Key Priorities for the HR Profession Through 2015: Are You Ready?

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1 SHRM Survey Brief Key Priorities for the HR Profession Through 2015: Are You Ready? Data Highlights The vast majority of HR professionals believe that HR serves as a partner (has partial or shared responsibility) in managing change and cultural transformation in organizations. Managing talent and improving leadership development are the most critical HR challenges facing organizations today and projected for the future, yet more than six out of 10 HR professionals feel that their organizations are doing an average job in these areas. Managing demographics and managing globalization will take on a higher priority for organizations in the future compared with Currently, most organizations do not have staff dedicated to managing demographics. A Publication of the Society for Human Resource Management HR professionals have important roles and responsibilities in addressing human capital issues within their organizations. They are best able to support their organizations business goals related to human capital initiatives when they are viewed as a strategic partner or owner in decisions and are successful at aligning their work with the organization s overall business strategy. As will be discussed later, HR more often serves as a partner than as an owner in the areas of talent management, leadership development, managing demographics, recruiting and staffing, and change and cultural transformation at their organizations the five areas projected as most critical for organizations in As shown in this research, more than six out of 10 HR professionals agreed that their head of HR was strongly involved in business decisions at the board level (64% gave a favorable response, 26% gave a neutral response). Similarly, when asked if their HR department was capable of aligning its work with the organization s overall business strategy, most respondents were in agreement (62% Table 1 What Are the Priorities for the HR Profession? gave a favorable response, while 31% gave a neutral response). 1 HR departments/functions are likely to be less effective in meeting human capital challenges unless they have a presence at the board level and align their work with business strategy. To gain a better understanding of the human capital challenges that confront organizations, HR professionals were asked to identify priorities for their organizations now (2007) and in the future ( ). As shown in Table 1, managing talent and improving leadership development ranked as the most critical HR issues facing organizations by approximately one-half of respondents each. Managing demographics, delivering on recruiting and staffing, and managing change and cultural transformation were the other leading HR challenges facing organizations. In contrast, the least critical issues reported were providing shared services and outsourcing HR and managing corporate social responsibility. Today (n = 517) Future (n = 504) Managing talent 48% (2) 52% (1) Improving leadership development 52% (1) 45% (2) Managing demographics 16% 34% (3) Delivering on recruiting and staffing 46% (3) 33% (4) Managing change and cultural transformation 34% (4) 31% (5) Enhancing employee commitment 28% (5) 26% Transforming HR into a strategic partner 25% 25% Improving performance management and rewards 21% 21% Managing globalization 9% 20% Managing work/life balance 23% 20% Managing diversity 20% 19% Becoming a learning organization 10% 15% Measuring HR and employee performance 14% 15% Mastering HR processes 15% 10% Restructuring the organization 16% 9% Providing shared services and outsourcing HR 7% 8% Managing corporate social responsibility 5% 6% Note: Table represents U.S. respondents. Percentages do not total to 100% as respondents were allowed multiple choices. Respondents were asked to select the four most important topics in 2007 and in the future ( ). Data sorted in descending order by the data.

