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Trends in economics, demographics, and technology are creating an intense battleground for talent in Europe. In a Hewitt survey of HR professionals in more than 140 European organizations, the majority indicated that they are already experiencing significant challenges in recruiting talent, and expect the situation only to get worse. When asked by Hewitt to forecast the next five years, more than 90% of the companies said that they expect the talent recruiting pool to shrink even more.

Despite the dismal prediction, few HR professionals are identifying new approaches to talent management, such as predictive workforce planning. Sharon Mattingly of Hewitt's HR Consulting Group in London says, "Companies must develop longer-term talent management strategies, instead of simply responding to immediate recruitment pressures and trends. In the intensifying war for key talent, the advantage will go to companies that get smarter at adopting creative solutions for attracting and retaining talent."

The survey also reveals that recruiting key talent remains a priority, with half of the companies indicating that they devote more resources to recruitment than to retention. "Identifying and nurturing key talent within an organization is critical in managing next-generation talent," Mattingly explains.

The good news is that developing next-generation talent is becoming a strategic priority at the very top level of organizations. More than half of the companies surveyed said that their executive board was directly involved in talent planning. "Senior management is recognizing that changing demographics and working practices, such as the aging workforce and employment patterns, will significantly affect their ability to fuel future growth," explains Jamil Husain, head of the HR Consulting group in Hewitt's London office. "For HR professionals, the issue of talent management offers a prime opportunity to strategically contribute to business growth by facilitating innovative ways of attracting and retaining talent."

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