibre of People

Career Progression

Package

Corporate Reputation

Role Content

0 1 2 3 4


Comparison with Candidates Perceptions

What is of interest to note, is that reward or compensation package ranked fourth out of seven possible
factors attracting high performers, at least in the perception of survey respondents, that is, those
involved in the recruitment of high performers.

Earlier this year, Talent Partners conducted an on-line Candidate Survey, and asked candidates
themselves what were their top three criteria when choosing a new employer. For 80% of respondents,
the financial package on offer was ranked as the top reason for moving. 68% of respondents mentioned
‘role content’. 52% of candidates cited ‘opportunities to progress’ as their reason for choosing a new
employer, while this was similarly ranked the third most important factor by hiring organisations in
attracting high performers. The candidate survey did not ask about corporate reputation as a factor in
choosing a new employer.



RETENTION AND TURNOVER OF HIGH PERFORMERS

The process of identifying, attracting and recruiting high performers is only one aspect of any
organisation’s talent management strategy. As the previous section indicates, this is difficult in itself,
with differences in perception between candidates and companies as regards what candidates are
looking for in an employer. But with candidates having high expectations in terms of role content,
opportunities for progression and compensation package, the challenge to retain high performers and
manage their career development expectations is one which employers cannot afford to ignore.

During the economic boom, the mobility of high performers increased, with a corresponding impact on
employee turnover. With industry-wide restrictions on headcount imposed in recent months, this survey
asked respondents to give their views on the current situation with regard to retention and turnover of
high performers.

Expectation Regarding Turnover

First, survey respondents were asked about their expectations with regard to the levels of turnover of
high performers in their businesses – had it been ‘as expected’? For the majority of survey
respondents, the levels of turnover experienced were ‘as expected’. For 28%, in fact it was lower than
expected, perhaps indicating a note of caution among high performers of the impact of economic factors
on employment opportunities elsewhere. Of particular interest are the responses from the Banking and
Financial Services sector, where 67% of respondents stated the turnover of high performers has been
lower than expected in 2008, perhaps indicating an awareness among high performers of credit crunch
and uncertainty within the financial sector in general, and thereby a corresponding caution.

Figure 11
Has the turnover of high performers in your business this year been higher, as expected or lower than expected?

Expectation of Turnover am ong High Perform ers

7.6%
Higher than
27.8%
expected
Low er than
expected

64.6%
As expected




Cost to the Business of the Loss of a High Performer

The majority of respondents (88%) agreed that the departure of a high performing individual has a
‘large’ or ‘very large’ impact on their business.

Figure 12
What impact does the departure of a high performing individual have on your business?

Impact of Departure of High Performer

Very litt le impact
1%
Very large impact
11% Lit tle impact
11%

Large impact
77%


Last year, when asked to quantify this impact, the average cost to the business of the loss of a high
performing individual was estimated €237,000. This year, the question was asked slightly differently,
but nonetheless, respondents indicated significant financial costs to the business associated with the
loss of a high performing individual. When asked to quantify this, 76% of respondents estimated the cost
to business to be between €25,000 and €250,000.

Within the Banking and Financial Services sector, 50% of respondents estimated the loss of a high
performer to cost their business between €75,000 and €150,000. This appears to be significantly less
than comparative figures from 2007 (where Banking and Financial Services respondents estimated an
average cost of €208,000).



Figure 13
Can you estimate the cost of losing a high performer for your business in the last 12 months?

Estimated Cost of Losing a High Performer

6% 7%
11%

32%
21%

23%

<€25k €25k - 75K €75k - 150k €150k - 250K €250k - €400K €400k plus




Factors Contributing to the Loss of High Performers

Several factors were identified as being ‘key’ in accounting for the loss of high performers from
respondents’ businesses during 2008. These included lack of internal opportunities, financial packages
offered elsewhere, the economic climate, the individual’s perception that it was a time for new
challenges and downsizing of the company. Interestingly given the current global financial crisis, at the
time of survey, 56% of respondents from Banking and Financial Services reported that downsizing of the
company was ‘unimportant’ as a factor in losing high performers. However, this may be indicative of a
point in time, and it would be interesting to speculate how this factor might impact over the coming
months as we move towards speculated consolidation within this sector.

