HR survey The global trend remains defensive

Transcription

1 HR survey The global trend remains defensive

2 Table of Contents Summary 3 Recovery: caution in order 3 Attracting and developing talent in order to meet new challenges 3 Retain and motivate: moving on from the crisis 3 An HR system: a requirement for many companies 4 Main conclusions 4 The global trend remains defensive 5 Strategic Management Priorities 6 Downsizing forecasts 6 But a growing number of companies are aware of the growing challenges regarding talent management and many of them are preparing to face new challenges 9 Staff retention once again a priority? 12 A new HR system to support the recovery? 15 Survey respondents 18 2

3 Summary Set against the current economic context, this report presents a summary of the critical elements and key trends as perceived by survey respondents: decision-makers, HR managers, finance specialists and other operational department professionals Recovery: caution in order At the end of 2010, Deloitte Luxembourg decided to extend the Talent Survey initiative first launched one year previously in order to more closely monitor the concerns of Luxembourg companies and provide food for thought regarding the fundamental trends in talent and high-potential profile management. Set against the current economic context, this report presents a summary of the critical elements and key trends as perceived by survey respondents: decisionmakers, HR managers, finance specialists and other operational department professionals. The respondents recognise that the current economic situation is improving but remain cautious regarding the solidity and sustainability of the recovery. This tempered optimism is leading decision-makers to seek a balance between tight cost control (which for a third of them involves consideration of additional downsizing) and strategic investment in support of growth recovery, the prioritising of business development, the building of customer loyalty and innovation through new products and services. identifying and rewarding high performers and high-potentials, improving the attractiveness of functions and defining career opportunities more clearly, for example. Companies also state their willingness to promote flexibility in the workplace, offering new opportunities to access positions of responsibility and strengthening their image as employers of choice. In return, they expect their high performers and high-potentials to participate more fully in the future of the company, particularly in strengthening managerial functions, developing activities and gaining a better understanding of risk management, rules and governance. Attracting and developing talent in order to meet new challenges As regards human capital management, the results reflect a desire to prioritise the attraction and retention of talent and high-potentials. Most companies acknowledge the need to make significant efforts to augment their appeal, particularly by improving their talent management programmes: developing skills, HR Survey The global trend remains defensive 3

4 Retain and motivate: moving on from the crisis One third of companies state that they have identified an increase of around (as compared to 2010) in the voluntary turnover risk, a trend that is in line with the economic recovery projections of the IMF and the ECB for the euro zone. This situation is caused partly by the declarations of companies over the past two years of their intentions to control costs, and by the difficulty they face in offering career opportunities, which is a cause of frustration for some. Organisations are now keen to address this problem by promoting their culture and values and their willingness to establish a direct link between pay increases and economic performance. and cutting jobs, while Luxembourg companies have attempted to maintain their workforces as far as was possible, enhancing their flexibility in the workplace and encouraging their employees to become more involved in their activities. As regards preparations for a return to growth, the investment priorities of companies nationally and internationally also converge their efforts are focused on research and development and the integrated field of technology and talent management, in order to (i) offer customers a diverse range of products and services that provide true added value and (ii) give employees opportunities to fulfil their ambitions. An HR system: a requirement for many companies The gradual and prudent recovery ahead is encouraging companies to launch a variety of projects to support a return to growth. As regards the management of their human capital, one third of companies recognise that their HR system is over 7 years old and primarily involved in performing administrative tasks and time management. Meanwhile, 4 out of 5 companies recognise that they have neither the satisfactory management tools nor the functions required to adequately support talent management. Main conclusions The gradual and prudent recovery ahead is encouraging companies to launch a variety of projects to support a return to growth Concluding and comparing the results of this study to that carried out internationally by Deloitte, it appears that with the exception of some emerging countries, where growth is more visible and tangible the recovery prospects and concerns of companies regarding the management and retention of talent are relatively similar. However, global measures taken to contain the effects of the crisis have focused significantly on improving profitability, reducing costs 4

