Korn Ferry · NYSE:KFY
Korn Ferry — Farnborough Primer Webinar (July 2018)
44 slides from Korn Ferry's conference presentation, Jul 11, 2018
Slide 1: Farnborough Primer: How aerospace and defense leaders fight the talent wars
FARNBOROUGH PRIMER How aerospace and defense leaders fight the talent wars – 5 major trends and action plan Webinar Wednesday, July 11th Presented by: Jon Barney, Senior Partner
Slide 2: Agenda
Agenda Today we will discuss five key trends in the aerospace & defense sector, with insights from Korn Ferry research and a perspective on each, and provide an action plan for senior leaders on how to respond. 1 INCREASING COMPETITION AND THE WAR FOR TALENT 2 DEMOGRAPHICS REQUIRE NEW APPROACHES 3 D
Slide 3: Korn Ferry: The synchronization of strategy and talent
Korn Ferry…The synchronization of strategy and talent Organizational Assessment & Talent Leadership Rewards & strategy succession acquisition development benefits Performance is our business Reward data Assessment Management Engagement Profiles of 8M on 20M data on 6M data on 114 data on 6M candidat
Slide 4: Webinar background
Webinar background ▪ Survey of approximately 100 aerospace & defense leaders on market trends ▪ 35 heads of talent across multiple industries – benchmarking survey ▪ Market expertise across global aerospace & defense sector – aerospace, defense, government services, aviation, private equity ▪ Functi
Slide 5: Competition and war for talent
1 Competition and war for talent
Slide 6: War for talent: Strategic issues
War for talent: Strategic issues ▪ Emerging global competitors ▪ Entrants in autonomous, space, cyber outside A&D sector ▪ Recruiting and retaining top talent becoming harder © 2018 Korn Ferry. All rights reserved 6
Slide 7: Aerospace & defense companies operate in an increasingly competitive environment
Aerospace & defense companies are operating in an increasingly competitive operating environment Question: Overall, in 2018 I expect my competitive environment to: Strongly increase 16% 60% Increase Stay the same 24% 0% Decrease Strongly decrease 0%
Slide 8: Considerable increase in the need to recruit talent
Specifically with respect to talent and human capital, aerospace & defense companies see considerable increase in the need to recruit Question: Overall, in 2018 I expect my need to recruit talent to: Strongly increase 23% 56% Increase Stay the same 21% 0% Decrease Strongly decrease 0%
Slide 9: Recruiting and retention are becoming more challenging
Recruiting and retention are becoming more challenging for aerospace & defense companies Question: Over the last 12 months, retaining my organization's top talent has become: Much more challenging 7% 66% More challenging No change 21% 3% Less challenging 3% Much less challenging
Slide 10: Many challenges around recruiting and retaining talent
Many challenges around recruiting and retaining talent but several rise to the top for aerospace & defense leaders Overall, what is the #1 challenge you face today around recruiting and retaining talent? ▪ Finding qualified people (e.g. engineers, geography, cleared) ▪ New skills/job specific (pilot
Slide 11: Companies acknowledged as leaders in talent and human capital
In this competitive environment, certain companies are acknowledged for being leaders in talent and human capital Within aerospace & defense Outside aerospace & defense
Slide 12: Staying the course around talent is not an option anymore
Global heads of talent: Staying the course around talent is not an option anymore – refresh or disrupt to stay competitive 35 heads of talent across multiple sectors globally: How would you characterize your approach towards talent management? DISRUPT 55% ” REFRESH 45% STAY THE COURSE 0%
Slide 13: Success requires four components according to heads of talent
Success in this competitive environment requires four components according to heads of talent in multiple sectors Talent acquisition - It’s all about discipline, bold targets and deep, internal expertise Talent engagement - It’s all about inclusivity, talent intimacy and leadership mindset and accou
Slide 14: War for talent: Strategic issues and action plan
War for talent: Strategic issues Action plan ▪ Markets becoming more competitive • Talent acceleration - Recruit and retain as a source of advantage ▪ Emerging global competitors –proactive, faster, enable ▪ Entrants in autonomous, space, cyber technology outside A&D sector • Establish talent alignm
Slide 15: Demographics and developing talent
