Softscape Executive Brief: Five Critical Steps To Ensure Workforce Preparedness
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EXECUTIVE BRIEF
Five Critical Steps to Ensure Workforce Preparedness Softscape Survey Finds That 63% of Companies Do Not Believe Their Workforce Is Prepared To Meet Future Plans A Softscape Executive Brief October 2005
Understanding the Importance of Human Capital In a recent survey by Softscape of over 650 HR executives, 63% of companies did not believe that their workforce is adequately prepared to meet their company’s future plans. What is driving this concern? Why are corporate leaders now focusing on their workforce strategy? In this 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 continue growth.
“Improving Workforce Performance” and “Developing Employees into Capable Leaders” took the number 7 and 10 spot respectively. According to the Conference Board’s CEO Challenge 2004 Research, “stimulating innovation,” the “availability of talented managers,” and “succession planning” all ranked as a top 10 issue. In addition, a study by CFO Magazine found that 95% of CFO’s surveyed said that Human Capital was one of the top three most important issues to the success of their business.
Large, high profile consulting firms have recently studied senior executives to determine their current priorities and initiatives. Several key elements of human capital strategy have clearly emerged as a top concern across these groups.
Watson Wyatt has calculated that adopting best practices for human capital operations is directly linked to shareholder value. Companies who optimize their people processes earn significant premiums in terms of total return to shareholders over three years and in market premium, or the value that the market places on the company’s intangible assets.
In Accenture’s “Executive Issues 2005” survey, human capital issues took 4 of the top 10 most pressing issues on senior leadership’s plate. The number one and two concerns: “Attracting and retaining skilled staff” and “Changing organizational culture and employee attitudes.”
It is clear that today companies “get it.” They understand that to effectively compete and grow their businesses, they need to employ a high achieving workforce, and that human capital strategy is central to achieving this monumental goal.
Top Human Capital Issues Facing Executives • Attracting & Retaining Skilled Staff 35% (1)
• Changing Organizational Culture & Employee Attitudes 33% (2)
These compelling numbers represent a rising trend. Increasingly senior executives are recognizing the inherent need to align their workforce management practices by leveraging human capital management technologies and outsourced services.
• Improving Workforce Performance 28% (7)
• Developing Employees into Capable Leaders 26% (10)
Accenture “Executive Issues 2005, September 2005
www.softscape.com
(Number in parenthesis is overall rank)
“Talent is the core of any organization and should be optimized, leveraged and aligned for maximum results” - Dr. Jac Fitz-enz, Author of The ROI of Human Capital Management
Heightened Focus Does Not Equal Heightened Action What are companies doing to achieve workforce preparedness? What best practices are being instituted? How are companies leveraging technology to enable their human capital strategy? In the fall of 2005, Softscape surveyed over 650 HR executives at companies of all sizes. “The State of Workforce Preparedness” survey revealed that organizations are concerned about the current ability of their workforce to meet future plans, and are beginning to take steps to fix this problem. After analyzing the data by company size and then further segmenting by stated preparedness, several important trends emerged: Larger Companies Only Slightly More Prepared
With just 35% of companies planning to add staff to aid in achieving workforce preparedness, companies must do a better job of retaining and developing talent, according to the survey. As expected, 57% say that workforce planning is high on their priority list. The survey results clearly demonstrate that despite the overwhelming evidence that strong workforce practices will drive corporate value, there remains a gap between knowledge and action. Top Priorities
1,000-5,000ee Over 5,000ee
100% 90% 80% 70% 60% 50% 40% 30% 20% 10%
Empower Workforce
Connect Learning to Performance
Pay-forPerformance
Develop Employees
Attract & Retain Staff
0%
Link HR Metrics
Large companies (more than 5,000 employees) were slightly more prepared than the overall group (36% vs. 32%), and very large companies (more than 50,000 employees) also outperform the group average (39%). The majority of companies, however, remain concerned about the state of their preparedness. Pay-for-performance Instituting a pay-for-performance culture is widely praised as a key component to align the workforce with the mission of the organization. 25% of respondents listed this as a current top priority. Pay-for-performance also ranks as a future initiative for over 50% of all respondents. Performance Driven Learning Implementing training programs was cited by nearly 40% of respondents as a key initiative to ensure workforce preparedness, but still did not rank as one of respondents’ top three. However, making the connection directly between learning and performance goals to boost productivity was the majority favorite of all respondents at 71%. Streamlining Workforce Planning Under-prepared companies will still focus on connecting learning and performance. However, they are also exploring how to streamline workforce planning to hire more effectively (57% to 48%), and leverage pay-for-performance at a much higher rate (64% to 56%).
