Creating People Advantage 2014-2015

Creating People Advantage 2014-2015

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Creating People Advantage 2014-2015: How to Set Up Great HR Functions

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    The Boston Consulting Group (BCG) has published an annual Creating People Advantage report—partnering, in alternating years, with the World Federation of People Management Associations (WFPMA) and the European Association for People Management (EAPM)—since 2007. In this year’s report, BCG and the WFPMA conducted a survey of human resources professionals and other business leaders around the world. The report summarizes the survey’s findings, provides a comprehensive snapshot of people management priorities and capabilities, and explores their link to companies’ operational and financial performance.

    This report serves as an overview, with highlights of key findings. Follow-up reports will provide more detailed findings and in-depth analyses on specific topics.

    Survey Methodology

    More than 3,500 respondents from 101 countries participated in our online survey in 2014. (See Exhibit 1.) We also conducted 64 in-depth interviews with HR and non-HR executives at leading companies in a variety of regions. (For more about the survey methodology, see Appendix I; for a list of executive interviewees, see Appendix II.)


    To identify HR priorities, we analyzed ten broad HR topics, which were further broken out into 27 subtopics. (See Exhibit 2.) For example, the topic of training and people development includes three subtopics: training and learning, career models and competencies, and assignment management. This categorization allowed us to look at big-picture trends and to drill down into specific analyses. We asked the survey respondents to rank each of the 27 HR subtopics by its future importance, their companies’ current capabilities in the subtopic, and the levels of effort invested in the subtopic.


    Exhibit 2 shows the ten HR topics ranked by respondents’ assessment of future importance. The 27 subtopics are color-coded according to the levels of effort invested. Interestingly, while levels of effort broadly link to future importance, there are notable exceptions. For example, leadership, talent management, and strategic workforce planning are among the highest priorities, yet they received only average levels of investment. Clearly, companies must be more consistent in their investment decisions.

    In addition, we combined future importance and current capabilities into a single metric—defined as urgency for action—and ranked all 27 subtopics by this dimension. The subtopics most urgently in need of action across all industries were leadership, talent management, behavior and culture, HR and people strategy, employee engagement, and strategic workforce planning. (See Exhibit 3). (For more on leadership, see “PepsiCo Offers Its Executives a Master Class in Strategy.”) 

    Urgency is determined by calculating the difference between future importance and current capabilities, and then multiplying that difference by future importance.
    Non-HR Respondents Say That Capabilities Need to Improve

    Both HR and non-HR respondents identified the same HR subtopics, such as talent management and leadership, as priorities—that is, the areas with the lowest current capabilities and the highest future importance. However, there were significant differences in the perceptions of their companies’ people management capabilities. (See Exhibit 4.)


    Virtually across the board, HR respondents rated capabilities more highly than non-HR respondents. They also did not consider any areas to be in urgent need of action. By contrast, non-HR respondents categorized nearly half of the 27 subtopics as urgently needing action. This was especially true for talent management and leadership, two highly important subtopics for which non-HR respondents think their organizations show low capabilities. 

    (For more on talent management, see “Decoding 200,000 Global Talent Profiles.”) Also, HR respondents attributed a higher importance to all subtopics—almost 10 percent on average—than did non-HR respondents, and they rated their capabilities as consistently higher.


    Over the past several years, talent management has been consistently rated as one of the HR subtopics in the greatest need of action. Companies are scrambling to develop strategies, programs, and measures to recruit, develop, and retain their top talent and keep them motivated at the same time—not an easy task.

    In Decoding Global Talent: 200,000 Survey ­Responses on Global Mobility and Employment Preferences (BCG report, October 2014), we explored this issue in depth. We partnered with The Network—an association of more than 50 job boards worldwide, with more than 200 million visitors per month on all its websites—to conduct an online survey. The survey included 33 questions about talent mobility and job preferences, 13 of which looked at demographic factors, such as age, work experience, gender, education, industry, salary, and occupation. The result is a unique database that offers strategic insights for developing people strategies.

    For example, the report shows worldwide trends in talent mobility across countries, age groups, and positions, among other factors. Global mobility is widespread, with 64 percent of job seekers willing to work abroad. The U.S. is the favorite work destination, followed by the UK and Canada. Germany is the fourth most popular country to work in and the top non-English-speaking market in the group.

    One of the survey’s more striking findings has to do with what people say makes them happy on the job: increasingly, workers are starting to put more emphasis on cultural aspects and less on financial compensation. Out of 26 job elements, the single most important one for all people globally is appreciation for their work. (See the exhibit below for the top ten elements.) Good relationships at the office—whether with colleagues or superiors—are critically important and come in second and fourth, respectively. A good work-life balance is the third most important job factor. The implications for companies, economies, and individuals are significant and varied; addressing them will be key for future success. 

    Cultural Aspect of Work Are More Important to Employees Than Are Financial Aspects

    Equally distressing, the strongest misalignment was in the area of HR staff capabilities, HR communication, works councils and union management, and HR processes. (See Exhibit 5.) HR and non-HR respondents agreed on the level of capabilities in the subtopics employer branding, generation management, and assignment management.


    In many organizations, the HR function is perceived as not meeting the expectations of its internal clients. To address this misalignment, HR departments must better align with business units throughout the enterprise, to increase the impact of HR and generate stronger business performance.