2 2 SHRM Survey Brief Although similar challenges were reported for 2007 and , there were some notable differences. For example, compared with 2007, more than twice as many respondents believed that managing demographics and managing globalization will be key issues in Delivering on recruiting and staffing is expected to take on a lower priority for organizations in the future than it does today (33% compared with 46%). Based on their selections for key priorities in , respondents were then asked a series of follow-up questions. The top five future HR challenges for organizations are outlined below. 1. Managing Talent For the purposes of the study, managing talent was defined as the means used to attract, recruit, retain, identify and develop highpotential people. This topic ranked as the most critical HR topic facing organizations in the future. Laura Lea Clinton, GPHR, director of human resources management for CARE USA and a member of SHRM s Employee Relations Special Expertise Panel concurs: A major issue for organizations, as they continue to evolve, is retention the whole concept of talent management identifying who the talent is within the organization and focusing effort and energy on developing, engaging and retaining them. In her opinion, the focus of these efforts in the past has been on rehabilitating poor performers the trend will reverse to a focus on the continued engagement and retention of the top performers. Although talent management topped the list, it is not a particular area of strength for many organizations. When asked how good their organization was at talent management, the vast majority of responses were neutral (64%), while 30% of the responses were unfavorable and 6% were favorable. More than four out of 10 respondents said that their organization did not have a designated person, people or unit(s) for managing talent. HR most often had a shared or partial responsibility (partner) (55%) than a primary responsibility (owner) (33%) in this effort. These data are illustrated in Figure 1 and Table 2. Talent management is clearly at the forefront of HR professionals minds; however, this matter is complex due to a number of internal and external forces that are at play. When developing talent management strategies and with workforce planning in general, it is important for HR professionals to be aware of the needs and composition of their workforce, as well as environmental factors and trends. The strategies that are successful in attracting and retaining employees, for example, can vary widely depending on individual characteristics (gender, age, years in the workforce, etc.) and organizational demographics (organization staff size, industry, sector, etc.). External forces such as emerging marketplaces, advances in technology, increased global competition, changing demographics and economic conditions not only affect the success of talent management initiatives but also influence the overall success of the organization. Figure 1 How Good is your Organization in the Areas of? Managing talent (n = 261) 30% 64% 6% Improving leadership development (n = 225) 27% 64% 9% Managing demographics (n = 172) 23% 70% 8% Delivering on recruiting and staffing (n = 166) 12% 69% 18% Managing change and cultural transformation (n = 158) 21% 70% 8% Unfavorable Neutral Favorable Note: Figure represents the top five most important topics for , U.S. respondents only. For the purposes of the analysis, the following ratings were recorded: unfavorable = 1 significant need for improvement and 2; neutral = 3 and 4; favorable = 5 and 6 best practice company. Percentages may not total to 100% due to rounding. Data sorted in descending order by the most important topics for

3 Key Priorities for the HR Profession Through Table 2 Who Are the Individuals Responsible for? Designated Person, People or Unit(s) HR s Role Yes No None Partial or Shared Responsibility (Partner) Primary Responsibility (Owner) Managing talent 58% 42% 12% 55% 33% Improving leadership development 64% 36% 9% 53% 38% Managing demographics 25% 75% 23% 46% 30% Delivering on recruiting and staffing Managing change and cultural transformation 81% 19% 4% 52% 44% 34% 66% 13% 69% 18% Note: Table represents the top five most important topics for , U.S. respondents only. Percentages may not total to 100% due to rounding. Data sorted in descending order by the most important topics for With an increasingly diverse, competitive and shrinking labor market, organizations will need to maximize and invest in the available labor pool, make the best use of the contributions of employees, and find creative ways to recruit, retain and develop talent. In response to talent management challenges, respondents frequently reported that HR is currently sourcing talented employees locally and hiring talented employees from competitors. To meet future challenges, HR professionals most often said that their organizations have plans to develop tailored career tracks and specific compensation schemes for talented people (see Tables 3 and 4). 2. Improving Leadership Development The phrase improving leadership development encompassed influencing, motivating and enabling others to contribute to the achievement of specific goals. Leadership development emerged as the second greatest challenge likely to confront organizations in the future. Similar to talent management, leadership development was an area in which most of the respondents felt that their organization was doing neither well nor poorly (Figure 1). Building leadership capability will be important for organizations as they prepare the next generation of leaders to succeed those who will soon be moving into retirement. As organizations compete with and expand into emerging markets, global leadership capabilities will also need to be cultivated. Lewis Benavides, SPHR, associate vice president for human resources at Texas Woman s University and a member of SHRM s Workplace Diversity Special Expertise Panel, was not surprised by these findings. According to Benavides, so few organizations do [Leadership development is] costly and time consuming, thus there is a tendency to just go out and find leadership that has already been developed. Lewis Benavides, SPHR, associate vice president for human resources, Texas Woman s University it [leadership development] well. It s costly and time consuming, thus there is a tendency to just go out and find leadership that has already been developed this is bad long-term strategy Additionally, so few U.S. organizations have their executives exposed in global or emerging market countries, thus they lack that international perspective in leadership development. In order for leadership practices to be successful, there needs to be a strategic business and senior-level commitment to leadership development. As reflected in Table 2, more than six out of 10 HR professionals said that there was a person designated (64%) to improving leadership development within their organization, and again, HR typically serves as a partner (53%) than as an owner (38%) in this area. As the importance of leadership grows, HR professionals are likely to become even more involved in integrating leadership development into every aspect of the business.