A Softscape Executive Brief
Five Critical Steps to Ensure Workforce Preparedness
Page 2 of 4
Five Steps to Success Over 60% of respondents believe their workforce is unprepared to meet future plans. Regardless of where you feel your organization is in terms of readiness, there are several things everyone should be doing now to become better prepared. The following five steps reflect the best practices of your peers and provide a roadmap to close the gap between knowledge and action.
holistic human capital management strategy that aligns the effort of the workforce with the goals of the organization. Every organization has its own set of unique needs and challenges. However, Softscape’s “State of Workforce Preparedness” survey clearly identifies several key initiatives universally underway at companies of all sizes and geographies.
Develop Integrated Strategy 64% of respondents believe that an integrated Human Capital Management strategy is very important to the success of their initiatives.
Streamline Workforce Planning The organization must have a clear vision of where it is going in order to rationalize it against the current skills of the organization and make hiring and training investments.
Top Three Initiatives to Ensure Workforce Preparedness • Link Learning & Performance to Boost Productivity 71%
• Streamline Workforce Planning to Improve Hiring Effectiveness 54%
• Leverage Pay-for-Performance to Create High Performance Culture 52%
Align Learning & Performance An integrated strategy is required to truly understand workforce skill gaps and ensure the most appropriate learning is delivered to close those gaps and drive value for the line-ofbusiness. Human Resource organizations will have to ensure that with the natural migration of talent, there is a surplus that can be recruited from within, and that skill sets and competencies are aligned to avoid a “hole” in the workforce.
Build Pay-for-Performance Culture Top-performers universally want strongly differentiated pay as a reward for continued excellence.
Measure It Understanding historical trends is critical to future success, but organizations must take that further by predicting workforce trends and modeling industry best practices.
The Time to Act is Now 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
A Softscape Executive Brief
Softscape “The State of Workforce Preparedness”, October 2005
It is critical, however, to remain flexible throughout strategy development and execution to create a system of processes that effectively match your organization and meet the needs of your business. Put into practice, the preceding five steps provide a clear roadmap for organizations to ensure workforce preparedness.
Survey Methodology Softscape surveyed over 650 senior HR executives from global companies in September 2005. The distribution of respondents was spread evenly among small companies (less than 1,000 employees), mid size companies (1,000-4,999 employees), and large enterprises (over 5,000 employees). Respondents answered several questions to gauge workforce readiness across companies, and what initiatives organizations were undertaking to ensure preparedness.
Five Critical Steps to Ensure Workforce Preparedness
Page 3 of 4
Authored By Christopher Faust Executive Vice President Global Strategy, Softscape
For More Information Contact: Softscape North America One Softscape Center 526 Boston Post Road Wayland, MA USA 01778 +1 (800) 881-2546 +1 (508) 358-1072 Softscape Europe Greenland Court 6 Greenland Place London NW1 0AP United Kingdom (+44) 207 424 4000 Softscape Asia Suite 1207-08, City Plaza One 1111 King's Road Taikoo Shing, Island East Hong Kong +852 2185 7670
About Softscape Softscape provides advanced technology and global services to help organizations better manage their people and their business. Recognized by leading industry analysts as the most comprehensive integrated people management platform, Softscape’s award-winning web-based software enables customers to enhance productivity, improve effectiveness, facilitate long-term planning, reduce operational costs, and drive organizational performance. • • • • • • • • •
Workforce Planning Talent Acquisition Workforce Performance Learning & Development Succession Planning Enterprise Compensation Management Workforce Collaboration Workforce Analysis HR Management
www.softscape.com
Softscape Confidential Reproduction without written permission is strictly prohibited. Copyright © 2006. 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.
