THE seminal article The War for Talent by Michaels, Handfield-Jones and Axelrod, was first published in the Harvard Business Review in 2001.

In that piece, companies worldwide were urged to focus on attracting and retaining high potential employees as a means to better business performance.

Now, some 13 years later, a 2014 KPMG global survey with more than 350 human resources consultants suggests that of the 106 companies which adopted this approach, barely a quarter was performing well and a third had ceased to exist altogether.

The survey suggests that rather than only targeting high potential talent at a senior level, it is more critical to address the needs of all employees, in the context of the business and its strategy. More equitable and holistic talent management strategies result in employees that are better engaged, satisfied and motivated, leading to productivity gains for the business.

Where the gap exists

The greatest concern in today's war for talent is the shortage of skilled workers. In the KPMG survey, four in five respondents regard addressing skills shortages across the organisation as warranting their highest priority in 2014. Skills shortages will likely increase in the face of stiffer competition for talent brought about by globalisation, as well as the improving global economic conditions, leading workers to seek greener pastures.

This situation is also prevalent in Singapore. According to the Manpower Singapore's 8th Talent Shortage Survey, 47 per cent of employers face problems in finding workers with the relevant skills.

Significantly, a majority of this survey's respondents also believe that the root cause of the talent and skills shortages is generational.

The key challenge for many companies today is therefore to have a clear understanding of the changing career expectations and goals of younger skilled workers. Unlike their predecessors, younger skilled workers today are less interested in traditional roles and see themselves as free agents.

With half of local university students declaring that they are expecting to work in a job for two to three years before moving on, local companies are finding it increasingly difficult to retain Gen Y employees.

The Gen Y phenomenon provides challenges on two fronts. First, to devise programmes that attract and retain talents so that they invest the time to hone their skills in their chosen trade. Skills in technical professions like medicine, engineering and technology usually take a lifetime to acquire. But the abundant opportunities available globally to a new generation driven more by fickle, transient passions make it challenging to engage them for the long haul.

Hitting home hardest

In Singapore, the small and medium enterprises (SMEs) are likely to be the most adversely affected by this generational change.

It is estimated that by 2025, 75 per cent of our local workforce will consist of Gen Y workers. With almost 99 per cent of companies in Singapore being SMEs that account for over two thirds of our workforce, addressing skills shortages in SMEs will be a critical issue for the economy over the next few years.

SMEs face a challenging prospect in attracting and retaining talent, competing as they do with large multinationals for a finite talent pool. This is exacerbated by a general lack of resources to offer competitive salaries and progressive human resources policies.

A multi-pronged approach will be needed to address this problem. Building a strong employer brand may be a good start. In the same way that a compelling brand story draws customers, a strong employer value proposition attracts higher quality candidates and employees. This can take a variety of forms, including a competitive remuneration strategy, rigorous training and development and providing varied exposure and career opportunities within the organisation.

SMEs could also consider extending their target recruitment pool, looking beyond existing sources to develop new talent tools, including freelancers, part-timers or older workers.

By 2020, it is estimated that one in six residents will be at least 65 years of age. As the population ages, this pool of more mature employees is one whose experience, expertise and commitment can add much stability to organisations.

Change, or else

The HR function has long described itself as a strategic business partner. The impetus for HR to fulfil such a role has never been greater. Talent acquisition and access have changed in fundamental ways due to shifts in global talent markets, skills shortages, and more virtual and flexible ways of working. In addition, with emerging markets accounting for more of the growth these days, building a sustainable workforce to drive growth in these new markets will be a key priority of HR functions.

Harnessing technology can help companies win in this new war for talent. Powerful big data tools are now readily available to help companies both source for quality candidates around the world, and measure and fine-tune people performance-related practices over time. They give companies the ability to offer differentiated approaches to organising their HR functions.

To compete for talent in a global marketplace, HR teams must move to more porous, innovative and social-media savvy approaches to talent acquisition