Human resources matters, and not just to chief human resources officers (CHROs). Interviewed in Canada and around the world, CHROs said their chief executive officers and boards of directors are increasingly taking a very active interest in the workforce.
That’s the conclusion of
Unlocking the DNA of the Adaptable Workforce,
a study of more than 400 CHROs developed by IBM Global Business Services’ Human Capital Management practice and the IBM Institute for Business Value, with assistance from the Economist Intelligence Unit. The respondents participated in structured, often face-to-face interviews designed to capture insights on workforce transformation.
4 key challenges facing HR
This increased interest in the workforce affects the agenda of CHROs more than ever, as they work to align to the business while managing four key interrelated challenges:
• responding to pressures and opportunities requires a much more agile and adaptable workforce;
• to achieve this agility, organizations need to be better at predicting and developing skills for the future;
• organizations need leaders who will take on the business and people leadership challenges of responding to dynamic markets; and
• leaders need clear and reliable information at their fingertips to enable prompt and effective talent decision-making.
The good news is slightly more than one-half of the respondents (53 per cent) said their workforce is generally capable of adapting to change. On the other hand, only 14 per cent said it is very capable of adapting to change and 30 per cent said it is only somewhat capable of adapting to change. Relatively few Canadians expressed high confidence.
Organizations need to be very good at being adaptable. Just look at the pace of change in the value of the loonie and the resulting pressures on Canadian exporters. Is simply being “good” going to be good enough? Probably not.
CHROs acknowledge organizations have to develop and enhance adaptive capacity to be successful in the future.
3 things adaptable organizations do better
The most adaptable organizations do three things differently from other, less agile organizations.
Predicting required skills:
The first differentiator is the capacity to predict required skills and their availability over the next three to five years. Developing an adaptable workforce means anticipating business scenarios and assessing required competencies in advance of critical market shifts.
Improvements in this area require integrated business and workforce planning to identify emerging trends and allow companies to make decisions about buying versus building these skills internally. They should also cultivate these skills before pressures are too severe.
Identifying and deploying existing talent:
The second differentiator is the ability to identify, locate and apply existing knowledge and skills to new challenges, and to do it fast. Many companies have a wealth of talent on staff but have difficulty finding and deploying that expertise quickly. Respondents said finding the right expert is critical in allocating resources to address new opportunities and threats.
Many organizations now have formal top-down skills-management processes. Leading organizations create conditions for employees to find and connect with experts on demand through online employee profiles that increase the visibility of an individual’s personal knowledge and relationships to others.
The third agility differentiator is one of fostering an environment that allows people to collaborate across organizational boundaries, share knowledge and solve problems. Leading organizations embed collaborative technologies into everyday work activities and processes.
Workforce more transient
Globalization, changing workforce demographics and shifting generational attitudes have contributed to a more transient workforce, making it more difficult to retain staff. CHROs report turnover has increased. One Canadian HR leader said: “Staff turnover is increasing, largely driven by an aging workforce and increasing skill scarcity in the market.”
Most CHROs expressed considerable confidence in their organization’s capacity to attract talent in a competitive market.
Don’t overestimate ability to attract talent
When asked to rate their ability to attract and retain talent, almost 60 per cent said they accomplish this better than their peers, while only 10 per cent said they are less effective. Essentially, everybody thinks their organization is “above average.” Have they really cracked the code for talent? Many said their corporate brands stand out in the marketplace, but employers should be wary of overestimating their ability to attract the best talent in a volatile marketplace.
What is holding HR back?
So what is holding HR back from contributing to business strategy and driving improved workforce performance? A look at the top four areas of weakness identified by CHROs shows organizations with poorly integrated HR systems are significantly less likely to effectively use data to make workforce decisions.
This is reflected in the sobering comments of one public sector CHRO who said: “We currently have 42 different HR systems in place, making it hard for managers to readily access aggregated data across business silos.”
HR has yet to derive value from technology, information
Only six per cent of CHROs interviewed felt they were very effective at using HR information to make workforce decisions. One Canadian CHRO said his board is asking for more, and clearer, information about turnover. He commented on the challenge of defining appropriate metrics that provide real insight and do not distort. He also noted the exit rate from his organization is modest, but there is significant churn inside.
Many CHROs have invested in HR information systems but have yet to derive real business value from the data. They have not been able to put the data to work to address the primary business issue of adapting to a dynamic global market. They attribute the gap partly to the lack of analytical expertise within HR.
CHROs see the promise of business intelligence tools to gain better, more actionable information fused from a variety of HR and corporate data sources. They know business leaders expect reliable information around key workforce metrics and the insight to show where action is needed to improve. Organizations fear the data they have is incomplete or inaccurate, and they cannot apply data to making better decisions about the workforce. In some cases, the data exist, but is too difficult to access. Either constraint prevents the organization from using metrics to drive business decisions.
The conclusion from the study is unmistakable: Addressing the business intelligence and performance measurement challenge is high on the agenda of CHROs of leading organizations worldwide.
Terry Lister is an HR strategy consultant at IBM Global Business Services in Ottawa. She can be reached at firstname.lastname@example.org.