Softscape Eb State Of Talent Nation 08

EXECUTIVE BRIEF

State of the Global Talent Nation: Organizations Struggle to Ready Workforces to Meet Growth Demands

Third Annual Softscape Survey Reveals That 94% of HR Professionals Feel Their Workforces Are Still Not Adequately Prepared to Meet Future Goals A Softscape Executive Brief January 2008

Workforce Readiness Moving Slowly The demands on the rapidly changing workforce continue to increase, and the need for improved employee productivity and effectiveness has become paramount. However, as organizations are faced with increasing pressures to achieve more with less, they continue to struggle with keeping pace in measuring and preparing their workforce to meet growth plans. A recent Softscape survey of more than 250 human resources professionals from around the world finds that an unprecedented 94 percent do not feel their personnel are adequately prepared to meet their companies’ future goals. This percentage is up significantly from previous years. In 2006, only 64 percent felt their employees were unprepared. By 2007, it had reached 86 percent. The trend was spread almost evenly across geographies, with North America only slightly (17%) more concerned than EMEA and APAC. This annual survey, which Softscape has conducted during each of the past three years, shows that while there is an increasing trend toward workforce readiness, it is moving too slowly to keep up with most company’s growth plans.

2008 2007

94%

2006

86%

Not Adequately

64%

Not Adequately

Prepared

Not Adequately

Prepared

Prepared Source: Softscape - Results from the past three “State of the Global Talent Nation” surveys

The primary reason HR professionals are increasingly less confident about their workforce readiness lies in their organizations’ immediate need to improve a variety of HR processes. More than half (55%) felt unconfident that their organizations effectively manage their HR processes. Given the misgivings about preparedness, it comes as no surprise that the top concerns facing organizations today are all related to employee retention, development, and performance.

Top Concerns

Source: Softscape 2008 “State of the Global Talent Nation” survey

These workforce concerns facing HR professionals include retaining skilled talent (24%), finding top talent (22%), developing future leaders (21%), impacting workforce performance (11%), motivating employees (10%), and reducing overall HR costs (4%). Some of the global trends fueling the need for change in how organizations manage their workforce include the tightening labor market worldwide, a sharper focus on workforce productivity, continued globalization, a move to shared services, and changing workforce demographics.

Key Findings

Retention Development Performance

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Workforce productivity is a new focus as organizations seek to do more with less while trying to contain costs.

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Individual roles are becoming more multi-functional, and are requiring ongoing skill development and real-time learning and collaboration.

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Whether they are expanding or downsizing, companies are seeking to leverage centralized shared services to support global initiatives.

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As the more tactical HR functions are commoditized, strategic HR functions are becoming more integrated and further outsourced.

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Productivity gains and cost reductions are being realized through systematic focus on improving talent management processes.

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Changing workforce demographics are forcing organizations to deploy new approaches to how they plan, hire, develop, and retain their staffs.

Ongoing business transformation is also prompting organizations to look for ways to rapidly evolve their workforce to achieve a new level of productivity and effectiveness. Leading global organizations are turning to integrated people management technology, with business intelligence measurement capabilities at its core, to better drive performance.

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© Softscape 2008, “State of the Global Talent Nation”

Talent Acquisition Improving hiring effectiveness has become a top priority for organizations as the global labor market tightens. Nearly 92 percent of organizations say improving quality of hire is a top priority for their executive teams. It is important to note that senior management at many organizations is increasingly more aware of workforce-related issues and their impact on the overall business than in previous years as human capital management (HCM) is now a concern with boards of directors. Many organizations are leveraging performance-based goal setting during their on-boarding process (48%), with the concepts for building performance-based cultures being embraced across many different types of companies. Competencies are also coming back into vogue as companies realize the value of defining what it takes to be successful in a particular role. More organizations are linking competencies to hiring processes to improve the quality of hire. Forty-nine percent of respondents currently have a paper-based competency process, while 32 percent are implementing a software-based solution. Improving the quality of hire with candidate assessments is still not utilized by many organizations (43%). Of those who do use pre-hire assessments, 23 percent are still using a manual paper-based assessment process, which prevents real-time reporting. Thirty-five percent have moved to software-based candidate assessments.

