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Hr Talent Paradox Deloitte


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before HR can help an organization to address the talent gap, it needs to address its own

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Hr Talent Paradox Deloitte

  1. 1. The talent paradox Before HR can help an organization address the talent gap, it needs to address its own
  2. 2. The role of HR continues to challenges such as leadership development and pipeline, creating a high performance culture, talent evolve, gradually shifting from management and acquisition, and anticipating and responding to mission-critical events. According to administrator to strategic the survey, these are the types of challenges that drive an organization’s overall performance. To meet business partner. Traditional HR the challenges, respondents expect HR will need to significantly upgrade its talent and capabilities. focus areas such as improving • Strategic HR requires new skills and HR operational efficiency, competencies. Competencies expected to rise the most in importance over the next three years are all reducing staff costs, and training/ fundamental to HR’s new role as a strategic partner – things like innovation, strategic thinking and development are now tablestakes. analytical ability, relationship building/strategic partnership, and business acumen. Unfortunately, They must be done well, but the survey data shows that many of these critical future competencies are currently viewed as HR’s don’t provide a sustainable weakest areas. 38% of respondents say that HR is “weak” or “very weak” in innovation, while another performance advantage. 39% rate HR’s innovation capabilities as simply “moderate.” Other key competency areas receive To succeed in its new role – and deliver what the similarly low marks. broader organization needs – HR must attract and develop staff with new skills and capabilities. The • Build? Buy? Or both? To close the gap, HR should Economist Intelligence Unit conducted a global increase its investment in business-related training, leadership survey on behalf of Deloitte member firms and ramp up programs such as job rotations that (“Deloitte”) to understand the challenges that today’s help HR staff improve their business knowledge and HR organizations’ face in developing and acquiring HR experience. It should also recruit leaders and staff talent. Key findings: with broad knowledge and experience that transcends traditional HR competencies. In the face • HR must improve its capabilities. Most of the of a chronic talent shortage, HR will need to recruit surveyed organizations believe the HR function has more aggressively, actively positioning itself as a significant room for improvement. Although great place for top talent to launch a career. respondents say HR is generally performing well in its traditional administrative role, only 29% believe Before HR can help the broader organization address their HR function has the talent necessary its strategic talent challenges, HR must first address its to succeed in the next three to five years. own talent challenges. This survey report highlights the latest issues and trends in HR talent, and offers • HR must focus on strategic people issues, not practical, real-world insights to help HR attract, just administration and operating efficiency. develop, and retain the talent it needs to help the To fully support the broader organization, HR must organization succeed. focus more time and effort on strategic people 2 The talent paradox
  3. 3. What organizations need from HR The survey results show that in order to help an Organizations today face unprecedented people organization thrive, HR must focus more time and effort challenges, and they need HR’s help. The HR function on strategic people challenges: can no longer limit its focus to traditional improvement areas such as HR operational efficiency, reduced staff • Leadership development and pipeline – building the costs, and training/development. These kinds of next generation of leaders activities have become tablestakes. They should be • High performance culture – creating a workforce that done well, but don’t provide a sustainable advantage in is pre-wired for high performance the marketplace. And they are not enough to address • Talent management – attracting, developing, and the myriad of short- and long-term people issues that retaining the talent an organization needs to thrive today’s organizations are wrestling with. • Talent acquisition – recruiting and hiring people with the right skills and capabilities • Anticipating and responding to mission-critical events – proactively addressing strategic challenges, instead of reacting after the fact These challenges have a tremendous impact on an organization’s overall performance. Figure 1: Strategic challenges Which of the following issues present the most important challenges to the performance of your organization? Leadership development and pipeline 50% Creating a high performance culture 49% Talent management 39% Talent acquisition 29% Anticipating and responding to business-critical events 26% Improving operational efficiency of HR through process and technology 23% Reducing staff costs 22% Training/development 19% Compensation, benefits, and pension planning and management 15% Complying with regulatory questions 8% 0% 10% 20% 30% 40% 50% The talent paradox 3