5 The global trend remains defensive Despite the tangible signs of improvement and an impression among survey respondents that the crisis is now largely over, the same respondents remain cautious about the stability of this recovery This situation is leading managers to seek a balance between austerity measures and the need to invest in preparing for their organisations future growth. Strategic Management Priorities Questioned about their strategic priorities, as in 2010, acquiring/serving/retaining customers remains the top priority for 2 of respondents (as opposed to 2 in 2010, see figure 1), followed by cutting and managing costs, in second place for 17% of respondents (and down from 2 in 2010). In addition to these predominant trends, four other priorities emerge from the survey, each with a score of around 10%. Three show a situation comparable to the assessment made in 2010: developing new products and services, improving top- and bottom-line performance and managing human capital. However, addressing risk and regulatory changes increased significantly (up from in 2009) and is explained by the introduction in 2010 of new regulations and recommendations, primarily applicable to the financial sector. Figure 1: Which strategic issues currently capture the most management attention at your company? (select 1st to 3rd priority) Acquiring/serving/retaining customers 1 Cutting and managing costs 8% Developing new products and services Addressing risk and regulatory challenges Managing human capital Expanding into global and new markets Improving top- and bottom- line performance Managing mergers/acquisitions/restructurings Investing in innovation/research & development 1 1 Leveraging technology Other 0 0 First priority Second priority Third priority HR Survey The global trend remains defensive 5

6 Downsizing forecasts The improved economic conditions are significantly influencing workforce management. The data gathered for the last 6 months of 2010 and projections for 2011 show that, according to 6 and 5 of respondents respectively (compared to 3 and 4 in 2009/2010, see figure 2), their company is not planning any reduction of its workforce. This trend must, however, be tempered by the significantly large number of companies (around 30%) that have recently carried out, or are planning to carry out, workforce reductions in the short term, thus confirming the priority given to cutting and managing costs and the caution regarding sustainable prospects of a recovery in growth. Figure 2: Has your organisation experienced layoffs in the past 6 months? versus Do you anticipate layoffs in your organisation over the next 6 months? Yes 70% 60% 6 5 No Don t know 50% 40% 30% 10% 0 3 Past 6 months 28% Next 6 months 1 6

7 But a growing number of companies are aware of the growing challenges regarding talent management... Despite the background of high unemployment, competition for talent recruitment remained one of the major concerns in 2010 Recruiting hard-to-find skill sets is in fact the main priority of respondents both now and for the next three years (1 and 1 of responses respectively, see figure 3). Competition for these talents is global rather than local, given that career opportunities now present themselves all over the world. This effect is amplified by the growing needs of emerging countries, which have a high demand for skilled labour. Alongside this trend, there is confirmed optimism among respondents about economic growth restarting over the next 3 years, with retaining talent at all levels of the organisation once more becoming a top priority for 1 of them over that period compared to 8% currently. Figure 3: What are your organisation s most pressing talent concerns today? (select 1st to 3rd priority) versus What do you anticipate your organisation s most pressing talent concerns will be 3 years from now? (select 1st to 3rd priority) Recruiting hard-to-find skill sets Developing leaders and succession planning Creating career paths and challenging job opportunities for employees Retaining employees at all levels 8% With experienced leaders from the baby boomer generation reaching retirement age combined with the current changing economic context, increased globalisation and complexity of new projects companies are increasingly anticipating the risk of a chronic shortage and growing need to renew or strengthen their management skills. In fact, while the goal of developing leaders and succession planning only comes fourth in the list of priorities for 2011 (), it climbs to second place in the next 3 years (1). Sustaining employee engagement 1 1 Aligning HR and talent with business priorities Reducing employee headcount and costs Providing competitive compensation and benefit packages Managing and delivering training programs Managing a diverse workforce (e.g., gender, generations, cultures, etc.) Providing flexible work options (e.g. ability to work from home) Evaluating and implementing technology/hris Other 7% Today Next 3 years HR Survey The global trend remains defensive 7