92% Improving Quality of Hire Top Priority for Executives

81% Linking Competencies to Hiring Process

More companies are measuring hiring effectiveness in order to impact and predict productivity gains. Speed (50%) and cost (47%) of hire are still the top priorities for organizations measuring hiring effectiveness, while post-hire performance (32%) and productivity (11%) assessments are gaining in popularity.

Assessment Improving workforce productivity and performance remain top issues for senior executives, with 66 percent saying that they are very important. However, organizations remain ineffectively paper-based despite the increased importance on improving performance and productivity. Sixty-six percent of organizations still use an inefficient paper-based process to communicate and align organizational goals to their employees and manage an overall annual review process. Seven percent still do not, and do not plan to, link to or communicate overall corporate goals. Fifty-two percent have successfully deployed pay-for-performance policies and processes. The concepts of pay-for-performance are being deployed, but they are primarily paper-based, and often only for executive management. Finding new ways to increase employee engagement are also on the rise as organizations seek to improve overall performance. At the top of the list for employee engagement are: •

Challenging work (29%)

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Constant learning opportunities (25%)

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Empowerment or autonomy (20%)

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Annual salary increases (15%)

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Non-monetary recognition (11%)

66% Improving Workforce Productivity Top Priority for Executives

52% Successfully Deployed Pay-for-performance Processes

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Development Learning and development are becoming more important to most organizations. Seventy-six percent say learning and development are high priorities for their executive management teams. Unfortunately, development still tends to be underfunded by many organizations. Most HR professionals (81%) say the lack of regular employee development opportunities is impacting overall employee retention. At the same time, performance-driven learning is becoming the de-facto norm, as performance appraisals remain the primary trigger for employee development (89%). However, many organizations are struggling to successfully implement processes that link performance and development (45% implemented successfully, 44% unsuccessful). The struggle is due in part to many still using manual processes (62%). Measurement of the effectiveness of development is helping and is increasingly important, especially in determining ROI on training expenditures (69%). Companies are seeking to better understand their overall organizational skill gaps in order to support future needs and succession plans, but the majority still lacks an effective means to warehouse an overall skills inventory (65%). To get more productivity out of fewer resources, there is a growing trend toward multifunctional roles and shared services (41%). Many HR professionals (35%) indicate that the majority of their employees have complex multi-function roles. This is also driving the need for more real-time employee development.

Management

76% Learning & Development Top Priority for Executives

89% Implementing Performance-Driven Learning

69% Measuring Training ROI

Investments in HR technology are increasing as organizations seek to solve key business challenges, including: •

Scattered information across silos of files and systems that prevents reporting (18%)

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The lack of a system to accurately define and track talent management functions (17%)

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Inconsistent execution across divisions and departments (16%)

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A lack of total process management (16%)

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Limited visibility into skills inventory (10%)

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Limited alignment between employees and organizational objectives (10%)

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A lack of effectiveness in reaching performance targets (5%)

As a result, strategic HR functions are becoming more integrated and increasingly outsourced (41%). This includes functions for performance, compensation, succession, learning, and recruiting. HR professionals want to access real-time metric-based reports focused on retention and productivity. Critical reports for organizations include:

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Training’s impact on performance (13%)

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Employee productivity improvement rates (11%)

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Time to productivity (10%)

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Cost per hire (9%)

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Compensation to performance ratios (9%)

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Time to fill (8%)

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Promotions by performance rating (8%)

41% Integrating Multiple HR Functions

“Value is derived from real-time results. When technology makes employees more effective, organizations see it in their bottom-line.”

- Dave Watkins, CEO & Co-founder, Softscape

Global Trends Fueling the Need for Change There is an invariable need for organizations to expedite new and improved internal processes to support the changing landscape of global influences on their businesses.

Tightening Labor Market Competition for high-performing talent is increasing as fewer skilled workers enter the market. Based on baby boomer retirement and average university graduate statistics, there are approximately nine percent fewer workers starting careers than those leaving the workforce through 2011, while overall global unemployment has come down 17 percent since 2003. Salary costs are rising as new entrants are demanding higher pay. At the same time, employer skill expectations are higher, and they are not willing to pay more for fewer skills. All of this is requiring companies to apply new approaches to how they attract and retain top talent.

