That's the message of a new study by consulting firm Accenture, which polled 483 senior executives about what they need to recruit and retain workers in the current economic downturn.
Despite--or perhaps because of--the torrent of layoffs announced in recent months, 80 percent of business leaders believe that "people issues" are more important now than in 1998. About one-third believe that not enough attention is being paid to human resources.
The study also found that most companies continue to struggle with retention because they are relying on salary increases and bonuses exclusively, often entirely ignoring issues such as flexible work schedules, job sharing, telecommuting and mentoring programs.
More than half of the executives in the study said they boosted salaries, bonuses or stock options in their quest to attract and retain talent. But only 27 percent reported that they adjusted their companies' policies to provide employees with advancement opportunities within their organizations.
"People have become the key competitive differentiator in today's knowledge-based economy," said David Clinton, global leader of the Human Performance practice at Accenture and primary author of the study. "But addressing these human performance or 'people issues' is still a vexing management problem for many corporate leaders, regardless of location, industry or type of company."
Accenture researchers polled executives from three business categories: 47 percent identified themselves as senior executives of traditional, "brick-and-mortar" companies; 39 percent were from "click-and-mortar" companies; and 14 percent were from Internet-only businesses, or "clicks."
All the executives said they faced similar challenges in retaining workers and boosting performance, and 59 percent said their companies have made some changes to their recruitment and retention practices.
Companies are taking notice
But strategies to solve HR woes varied according to business type. "Clicks" were much more likely than "brick-and-mortar" and "click-and-mortar" organizations to have made such changes in both salary and nonmonetary aspects of a worker's employment.
According to the study, which polled executives from eight countries this past December, all businesses are putting more emphasis on retaining good workers.
Nearly seven out of 10 executives in the Accenture study said retaining existing workers is "far more important than acquiring new blood." And three out of four said information technology can improve workers' performance by allowing them occasional telecommuting privileges, Web-based training seminars and other IT-based benefits.
Executives have a strong economic motivation to retain workers instead of hire new ones: According to the human resources portal HR.com, the cost of a replacement worker is two to three times the cost of a retained worker. The cost increases as the salary and position of the worker to be replaced increases.
Researchers at Accenture, formerly Andersen Consulting, also found that employers were eager to find new ways to keep workers on the payroll longer: They are increasingly letting workers work on short-term assignments instead of sequestering them within a single department or role, and they're developing "talent exchanges" to connect employees with mentors and colleagues throughout the company.
Accenture researchers said recruitment may be less of a short-term concern for high-tech hot spots such as San Francisco, Boston or New York, where a rash of layoffs have made the job market for certain business niches more slack. But the long-term outlook for employers remains bleak: Because of generational shifts, the job market--especially for seasoned executives--is likely to stay tight as baby boomers retire.
"The perception is that the war for talent has eased somewhat in the short-term wake of the dot-com fallout. But the reality is that it is not going to be easier to retain and attract top talent in the coming year," Clinton said. "Until senior executives effectively address these issues, their companies will continue to find it difficult to build and maintain high-performance work forces."