8 Furthermore, as regards the need to take current and future concerns into account and establish initiatives to respond to them, companies point to creating career paths and challenging opportunities for employees and sustaining employee engagement as key priorities (1 and 1 of responses respectively). These initiatives are designed to meet the aspirations of their staff and management teams, and we believe that on their success will depend (increased) employee engagement and commitment to the organisation. Generally, respondents have little or no fear of a shortage of candidates for the types of function presented to them; one respondent in two has little or no fear of a shortage of resources for the functions considered in the survey. However, for 4 of the positions identified, respondents anticipate a high risk of shortage: leader and manager (5 anticipate a severe or moderate risk, see figure 4), risk and compliance manager (4) and sales (4), and to a lesser extent, the research and development function (38%). This high level of concern could be explained by the following needs: Renewal and strengthening of management teams Fulfilment of new regulatory requirements established by local and international authorities Support of company development by increasing turnover to sustain economic recovery Innovation in research in order to sustain development of new products and services Figure 4: Do you expect to see talent shortages in the following areas over the next year? Executive leadership/management 28% % Risk and compliance % 3 Sales/business development 1 28% 2 3 Research and development Legal 1 18% 18% 5 Finance and accounting 18% 2 4 Engineering 1 5 IT 2 5 HR and talent 8% Investment funds Consultancy 1 6 Banking 1 6 Audit Marketing 2 67% Logistics 2 68% Yes - severe shortage Yes - moderate shortage Yes - slight shortage No 8

9 ... and many of them are preparing to face new challenges The study shows that, having survived the recession, companies (particularly small and medium sized ones) are unsatisfied with their achievements and recognise the need to rethink their strategy and intensify their efforts in certain key areas of talent management Although 4 of respondents (see figure 5) believe that their organisation has a satisfactory talent management programme,(in fact, a world-class one in the best case), 57% recognise that they need to make significant efforts and take greater initiatives to conform to best market practice in this area. The main talent management forces underlined by respondents are: Employee engagement (7 of respondents believe themselves to be good or excellent in this respect, see figure 6 on the following page) Employee retention (7) Workforce flexibility (7) However, the following three weaknesses were highlighted in particular: Tele-work (3) used very little in Luxembourg Use of appropriate HR technology (3) Succession planning (37%) The last two points are still to be developed, particularly in small and medium sized companies. Figure 5: How could you asses your overall talent management program? Furthermore, as regards the establishment of talent management programmes, the lack of succession planning appears critical and reveals an inadequate approach and lack of appropriate tools for identifying and developing new leaders to succeed existing ones. 3 38% 1 We are world class in talent management We are underperforming in talent management and radical improvements are needed We are doing reasonably well in talent management but significant improvements are needed We have adequate talent management for our industry but we need to improve Consistent with the increased pressure on company workforces created by the retirement of baby boomers, respondents recognise that intensifying the search for high-potential resource profiles (6 compared to 3 in 2010, see figure 7 on the following page), and increasing their assessment and development (58% compared to 37%) is a priority. Additionally, they seek to promote the emergence of new leaders (58% compared to 37%) in order to ensure that the generation currently holding these positions. HR Survey The global trend remains defensive 9

10 Figure 6: How would you rate your organisation s performance in the following areas? Employee engagement 6 6 Employee retention 2 5 Workforce flexibility 2 50% 2 Maintaining trust/confidence in leadership 58% 2 Recruitment and attraction of talent 7% 6 28% Workforce planning 5 2 Learning and training % Rewards (e.g., compensation, Goodus, and incentives) Diversity management Alignment of talent and business priorities 5 3 Employer branding % Performance management 48% 38% Quality of employee communications 4 4 Leadership development 47% 40% Global mobility Succession planning 3 47% 1 Use of HR technology 7% % Virtual and tele work Excellent Good Poor Don t know Figure 7: How do you anticipate your organisation s focus on core talent management priorities will change over the next year? Experienced hires Performance management 58% High-potential employee development 58% 3 1 Talent assessment (focusing on potential) 5 3 Regulatory, security and risk training Emerging leaders 50% 3 Succession planning Onboarding and orientation 38% 5 3 Workforce planning 37% 57% 3 3 Job-specific/functional training University graduates 3 5 Right-sizing/down-sizing 30% 5 Senior leaders 27% 57% 10% Part time staff Interim staff Increase focus No charge Decrease focus Don t know 10