2 Demographics and developing talent
Slide 16: Shifting demographics: Strategic issues
Shifting demographics: Strategic issues ▪ Demand increasing significantly for new roles – e.g. technology, recent graduates ▪ More diverse and international workforces ▪ Training programs becoming more important but uneven results ▪ Convergence of tech, demographics, geography © 2018 Korn Ferry. All
Slide 17: Demand increasing for all roles, especially technology and digital
Demand increasing for all roles with emphasis on technology/ digital, recent graduates, and business development Question: In 2018, the percentage citing increase or significant increase in demand for specific roles: Technology/digital expertise 75% 67% Recent college graduates BD and capture 64% Se
Slide 18: Training and development programs could become more effective
Training and development – programs could become more effective at aerospace & defense companies Question: For the following corporate training program, what are characterized as effective and very effective? Diversity & inclusion 53% Corporate sponsored 49% training High potential leaders 43% New h
Slide 19: Rising importance in some programs
Rising importance in some programs at aerospace & defense companies Question: For the following programs, how would you characterize as becoming more important to your company in 2018: 69% New hire onboarding Succession planning 65% High potential leaders 58% Diversity & inclusion 54% Corporate spon
Slide 20: Successful programs require senior level leadership, bandwidth and focus
Successful programs requires senior level leadership, bandwidth and focus in the aerospace & defense sector Question: For the programs discussed, what are the greatest obstacles to achieving success?
Slide 21: Pay equity is important and becoming more so
Pay equity – important and becoming increasingly important in the aerospace & defense sector Pay equity Pay equity in 2018 82% important or 52% say becoming more important to extremely important company © 2018 Korn Ferry. All rights reserved 21
Slide 22: Propensity to act among US employers on pay equity
Propensity to act among US employers – beyond the aerospace & defense sector Is gender pay equity an issue for your organization? Has your organization taken any action in the past two years on assessing gender pay equity? Source: KFHG (2017) sample of 100 organizations. 22
Slide 23: The shift in companies, technology and demographics is monumental
The shift in companies, technology, and demographics is monumental and is impacting the aerospace & defense sector >50% of companies at the 75% of your 1 billion people top of Fortune workforce will be will regularly be 500 in 2000 made up of using an AR/VR weren’t there by millennials by platform b
Slide 24: Shifting demographics: Strategic issues and action plan
Shifting demographics: Strategic issues Action plan ▪ Demand increasing significantly for new roles • Ensure programs align to – e.g. technology, recent graduates demographic/ tech shifts ▪ More diverse and international workforces • Senior level engagement and ▪ Training programs becoming more impo
Slide 25: Driving innovation
3 Driving innovation
Slide 26: Driving innovation: Strategic issues
Driving innovation: Strategic issues ▪ Advanced technologies – e.g. autonomous systems, cyber, space requires new skill sets at all levels ▪ Looking at best practices from outside A&D sector – e.g. Silicon Valley ▪ Venture organizations within large companies, DIUX, etc . - goal to drive innovation,
Slide 27: Companies are still not structured for the digital age
Aerospace & defense companies are still not structured for the digital age – only 26% ready Question: My organization is structured properly for the digital age: Strongly Strongly agree, disagree, 8% 6% Agree, 20% Disagree, 31% Neither agree nor disagree, 35%
Slide 28: Talent gaps remain as companies look to grow in the digital age
Talent gaps remain for aerospace & defense companies as they look to grow in the digital age Question: My organization has the talent needed to support growth in the digital age Strongly Strongly agree, disagree, 6% 4% Agree, 20% Disagree, 26% Neither agree nor disagree, 44%
Slide 29: Technology can be an enabler for improving talent challenges
Technology can be an enabler for improving human capital and talent challenges at aerospace & defense companies Question: Improved analytics and/or artificial intelligence can improve the management of my current talent and human capital challenges: Strongly Somewhat disagree, 2% disagree, 8% Strong