Figure 14
What do you consider to be the key factors for the loss of high performers from your business this year?

Factors for Loss of High Performers

Downsizing of Company 13% 24% 41% 24%

Time for new challenges 26% 68% 5% 3%

Economic Climate 10% 50% 25% 16%

Financial Packages offered
25% 56% 17% 1%
elsewhere

Lack of internal
28% 54% 18% 1%
opportunities

0% 20% 40% 60% 80% 100%

Very Important Important Unimportant Very unimportant




Factors in Retaining High Performers

If, as stated previously, the factors which encourage high performers to leave organisations include ‘a
time for new challenges’, lack of internal opportunities and financial packages offered elsewhere, we
asked survey respondents for information about their employee retention programmes. Specifically,
they were asked to rate the importance of a range of factors in their employee retention programme.

Figure 15
How important are the following factors in your employee retention programme? (4 = Very important, 3 = Important, 2
= Unimportant and1 = Very Unimportant)

Factors to Retaining High Performers

International Opportunities

Flexible Working Hours

Fast Track to Promotions

Improved Benefits Package

Higher Salary

Training & Development

0 1 2 3 4


There appears to be a good ‘fit’ between factors impacting the loss of high performers and those factors
making up the organisations employee retention programme, including training and development, salary
and compensation package. This may in fact, account for why the majority of respondents to the
previous question stated that the level of turnover among high performers was ‘as expected’.



ORGANISATIONAL APPROACH TO TALENT MANAGEMENT

Given the difficulties expressed year on year by survey respondents in identifying high performers, and
the very real financial impact on a business of the loss of a high performing individual, we felt it would be
useful to ask companies about their organisational approach to talent management.

Existence of Talent Management Programme

In 2007, 83% of companies surveyed indicated that they did not have a specific policy or programme in
place for attracting and retaining high performers.

Recognising this, this year we asked the question in a number of different ways in the survey. Our hope
was that, although a company may not have a comprehensive talent management programme in place
overall (or it may not refer to it as a talent management programme), that the different aspects of talent
management might be subsumed under other recruitment, retention and/or performance management
and career development programmes, particularly in relation to high performers and employees with
high potential within the organisation.

This year’s figures indicate that just over half of organisations surveyed still do not have a talent
management programme in place. However, with 44% of companies with a policy or programme on
talent management, this suggests some efforts being made by Irish-based organisations to take a
strategic approach to their high performers. Our hope is that this figure will continue to grow year on
year.

Figure 16
Do you have a talent management programme in place in your organisation?

Talent Managem ent Program m e in Place

44%
56%

Yes No




Effectiveness of Organisation’s Talent Management Programme

Over half of survey respondents consider their talent management programmes to be ‘effective’ or ‘very
effective’. Conversely, just under half consider their programmes to be ‘ineffective’ or ‘very ineffective’.
It would appear from these findings that, while there has been some progress in putting talent
management programmes into place, some additional work needs to be done in maintaining these
programmes to ensure that they are structured appropriately in order to add value to the business.

The low statistic on the existence of talent management programmes may be attributed to its ‘newness’
as a concept within Irish organisations. If this is the case, then it is likely that an increase in their
effectiveness will be seen over the coming years, as the programmes get ‘bedded down’ into the
organisations, and when, with time, their potential impact can be seen and experienced.

Figure 17
How effective would you rate your company’s Talent Management Programme?

Effectiveness of Talent Management Programme

5% 7%

40%

48%

Very Effective Effective Ineffective Very Ineffective




Managing Talent by another Name

We were interested to understand how those companies who do not have a talent management
programme in place are organisationally equipped to handle the various elements which make up a
talent management strategy, such as recruitment and retention, for example, particularly with reference
to high performers. So we asked them if they had a specific policy or programme for attracting and
retaining high performers.

Figure 18
Does your company have a specific policy or programme for attracting and retaining high performers?