A Softscape Executive Brief
Five Critical Steps to Ensure Workforce Preparedness
Page 4 of 4
Five Critical Steps to Ensure Workforce Preparedness Softscape Survey Finds That 63% of Companies Do Not Believe Their Workforce Is Prepared To Meet Future Plans A Softscape Executive Brief October 2005
Understanding the Importance of Human Capital In a recent survey by Softscape of over 650 HR executives, 63% of companies did not believe that their workforce is adequately prepared to meet their company’s future plans. What is driving this concern? Why are corporate leaders now focusing on their workforce strategy? In this 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 continue growth.
“Improving Workforce Performance” and “Developing Employees into Capable Leaders” took the number 7 and 10 spot respectively. According to the Conference Board’s CEO Challenge 2004 Research, “stimulating innovation,” the “availability of talented managers,” and “succession planning” all ranked as a top 10 issue. In addition, a study by CFO Magazine found that 95% of CFO’s surveyed said that Human Capital was one of the top three most important issues to the success of their business.
Large, high profile consulting firms have recently studied senior executives to determine their current priorities and initiatives. Several key elements of human capital strategy have clearly emerged as a top concern across these groups.
Watson Wyatt has calculated that adopting best practices for human capital operations is directly linked to shareholder value. Companies who optimize their people processes earn significant premiums in terms of total return to shareholders over three years and in market premium, or the value that the market places on the company’s intangible assets.
In Accenture’s “Executive Issues 2005” survey, human capital issues took 4 of the top 10 most pressing issues on senior leadership’s plate. The number one and two concerns: “Attracting and retaining skilled staff” and “Changing organizational culture and employee attitudes.”
It is clear that today companies “get it.” They understand that to effectively compete and grow their businesses, they need to employ a high achieving workforce, and that human capital strategy is central to achieving this monumental goal.
Top Human Capital Issues Facing Executives • Attracting & Retaining Skilled Staff 35% (1)
• Changing Organizational Culture & Employee Attitudes 33% (2)
These compelling numbers represent a rising trend. Increasingly senior executives are recognizing the inherent need to align their workforce management practices by leveraging human capital management technologies and outsourced services.
• Improving Workforce Performance 28% (7)
• Developing Employees into Capable Leaders 26% (10)
Accenture “Executive Issues 2005, September 2005
www.softscape.com
(Number in parenthesis is overall rank)
“Talent is the core of any organization and should be optimized, leveraged and aligned for maximum results” - Dr. Jac Fitz-enz, Author of The ROI of Human Capital Management
Heightened Focus Does Not Equal Heightened Action What are companies doing to achieve workforce preparedness? What best practices are being instituted? How are companies leveraging technology to enable their human capital strategy? In the fall of 2005, Softscape surveyed over 650 HR executives at companies of all sizes. “The State of Workforce Preparedness” survey revealed that organizations are concerned about the current ability of their workforce to meet future plans, and are beginning to take steps to fix this problem. After analyzing the data by company size and then further segmenting by stated preparedness, several important trends emerged: Larger Companies Only Slightly More Prepared
With just 35% of companies planning to add staff to aid in achieving workforce preparedness, companies must do a better job of retaining and developing talent, according to the survey. As expected, 57% say that workforce planning is high on their priority list. The survey results clearly demonstrate that despite the overwhelming evidence that strong workforce practices will drive corporate value, there remains a gap between knowledge and action. Top Priorities
1,000-5,000ee Over 5,000ee
100% 90% 80% 70% 60% 50% 40% 30% 20% 10%
Empower Workforce
Connect Learning to Performance
Pay-forPerformance
Develop Employees
Attract & Retain Staff
0%
Link HR Metrics
Large companies (more than 5,000 employees) were slightly more prepared than the overall group (36% vs. 32%), and very large companies (more than 50,000 employees) also outperform the group average (39%). The majority of companies, however, remain concerned about the state of their preparedness. Pay-for-performance Instituting a pay-for-performance culture is widely praised as a key component to align the workforce with the mission of the organization. 25% of respondents listed this as a current top priority. Pay-for-performance also ranks as a future initiative for over 50% of all respondents. Performance Driven Learning Implementing training programs was cited by nearly 40% of respondents as a key initiative to ensure workforce preparedness, but still did not rank as one of respondents’ top three. However, making the connection directly between learning and performance goals to boost productivity was the majority favorite of all respondents at 71%. Streamlining Workforce Planning Under-prepared companies will still focus on connecting learning and performance. However, they are also exploring how to streamline workforce planning to hire more effectively (57% to 48%), and leverage pay-for-performance at a much higher rate (64% to 56%).