  4. 4. Room for improvement According to the survey, most organizations believe HR has significant room to improve its capabilities and performance. 46% of respondents say their HR function is “adequate but needs to improve,” while Figure 2: Rating HR’s overall performance 20% say HR is “world-class in some aspects, but needs to improve in several areas.” 20% believe “significant Which of the following statements best describes the overall state improvement” is needed, while another 10% say that of your organization’s management of HR issues? “radical improvements” are needed. Only 5% consider We have an adequate HR function for our their HR function “world-class” in every aspect of 46% industry but we need to improve performance. We are world-class in some aspects of our HR function, 20% but we need to improve several areas In Deloitte’s experience, most HR organizations perform We are getting by in our HR function, 20% well on traditional activities such as benefits but significant improvement is needed administration and regulatory compliance. Also, they We are underperforming in our HR function; radical improvements are needed 10% have made great strides at improving HR operating efficiency. Yet there is clearly a gap between HR We are world-class in all aspects of our HR function 5% capabilities and the changing needs of the overall 0% 10% 20% 30% 40% 50% organization. Figure 3: Specific HR competencies Rate the specific competencies that your organization’s HR function collectively demonstrates Providing technical HR expertise to address people management challenges 43% 36% 21% Helping to execute on corporate or business unit strategies or plans 42% 35% 23% Contributing to the development of corporate or business unit strategies or plans 42% 34% 24% Retaining talent to meet the organization’s needs 40% 34% 26% Attracting talent to meet the organization’s needs 39% 36% 25% Leading, managing or supporting organizational change 36% 39% 25% Improving HR operational efficiency 34% 40% 26% Developing and attracting leaders 32% 38% 30% Creating a high performance culture 29% 34% 37% 0% 20% 40% 60% 80% 100% Highly effective/moderately effective Adequate Highly ineffective/moderately ineffective 4 The talent paradox
  5. 5. Looking at specific competencies, HR received its About the survey highest rating for technical HR expertise (see figure 3). A total of 359 people from 78 countries participated in the Yet even in this traditional area of strength, 21% of survey. 80% of respondents were senior leaders, including respondents consider HR “highly or moderately CXOs, board members, department heads, vice presidents, and ineffective,” while another 36% rate HR as merely directors. 40% were from human resources, with the rest “adequate.” representing a broad cross-section of business functions, from operations and corporate management to finance and sales Even more alarming, HR’s lowest ratings were in the & marketing. two areas rated most important for the broader organization: (1) creating a high performance culture 5% 3% CIO/Technology director and (2) developing and attracting leaders. 5% 21% CEO/President/Managing director 6% SVP/VP/Director The majority of respondents expect HR to improve its Manager 7% Head of department expertise and capabilities over the next three years, but CFO/Treasurer/Comptroller to fall somewhat short of its loftiest aspirations. Less 7% Other C-level executive than a third expect HR to evolve into an effective 16% Other business partner, or to attain world-class status with 8% CHRO extensive involvement in workforce analytics, culture Head of business unit building, change management, and strategic planning 8% 15% Board member (see figure 4). 10% 6% Sales and marketing Figure 4: Expectations for HR improvement 10% Human resources Which of the following statements best describes your Business operations expectations for the development of your organization’s Other corporate management HR function over the next three years? 14% Other 40% Finance 11% 18% 20% 20% 29% 15% Participating organizations ranged in size from small (less than 6% 5,000 employees and $500 million in revenue) to large (more than 100,000 employees and $5 billion in revenue), with strong 0% 10% 20% 30% representation from every major industry and global region. Will attain world-class status with extensive involvement in workforce 6% analytics, culture-building, change management and strategic planning Will evolve into an effective business partner 26% Middle East and Africa Will learn more about the business and will aspire to become a strategic Europe partner but will not be fully accepted in that role 35% Americas Will develop increased HR expertise and will proactively promote best practices Asia-Pacific Will remain primarily focused on managing HR transactions Don’t know 33% The talent paradox 5
