EXCLUSIVE: UK businesses struggling with leadership capability gaps, says Deloitte study
HRZone can exclusively reveal the UK results of Deloitte’s Global Human Capital Trends report, which surveys companies predominantly in the 10,000+ employee range.
Five key priorities of UK HR
- Develop leaders at all levels, close gap between hype and readiness
- Develop HR professionals into skilled business consultants
- Build passion and purpose in the workforce
- Globalise and localise the HR function
- Go from talking to delivering on Big Data
- Leadership effectiveness is the biggest priority for UK HR, up from 2013 when it was ranked fourth. Only 43% of respondents are ready to address this key area
- Since 2013, business outlook has improved considerably - 41% of UK respondents expect moderate growth in 2014 compared to 2013, compared to 35% across the EMEA region
- 14% of UK respondents will significantly increase HR investments in the next 12-18 months, compared to 12% across the EMEA region
- 3% of UK respondents said that HR and talent capabilities are under-performing, compared to 10% globally
- UK is lagging behind on talent analytics, with a capability gap of 41%, well behind the global average of 29%
- UK is behind on revisiting the talent acquisition agenda, with a capability gap of 38%, behind the global average of 26%
- 38% of respondents rated the delivery and success of their change management programmes as "adequate." Just 3% said they were excellent and 31% good
Biggest gaps in UK HR between prioritised areas for action and readiness to take action:
- Implementing talent analytics: 43%
- Revisiting talent acquisition: 38%
- Re-skilling the HR function: 36%
- Globalising and localising the HR function: 35%
- Rescuing overwhelmed employees: 35%
We spoke exclusively with David Parry, Partner in People and Programmes in Deloitte, who gave us more insight into what the trends mean for UK HR and other key lessons.
Reflections on the main findings of the survey
"It's quite interesting that the five key priorities for UK HR [see top right] are all connected, and I think what we find, the big takeaway, is that there are some major business challenges in the UK at a time when the market is beginning to pick up and the demand on business leaders is high, as businesses in the UK are looking to new markets and to the UK and needing to develop leaders and globalise the HR function.
"We find the function over the course of the last few years has had a pretty lean time, and at a time when there are lots of challenges placed on HR, it’s not as fit and ready to support those challenges as it should be, because it has suffered from a lack of investment over the last five years. It's quite an interesting challenge for the function."
Why do we need to re-skill HR professionals?
- The rise of people analytics and the need to deliver better reporting & analysis
- The skills gap that's developed due to under-investment in HR teams in recent years
- The rise of organisational effectiveness, whereby HR departments must deliver greater insight and strategy around workforce planning
- The need to transform HR into skilled business consultants equipped with business-critical capabilities
- HR must refocus attention on top talent and leadership development
Are companies concerned about the capability gaps?
"Most are concerned about the capability gaps. The challenge in the analytics space for HR is creating a business case that makes up for three or four years of under-investment. For many organisations it can be quite a big number, even just to get all the data in one place to enable you to start basic reporting, and I think at the moment what HR and the busineses are struggling with are the numbers.
"We have many debates with a lot of clients on trying to help them articulate some of the value from business cases for HR investment. This is one of the driving forces behind the uptake of cloud-based HR – good user experience, low initial cost of investment, and that is attractive to companies. But we’re in the early phases of HR’s response to the cloud, there are lots of businesses where they, for whatever reason, have security concerns around cloud. In some businesses the view of CIOs is wanting a single global instance of a multi-function environment, so HR, finance etc on one platform, and they believe that’s the right way to go."
On the capability gaps associated with today's business leaders.
"As the market picks up, the whole issue of retention and engagement is beginning to come to the fore and I think what’s also happened is that traditional retention tools around learning, development, reward etc that people deployed, they don’t seem to be working as effectively, and employees are expecting to be engaged in an tangible way with the business, the brand, the team, the leaders and line managers.
"I think that’s one of the things that came out in the leadership component of our study: leaders are lacking in the skills to really engage people effectively, and they don't have the tools. Here's an example: pay for many years has been used effectively in the financial services industry as a proxy for good management and good leadership. Now some of the curbs have come in around pay, leaders in that sector particularly are being found wanting in basic communication, motivation and leadership skills."
Global v local HR
- Talent strategies must be global in scale and local in implementation
- Create HR operating models that are agile and flexible enough to adapt to local markets
- Implement global technology platforms that provide common HR standards and tools
- Empower local teams to innovate and customise global, corporate programmes
- Redefine measures of HR success and tailor them to specific geographies
The morphing of HR into business consultants.
"Organisational effectiveness is coming to the fore, and what I mean by this is an almost in-house consulting capability around change management, organisational design and development and global program management capability as organisations begin to be much more bullish moving into new markets, restructuring and undertaking acquisitions/mergers. Increasingly organisations are looking to HR to have the capability around these key areas, which organisations have traditionally had to hire in external consultants for."
We are moving towards the age of organisational personalisation.
"If you think about HR and its roots in personnel, until fairly recently, HR has been about fairness, parity, comparability, precedent, and has been concerned very much with treating everyone equally and fairly. Going forward that will not be an appropriate strategy any more; you can't afford to treat everyone the same as far as reward and L&D is concerned.
"Companies simply don’t have the investment capability to do that, so we will start to see increasing employee segmentation and more differentiation in a number of dimensions on the employment package."
Implementing talent analytics
- Identify specific business challenges, so the value of analytics and insight can be measured and proven
- Identify roles and skill sets necessary to establish a core level of analytic capability in the HR function
- Grab control of your HR data landscape and establish clear protocols for ensuring data integrity and quality
- Make analytics user-friendly - improve the customer experience and build standard reporting into dashboards, so that core analytics team can focus on analysis and data-driven insight
We must understand individual motivation.
"Different generations have different views on what work is and what employees should want from work. There’s no doubt that there is at least one or maybe two generation gaps in organisations between the current crop of leaders and the vast majority of employees. One of the things we’re saying at Deloitte is that it’s not all about training – it’s about getting out and understanding the perspectives and some of the expectations and what therefore from a leadership perspective is appropriate to put in place in terms of engaging with people. Now that might be agile and flexible career models, and for some it's physical location.
"Rather than carving out long-term careers, people are becoming more short-term and thinking about what they want to do for the next two or three years, at which point they may go off and do something else. Understanding this is fundamental, because if you’re focusing, for example, all of your HR strategies and policies on a fundamental assumption over peoples' career and life goals, and that’s at the heart of your performance reward strategies, then you need to think differently about how you engage with people and what is motivating people. It’s not always about the career opportunities or the ambition levels and it can be as simple as ‘doing cool things and interesting work.'"
You can download the full report here [PDF, 1mb].
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Jamie Lawrence is editor of global online HR publication and community HRZone.com. He is committed to driving forward the HR agenda and making sure that HR directors have the knowledge and insight necessary to make HR felt across the whole organisation. He regularly speaks to audiences of 250+ and has interviewed key HR industry names,...