4 4 SHRM Survey Brief Given the recent economic downturn that has decimated most retirement plans, organizations need not worry about a mass exodus of Baby Boomers from their workforce as many will opt to continue working out of financial necessity. Fernán R. Cepero, PHR, vice president of human resources, The YMCA of Greater Rochester The largest proportion of HR professionals reported that their organizations were using or planning to use internal coaching from top management in an effort to strengthen employees leadership skills. Coaching is a training method that organizations can use to retain the knowledge of more experienced or skilled workers, particularly Baby Boomers (those born between 1946 and 1964), so that younger employees can benefit from their knowledge and experience. Organizations are also currently measuring or planning to measure leadership skills through 360 feedback, a method for collecting perceptions about an individual s job performance and the impact of that behavior in the workplace from a variety of sources. By increasing the number of evaluations, a more balanced and comprehensive view of an individual s overall job performance is possible (see Tables 3 and 4). 3. Managing Demographics (Aging Workforce) Managing demographics was defined as adapting to a shifting age structure and the resulting loss in productivity and capacity. This was the third greatest future challenge for organizations, as reported by more than one-third of HR professionals (34%). By 2008, it has been projected that more than 62 million workers (over 40% of the labor force) will be 45 and older, and 37 million of these will be between the ages of 45 and 54. The number of young workers, 16 to 24 years old, is also projected to increase by 15%, but the number of those in the year old range will actually decline by about 7%. 2 According to the Bureau of Labor Statistics (BLS), once the Baby Boomers exit the last years of the prime age group (ages of 25 to 54) and enter the 55 and older age group, with participation rates roughly half that of the prime age group, the overall la bor force participation rate will decline significantly. 3 Coupled with lower participation rates among older groups are concerns that new workforce entrants lack a number of skills necessary to job success 4 and that Generation X (those born between 1965 and 1980) and Y (those born after 1981) workers are not (or have not been) prepared to assume leadership roles. As such, organizations have become increasingly concerned with preserving the critical knowledge of older workers and boosting skill levels of younger workers. As Fernán R. Cepero, PHR, vice president of human resources at The YMCA of Greater Rochester, points out, Given the recent economic downturn that has decimated most retirement plans, organizations need not worry about a mass exodus of Baby Boomers from their workforce as many will opt to continue working out of financial necessity. Table 3 What Actions Have Organizations Taken in Response to Current HR Challenges? Challenges Actions % Managing talent Improving leadership development Managing demographics: managing future capacity loss due to aging workforce Managing demographics: managing an aging workforce Delivering on recruiting and staffing Managing change and cultural transformation Source talented employees locally Hire talented employees from competitors Use internal coaching from top management Measure leadership skills through 360 feedback Implement health management and wellness programs 75% 58% 58% 49% 64% Use external recruiting 57% Invest in training to enhance employee skill levels 80% Manage pension liabilities 47% Create an Internet presence/ home page Identify recruiting needs precisely 62% 59% Ensure visible leadership 79% Communicate a vision for action 74% Note: Table represents the top two actions HR took in 2007 in response to managing talent, improving leadership development, managing demographics, delivering on recruiting and staffing, and managing change and cultural transformation (top five most important topics for ), U.S. respondents only.