  6. 6. Time for an HR talent upgrade To fulfill its new role – and deliver what the organization needs – HR must attract and develop staff with new skills and capabilities. According to the survey, only 29% of respondents believe their organizations currently have the HR talent necessary to succeed over the next three to five years (see figure 4). Looking deeper, the survey data shows that the vast majority of HR organizations (80%) already have the Figure 5: HR talent needs are changing talent they need to meet demand in traditional transaction areas such as payroll and benefits. Where Ability of talent to fulfill organization’s HR needs now vs. in they come up short are areas that are critical to HR’s three years (more than able to meet demand/able to meet demand) new role as a strategic partner, such as business Traditional HR capabilities 80% strategy, workforce planning & development, global (payroll, benefits, other transactional) 82% mobility, change management, and innovation. At the Competencies for transformed HR role 34% moment, only 34% of organizations believe HR has the (business strategy, workforce planning & development, 58% global mobility, change management, innovation) talent required to meet their needs in these areas. However, survey respondents expect HR to dramatically 0% 30% 60% 90% improve its capabilities in these key areas over the next Now In 3 years three years. Figure 6: Key HR competencies in the future Importance of the following specific HR competencies now vs. three years from now (respondents selected “essential”) 62% Teamwork and communications 68% 56% Customer focus 64% Leadership 56% 66% 49% Strategic thinking/analytical ability 69% Relationship building/strategic partnership 46% 58% Consulting/advisory skills 42% 51% Negotiation/conflict resolution 41% 48% Business acumen 38% 49% Innovation 36% 57% 0% 10% 20% 30% 40% 50% 60% 70% Now In 3 years 6 The talent paradox
  7. 7. Key HR competencies Business acumen and relationship building are also Survey respondents expect HR to improve its critical. In order to serve the broader organization as competencies areas across the board over the next credible and trusted partners, HR staff must develop three years. However, the competencies expected to strong relationships with the organization’s leaders, and rise the most in importance during that time are all demonstrate a solid understanding of strategic issues. fundamental to HR’s new role as a strategic partner: innovation, strategic thinking and analytical ability, Unfortunately, the survey data shows that many HR relationship building/strategic partnership, and business departments have yet to develop these critical acumen. competencies. 38% of respondents rate HR as “weak” or “very weak” in innovation, while another 39% Innovation is important because even the best ideas believe HR’s innovation capabilities are just “moderate.” eventually become commodities. To keep pace with Other key competencies such as business acumen and changing needs – and maintain a sustainable advantage strategic thinking/analytical ability receive similarly low in the talent marketplace – HR must constantly strive for marks. new and better ways of doing things. To support the future strategic needs of the Strategic thinking and analytical ability are essential HR organization, HR must find ways to expand and competencies because today’s talent challenges are improve its performance in all of these key areas. driven by complex trends such as workforce aging and global sourcing. It is HR’s job to help the organization understand and solve these complex puzzles. To keep pace with changing needs – and maintain a sustainable advantage in the talent marketplace – HR must constantly strive for new and better ways of doing things. Figure 7: Rating HR’s current competencies Rate the specific competencies that your organization’s HR function collectively demonstrates Customer focus 49% 34% 17% Teamwork and communications 46% 39% 15% Negotiation/conflict resolution 41% 39% 21% Communications 37% 42% 21% Relationship building/strategic partnership 37% 39% 25% Consulting/advisory skills 36% 40% 24% Leadership 36% 39% 25% Strategic thinking/analytical ability 30% 39% 30% Business acumen 27% 43% 30% Innovation 23% 39% 38% 0% 20% 40% 60% 80% 100% Very strong/strong Moderate Very weak/weak The talent paradox 7
  8. 8. Current efforts to fill the HR talent gap HR departments are also making a deliberate effort to In light of these new requirements, many of the hire HR staff with diverse backgrounds and business surveyed organizations are investing in business experience. Although a master’s degree in HR remains management training to help the HR staff improve its the most popular credential for success in HR, more business savvy and capabilities (see figure 8). than a third of respondents (37 %) are interested in candidates with an MBA. That’s a good start, but Deloitte believes HR needs to do more. Other key areas for learning and development HR organizations are looking for leaders with HR include: consulting skills, strategic/analytical thinking, experience in other industries (59%), business operations and conflict resolution. These kinds of skills can help HR experience (58%) and corporate management staff partner with the organization more effectively. experience (45%). In addition, a significant number are looking for leaders with experience in non-traditional HR areas, as well as in finance and IT (see figure 10). This broad experience improves an HR leader’s effectiveness and credibility when interacting with leaders from other parts of the organization. Figure 8: Current training investments for HR staff Which of the following types of training is your company investing in to develop the HR competencies needed for future success? Select all that apply Business management skills 52% HR functional skills 50% Organizational design 34% Professional certification 31% Psychology or other social sciences 20% Don’t know/not applicable 14% Other, please specify 7% 0% 10% 20% 30% 40% 50% 60% Figure 9: Desired education for HR staff How important are the following credentials to the success of professionals in your HR organization? Select up to three Master’s degree in Human Resources 46% Undergraduate degree 39% MBA or similar degree 37% Certification from an HR professional organization (CHRP, SPHR, etc) 34% Don’t know/not applicable 14% Law degree 13% Public Administration/Public Affairs degree 11% PhD 4% 0% 10% 20% 30% 40% 50% 8 The talent paradox