High Performer Policy - 2007 to 2008

83
2007
17

66
2008
34

0 20 40 60 80 100

Yes No


While the majority of respondent companies still do not have a dedicated high performer recruitment and
retention programme in place, we can see quite a change from the 2007 responses. Then only 17% of
respondents had such a programme, whereas today 34% of survey respondents have a programme for
attracting and retaining high performers – a doubling of the figures.



Managing the High Potentials in the Organisation

If we define high potentials in the organisation as those most likely to become the future leaders of the
business, it would be remiss of organisations who do not focus on any other employee, to ignore these
select few in terms of retention, identifying and creating career development opportunities for them and
actively facilitating their route to the top through strategic succession planning.

We asked survey respondents whether they have a programme in place to manage high potentials.
Just over half (52%) said that they do. However, the fact that 48% of respondent organisations do not
have such a programme in place indicates that they may in fact have to go outside the organisation for
their leadership talent. While this can be a good choice if made strategically, if it is made by accident
rather than by design, then it has the likelihood of disenfranchising existing committed talent, and of
bringing in a new leader who lacks a useful level of tacit knowledge about the organisation.

Figure 19
Do you have a programme in place to manage the high potentials in your organisation?

Programme in Place to Manage High Potentials

48%
52%

Yes No




Identifying High Potential Employees

Respondents were invited to select as many of the following methods as used by their organisations to
identify high potential employees. By far the most utilised method is ‘performance to date’. This
significantly exceeds academic qualifications, suggesting that while qualifications play an important role
in securing the appointment of the individual within the company, once in and on a level playing field
with peers, it is actual performance, combined with ‘desire to succeed’ which ultimately help high
potential employees become noticed within their organisations.

Figure 20
How do you identify high potential employees in your company?

Methods Used to Identify High Potential Employees

Client Endorsements

Desire to Succeed

Performance to Date

Academic Qualification

0 20 40 60 80 100




OFFSHORING PRACTICES IN IRISH-BASED ORGANISATIONS

While this survey predominantly addresses talent management practices and perceptions within the
Irish jurisdiction, the competition for talent and the competition for jobs have become global. While on
some level, it is possible though not palatable to comprehend the loss of Irish jobs due to our own,
home-grown, economic downturn, the loss of corporate investment in Ireland to other less expensive,
potentially more skilled economies is potentially more worrisome. For this reason, we dedicated a
section of this survey to offshoring, with a view to gaining an understanding of the practices and plans of
Irish-based organisations to relocate work previously (or currently) done in Ireland to other countries.

A total of 32% of respondents to our survey stated that their company currently offshore work previously
done in Ireland (although of note, only 10% of survey respondents from the Banking and Financial
Services sector stated that they offshore).

Figure 21
Does your company offshore any of its work that was previously Irish based?

Companies Offshoring Work Previously Done in Ireland

32%

68%

Yes No




Satisfaction with Level of Work Delivered Off Shore

Almost 80% of survey respondents, who do offshore work, stated that they are ‘satisfied’ or ‘very
satisfied’ with the level of work delivered for their businesses off shore.

Figure 22
If yes, how satisfied are you with the level of work delivered off shore for your business in Ireland?

Satisfaction with Level of Work Delivered Off Shore

4%
23%
19%

54%

Very satisfied Satisfied Neutral Unsatisfied




Effectiveness of Offshoring

We asked survey respondents whose companies currently off shore work to rate the effectiveness or
benefits of off shore activities in four different areas. The main factors or benefits of offshoring are
perceived by them to be: cost savings and availability of skilled staff. However, when looking at benefits
such as time savings, it is evident that 39% of respondents find offshoring ineffective. The question for
organisations deciding whether to offshore or not might be determined by setting the savings of cost of
overheads against losses sustained by potential time delays. Based on the current findings, cost
savings currently appear to outweigh time delays; however this is potentially an interesting factor to
measure on a rolling basis.

Figure 23
From your experience, how would you rate the effectiveness of offshoring in the following areas?