5 Key Priorities for the HR Profession Through Table 4 What Actions Are Organizations Planning to Take in Response to Future HR Challenges? Challenges Actions % Managing talent Develop tailored career tracks 73% Improving leadership development Managing demographics: managing future capacity loss due to aging workforce Managing demographics: managing an aging workforce Delivering on recruiting and staffing Managing change and cultural transformation Develop specific compensation schemes for talented people Use internal coaching from top management Measure leadership skills through 360 feedback Conduct internal training and qualify people for other job groups than their own (cross-job qualification) Offer employment options to attract or retain semi-retired or retired workers Invest in training to enhance employee skill levels Train employees to respond to generational differences 65% Cepero calls for a pragmatic approach to both knowledge management and mentoring. It is imperative that the critical knowledge of older workers be preserved by human resources who will now have a new role that of competency steward for their companies. Aligned with formal mentoring programs, human resources will be responsible for managing knowledge transfer processes in their respective organizations. This knowledge transfer will seek to organize, create, capture and distribute knowledge and ensure its availability for a new generation of workers. 70% 64% 66% 66% 79% 60% Identify recruiting needs precisely 67% Control recruiting and staffing processes more closely 67% Communicate a vision for action 83% Close gaps in capabilities through assessment, training and staffing 83% Note: Table represents the top two actions HR is planning to take for in response to managing talent, improving leadership development, managing demographics, delivering on recruiting and staffing, and managing change and cultural transformation (top five most important topics for ), U.S. respondents only. Although managing demographics ranked among the top future challenges, organizations are doing mediocre in this area. Seven out of 10 respondents believed that their organization was doing an average job at managing demographics (Figure 1). Among the five topics, managing demographics was the one area in which organizations most often did not have a designated person (75%). As mentioned earlier, this area was deemed less important in 2007 than in , which may partially explain why a number of organizations do not currently have resources allocated to this issue. This does raise some concern that organizations are not prepared or have not taken the necessary steps to prepare for a future loss in productivity and capacity due an aging workforce. Although nearly one-fourth of respondents reported that HR did not have a role in this area (23%), more than three-fourths said that HR was either a partner or an owner (76%). These data are illustrated in Table 2. As Baby Boomers prepare to exit the workforce and the next generation enters the workforce, organizations will need to leverage and incorporate the demographics into their strategies. Strategies will need to take into account the different values, needs, preferences, and work and learning styles of Baby Boomer and Generation X and Y workers. To manage future capacity loss due to an aging workforce, most HR professionals indicated that their organizations have already implemented health management and wellness programs. In the future, however, the focus will be on conducting internal training and qualifying people for other job groups than their own (cross-job qualification) and offering employment options to attract or retain semi-retired or retired workers. Investing in training to enhance employee skill levels in an effort to manage an aging workforce was the top action reported for 2007 and by nearly eight out of 10 respondents each (see Tables 3 and 4). 4. Delivering on Recruiting and Staffing Delivering on recruiting and staffing entails sourcing and attracting sufficient human resources. This includes all processes and systems designed to find, recruit, integrate, develop and retain the right employees for the right positions. Overall, one-third of respondents believed that delivering on recruiting and staffing will be a key issue for their organizations in the future, placing it fourth on the list. When asked how successful their organization was in this particular area, the vast majority of responses were neither favorable nor unfavorable (Figure 1). Recruiting and staffing was the one area, out of the five most critical HR issues, in which the vast majority of organizations have a designated person (81%). As this is an area traditionally within HR s domain, approximately one-half of respondents each cited HR as the partner (52%) or owner (44%). These data are depicted in Table 2. Developing a recruiting strategy that includes identifying recruiting needs is an essential HR initiative to ensure that orga-