11 Workforce flexibility Leadership development Employer branding Social media and collaboration Global mobility Diversity management Virtual and tele-workplace programmes Generational issues Gender issues The changing context is also affected by two strong current trends: Increased performance evaluation for people with high potential (for 58% of respondents), in order to assess their achievement in relation to the investment made in them Strengthening expertise in regulation/security/risk (5) in order to respond to the new regulatory frameworks and control requirements introduced over the past two years Figure 8: How do you anticipate your organisation s focus on emerging talent management strategies will change over the next year? % Increase focus No change Decrease focus Don t know 58% % 8% 67% % 1 17% 1 1 The results of the survey reveal a remarkable trend: companies foresee a major investments in regulatory, security and risk training (5 in 2011 compared to 2 in 2010) in order to respond to the requirements set by new directives or regulations In addition to the efforts envisaged by companies to meet their talent management challenges, there are other areas emerging in which investment will be required over the coming years. Workplace flexibility emerges as the most significant element (58%, see figure 8) underlining the increased willingness of companies to constantly adjust their needs to the available resources. This is followed by leadership development (5), confirming the basic trend as discussed previously. Finally, there is employer branding (5), which underlines the importance of making the organisation more attractive both in the employment market in general and to high-potentials in particular. HR Survey The global trend remains defensive 11

12 Staff retention once again a priority? At a time when the labour market is experiencing a slight respite, the rate of employee turnover is likely to become a critical issue for businesses The survey shows that one company in two believes that the voluntary turnover rate should remain stable between 2010 and 2011 (see figure 9). With a significant increase compared to 2010, 3 identified signs of tension, on account of the slow and uncertain recovery of the economy, limited job opportunities in the labour market and the strong disparities between categories of employees. In this context, respondents reveal three main reasons for dissatisfaction that may lead their staff to leave the company: lack of career progress (18%, see table 10), lack of remuneration increases (1) and new opportunities in the labour market (1). These three complaints arise from the uncertainties that companies face regarding their survival and development prospects, which reduce their ability to offer career opportunities and flexible remuneration policies. Figure 9: Charges to your organisation s voluntary turnover rate? 60% 50% 47% 5 40% 3 30% % 0 Remained the same Increased Decreased In the past 12 months Expected over the next 12 months 12

13 Looking ahead to the next 12 months, the results show a lessening of the reasons for dissatisfaction. The first obstacle, Lack of adequate bonus and insufficient financial incentive (1 of responses), precedes the three other sources of discontent mentioned above and demonstrates the desire of employees to profit from the results and performance of their company, however limited. Two further obstacles that are frequently mentioned: lack of career progress () and new opportunities in the labour market () highlight the strong desire of employees to grow professionally in their career and their company. Figure 10: What are the top three most significant barriers to retaining employees faced by your organisation today (select 1st to 3rd barriers) versus What will be the top three most significant barriers to retaining employees that your organisation will face in the next 12 months? (select 1st to 3rd barriers) Lack of adequate bonus and/or other financial incentive Lack of career progress New opportunities in market Lack of remuneration increases % Despite a high (albeit tempered in comparison to that of neighbouring European countries) unemployment rate of around in 2010, respondents fear that they will experience difficulties in retaining their staff, particularly those who contribute significantly to company profitability (48%, see figures 11 and 12 on the following page) and high-potential talent (4). Companies are aware of the obstacles to retaining valuable employees and are attempting to respond in order to hold on to their staff. 30% (see figure 13 on the following page) therefore favour the establishment of financial incentives, through fixed and variable remuneration, as well as benefits in kind. Nor are they ignoring the culture and image of the company, both of which are important differentiators in the labour market, together with career accelerators for certain profiles (1) and to a lesser extent, the importance of developing and offering career opportunities is being addressed (). Lack of job security Lack of flexible work arrangements Lack of training and development opportunities Too much travel Excessive workload Lack of adequate challenges in the job Dissatisfaction with supervisor or manager Declining perception of company Constraints due to new regulations from authorities High rate of voluntary staff turnover within company Other Lack of trust in leadership 7% 8% Generally low employee engagement/morale Poor employee treatment (during downturn) 0% Today Next 12 months HR Survey The global trend remains defensive 13