Slide 30: Digital transformation challenges are not unique to the sector
The challenges faced by aerospace & defense companies around digital transformation are not unique to the sector…KF view on digital readiness Companies are making meaningful investments …but feel like and commitments… they’re struggling. The roadblock? People. 63% of executives say digital 75% of or
Slide 31: Driving innovation: Strategic issues and action plan
Driving innovation: Strategic issues Action plan ▪ Advanced technologies – e.g. autonomous • Recognize it’s a tech issue but systems, cyber, space requires new skill sets also a people issue at all levels • Build a digital strategy ▪ Looking at best practices from outside A&D • Workforce planning fo
Slide 32: Global expansion
4 Global expansion
Slide 33: Global expansion: Strategic issues
Global expansion: Strategic issues ▪ Budget growth continues outside US and Western Europe – MENA, Asia Pacific, Eastern Europe ▪ Companies increasingly setting up manufacturing, JV, partnerships in countries outside of home markets ▪ Consistent challenges with recruiting, training, developing and r
Slide 34: Global expansion remains a top priority
Global expansion remains a top priority in the aerospace & defense sector Question: What is your expected largest source of growth in 2018? 40% Growth in core domestic markets Growth in core international markets 33% 15% Growth via M&A Adjacent market growth (non-core) 10% Other 2%
Slide 35: Hiring outside of US and Europe remains a considerable challenge
Hiring outside of US and Europe remains a considerable challenge across the aerospace & defense sector Question: For the following regions, North America 41% my organization can “successfully” Europe 37% recruit talent: Latin America 28% 18% Asia Pacific MENA 18% Question: For the following regions,
Slide 36: Global expansion: Strategic issues and action plan
Global expansion: Strategic issues Action plan ▪ Budget growth continues outside US and • Be global but operate locally – Western Europe – MENA, Asia Pacific, develop competency in model Eastern Europe • Establish mix of corporate & local ▪ Companies increasingly setting up experience manufacturing,
Slide 37: M&A
5 M&A
Slide 38: M&A: Strategic issues
M&A: Strategic issues ▪ High multiples across aerospace, defense, and government services sector but active M&A environment continues ▪ Large scale, cross-border, services, and PE all pursuing deals ▪ However, > 50% of transactions don’t ultimately achieve value © 2018 Korn Ferry. All rights reserve
Slide 39: Lots of M&A but deals often fail to achieve their promise because of people
Lots of M&A in aerospace & defense sector but deals across sectors often do not achieve their promise because of people 50% 23% 90% of M&A deals reduce recover the cost of acquisition, of successful deals addressed shareholder value and 33% and they do it over 10 years. culture and people practices
Slide 40: Deals fail due to eight clear people issues
Deals across sectors fail due to eight clear people issues Korn Ferry research and Internal experience Clash People can’t Leaders instead of cultures work together don’t lead of customer suggest that the focus following people issues need to be addressed Cost synergy People are Long Best talent remo
Slide 41: Improving assessment and succession planning are critical to successful M&A
Improving assessment and succession planning are critical to successful M&A processes in the aerospace & defense sector Question: For the following corporate training program, what are characterized as effective and very effective? Diversity & inclusion 53% Corporate sponsored training 49% High pote
Slide 42: M&A: Strategic issues and action plan
M&A: Strategic issues Action plan ▪ High multiples across aerospace, defense, • Address people issues early - 90% and government services sector but active successful deals address talent & M&A environment continues human capital in first 30 days ▪ Large scale, cross-border, services, and • Focus on
Slide 43: Take-away: The 5 A&D trends, the indicators and an action plan
Take-away: The 5 A&D trends, the indicators and an action plan A&D trend Market indicators Action plan • Talent acceleration - Recruit and retain as a • Emerging global competitors 1. Greater source of advantage –proactive, faster, enable tech • Entrants in autonomous, space, cyber outside A&D compe
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