Workforce Productivity Improvement Making the workforce more productive is another driving force as organizations continue to seek ways to do more with less while trying to contain costs. Employees are working longer hours and performing multiple functions to meet productivity constraints. But the value to pay ratio is not always equal to overall productivity. Organizations are realizing they need to better align their workforces with company objectives and link compensation and rewards to specific individual performance. Equally important is the need to groom and retain the next generation of an organization’s leaders.

Globalization As organizations continue to expand, they require globally distributed teams and attract the best talent, regardless of location. Resource capabilities, availabilities, and interactions have to be seen and managed from a higher level and take into consideration the cultural and value-based differences across diverse teams. Increased pressures to meet different compliance requirements in various regions is also forcing companies to look for better ways to manage their employees in a more unified fashion. Global coordination requires the blending of diverse skill sets, and organizations need to be able to plan and forecast resource requirements based on current deficiencies. This means bringing skills to challenges, not challenges to skills.

Centralized Shared Services The trend toward shared services is also changing how organizations manage their total workforce. Economies of scale are changing as large organizations trim resources and spin-off divisions to become more agile, and as mid-sized companies grow rapidly across diverse regions. Companies seek to align their best practices, while keeping costs down, by sharing services. Paramount is getting global teams to collaborate more effectively by leveraging and pooling the right resources and skills sets worldwide. This requires organizations to adopt a single source of accurate and timely workforce information to better plan needs, manage costs, and make more informed strategic decisions.

Changing Demographics Finally, there has been a dramatic impact on workforce demographics as skill bases change across different age groups and geographies. Many aging workers are working longer into their careers. Younger workers are expecting more, including instantly accessible information. Both are creating a diverse workforce motivated by very different needs. This has changed how organizations plan and hire. Organizations are also shifting how they manage skills inventory, collaboration, and knowledge sharing. And they require an infrastructure to support it. There is even a greater focus on how to hire from within and leveraging succession planning as the primary process for identifying development needs. Each of these trends is creating the need for change in how organizations plan, acquire, align, develop, reward, collaborate, manage, and analyze their workforces. Human resource professionals clearly have a much more strategic function in their business as they are chartered with addressing these challenges.

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Bottom-Line Impact The connection between shareholder value and workforce effectiveness has clearly reached the executive suite. Organizations today are asking their HR leadership to define and implement a holistic human capital management strategy that aligns the efforts of the workforce with the goals of the organization. Overall, human capital management is viewed today as an inherent need driven by executive and board level priorities. An integrated approach to people management technology is key to building a superior corporate culture based on performance and accountability. These new corporate practices are changing the landscape of management and development from process-driven to purpose-driven. In an era of global expansion, technological commoditization, and a shrinking labor pool, it is ever more critical to rely on the skills of the workforce to drive competitive advantage and continued growth. Every organization has its own set of unique requirements and challenges. However, Softscape’s research clearly identifies several key initiatives universally underway at companies of all sizes and geographies. The top six technology initiatives include:

Larger companies only slightly more prepared

Source: Softscape 2008 “State of the Global Talent Nation” survey

When analyzing the survey data by company size and further segmenting it by stated preparedness, an additional trend emerges: larger companies are only slightly more prepared. The workforces of large enterprises (more than 5,000 employees) are still only slightly more prepared than the overall group (42% to 38%). This trend has remained consistent for the past three years, but the majority of companies remain concerned about the state of their overall readiness.

Executive Commitment The results of this survey point to another important trend: senior executives are increasingly recognizing the need to align their people management processes by leveraging human capital technologies and outsourced services. Executives clearly understand that to effectively compete and grow their businesses, they need to employ a high-achieving workforce, and that human capital management technology is central to achieving this goal. 6

Retention, development, and measurement are key business drivers for implementing talent management technology in the coming year, according to survey respondents. The Softscape survey also revealed that organizations are concerned about the current ability of their workforces to meet future plans and are beginning to take steps to fix this problem.