Effectiveness of Offshoring

Availability of skilled staff 24 76

Consolidation of functions 15 62 19 4

Time savings 19 43 38

Cost savings 48 48 4

0 20 40 60 80 100

Very Effective Effective In Effective Very Ineffective




Plans to Increase Offshore Activities

While 42% of respondent companies who currently off shore work previously done in Ireland, indicated
an intention to increase the amount of work currently offshored, there were significant differences across
the ICT and Banking and Financial Services sectors. Those respondents from the Banking and
Financial Services sector who responded that they currently offshore work indicated that they had no
current plans to increase the amount of work offshored. This compares with ICT companies who
currently offshore, 57% of whom indicate an intention to increase the level of work offshored.

Figure 24
Do you plan to increase the amount of work you offshore?

Companies Planning to Increase Offshored Work

Banking and Financial
0
Services

ICT 57

Overall 42

0 20 40 60 80 100




Plans to Commence Offshore Activities

Companies who indicated that they do not currently offshore business were asked to state whether
offshoring might form part of the future plans for their business. Currently 68% of respondent
companies do not offshore any of their work outside of Ireland. Of those companies not offshoring, an
average of 30% overall are currently considering offshoring as a business strategy. However, this is
more interesting when broken down by sector, as Figure 21 below illustrates. If future work leaves
Ireland to be offshored, then that loss is most likely to come from the ICT sector.

Figure 25
Results by Sector: If you are not currently offshoring work, has your company discussed offshoring some of its future
business functions?

Companies Discussing Offshoring by Sector

12.5 87.5
Services

ICT 33 67

Overall 30 70

0% 20% 40% 60% 80% 100%

Yes No

Source: Talent Partners 2008

While the majority of respondents across all sectors indicated that they were not currently considering
offshoring, those who are having such discussions are actively considering offshoring in the immediate
term. In effect, 30% of respondent organisations are actively considering offshoring and the greater
majority of those (60%) are considering doing so within the next 12 months.



IMPACT OF CURRENT ECONOMIC CLIMATE ON BUSINESS

There is no getting away from the fact that the credit crunch, sub-prime lending, and the collapse of the
property market have led us into a recession. And there is no doubting the fact that this is having a
clear and considerable impact on Irish-based businesses across all sectors. We were interested to
know in more specific terms, what aspects of business, and to what extent, current economic forces are
impacting on the businesses who participated in our survey.

Business Activities Impacted

Survey participants were asked to identify those aspects of business affected by the current economic
climate, including impact on market opportunities, profitability and future plans regarding workforce and
investment. There are few companies in Ireland unaffected by the recent credit crunch and subsequent
recessionary downturn. Specifically, Figure 22 illustrates those areas impacted, as identified by our
survey respondents:

Figure 26
How has the economic climate of 2008 affected your business?

Business Activities Impacted by Economic Climate

Reduced workforce 22

Increased work force 10

Stopped/curtailed expansion plans 26

Reduced revenue/profits 45

Reduced market opportunities 44

Created more market opportunities 23

0 20 40 60 80 100


Not surprisingly, many areas of business were reported to be impacted by economic events. 45% of
survey respondents have noted a reduction in revenue/profits, and 44% have experienced reduced
market opportunities. On the positive side however, almost one quarter of respondents indicated that
events had created more market opportunities for them. Only 22% indicated that a reduced workforce
was likely, with 10% reporting an increase in workforce – this would seem to balance out each other and
indicate less impact overall on workforce than predicted in media. What is not possible to assess,
however, is the actual number of jobs lost, as level of reduction naturally will vary from company to
company.



Regarding curtailment or expansion plans, only 25% of companies noted an impact here. That might
indicate that for the other 75% of respondents, expansion plans are going ahead as normal. However, it
may also suggest that those other respondents do not have current plans to expand and will simply
maintain the status quo throughout the economic downturn.

Comparison by Sector

When compared industry sector by sector, the impact of the credit crunch on the Banking and Financial
Service sector is clearly evident. 80% of respondents from that sector noted a reduction in
revenue/profits in their businesses, and 70% noted reduced market opportunities.

Figure 27
Comparison by Industry Sector: How has the economic climate of 2008 affected your business?