A Softscape Executive Brief
Five Critical Steps to Ensure Workforce Preparedness
Page 2 of 4
Five Steps to Success Over 60% of respondents believe their workforce is unprepared to meet future plans. Regardless of where you feel your organization is in terms of readiness, there are several things everyone should be doing now to become better prepared. The following five steps reflect the best practices of your peers and provide a roadmap to close the gap between knowledge and action.
holistic human capital management strategy that aligns the effort of the workforce with the goals of the organization. Every organization has its own set of unique needs and challenges. However, Softscape’s “State of Workforce Preparedness” survey clearly identifies several key initiatives universally underway at companies of all sizes and geographies.
Develop Integrated Strategy 64% of respondents believe that an integrated Human Capital Management strategy is very important to the success of their initiatives.
Streamline Workforce Planning The organization must have a clear vision of where it is going in order to rationalize it against the current skills of the organization and make hiring and training investments.
Top Three Initiatives to Ensure Workforce Preparedness • Link Learning & Performance to Boost Productivity 71%
• Streamline Workforce Planning to Improve Hiring Effectiveness 54%
• Leverage Pay-for-Performance to Create High Performance Culture 52%
Align Learning & Performance An integrated strategy is required to truly understand workforce skill gaps and ensure the most appropriate learning is delivered to close those gaps and drive value for the line-ofbusiness. Human Resource organizations will have to ensure that with the natural migration of talent, there is a surplus that can be recruited from within, and that skill sets and competencies are aligned to avoid a “hole” in the workforce.
Build Pay-for-Performance Culture Top-performers universally want strongly differentiated pay as a reward for continued excellence.
Measure It Understanding historical trends is critical to future success, but organizations must take that further by predicting workforce trends and modeling industry best practices.
The Time to Act is Now 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
A Softscape Executive Brief
Softscape “The State of Workforce Preparedness”, October 2005
It is critical, however, to remain flexible throughout strategy development and execution to create a system of processes that effectively match your organization and meet the needs of your business. Put into practice, the preceding five steps provide a clear roadmap for organizations to ensure workforce preparedness.
Survey Methodology Softscape surveyed over 650 senior HR executives from global companies in September 2005. The distribution of respondents was spread evenly among small companies (less than 1,000 employees), mid size companies (1,000-4,999 employees), and large enterprises (over 5,000 employees). Respondents answered several questions to gauge workforce readiness across companies, and what initiatives organizations were undertaking to ensure preparedness.
Five Critical Steps to Ensure Workforce Preparedness
Page 3 of 4
Authored By Christopher Faust Executive Vice President Global Strategy, Softscape
For More Information Contact: Softscape North America One Softscape Center 526 Boston Post Road Wayland, MA USA 01778 +1 (800) 881-2546 +1 (508) 358-1072 Softscape Europe Greenland Court 6 Greenland Place London NW1 0AP United Kingdom (+44) 207 424 4000 Softscape Asia Suite 1207-08, City Plaza One 1111 King's Road Taikoo Shing, Island East Hong Kong +852 2185 7670
About Softscape Softscape provides advanced technology and global services to help organizations better manage their people and their business. Recognized by leading industry analysts as the most comprehensive integrated people management platform, Softscape’s award-winning web-based software enables customers to enhance productivity, improve effectiveness, facilitate long-term planning, reduce operational costs, and drive organizational performance. • • • • • • • • •
Workforce Planning Talent Acquisition Workforce Performance Learning & Development Succession Planning Enterprise Compensation Management Workforce Collaboration Workforce Analysis HR Management
www.softscape.com
Softscape Confidential Reproduction without written permission is strictly prohibited. Copyright © 2006. 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.
A Softscape Executive Brief
Five Critical Steps to Ensure Workforce Preparedness
Page 4 of 4
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