BT has announced 10,000 job cuts today, with unemployment rising and the dark clouds over manufacturing companies such as General Motors is there an end of the reluctance for companies to make their talent redundant?

It poses a question: Will companies ensure that they identify the best talent to survive the recession or assume that talent can be picked up when needed when an upturn comes?

History would indicate that once talent is lost it’s very difficult to replace. 

Since Margaret Thatcher’s Government  introduced legislation that made striking difficult and secondary striking illegal unions have found it difficult to flex their muscles in the same way as they used to.

However, with a financial downturn will the tide begin to change and if so how will that affect business in general?

That will probably depend upon what happens to inflation. The cost of many raw materials for production such as copper, fertilizer and oil have doubled in the last few months. Already at its highest for ten years inflation is likely to rise even higher.

The result is that there will be demands for increased salaries in order to keep up. Petrol tanker drivers are possibly the first in a series of high profile wage demands that will include teachers, health staff, civil servants and refuse collectors that will run through the coming autumn and winter.

To counter rising prices firms, including SME’s, will feel that a mix of strategies including increasing product charges, reduction in quantity delivery and reducing costs such as advertising. In the end, however, it could result in savings that will result in “regretted layoffs”.

However, care needs to be taken with laying off employees because once gone the same skills may be very difficult to re-employ when times inevitably get better.

The reason is the demographics of the working population. Sourcing managerial and technical talent is seen as being the most important challenge for countries such as UK, USA, Japan and Australia. Yet the working population is getting older and many of those “Let go” will be older employees that may retire or choose to retire before the economic situation improves.

Coupled with the fact that booming economies such as China are recruiting managerial and technical talent as fast as it can (It’s cheaper for China to recruit one expert-expat to work in China than to send 20 of their students to study abroad) this could well mean that much of the top talent currently available will have disappeared in the future.

In order to increase the talent pool in a business companies might consider “Zig-zag” career progression that enables top talent to gain a variety of experiences.

In doing so this replicates the career process that top talent defines for itself when developing a career. This means moving from one company to another and from one responsibility to another.

Placing top talent in one position and maintaining that for too long is likely to create boredom and frustration that eventually means the loss of the talent to one’s competition.

Why is it that only 18% of financial services firms are able to describe themselves as very successful at retaining talent?

This should worry firms who fear that their key executives will be easy prey for competitors with the need to maintain sales during s financial downturn.

Throwing money at the problem is recognised as a blunt tool for recruitment and retention that can too easily be beaten by competitors eager to lure talent away. Few firms are confident that they are genuinely engaging and motivating their talented executives.

In a recent report into global talent talent it’s been found that business leaders agree that recruiting and retaining talented employees is getting tougher (46.5 per cent saying it was becoming slightly more difficult and 41 per cent believe it is becoming significantly more difficult).

Yet only a quarter of organisations surveyed have a talent management strategy in place and 16 per cent said they had no talent management strategy.Given the low number of businesses with a formal talent management strategy, it’s unsurprising that a third of respondents said their organisation were poor at forecasting the need for talent requirements and being able to retain talent.Recruitment and retention difficulties are seen as being most acute in Asia, whilst business leaders in Western Europe and North America agreed that employee career switching is a major issue in fuelling talent shortages and they are more concerned than their Asian counterparts of the effects of an ageing population.

In recent years with most economies growing and shortages of talent being common, candidates and employees have held the upper hand in workplace negotiations. However with speculation that a U.S. recession could trigger a global business slowdown, the position of power in employment negotiations may soon change.