6 6 SHRM Survey Brief nizations have the right complement of people in order to meet business needs. For example, this can include anticipating human capital needs, conducting a gap analysis between the current and future staff, and determining how to best meet these needs. Most HR professionals indicated that their organizations have identified (59%) and will continue to identify recruiting needs in the future (67%) as part of their response to recruiting and staffing challenges. Another popular action in response to current recruiting and staffing challenges was creating an Internet presence/home page. Recruiting has changed dramatically over the past decade. As the data indicate and other studies 5 have shown, organizations are increasingly relying on various e-recruitment technologies to bring greater efficiency and productivity to the recruitment process. Creating an Internet presence/home page allows the organization to share information about the organization and job openings with a wide audience. Ideally, it would also simplify the job application process for job-seekers. In addition to identifying recruiting needs precisely, there will be an emphasis on controlling recruiting and staffing processes more closely in the future. These data are reflected in Tables 3 and 4. To help control these processes, organizations have employed applicant tracking systems, which have been shown to improve the efficiency of tracking candidates, managing resumes and managing the organization s recruiting efforts in general Managing Change and Cultural Transformation Rounding off the list was managing change and cultural transformation: more than three out of 10 respondents (31%) predicted that this topic will be important in the future. Change management is the systematic approach and application of knowledge, tools and resources to deal with change. It means defining and adopting corporate strategies, structures, procedures and technologies to deal with changes in external conditions and the business environment. 7 Operational changes in response to new legislation, changing economic conditions or national/international events are examples of organizational changes. Under the leadership of the new U.S. President and Congress in January 2009, we are likely to see some changes in employment laws and regulations with which employers would have to comply. Similarly, Melanie Young, vice president of corporate HR and services at Arrow Electronics, expressed concerned with government regulations as they relate to localization such as taxes and labor laws and their impact on HR. Having a global standard or policy and clear direction on localization is hard. A lot of energy and inefficiency takes place as there is not always a clear description of how to handle localization, and it will happen more and more with the competitive labor market for skilled resources. Having a global standard or policy and clear direction on localization is hard. A lot of energy and inefficiency takes place as there is not always a clear description of how to handle localization. Melanie Young, vice president of corporate HR and services, Arrow Electronics Similar to the other top challenges, most organizations were doing an average job of managing change and cultural transformation (Figure 1). Among the top five challenges, managing change and cultural transformation was the one area in which HR was most likely to be the partner (69%), yet most organizations did not have a designated person (66%). Rather than one person/group being in charge of this area, it is likely that it s an informal arrangement where many individuals share this responsibility. These data are illustrated in Table 2. Change management leaders must promote awareness and understanding of the change initiative to influence employees willingness to embrace the change. HR s role during major organizational changes most often includes assisting employees in the transition through the process and coordinating meetings and communications about the change and related initiatives. 8 As shown in Table 3, nearly three-fourths or more of the respondents each indicated that their organizations had taken steps to ensure visible leadership and to communicate a vision for action in response to current change and cultural transformation challenges. Change initiatives always require the buy-in of managers at all levels, beginning with senior management, who sets the business strategy, down through the entire organization. Likewise, the most