Economic Impact by Sector

40
Reduced workforce 14
22

Increased work force 12
10

Stopped/curtailed expansion 40
28
plans 26

80
Reduced revenue/profits 39.5
45

70
Reduced market opportunities 37
44

Created more market 28
opportunities 23

0 20 40 60 80 100
Overall ICT Banking and Financial Services




Key factors for a Competitive Advantage

The clear challenge facing Irish business leaders is gauging how best to compete in today’s more
straitened economic times. We asked our survey respondents to identify what, for them, are the key
factors which give their company a competitive advantage in today’s marketplace. While no-one would
discount any of the factors listed below as playing a critical role, interestingly, it was ‘people’, i.e. the
organisations workforce and talent which survey respondents identified as playing the most important
role in securing competitive advantage, followed closely by the calibre of their leadership.

Figure 28
What are the key factors that give your company a competitive advantage in today’s marketplace?

Competitive Advantage

Financial Stability 35 36 1

Organisation's culture 26 42 3

Reputation of Company 49 27

People 67 10

Leadership 53 21

Technology 50 22 4

0% 20% 40% 60% 80% 100%

Essential Important Unimportant




Expectation of Employment Levels at 31/12/2008

It would seem like a clear assumption that, if people and leaders are to play such a critical role in
securing competitive advantage, that, going forward, Irish businesses ought to be paying more attention
to their talent management behaviours and strategies. This seems particularly important, as 47% of
survey respondents stated that they expect to be employing more people in their business at 31/12/2008
than they did at 31/12/2007.

Figure 29
At the 31/12/2008, will you expect to have more employees in your business compared to 31/12/2007?

More Employees At Year End '08 Compared with '07

30 70
Services

ICT 57 43

Overall 47 53

0% 20% 40% 60% 80% 100%

Yes No




METHODOLOGY

The 2008 White Paper is a follow on from a 2007 survey of Irish organisations on The Competition for
Talent, which was published by Talent Partners in July 2007.

The 2008 Competition for Talent survey was conducted by Talent Partners using an on-line self
completion questionnaire. A total of 27 questions (closed, rating scale and Likert scale) were used.

82 leading multinational and indigenous Irish organisations participated in the survey. These were
drawn from the ICT, Finance, Utilities, FMCG, Engineering and Construction sectors. A mixture of job
titles responded including the following:-

CEO
Financial Controller
Sales Director / Manager
Marketing Director / Manager
Human Resources Director / Manager

A total of 46 organisations from the ICT sector responded, among them many of the largest names in
the Irish software, telecoms and IT hardware industries. 10 organisations from the Banking and
Financial Services sector were represented – similar response levels to the 2007 survey. These
represent some of the major banks, financial services and insurance industries in Ireland.

Where the response rates allow, data is broken down by these two industry sectors. Responses from
the other sectors were smaller in number and so specific data is not shown for these other industry
sectors. Where possible, results from the 2007 survey are shown for comparative purposes.



Recommendations for Irish Organisations

This research paper, commissioned by Talent Partners Ltd, shows that in the current economic times,
the availability of skilled talent at employee and leadership level is critical to securing competitive
advantage in the marketplace. This combined with technology capacity and investment will be what
gives successful Irish businesses (indigenous and multinational) the competitive edge. Yet the research
also shows that 90% of participating companies still find it difficult to identify and attract high
performance talent for their organisations.

In particular, with the increasing rates of unemployment, companies will be challenged in their
recruitment and selection procedures to identify high performers with the right levels of skills and
experience who is also a good organisational fit, from among the potential flood of job seekers coming
onto the market.

Our survey also shows that the majority of participating companies do not have a talent management
programme in place. Nor do they have an effective programme to attract and retain high performers.
Yet, as with our 2007 findings, the cost of losing a high performer from the business continues to be
significant. Some of our survey respondents rated this cost at over €400,000 based on the loss of one
high performer alone.

Added to this is the recognition that companies, within the information and communications technologies
sector in particular, are and will increase the practice of offshoring work previously undertaken in
Ireland. With compensation package playing a strong role in attracting and retaining high performers,
companies will be challenged to maintain cost competitiveness while, in parallel, securing the
appointment and retention of high performers. The one factor which will help them in this will be the
provision of a clear line of sight for high performing candidates and employees, of their career
opportunities within the organisation, both from the perspective of existing job content and future path
for development within the organisation.