14 Figure 11: What is your level of concern regarding retention of the following employee segments over the next 12 months? Critical talent (employees that drive a significantamount of profitability or value) 48% 2 18% 3 High-potential talent % Leadership (top managers and executives) % All employees % 1 High Neither high or low Low No change Don t know Figure 12: Given the current economic climate, what is your current level of concern about your organisation s high-potential and high-performing employees being actively recruited by a competitor? 17% High Neither high nor low 4 Low Don t know 3 Figure 13: Which of the following talent retention incentives does your organisation use to differentiate itself from other employers as part of its employee value proposition/employer brand? (select 1st to 3rd incentives) Company culture 10% Fringe benefits (i.e. pensions, work-life balance, ) Fixed remuneration Variable remuneration/other financial incentives Career development and opportunities for challenging future roles Job and work flexibility Type of work Internal and/or external training programs Prestige of organisation Corporate social responsibility Other 1st incentive 2nd incentive 3rd incentive 14

15 A new HR system to support the recovery? The survey reveals a relatively balanced distribution regarding the level of obsolescence of HR information systems: 3 (see figure 14) of respondents state that they have implemented a new system over the past three years, compared to the 30% who are using a system that is 3 to 7 years old and 3 a system that is over 7 years old. Figure 14: Since how long have you had your HR Information System(s) (HRIS) in place? 30% 3 Less than 3 years More than 7 years Between 3 and 7 years Existing information systems primarily cover the following areas of HR operations: personnel administration (18%), management of staff leave (1), performance management and talent assessment (1), compensation and time management (figure 15). This situation demonstrates the priority given by companies to HR administrative work, which leaves a great deal of potential for the implementation of talent support and development and ressource planning systems. The differences in the areas covered by the operational processes of HR systems are mainly due to company size and to the perception they have of their ability to finance this type of investment. 3 Figure 15: Which of the following HR processes are you using in your existing HRIS? 18% 18% % 10% 10% 8% 8% 0 Personnel administration Leave Performance Compensation Time management and management Talent assessment Learning Recruitment management Employee/ manager self-service Succession planning HR Survey The global trend remains defensive 15

16 Figure 16: How would you describe your organisation s use of metrics and key performance indicators (KPIs) to support talent to support talent management? 1 37% We have no talent-related metrics/kpis 4 We have a few metrics/kpis across some talent categories We have world-class metrics/kpis across almost all talent categories We have adequate metrics/kpis across some talent categories Figure 17: Which vendors products are you using as HRIS? Furthermore, a great majority of respondents (8, see figure 16) recognise that they have very few tools with which to monitor HR activities. This situation shows that existing systems lack adequate analysis and reporting functions, meaning that the potential for improvement in this area is particularly significant. As regards existing HR solutions, the results show the overriding presence of two suppliers of generic solutions, Peoplesoft and SAP, and also a considerable fragmentation of the applications used, given that of the remaining 60% of responses (see figure 17), 16 different solutions are mentioned. Generic solutions are mainly found in companies with more than 500 employees and cover an average of four HR processes, whereas other solutions with a lesser number of functions cover just 1 or 2 processes. For of respondents, implementation projects are currently underway, in order to establish or expand the functions of their HR system; 30% (see figure 18) are assessing or implementing pilot programs in order to assess the opportunities and potential investment returns and close to 50% of them state that no action has been taken, or is envisaged in the short term, in this area. Peoplesoft SAP Autres Gesper (Microtis) SDWorx 10% HR Access 8% HR Accent (Securex) Oracle 16

