Transcript People Issues

Aligned at the Top
How business and HR executives view today’s
most significant people challenges—and what
they’re doing about it.
Geert Vercaeren
Director Human Capital
Deloitte Consulting
About the survey
 “Aligned at the Top” is a global survey of business, people, and HR issues,
trends and challenges
 Objective was to understand the connect or disconnect between senior
business executives and HR leaders on the people and HR agenda
 Conducted by Deloitte Touche Tohmatsu and the Economist Intelligence Unit
 Since the first survey in 2002:
– People and HR issues have continued to rise on the business agenda
– HR functions have made significant strides to improve their efficiency and service delivery
 Yet key questions remain:
– What are the people issues that keep executives awake at night?
– How are these issues being addressed, and what is HR’s role?
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Methodology
 Global survey of 531
HR and non-HR
executives
representing 468
companies
 Written survey
responses: 481
 Personal interviews: 50
 HR leaders and senior
business executives:
259
– Responses from HR
leaders: 40%
 Companies of every
size, from every major
region and industry
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Agenda
About the survey
People at the top put people
at the top
People challenges that keep
executives awake at night
Rising to the challenge
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People are critical to performance
 Senior business executives and HR
leaders agree that people are vital to
all aspects of performance
 More than 85% of all participants
consider people “vital” to every
aspect of their organization’s
performance
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Agenda
About the survey
People at the top put people
at the top
People challenges that keep
executives awake at night
Rising to the challenge
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People issues are increasingly strategic
 Both senior business executives and
HR leaders view people issues as
becoming more and more strategic
 Today
– More than 60% of senior business executives
already consider people issues “very
significant” or “highly significant” to strategic
decision-making
– 50% of HR leaders agree
 In the future
– 90% of senior business executives believe
people issues will be “very significant” or
“highly significant” to strategic decisionmaking in three to five years
– 86% of HR leaders agree
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The key people challenges are clear…
 HR leaders and senior business
executives agree the most critical
people issues are:
– Leadership development and pipeline
– Talent management
– Creating a high-performance culture
– Training and development
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. . . but HR’s role is still being defined
 “People” and “HR” are often treated as separate conversations
– People issues are considered “strategic”
– HR issues are perceived as “administrative”
People Issues
HR Issues
(Strategic)
(Administrative)
Examples:
Examples:
• Leadership development and pipeline
• Compensation and benefits
• Talent management
• Performance evaluations
• Creating a high-performance culture
• HR operating efficiency
• Training and development
 When senior business executives talk about strategic people issues, the HR function is
rarely even mentioned. But to achieve desired results, HR leaders and senior business
executives must work side-by-side, forming a new collaboration to tackle the company’s
most pressing people issues.
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Regional variations
 Survey results were very consistent across all three regions, with a few minor
exceptions
Issue
Importance of people
Similarities
Differences
 People are “vital” or “extremely vital”
 North America rates people issues highest
 People issues will be increasingly important
HR effectiveness
 HR considered “moderately effective”
 North America rates HR highest
 Western European rates HR lowest
Sources of talent
 Top source of talent is development of
existing personnel
 Asia
Pacific shows the strongest interest in
overseas recruitment

Role of HR
 HR increasingly viewed as a strategic
value-adding function
In North America and Western Europe,
demand for overseas recruitment is small,
but rising quickly
 HR activities most commonly outsourced:
– Asia Pacific: training
– Western Europe: payroll
– North America: benefits administration
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Industry variations
 Every industry faces a talent shortage
 Specific challenges — and responses — vary by industry
 Examples:
Industry
Retail
Typical challenges
Typical responses
 Hiring large numbers of entry-level sales
associates
 Additional training for store managers
 Minimal training for low-level staff
 Rapid turnover
 Need for quality service at low cost
Banking
 HR considered “moderately effective”
 Additional training for low-level staff
 General training about the banking business
Energy
 Ageing workforce
 Increased recruiting investments
 Tarnished public image
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Agenda
About the survey
People at the top put people
at the top
People challenges that keep
executives awake at night
Rising to the challenge
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Top people issues
 How can HR leaders and senior business executives work together to address
a company’s strategic people issues?
Leadership development and
pipeline
Talent management
Creating a high-performance culture
Training and development
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People challenge #1: Leadership development and pipeline
 Rated as the top people issue
 Grooming the next generation of
leaders is every leader’s
responsibility
 Leading companies are pushing
advanced leadership training down
to middle management
– Provides a steady pipeline of leadership candidates
“It’s the responsibility of managers throughout the
– Helps develop skills and capabilities consistent with
the company’s strategic direction
company to identify leaders and develop them.
Every manager needs to be able to point to two or
– Shows talented people they are valued
three people underneath him or her who have the
potential to move up, and then provide experiences
 Keys to results
that makes that possible.”
