Interrelated trends expected to dominate HR agenda for next 5 years
Three human capital challenges are expected to dominate the human resources agenda over the next five years — leadership development, employee engagement and the capacity to respond to change, according to the Conference Board of Canada.
And the three are interrelated. Without them, organizations will struggle to make the most of a slow economic and business investment climate, said its report HR Trends and Metrics, based on a survey of 150 Canadian organizations in 2016.
“Overall, the top HR priorities are aligned with these human capital challenges. But if HR is to respond effectively to change, it needs a sound evidence base, grounded in meaningful data and analysis, to inform all of its program design and delivery practices.”
Leadership capacity
Leadership capacity is the predominant human capital challenge for both the short- and long-term. Likewise, management and leadership development continues to be a top HR priority.
It’s been a trend over the years, but the context has changed, with transitions to a digital economy and retirement waves hitting their peak, said Shannon Jackson, associate director of HR transformation and effectiveness research at the Conference Board of Canada.
“They’re hitting that peak for retirement just as future disruptions are erupting everywhere. And for a lot of businesses, they’re unclear of what’s coming next, so from the HR leader’s perspective… and organizational leaders, knowing how many leaders they need, what are going to be the skills and behaviours and capabilities they need to develop or recruit becomes a bit of a moving target,” she said.
“And that affects how they’re building their capacity... it also means that there’s pressure on the existing leadership, so their capacity continues to be stretched as we see different approaches to business models and the size of teams they may have.”
What it takes to be a good leader has changed as the role becomes more complex, said Sandra Reder, president and founder of Vertical Bridge Corporate Consulting in Vancouver.
“It’s a way different world out there. To be a leader in today’s business climate, the old command-and-control style is long gone, and back in the day, you were the boss and you got to say what happened and if people didn’t like it, they sucked it up and left — you can’t lead that way anymore. You’ve got so many different factors impacting — you’ve got technology, generational issues in the workplace, you’ve got your leaders now coming out of that younger generation and they’re a different breed, they’re hard-wired differently, so to identify them and nurture them and grow them, it requires a whole different set of rules and skills.”
Historically, there really hasn’t been an adequate focus on leadership development and succession, and that’s lead to leadership capacity issues, said Laura Williams, principal of Williams HR Law Professional in Markham, Ont., along with “a dearth of individuals that are available to hire externally, that right out of the gate have adequate leadership capabilities.”
There are many factors that have led to a rise in complexity of the role, she said.
“You’ve got increasing diversity across workforces, which has made employee motivation, engagement, retention, a greater challenge; not to mention globalization has opened up new markets to Canadian businesses, but it’s also exposed our organizations to increased competition for talent, product and service and innovation… and then you’ve got a changing legal landscape and heightened legal requirements and responsibilities on employers and on managers specifically, certainly requirements that relate to accommodation, medical disability, gender identity, religious accommodation.”
Plus, there are top performers who prefer career mobility, millennials who like to job hop, and a greater focus on employee engagement, said Williams.
“You’ve got to balance that with meeting operational demands, which often requires leaders to do more with less. So you have to be strategic and you have to be results-driven.”
Engagement big concern
Leadership is linked to employee engagement, which is the second most important human capital challenge, according to 43 per cent of the survey respondents for the short term, and 34 per cent for the long term. It’s also ranked third on the HR priorities list.
“If you have sophisticated leadership in an optimally engaged and productive workforce then, for the organization, that’s gold,” said Jackson. “People are looking to their senior leadership to have a clear vision to know how to navigate through this uncertainty, make it clear how the employee fits in today and what that could look like in the future.”
Overall, there’s a shift in organizations, and employee engagement is contributing to that, she said, citing the fact that a less-than-two-per-cent voluntary turnover rate among mission-critical skills indicates people are engaged.
“If people have the skills, capability and understanding of how they’re contributing to the overall organization, and have autonomy to do the job, then they’re engaged in their work. So personal and professional growth becomes a very important element of that. People want to be good at what they do.”
