Human Capital Trends 2015 – Takeways from Deloitte’s report

The balance of power in the employer-employee relationship has shifted—making today’s employees more like customers or partners than subordinates.” This is how Deloitte’s report titled “Human Capital Trends 2015” begins.  [source: Deloitte]

As the report further states “It challenges our existing people practices: how we evaluate and manage people and how we engage and develop teams; how we select leaders and how they operate. HR organizations now face increasing demands to measure and monitor the larger organizational culture, simplify the work environment, and redesign work to help people adapt.

As I read through the nearly 100 page long report I thought it would be good to capture the salient features for quick public consumption. So here are the main points. I have added some of my own comments or thoughts to specific points. Italicized text has been taken from the report.

Deloitte surveyed nearly 3000 people in the industry to come up with their report.

Human Capital Trends - Gaps between Challenges and Readiness
Gaps between HR Challenges and Readiness

The report starts off by listing the capability gaps that exist in selected areas. More interestingly, if one takes a look at the trend across the last two years, there is a distinct widening of the gap across all the areas of interest, which is a worrying sign. Either people are becoming much more aware of the issues or organizations are finding it difficult to implement the required changes.

HR Challenge-Readiness Gaps across 2014 and 2015
Have Gaps narrowed between last year and this year?

 

It is interesting to note that culture & engagement were voted number 1 overall this year – a clear indication that companies are beginning to recognize the need to engage with employees much more effectively in order to retain talent.

Six  key findings from the report are:

  1. “Softer” areas such as culture and engagement, leadership, and development have become urgent priorities.
  2. Leadership and learning have dramatically increased in importance, but the capability gap is widening. Moreover, while this issue had the smallest capability gap last year at -9, this year, the gap widened significantly to -28. This result suggests that, while technical and professional skills are a top priority, corporate training departments have fallen behind.
  3. HR organizations and HR skills are not keeping up with business needs. HR organizations rated their teams the equivalent of a C-minus (an average of 1.65 on a five-point scale), showing almost no improvement over last year’s ratings. When  business leaders were asked to rate HR, the score was even lower. Business leaders rated HR a D-plus (an average of 1.32 on a five-point scale), indicating their increased expectations.
  4. HR technology systems are a growing market, but their promise may be largely unfulfilled. the heavy increased spending on technology has not been accompanied by similar investments in process and people. Implementing new tools without redesigning processes and retraining HR does not solve talent problems.
  5. Talent and people analytics are a high priority and a tremendous opportunity, but progress is slow.Companies that take the time and make the investment to build people analytics capabilities will likely outperform their competitors significantly in the coming years.
  6. Simplification is an emerging theme; HR is part of the problem.

The Deloitte report goes into more detail for each of these 6 issues and I have summarized the main points from the report on where companies can start to tackle these issues. While most of these points are self-explanatory, I have added my comments wherever I feel they can add value or where I disagree.

Leadership issues

Where companies can start:

  • Start with commitment to leadership development from the top
  • Answer the question: Leadership for what?
  • Develop inclusive leaders at all levels
  • Make talent development and succession a priority
  • Develop or leverage a capability model – While this seems like a lot of “consulting-speak” what the authors mean to say is that organizations need to come  up with new models for assessing and training leaders.
  • Extend boundaries to create new leadership development opportunities – This includes community service, working with universities and other outside organizations to give potential leaders every  opportunity to learn.

Training & Development

  • Reimagine the learning experience
  • Assess your current learning offerings
  • Centralize spending and strategy while carefully distributing learning capabilities
  • Assign a learning technology and design thinking team
  • Reimagine measurement
  • Elevate the job of chief learning officer

Culture & Engagement

  • Engagement starts at the top
  • Measure in real time –  I believe (and predict) that the yearly organizational surveys is going to meet a slow death over the coming decade. They really don’t provide as much information as organizations think they do. Instead, I see that more and more organizations are aware of the need to get near-real time information on how their employees feel. “Pulse surveys” are one way to do it, but even these are few and far between. Real time feedback mechanisms (including both simple mood surveys as well as suggestions, comments, questions) that can guarantee anonymity, are probably going to become ubiquitous within the next ten years.
  • Make work meaningful
  • Listen to the Millennials
  • Simplify the work environment

Workforce on-demand

  • Proactively plan for a hybrid workforce that includes owned and on-demand employees
  • Educate business and HR leaders on the range of on- and off-balance-sheet approaches to talent
  • Put in place integrated management and risk controls across the business, procurement, and HR teams
  • Extend your performance management and analytics efforts to on-demand talent
  • Develop HR and IT systems to support on-demand talent
  • Assign ownership and governance of ondemand workforce management

Performance Management

  • Simplify – This theme will come through again and again.
  • Align philosophy with strategy
  • Separate performance from compensation
  • Build a new performance management culture
  • Empower local managers
  • Ditch the curve

Making HR Relevant

  • Design the HR organization to deliver solutions
  • Create business-integrated “networks of excellence
  • Make HR a talent and leadership magnet
  • Invest in HR development and skills as if the business depended on it

HR and people analytics are stuck in neutral.

 

Current State of HR Analytics
HR Analytics – Much promise – wanting in rewards?

 

It was no great surprise for me to see that while the need for HR analytics was widely felt, respondents weren’t convinced about what it could deliver in terms of the RoI.  Some of the areas where people felt analytics could help are:

  • Understanding and predicting retention
  • Boosting employee engagement
  • Expanding the sources of talent and improving the quality of hires
  • Profiling high performers in sales and customer service

So how can companies start with their analytics efforts? According to Deloitte’s study, here is the list!

  • Build the right team and show the return on investment
  • Start with the tools you have
  • Partner with IT
  • Use analytics on the HR organization to show analytics’ potential
  • Focus on immediate business needs
  • Leverage embedded analytics by upgrading technology platforms

All of these are true to a large extent. However, not all organizations will have the wherewithal to build their own analytics teams and this is where analytics vendors can act as partners to help fill the gap.

People Data Everywhere – Bringing the Data In

  • Partner with marketing
  • Buy and access tools to tap into major social networks – I do have my own concerns about this. Most organizations that I have spoken to are wary of using social networks to identify what their people are up to. While the report suggests that there are vendors who claim that data from social media on employees can be a better predictor of churn than any internal data, companies that I have spoken to are very wary of being seen as a Big Brother who watches every move of an employee. There seems to be a very thin line between what is proper and what isn’t, at least in the eyes of the employees and I wonder if it will remain this way or with time, we will get used to what seems like “intrusion” now but might seem to be the norm in future. After all, we do know that Google’s, Facebook’s, Twitter’s algorithms scan our emails, posts and messages and that a lot of our personal data resides on the cloud.
  • Recognize that the drive for transparency is here to stay 

Simplifying Work

I love this segment because it fits in with the overall motto of our organization which is a quote attributed to Leonardo Da Vinci – “Simplicity is the ultimate sophistication”.

There are five pervasive drivers of complexity in today’s world

  • Pervasive technology and connectivity
  • Complexity in technology
  • Globalization
  • Increased administrative and compliance demands
  • Overly complex business processes and systems

Companies can:

  • Make simplification a business and HR priority
  • Get email and unproductive meetings under control
  • Invest in more integrated, simpler technology
  • Implement design thinking and process simplification within HR

Machines as Talent

Where companies can start

  • Explore and learn
  • Share experiences
  • Experiment with new job models
  • Evaluate what does and does not work

This is  a brief summary of the major trends for 2015 and beyond. Hope it is helpful for those who don’t really have the time to wade through a 100 page report.

Do keep the comments/suggestions/critiques flowing!

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