Our stated position and our core recommendation continues to be based in our belief that an effective
Talent Management strategy ought to be put in place, streamlined and integrated with business
strategy, with clear methods for identifying and matching candidates for significant roles within the
business, as well as tried and tested methods to manage employees’ career expectations within the
business, in line with business needs.

While responsibility for the management of talent within the enterprise tends to titularly rest with the
training and development and/or the human resources function, their ability to respond to the needs of
the business requires an integrated cross-functional approach to managing the acquisition and
maintenance of talent right across the organisation. This requires commitment from all levels of
leadership across the business.

The following are the recommendations of Talent Partners based on the research we have carried out.



Practical Tip 1 – Implement a Talent Management Strategy within the organisation with clearly
defined ownership at senior level within the business.

Practical Tip 2 – Clarify with your operational management the role requirements and
specifications for critical vacancies. Work closely with your internal and external recruitment
partners to match strategies with role requirements, including approach to advertising,
employer branding and job and candidate match.

Practical Tip 3 – Brief all interviewers, internal and external, on the importance of consistency
of message around role, career progression opportunities and organisation culture, to ensure
best fit with candidates.

Practical Tip 4 – Identify the key roles within your business and the key performers in your
organisation who are capable of filling these roles. Benchmark the experience and potential of
this “talent pool” against internal career opportunities with the company and grow and develop
it through training and professional development, both internally and externally.

Practical Tip 5 – Clarify your needs in terms of skills and experience of high potentials and
communicate these to your ‘talent pool’ on a regular basis, providing them with opportunities to
develop, and feedback on their performance in line with their progression within the company.

Practical Tip 6 – Work closely with high performers in the business who may not become future
leaders, but who are technical specialists and who can deliver at an operational level within the
business. Consider ways to enhance the technical aspects of their roles in order to maintain
their sense of challenge, interest and opportunity within the organisation.

Practical Tip 7 – Partner with an external recruiter to gain a deeper understanding of the
external market. This will also allow you to benchmark your internal talent against external
market talent and make better hiring decisions. Your external recruitment partner should be
seen as an extension of your company and your talent scout in the marketplace. It should be
communicating a consistent message about your company and “employer brand” to potential
hires and keeping you informed of key external market talent.

Practical Tip 8 – Consider widening your search for talent to the international marketplace as a
means of securing the best talent.

Practical Tip 9 – Create an “Employer of Choice” value around your company. Position your
organisation as the company to work for in your specific niche. Get your internal “talent pool” to
support this positioning.

Practical Tip 10 - The Company needs to share its goals and visions with this "talent pool" and
create a clear line of sight between employee performance and corporate success. A
compelling employee engagement programme, backed up by clear and consistent messages,
will ensure the strategy will be delivered successfully.



About Talent Partners & MRINetwork Worldwide

Talent Partners, founded in Dublin in 2003, is led by Stephen Kennedy who
has over 10 years experience within the executive search field. Working at
both a national and international level for both clients and candidates, their
extensive knowledge of their industry sector allows them to operate in a highly
specialised manner for clients predominantly within the IT, Telecoms and
Financial Services sectors. Talent Partners were recently awarded for being
one of the fastest growing offices within the MRI Worldwide Network in 2006.
MRINetwork comprises over 1,000 offices and 3,500 search professionals in
more than 35 countries specialising in mid to upper management/technical
positions and offering a full range of customisable solutions including
permanent placement, contract (interim) recruitment, advertised selection and
recruitment outsourcing.

External Publication of Talent Partners information and data – Any Talent Partners information that is to be used in
advertising, press releases, or promotional materials requires prior written approval from the appropriate Talent
Partners Director. A draft of the proposed document should accompany any such request. Talent Partners reserves
the right to deny approval of external usage for any reason.

For further information regarding this document please contact:

Stephen Kennedy
Tel: +353 (1) 8397070

© Copyright 2008 Talent Partners Ltd. Reproduction without written permission is completely forbidden.


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