17 The respondents involved in researching and evaluating HR solutions for potential future investment are focusing their attention on the functions offered in the areas of performance management and talent assessment (priority 1 for 27%, priority 2 for 2, see figure 19), personnel administration (priority 1 for 40%, priority 2 for ) and, to a lesser extent, remuneration management and the development of skills. Performance management and Talent assessments Personnel administration Compensation Learning management Table 19: Which of the following HR processes would you include in a potential HRIS search or evaluation? (select 1st to 3rd priority) 27% 1 40% 17% The distribution of the solutions suppliers in which the respondents are interested is similar to the current distribution of the solutions in companies: Peoplesoft and SAP are identified as the most attractive ones (17% of respondents, see figure 20), followed by a long list of alternatives for which the primary prerequisite appears to be their ability to respond to identified business requirements. Time management Recruitment Succession planning Employee/Manager self-service Leave Other 1 10% 10% 1 7% 7% 3110% 237% First priority Second priority Third priority Table 18: Where does your company stand with respect to implementing new HR/talent technology solutions? Table 20: Which vendors products would you be interested in for your HRIS evaluation and potential implementation? 1 Peoplesoft SAP 17% 17% 1 Oracle 50% HR Accent (Securex) Educos Vision (Educos / Deloitte) 8% We do not plan to expand our use talent technology We have some pilot programs in place for talent technology We have a strategy for talent technology that we are currently implementing We are evaluating talent technology solutions Gesall (Telindus) StepStoneGesper (Microtis) HRa Suite (HR Access) Apsal (Telindus) Workday TalentBox Vision X (SDWorx) HR Webworx X-Tend (SDWorx) Taleo Key-Linx (SDWorx) HR Survey The global trend remains defensive 17

18 Survey respondents The survey is based on information gathered from some 200 respondents Management functions are most highly represented (2, see figure 21) among respondents, followed by operational activities (1) and HR and finance functions (1). As regards the distribution of respondents by sector, finance and service companies are, as expected, overwhelmingly represented (6, see figure 22). Of these, 2 work in the funds industry, in other financial services and 18% in the banking sector. Conversely, there is low representation of other sectors: TMT, energy/utilities, industrial consumables, research and development. 6 of respondents work in companies with fewer than 500 employees (table 23), of which 4 have fewer than 50 employees, 2 between 101 and 500 employees and between 51 and 100. Almost 2/3 of the companies represented are private companies (6, see table 24) and 3 are listed companies. Figure 21: What is your principal functional role in your organisation? Figure 22: What is your company s primary industry? Corporate management 2 Investment funds 2 Business operations 1 Service industry 2 Human resources 1 Other financial services Finance 1 Banking 18% Sales & marketing Technology/media/telecom Compliance & Internal audit 7% Energy/utilities Information technology Consumer/industrial products Research & development Other Research & development Retail Construction 18

19 Figure 23: Approximately how many employees does your company have? Figure 24: What is your company s ownership structure? % 6 2 Fewer than Privately owned Publicly traded Not-for-profit or governement More than 1000 HR Survey The global trend remains defensive 19

20 Contacts Gilbert Renel Partner Human Capital Advisory Services Telephone: Filip Gilbert Partner Human Capital Advisory Services Telephone: Christophe Vallet Manager Human Capital Advisory Services Telephone: Deloitte S.A. 560, rue de Neudorf L-2220 Luxembourg Grand Duchy of Luxembourg Tel About Deloitte Touche Tohmatsu Limited: Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 140 countries, Deloitte brings world-class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte s approximately 170,000 professionals are committed to becoming the standard of excellence Deloitte S.A. Designed and produced by MarCom at Deloitte, Luxembourg