7 Key Priorities for the HR Profession Through popular actions that organizations plan to take in the future are communicating a vision for action and closing gaps in capabilities through assessment, training and staffing. These data are illustrated in Table 4. SHRM members can download the survey brief and executive summary of the worldwide study, titled Creating People Advantage How to Address HR Challenges Worldwide Through 2015, free of charge at Methodology In October 2007, the World Federation of Personnel Management Associations (WFPMA) and Boston Consulting Group (BCG) conducted a worldwide study to identify and address key HR priorities. SHRM partnered with WFPMA and BCG in the collection of the data for the U.S. portion of the 83 countries and markets represented in the study. This survey brief presents the key U.S. findings from the study. An that included a link to the online survey was sent to 4,000 randomly selected SHRM members (directors and above) from organizations with 1,000 or more employees. Members who were students, consultants, academics, located internationally or had no address on file were excluded from the sampling frame. Participants were also asked to forward the survey link to non-hr professionals to obtain the perspectives of this group. Of these, 3,595 s were successfully delivered, and 526 individuals responded, yielding a response rate of 15%. Of the 526 individuals who responded to the survey, 28 responses were submitted by non-hr professionals. The survey was online for a period of three weeks, and several reminders, a fax and a phone call reminder were sent to nonrespondents in an effort to increase response rates. Endnotes 1 These data are not depicted in a table or figure. 2 U.S. Department of Labor Employment and Training Administration. (n.d.) Aging baby boomers in a new workforce development system. Retrieved from /Seniors/other_docs/AgingBoomers.pdf 3 Toossi, M. (2007, November). Labor force projections to 2016: More workers in their golden years. Monthly Labor Review. Retrieved from /art3full.pdf. 4 Casner-Lotto, J., & Barrington, L. (2006). Are they really ready to work? United States: The Conference Board, Corporate Voices for Working Families, Partnership for 21st Century Skills and Society for Human Resource Management. 5 Society for Human Resource Management. (2007) advances in e-recruiting: Leveraging the.jobs domain: A survey report by SHRM. Alexandria, VA: Author. 6 Ibid. 7 Society for Human Resource Management. (n.d.). SHRM HR glossary of terms. Retrieved October 3, 2008, from 8 Benedict, A. (2007). SHRM 2007 change management survey report. Alexandria, VA: Society for Human Resource Management.

8 8 SHRM Survey Brief About SHRM The Society for Human Resource Management (SHRM) is the world s largest association devoted to human resource management. Representing more than 250,000 members in over 140 countries, the Society serves the needs of HR professionals and advances the interests of the HR profession. Founded in 1948, SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China and India. Visit SHRM Online at Media Contact Julie Malveaux (703) USA SHRM 1800 Duke Street Alexandria, VA Phone: (800) China SHRM Corporation Beijing, China Unit 601, Level 6, Tower W2, Oriental Plaza, No.1 East Chang An Avenue, Dong Cheng District, Beijing, , China Tel: Fax: India Strategic Human Resource Management India, Private Limited Raheja. Centre Point, 294 CST Road, 2nd level #213 Kalina Santacruz. Mumbai , India Tel: Fax: Project Team Project leader: Jessica Frincke, survey research analyst Project contributors: Evren Esen, manager, survey program Jennifer Schramm, manager, workplace trends and forecasting Steve Williams, Ph.D., SPHR, director, research External contributors: Kristi Acuff, SPHR, VP and chief HR officer, Alyeska Pipeline Services Company Thomas Belker, SPHR, GPHR, managing director, human resources, OBI Group, and member of SHRM s Global Special Expertise Panel Lewis Benavides, SPHR, associate vice president for human resources, Texas Woman s University, and member of SHRM s Workplace Diversity Special Expertise Panel Jeff Chambers, former VP, HR, SAS Fernán R. Cepero, PHR, vice president, human resources, The YMCA of Greater Rochester Laura Lea Clinton, GPHR, director, human resources management, CARE USA, and a member of SHRM s Employee Relations Special Expertise Panel Libby Sartain, former executive vice president of HR and chief people officer, Yahoo! Melanie Young, VP, corporate HR and services, Arrow Electronics Editor: Katya Scanlan, copy editor Design: Scott Harris, senior graphic designer This survey brief is published by the Society for Human Resource Management (SHRM). All content is for informational purposes only and is not to be construed as a guaranteed outcome. The Society for Human Resource Management cannot accept responsibility for any errors or omissions or any liability resulting from the use or misuse of any such information. December 2008 Society for Human Resource Management. All rights reserved. This publication may not be reproduced, stored in a retrieval system or transmitted in whole or in part, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the Society for Human Resource Management. SHRM Online: SHRM Research: SHRM Survey Findings:

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