Road Map to Success Regardless of where an organization is in terms of readiness, there are several steps that should be done to become better prepared to meet future goals.

1. Redefine Processes First The key to success is clearly defining processes and how they will cross-sect other processes, departments, business units, and divisions. A detailed initial analysis prior to implementing technology will help you map the technology to specific business requirements, not just replace an inefficient manual process. Also consider re-engineering certain processes to achieve greater success with the technology deployment.

2. Implement an Integrated Technology Platform Avoid siloed implementations that fragment the very data that will provide detailed reports and analyses. Integration should also include system of record for core employee data. Consider the benefits of going beyond a simple connection to an HRMS, and work to fully integrate all other employee-related information into a single system including competencies, skills, experience, certifications, performance and compensation history, career goals, development plans, employee records, and other profile data.

Top Ten Business Drivers For Implementing HCM Technology

► Improving Retention ► Leadership Development ► Operational Effectiveness ► Employee Motivation ► Workforce Performance ► Cost Reductions ► Risk Mitigation

3. Communicate From the Top Down

► Paper-Process Reduction

When rolling out new technology, an organization should motivate company-wide participation in all initiatives leading from the top down. If the CEO uses the technology, everyone will use it. Also, regular communication before, during, and after rollout is integral. Like all major technology deployments, involve all constituents and make them a part of the process.

► Compliance ► Growth & Value

4. Measure It Measurement is the first step to improvement. One of the most important benefits of implementing an integrated HCM strategy, is the plethora of reports and analyses that can come when all data is inherently connected. Consider not just standard reporting needs, but also additional analytics that can offer more detailed analysis. Analytics is a sometimes misused word, but when implemented correctly will offer a new level of depth and insight into all aspects of people management. Understanding historical trends is also critical to future success, but organizations must take that further by predicting workforce trends and modeling industry best practices. It is critical to remain flexible throughout strategy development and execution to create a system of human capital management processes that effectively match the organization and meet the needs of the business now and into the future. When implemented successfully, people management technology can offer the organization the means to better manage the business in real time.

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“It’s up to human resources professionals to break the perception of being in a supporting role and demonstrate just how powerful workforce analysis can be to a business’s bottom-line.” - Christopher Faust, EVP Global Strategy Softscape

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Source: Softscape 2008 “State of the Global Talent Nation” survey, Top reporting needs

Survey Methodology Softscape surveyed more than 250 HR professionals from around the world in the fall of 2007. The distribution of respondents was spread almost evenly across a variety of industries and among small companies (less than 1,500 employees), mid-size companies (1,500-5,000 employees), and enterprises (more than 5,000 employees). Respondents answered questions about workforce skill readiness, business drivers for talent management, and what key initiatives are being undertaken to ensure preparedness. The results are organized into the following categories: talent acquisition, assessment, development, and management.

State of the Global Talent Nation Report 2008

Authored By Christopher Faust, Executive Vice President Global Strategy, Softscape For more information, contact [email protected]

About Softscape Softscape is the global leader in integrated people management software that enables organizations to more effectively drive their business performance. Recognized by industry analysts as the most comprehensive strategic human capital management (HCM) solution, Softscape provides complete employee lifecycle management, including a core system of record, in a single, integrated platform for improved business intelligence. The company offers customers of all sizes and in all industries the most flexibility and choice with multiple purchase, configuration, and deployment options. For more than a decade, Softscape has helped millions of workers across 156 countries be more successful at their jobs while contributing to bottom-line results. Softscape’s customers represent Fortune 500/Global 2000, mid-market, and government organizations, including Procter & Gamble, Barclays, AstraZeneca, Seagate, GKN, Edcon, LandAmerica, and the U.S. Department of Homeland Security. Softscape is based in Massachusetts with offices in London, Sydney, New York City, Chicago, San Francisco, Hartford, Washington, D.C., Bangkok, Hong Kong, and Johannesburg. www.softscape.com Copyright © 2008. All Rights Reserved. Reproduction without written permission is strictly prohibited. The Softscape logos and referenced products are either trademarks or registered trademarks of Softscape, Inc. All other brand and product names may be trademarks or registered trademarks of their respective holders. 08_1211ls

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