People move around when they’re not happy, they’re blocked in their career growth, they don’t feel valued, they feel they’re not paid properly or they don’t feel there’s a future in their role. So employee engagement is important, said Reder.
“If you aren’t paying attention to it, your employees are ripe for headhunting, they’re ripe for somebody coming in and poaching them. And we all know it’s way harder to find somebody new and train them up than it is to keep good people.”
While most employers understand engagement is important and they need to spend more time and focus on the issue, it doesn’t mean they’re all doing it — or they’re doing it well, she said.
“They’ve got their hands full, there’s just so much going on, the world is changing… Organizational change, it’s going at the speed of sound right now, so to be a leader in this market, it’s not just about leading your people, it’s also staying on top of all the change going on in terms of globally, and locally and technologically, and then you’ve got the people, trying to stay one step ahead of what’s going to happen next.”
Higher engagement levels also tend to result in fewer law challenges and legal escalations within the workplace, such as costly wrongful dismissal challenges or human rights complaints, said Williams.
“The challenge for many organizations is leadership capacity — many managers and business owners are simply too overwhelmed from working in the business, and distracted by what they believe to be what drives the bottom line, than focusing on engagement. I think that there is a trend that suggests more employers are making the necessary investments to foster stronger employee engagement, but there are many others that still lag behind. It’s either due to a lack of will or sometimes it’s revenue — they don’t connect to the value enough to commit to these efforts.”
Organizational change
The third top human capital challenge deals with organizational change — more than one-third (39 per cent) of respondents ranked the capacity to respond to rapid change as a top short-term human capital challenge in 2016, up from just over one-quarter 10 years ago. However, they ranked the issue as less important (24 per cent) in the long term.
“Organizational change has always existed, the difference now is the pace,” said Jackson. “With the digital changes, new technology, new regulations, new everything, it seems every day those things are changing, and organizations that don’t know how to flex well are having difficulty responding. For the HR leaders… they have to revamp their methods of delivering talent management to the organization, not only delivering it but developing the strategies. So we’re seeing a revamping — in some cases, deconstruction and then reconstruction — of traditional HR practices; so recruiting, for example, or performance management.”
With the gig economy and hiring of more individual contractors, recruitment could be done through HR, the project management office or operations leaders, she said.
“It depends on your organization and whether you have that centralized and whether your organization considers those independent contractors or contingent workers part of your workforce, or part of your service providers.”
There are all kinds of influencers and drivers that are leading to changes that are well within an organization’s contemplation, said Williams.
“You’ve got international competition, demographic shifts, changing workplace norms, shifts in employment legislation… there’s also changes in the way that we work, greater employee demands for flexibility, more part-time work, working remotely... A lot of these translate into trends that are accessible and organizations can be much more planful and less caught reacting,” she said.
“It sometimes is dumbfounding the fact that the organization is caught scrambling when it was well within their contemplation that changes are going to happen.”
A lot of employers don’t take the time to analyze trends within their own industry, so they can anticipate and lead the change, rather than react to it, said Williams.
“The organization has to be nimble and agile, so they’re change-ready, and they don’t feel that sense of uncertainty… because the lack of certainty can erode an organization’s credibility if it looks like they’re floundering or they’re lagging in response to change, and that leads to attrition.”
Being able to track, anticipate and prepare for the people impacts of these changes will grow in importance, and competencies in navigating change will be a requirement for all leadership, said the Conference Board report.
It comes down to intentional, customized leadership development that’s relevant to a particular organization’s workplace realities — and emphasizes influencers such as competition, changing workplace norms and new legislation, said Williams.
“All of that should be embedded in the program so the leaders are equipped to deal with situations when they arise.”
And organizations should leverage opportunities change presents, she said.
“It could be opportunities that relate to you culling a certain percentage of the workforce that’s ineffective; there might be some innovation that becomes more viable based on the changing landscape, for whatever reason. There’s so many opportunities that change brings so it’s making sure that the organization has that mindset, that they’re not fearful of change, they don’t feel paralyzed by uncertainty but they embrace the opportunity.”
