Soft Skills

Overcoming HR hurdles

Shovan Mukherjee analyses a global study which has revealed that many HR professionals neither have a clear view of the skill sets and knowledge base of their employees, nor the ability to plan for future requirements.

As companies continue to look beyond cost-cutting measures as a primary tool to achieve a positive bottom line and revenue growth, the value of people comes into sharp focus. The much used but not acted upon phrase by business leaders ‘people are our most important asset’ now demands closer scrutiny. This is not solely because right people are needed to drive the growth of a company. In the face of growing attrition and the job market becoming increasingly competitive, huge gaps in a company’s skills base may emerge hampering its ability to compete, if left unchecked.

Our Human Capital Management Practice recently completed a global study of more than 300 chief human resources officers (CHROs). Out of many striking findings one, stood out. More than 60 percent are struggling to identify and develop the workforce skills required to sustain growth and remain competitive. Majority of HR professionals neither have a clear view of the skill sets and knowledge base of their employees, nor the ability to plan for future requirements.

This lack of robust data analytics arises at a crucial time. No up-to-date view of skills means that when an employee leaves, it will be too late by the time the company finds out that a careers’ worth of experience and talent has ‘walked out of the door,’ leaving insufficient talent available to fill the void.

The consequences of this looming employee exodus are twofold; first, the rapid loss of talent could impede companies’ ability to grow and remain competitive. Second, with a majority of HR professionals not able to gauge what skills and knowledge are being lost they cannot anticipate, plan for and ultimately replace the skill sets and knowledge areas lost to attrition, yet required for continued growth.

CHROs from organisations in emerging and growing markets typically found in Asia Pacific (excluding Japan) reported the greatest flexibility in proactively staffing prior to market demand, as well as recruiting the youngest workforce of all regions. So, the most successful companies of the future will be those that can quickly and flexibly respond to business opportunities. They will be able to because they have forecasted the skills the market needs and trained accordingly, based on a thorough knowledge of their employee skills base. But these young workers must be equipped and continually updated with the right skills. Survey findings include the following:

HR staff not held accountable

Employee performance measurements are often not built into compensation plans. Only a third of the respondents’ leadership teams were rewarded on the growth of key staff and less than a third were evaluated on their retention. Almost two-thirds of companies surveyed reported that rewards for their HR employees were not tied to overall HR performance.

Employee training is poorly managed

Very few companies measure the effectiveness of employee training. Less than half the companies surveyed thought about the business impact of employee training programmes and less than a third calculated the return on investment into the programmes. These figures underscore that training budgets are not being evaluated based on the contribution made to business objectives and could be failing to contribute towards overall competitiveness.

Buying talent has many risks

Companies with a higher percentage of managers bro-ught in from outside suffered a five percent higher employee turnover rate as well as lower morale. Companies choosing to “buy” management talent must carefully consider and manage the expectations for advancement of individuals within their organisations to ensure they do not lose existing valuable skills and knowledge when acquiring new talent.

Grooming talent can lead to better profit

Companies with 80 percent or more of managers in professional development programmes had approximately three times the profitability of companies with zero through 60 percent in similar programmes. However, companies that invested in development at the staff level were found to have higher voluntary turnover at that level. The findings suggest that companies that invest in nurturing talent internally must create opportunities for those individuals or risk losing them to competition. Promotion opportunities, performance feedback and child-friendly policies show a closer link to lower organisational turnover.

In organisations where a higher percentage of middle management positions are filled by internal candidates, child-friendly policies are in place and maintenance of higher than average ratio of employees receiving performance reviews, anecdotal evidence of lower company turnover exists.

So, how does a company keep its HR operations on track?

Improve HR Management and Information Systems

Many organisations maintain a patchwork of legacy HR systems limiting their ability to understand workforce trends, demographics and skills availability and make quick decisions on how best to deploy and develop employees.

Companies must develop business analytics to determine where and how employees are being used, understand current and future skill requirements and allow empl-oyees to measure and act in ways that improve performance.

Build a flexible talent pool

Using improved HR management information systems CHROs must identify and respond to both the current and projected skill sets dictated by business opportunities and management planning. They must identify where the skills and capabilities can be found outside the company if a critical skill set does not exist internally. Additionally, companies must be able to provide, on-demand, new and higher education allowing internal employees and external partners to become productive quickly in any new roles.

Evaluate and measure training

Companies need to apply a higher level of oversight in evaluating investment in human capital programmes. They should reflect the need for rapidly changing skill sets and be flexible so as to meet current needs. Training investment must be tied closely to clear business metrics and incorporate evaluation based on them apart from business goals and employee feedback to ensure that programmes are impacting the bottom line.

Retain talented individuals

Retention strategies must include the provision for regular feedback to employees and creation of long-term career development plans. In addition, given ageing of the population across developed countries, companies must develop flexible methods for retaining mature workers and providing solutions allowing employees to balance work and life challenges associated with care for children and elderly.

Incorporate HR goals into compensation

Accountability for people within the organisation needs to reach beyond the human resource function. Ultimately, operational and functional units need to be evaluated on their ability to source, retain and develop their main employees. While the HR function can act as an advisor and catalyst for these efforts, it is clear that executives across the business need to be held accountable for how they make use of human resources.

Understand geographical differences

The survey clearly highlighted that different parts of the world demonstrate varying philosophies on how human capital should be managed.

CHROs need to design and implement global human capital programmes that recognise variations in local labour markets and allow for cultural differences.

The coming shift in the workforce is like any other business issue faced by companies today. With the right information derived from deep analytical research, a robust and cost-effective business case can be built to address the problem and maintain competitiveness.

By obtaining better visibility into key skill sets and knowledge areas, companies can implement training and retention programmes or seek to acquire skills that are not available or will soon be lost from their organisations. The secret behind successfully navigating the exodus and remaining competitive is to become more flexible.

Shovan Mukherjee is Partner Business Consulting Services, IBM