– Collaborate with business schools and other third
parties to develop and deliver the training
— Director of HR at a mid-size technology company
– Have senior executives help develop and deliver the
training
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People challenge #2: Talent management
 Two-thirds of senior business
executives consider “skills gaps”
one of their most significant
workforce challenges
 Chronic talent shortage being
driven by:
– Baby Boomer retirements
– Declining birth rates
– Shifting educational patterns
 Requires a comprehensive and
balanced approach to talent
management
 Keys to results
– Align with business strategy
– Don’t rely solely on financial incentives
– Focus on critical workforce segments
– Create an inventory of skills
– Collaborate with universities
– Use offshore talent
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People challenge #3: Creating a high-performance culture
 Corporate culture and employee
behaviour have a significant impact
on performance
 More than 60% of all respondents
said the CEO is most responsible for
influencing culture and values
 Culture and behaviour are also
driven by critical workforce
segments and key events
 Keys to results
– Target critical events
– Target critical workforce segments
“It’s not just building a high-performance organisation,
it’s about how you build passion. How do you engage
people and have them bring more than just their basic
competence, which is just enough to collect a pay
check?”
– Use HR practices to shape culture and values
• performance evaluations
• compensation structures
• improved communication and coordination
– Link behaviour to strategy
— CEO at a privately held manufacturer in the United States
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People challenge #4: Training and development
 Executives view “development and
training of existing personnel” as their
most valuable source of talent
 Leading companies are focusing more
effort on training and development
– Improves employee productivity, loyalty,
and performance
– Provides the critical skills that companies need
– Is one of the few competitive factors a company can
control
 Keys to results
– Tailor development programs to individual needs and
interests
– Make training part of everyday operations
– Continuously reinforce the training
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Agenda
About the survey
People at the top put people
at the top
People challenges that keep
executives awake at night
Rising to the challenge
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The gap between HR capabilities and business needs
 Senior business executives want
HR to be more effective
– Only 4% describe HR as highly effective in
addressing the needs of the business
– 60% described HR as only moderately
effective
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Getting strategic about people
 HR is often out of the loop on
strategic issues
– Percentage of companies that “rarely” or “never”
consult their senior HR team on key business issues
•
•
•
Mergers and acquisitions (63%)
Compliance and regulation (26%)
Talent (25%)
 Only 14% of HR leaders believe HR is
currently perceived as a strategic,
value-adding function
– At large companies, the figure is even lower (less than
10%)
– However, 40% expect perceptions to improve in three
to five years
 Senior business executives have
high expectations
What is HR doing to close the gap?
And will HR’s efforts go fast enough — or far
enough — to satisfy the company’s needs?
– 95% expect HR to be perceived as a strategic, valueadding function within the next three to five years
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HR must continue to improve and streamline its operations . . .
 HR outsourcing on the rise
– 29% of all respondents already outsource
recruitment, training, and payroll
– Another 18% expect to outsource these
and other HR activities in the next three to
five years
 Other ongoing improvements
–
–
–
–
Shared services centers
Centers of excellence
Self-service
Offshoring
 Potential Benefits
– Reduce HR costs
– Improve efficiency
– Enable HR to focus on strategic business
issues
“Administrative processes have been outsourced
to the fullest extent possible. Now you might
believe we were treating HR as an afterthought
and you’d be right. But the way it’s turning out,
that’s really a world-class approach. We’re not in
business to administer HR.”
— VP of finance and business development at a small, privately
held bio-tech company
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. . . while building new skills and capabilities . . .
 CHROs needed
– Companies need HR staff who can think
and act like a CHRO — at every level of the
company
 HR staff must be business people,
not just administrators
– Deep understanding of the business
– Hands-on experience
– Ability to work closely with business leaders
to address complex problems
 Improvement begins at the top
– 52% of all respondents do not have a Chief
Human Resources Officer (CHRO), Chief
People Officer (CPO), or
other C-level executive who is dedicated to
people issues
– 68% expect to have such a position within the
next three to five years
“HR people have to understand the business first.
Career HR managers are useless except in a purely
administrative sense. To be a CHRO, you have to be a
business person first, and then an HR executive
second. You absolutely have to know how HR fits into
the business, and you can’t know that unless you know
the business.”
— CHRO at a global power development company
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. . . and measuring results in business terms
 What you measure says a lot about
what you value
 Old HR metrics (administrative
focus)
– Total payroll
– Total compensation
– Training costs
 New HR metrics (business focus)
– Time spent on managing people issues
– Time to efficiency for new managers and
employees
 Potential Benefits
– Improve HR’s business focus and impact
– Help HR shed its “touchy-feely” image
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Thank You
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