Talent That Fuels Growth

Talent That Fuels Growth

by Catherine Farley and David Gartside | Talent Management

 

For most of the world's companies, growth appears to have regained its place at the top of strategic agenda, displacing the cost-control mentality that has dominated boardrooms and executive suites for the past three years. That's good news, but are companies prepared for the economic recovery? Do they have the talent they need to grow?

 

According to the most recent Accenture High Performance Workforce Study, which is based on a survey of 674 C-level executives around the world, the answer for many companies is not hopeful.

 

The study, conducted between January and May 2010, found that president challenges in improving enterprise skill levels, workforce performance, HR organization productivity and effectiveness can substantially impede a company's ability to capitalize on emerging growth opportunities as economic prospects brighten in most parts of the world.

 

Workforce Actions During the Downturn

 

There's no doubt the recession had an impact on workforces around the globe, and that impact has been most visible in job eliminations: 62 percent of executives in the survey reported their organization had reduced the number of full-time employees during the downturn. Layoffs were much more prevalent in developed markets than in emerging economies.

 

When determining which employees to let go, 52 percent of companies claimed to eliminate employees in the lowest tier of performance. Future competitiveness also played a role in the decisions of many companies, with approximately four in 10 executives saying eliminated employees either had skills that were not critical to the organization's future business or were in workforces that were not deemed important to the organization's focus areas going forward.

 

But at the same time companies were laying off employees, about eight in 10 also were adding staff, mostly for strategic reasons such as strengthening workforces critical to the success of the business or addressing specific people needs related to a launch of a new product or business.

 

The study also revealed that the use of analytics is not pervasive. Only about one in 10 respondents strongly agreed they have a formal analytics capability that can help them make fact-based decisions about the skills needed to drive growth and the changes necessary to improve HR and training performance and effectiveness.

 

The net result of companies' workforce actions during the downturn was a smaller workforce for 47 percent of organizations, a larger workforce for 34 percent and workforce of about the same size for 19 percent.

 

Workforce Skills and Performance

 

Such workforce actions notwithstanding, Accenture's research revealed many companies will likely encounter major skills challenges that could make it difficult for them to achieve their growth objectives.

 

For instance, although sales and customer support and service were cited as the two most important functions by survey participants in the previous three editions of the study, many executives expressed concern about the performance of these workforces.

 

Just 21 percent of executives who named sales as a top-three workforce described that workforce as high performing, down from 25 percent in the previous edition of this study. Only 30 percent of respondents said the same about the customer service and support organization, an increase of 5 percent from the previous edition. There's a similar pattern across all other functions.

 

A major reason for this lack of high performance is that most organizations don't have the skills necessary for these functions to excel. A majority of executives who cited sales as their company's most important function said they either lack the needed skills in the sales function (29 percent) or significant proportions of the skills they do have in sales are out of date (24 percent).

 

The study found the same situation regarding customer service and support, although in this function, executives mentioned the additional challenge of having a difficult time attracting skills because their companies cannot afford to pay what the market demands. Overall, only 16 percent of respondents considered the current skill level of their entire workforce as industry leading. Worse, 30 percent said it would take a year or longer for their organization's workforce skills to return to the appropriate level.

 

Workforce Ability to Handle Change

 

In addition to facing skills challenges, executives said their workforces lack the ability to deal with change, a critical trait in today's business climate. In other words, many companies lack organizational agility, the adaptability and speed that enable them to execute innovations faster and move their organizations forward more nimbly.

 

For example, 8 percent of participating executives said their workforce is extremely well prepared to adapt to and manage change through periods of economic uncertainty. Only 23 percent strongly agreed they have the leadership necessary to help the enterprise navigate periods of economic uncertainty and the leadership development programs to prepare the organization's future leaders.

 

Given the preceding, it's not surprising that only 33 percent of survey participants strongly agreed they can quickly mobilize their enterprise to execute new strategies, serve new markets and new customers, and deliver new products and services, or that just 17 percent strongly agreed their organization's culture is highly adaptive and responds quickly and positively to change.

 

This puts many companies in a precarious competitive position as capturing growth opportunities requires quick, decisive action in a recovering economy.

 

Human Resource Function Capabilities

 

Critical to supporting the increased focus on growth reported by companies is a strong talent management function that can help build and sustain the workforce necessary to achieve performance objectives. But most companies said their HR functions are not fully prepared to answer this challenge. Indeed, the Accenture study found serious shortcomings continue to impede the ability of the HR and training functions to drive continuous improvement in the overall enterprise's operations and performance.

 

Perception of the HR function is not favorable. As reported in previous editions of this study, satisfaction with the HR function remains low. Only 8 percent of respondents said the performance of their human resource function in supporting the larger enterprise's pursuit of its business goals was industry leading.

 

Furthermore, just 13 percent of respondents rating HR as a top-three workforce described the function as high performing; and only 10 percent said their HR and training organizations are extremely well prepared to adapt to and manage change through periods of economic uncertainty. Perhaps most troubling of all, just 19 percent strongly agreed that HR and training are seen by their company as critical functions and act as true strategic partners in the enterprise's C-suite.

 

With a growing focus on talent and human capital as a key component of companies' growth strategies, HR needs to earn its place at the table. One tool that could help HR executives in that quest is analytics that enable HR and talent leaders to gauge how well their function performs. Such analytics can help identify areas where improvements can be made in cost and performance, to increase the business value the HR function generates for the larger enterprise and ultimately build greater credibility for the function and its leader.

 

The HR function is in need of a skills upgrade. More than half of respondents who cited HR as their company's most important function said they either lack the needed skills in the HR function (29 percent) or significant proportions of the skills they do have in HR are out of date (28 percent).

 

Some of the skills that should be more prevalent in today's HR function are financial acumen, including developing strong business cases for HR initiatives; stakeholder management; program management, ensuring the effective execution of initiatives; and communications, interacting with and inspiring stakeholders involved in change efforts.

 

Key HR and training capabilities in a large majority of companies are lacking in maturity. Only a small percentage of companies strongly agreed with statements that would indicate the presence of mature or robust HR and talent management practices. For example, only 10 percent of companies indicated that they have formal processes and tools that enable effective learning and knowledge sharing across the workforce, and only 13 percent claim to have a formal talent sourcing strategy that includes making use of alternative sources of talent.

 

Moving Forward

 

In the wake of the most severe economic downturn in decades, companies face myriad challenges, but none more important - or difficult - than creating a workforce that can implement an enterprise's strategies and respond to new competitive challenges.

 

The road back to recovery and growth begins with companies aligning their business strategy with a human capital strategy that puts in place the right talent in the right roles performing in the right ways to bring the business strategy to life and execute it optimally. It also includes a more flexible business design that can help increase the pace and certainty of successful organizational change and accommodate the ready use of other sources of talent, including outsourced talent and contingent labor, as needs dictate.

 

Most companies experienced some disruption to their workforces because of the recession, and many face a long road ahead. To spur growth, companies should leverage new techniques and tools to rapidly re-skill existing employees to perform new jobs and roles, and take on new hires in a way that gets them to competent performance levels faster.

 

What appears to be a monumental challenge also provides rare opportunities for companies to revisit their human capital strategies and capabilities and ensure the actions they take now and in the foreseeable future result in a new workforce that embodies the skills and capabilities needed for the organization to excel in the post-recession world.

 

 

[About the Authors: Catherine Farley and David Gartside are managing directors in Accenture's talent and organization performance practice.]