AOC Aon Corp.

Survey finds the cost to replace a senior executive for the majority of employers is two to three times salary and benefits CHICAGO, Sept. 3 /PRNewswire-FirstCall/ -- The leadership shortage(1) is now negatively affecting an organization's ability to meet business objectives, according to a recent study by Aon Consulting Worldwide, the global human capital consulting organization of Aon Corporation (NYSE:AOC). (Logo: http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO) Aon Consulting's 2008 Benefits & Talent Survey of more than 1,100 organizations found that 56 percent of employers nationwide are experiencing a leadership shortage that is impeding their organization's performance, and 31 percent expect to have a shortage of leaders that will impede performance in the next one to four years. Hit hardest by the impact of this leadership shortage are employers in the following industries: health care (62 percent); professional services (58 percent)(2); and manufacturing (57 percent). "We've heard about the impending leadership shortage for a while, influenced in part by the beginning of nearly 80 million Baby Boom retirements, but we're now starting to see the negative impact this loss of leaders is having on the business," said Dan Hajjar, executive vice president with Aon Consulting, and co-leader of the Human Capital Consulting practice. "With a lack of leadership talent, an organization will face severe challenges in: attracting new talent; easily developing and retaining current talent; and fostering the requisite thought leadership and innovation to grow the business. "Talent management and leadership development programs need to be viewed as an investment, not as an expense," Hajjar added. Preparing the pipeline The Aon Consulting survey found employers across all industries recognize the importance of implementing a succession plan or leadership development program to fill the leadership gaps, but few are effective at delivering such initiatives. For example, 58 percent of respondents said workforce planning in light of demographic shifts and talent shortages is very important or extremely important, but only 21 percent of employers believe they are very effective or extremely effective at delivering this workforce strategy. In the healthcare industry the disconnect is even greater. Workforce planning in light of demographic shifts and talent shortages is very important or extremely important to 63 percent of employers in the healthcare industry, but only 19 percent are very effective or extremely effective at delivering this solution. (See chart below for more industry breakouts.) What's more, organizations nationwide deem very important or extremely important: the ability to meet the talent/skill needs at the senior leadership level (89 percent); talent recruitment and selection (89 percent); and talent management and succession planning (73 percent). However, employers are less successful at delivering these initiatives. The survey found employers are very effective or extremely effective in the following: their ability to meet talent/skill needs at the senior leadership level (54 percent); talent recruitment and selection (43 percent); and talent management and succession planning (19 percent). "It is clear that employers understand the imperative to develop next- generation leadership skills in their workforce, but few have developed effective strategies to alleviate the impending talent risk to their organizations," said Cindy Keaveney, executive vice president with Aon Consulting and co-leader of the Human Capital Consulting practice. "We believe HR leaders who implement workforce planning strategies will improve overall workforce effectiveness, including reducing the turnover of newly hired executives, which is a critical issue facing many organizations. Workforce planning initiatives also will increase business performance, cut talent turnover risk and increase revenue. Employers who are not addressing future workforce changes will have significant challenges, especially given the fast-paced and ever-changing business world in which we all operate," Keaveney added. Recruitment & Communication One way to help bolster the leadership pipeline is through effective recruitment strategies, but the survey found hiring practices among employers could be more aggressive. For hard-to-fill positions, 33 percent of employers continuously recruit to establish a pool of candidates, but the majority of employers (52 percent) recruit applicants when positions become open, according to the 2008 Benefits & Talent Survey. The survey also found that over the last two years when organizations were not successful in hiring their top recruits, 36 percent of respondents said it was because these top candidates go elsewhere for pay they perceive as higher. Thirty-two percent of respondents said they did hire the majority of their top recruits. Implementing an effective communications strategy also plays a role in retaining senior leaders and other employees. More than 70 percent of survey respondents provide both intranet and hard copy communications on benefits, human resources and the organization. According to 47 percent of employers, one of the top issues to communicate is total compensation and rewards, and 35 percent of employers offer annual total compensation and rewards statements to their employees in print only. Thirty-seven percent of organizations do not offer this communication currently but are considering it for the future. "Our survey shows that the cost to replace a senior executive for the majority of employers is two to three times salary and benefits," said Bill Crawford, senior vice president with Aon Consulting and Benefacts(R) practice leader. "Employers who provide total compensation statements recognize the importance of these communications in helping senior leaders better understand their benefits and potential wealth accumulation; thereby, increasing loyalty and reducing turnover costs." About Aon Consulting Aon Consulting Worldwide is among the top global human capital consulting firms, with 2007 revenues of $1.352 billion and 6,335 professionals in 117 offices worldwide. Aon Consulting is shaping the workplace of the future through benefits, talent management and rewards strategies and solutions. Aon Consulting was named the best employee benefit consulting firm by the readers of Business Insurance magazine in 2006, 2007 and 2008. For more information on Aon, please visit http://www.aon.mediaroom.com/. About Aon Aon Corporation (NYSE:AOC) is the leading global provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting. Through its 36,000 colleagues worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Our industry-leading global resources, technical expertise and industry knowledge are delivered locally through more than 500 offices in more than 120 countries. Aon was named the world's best broker by Euromoney magazine's 2008 Insurance Survey. In 2008, Aon ranked highest on the Business Insurance ranking of the world's largest insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues. Aon also was ranked by A.M. Best as the number one insurance broker based on brokerage revenues in 2007 and 2008, and was voted best insurance intermediary, best reinsurance intermediary, and best employee benefits consulting firm in 2007 and 2008 by the readers of Business Insurance. For more information on Aon, log onto http://www.aon.com/. (1) Aon Consulting defines leadership as employees who are director level and above. (2) The professional services industry includes organizations such as real estate and property management companies, law firms, consulting firms, management firms, accounting firms, and industry associations. For more information, contact: Sara Carlson 312.381.5045 2008 Talent Management Industry Breakouts Workforce Strategy Industry Percentage of Percentage of employers who employers who deem the strategy are very or very or extremely extremely important to the effective organization at delivering this strategy Talent recruitment & Healthcare 88.0 49.2 selection process Professional 93.7 52.7 Manufacturing 90.7 29.8 National 89.0 43.1 Ability to meet talent/ Healthcare 89.7 62.7 skill needs at senior Professional 91.6 49.5 leadership level Manufacturing 89.0 43.8 National 89.0 53.8 Workforce planning in Healthcare 62.7 18.7 light of demographic Professional 56.5 22.0 shifts & talent Manufacturing 47.3 13.6 shortages National 57.7 20.9 Talent management & Healthcare 71.2 13.6 succession planning Professional 74.8 21.2 Manufacturing 79.4 17.8 National 72.9 19.2 http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO http://photoarchive.ap.org/ DATASOURCE: Aon Corporation CONTACT: Sara Carlson of Aon Corporation, +1-312-381-5045, Web site: http://www.aon.com/

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