  9. 9. Another way for HR staff to build broader business At the moment, respondents have mixed feelings about experience and acumen is through exchanges with other such exchanges (see figure 11). People outside of HR parts of the organization. Through these direct, often shy away from HR assignments because they view hands-on experiences, HR staff learn what really matters them as dead ends. Conversely, traditional HR staff to the organization, and how to think like business sometimes lack the broad capabilities necessary to people. Just as important, they develop personal succeed on assignments within the broader relationships across the organization that help them organization. Deloitte believes this dilemma will partner more effectively in the future. gradually resolve itself as HR adjusts to its new role as a strategic partner, and as the need increases for HR staff with business experience. However, organizations can prime the pump by taking a more active role in job rotation programs and providing extra management support to help ensure participants are successful. Figure 10: Desired backgrounds for new HR leaders Which of the following backgrounds do you look for when seeking new HR leaders from inside or outside the company? Select up to three HR experience in other industries 59% Business operations experience 58% Corporate management experience 45% Communications experience 44% Non-tradional HR experience 27% Finance experience 10% IT experience 9% 0% 10% 20% 30% 40% 50% 60% Figure 11: Staff exchanges How open is your organization to facilitating interchanges of key staff between HR and other business functions? Incoming exchanges – Temporary developmental assignments of professionals from operations or other 33% 46% 21% enabling functions within the organization in HR Outgoing exchanges – Temporary developmental assignments of HR professionals in operations of other 32% 47% 21% enabling functions within the organization 0% 20% 40% 60% 80% 100% Highly enthusiastic/enthusiastic Neutral Highly averse/averse The talent paradox 9
  10. 10. Challenges for recruiting HR talent important to provide clear career paths that offer plenty Most of the surveyed organizations believe there is a of room for advancement and growth. In order for global shortage of qualified HR talent. They also worry people to view HR as a good place to start a career, that their HR staff don’t have enough opportunities for they need to see HR staff being promoted to senior professional and career development, and that recent leadership positions within and beyond the HR function. graduates do not see the HR organization as a career launch pad. Of course, HR’s image as a career launch pad starts at the top. The good news is that a significant number of To address these deep-rooted challenges, HR must be respondents believe CHROs have a real opportunity to more aggressive about recruiting top talent and win another C-level position (38%), or even to become improving its brand image in the talent marketplace. CEO (19%) (see figure 13). This is another sign of the Many of the actions HR organizations are taking to progress HR is making as a strategic function. improve their strategic role and capabilities will naturally make HR more attractive to talent. That said, it is Figure 12: Thoughts on recruiting HR talent To what extent do you agree with the following statements about recruiting HR talent? There is a global shortage of qualified HR talent 56% 30% 14% We don’t offer HR staff enough opportunities for professional and career development 46% 32% 21% Recent graduates do not see our company’s HR organization as a career launcher 44% 35% 20% HR talent is often lured away by managerial or other non-HR positions 43% 28% 29% The HR profession is perceived by many new graduates as an attractive career 32% 33% 35% Our HR function does not offer competitive compensation and benefits 31% 32% 37% We have the HR talent we need to succeed in the next three to five years 29% 31% 40% Our company is generally regarded as an employer of choice for HR staff 28% 40% 31% 0% 20% 40% 60% 80% 100% Strongly agree/agree Neutral Strongly disagree/disagree Figure 13: Career paths for CHROs What are the future career moves for the CHRO? Select all that apply CHRO of another, larger company 57% Consulting industry 55% Other C-level position 38% Academia 24% CEO 19% Don’t know/not applicable 9% Other, please specify 2% 0% 10% 20% 30% 40% 50% 60% 10 The talent paradox
  11. 11. To fulfill its expanding role, the HR function must develop new capabilities that are less administrative and more strategic. This will require HR talent with new skills and capabilities. If HR can successfully address its own talent challenges, it will be in a much stronger position to help an organization tackle talent challenges outside of the HR function.
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