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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    Regional and Industry Considerations

    To highlight the biggest priorities for companies in various regions and industries, we looked at all 27 HR subtopics, using our urgency metric to determine those with the greatest need for action. 

    Regional: Leadership & Talent Management Show Urgency

    Across most countries, the leadership subtopic was ranked by far as the one most urgently in need of action, and talent management was ranked the second most urgent. Beyond those clear-cut results, however, we found considerable differences in the rankings of subtopics across countries. (See Exhibit 11.)

    exhibit

    For example, behavior and culture, as well as employee engagement, were all ranked as more urgent in the U.S. than they were in most other regions. In that market, growth is slowly returning and unemployment is easing. As a result, the competition for labor—particularly in skilled positions—is becoming tougher. Increasingly, some companies are finding that they have to manage their employees on a long-term basis.

    In other markets of the Americas, such as Brazil, the focus is still primarily on talent management, given the shortage of candidates for many positions. “The challenge that we see is a huge lack of qualified professionals in Brazil, which is restraining Brazil’s growth and, consequently, the growth of Brazilian companies,” says Simone Cristina T. Salsa Nunes, a corporate strategic people development manager at Queiroz Galvão, a Brazilian conglomerate with investments in infrastructure, energy, food, steel, and shipbuilding industries.

    Notably, rewards and recognition were ranked as more urgent in Brazil than in most other markets. This is primarily due to the country’s current economic situation, with relatively low productivity growth and increasing salaries. As Brazilian companies lose competitive ground, they must work harder to motivate their existing employees.

    The talent management challenge also exists for Asian countries. According to Joseph Bataona, a human resources director at Indofood Sukses Makmur, “Indonesia has a talent crisis at the national level—in almost every sector, including government. The shortage of talent is not being addressed in higher education, whereby graduates are not really ready for the professional world. There is also a shortage of vocational training. Companies really have to invest more in developing people, even at the entry level.”

    In many European countries, by contrast, demographic challenges, such as those posed by an aging labor pool, are compelling companies to adopt strategic workforce planning, which was ranked as far more urgent in Germany, among others, than the global average. (See “The Global Workforce Crisis.”)

    THE GLOBAL WORKFORCE CRISIS

    In The Global Workforce Crisis: $10 Trillion at Risk (BCG report, June 2014), BCG examined long-term labor issues in 25 of the world’s major economies, looking at imbalances in supply and demand over the next 10 to 20 years. As shown in the exhibit below, which summarizes the findings for 15 countries, some countries are likely to experience tremendous labor shortfalls. The workforce in Germany, for example, will likely fall 4 percent short of the country’s needs by 2020 and 23 percent short by 2030. Brazil is expected to experience a shortfall of 7 percent of its workforce needs by 2020 and 33 percent by 2030. In some of these countries—notably Germany—companies are already feeling the pinch, struggling to find qualified people to meet workforce demand.

    sidebar04_global_wf-lrg

    These dramatic shortfalls only underscore the importance of subtopics directly related to long-term human capital planning and preparation, such as strategic workforce planning, diversity, and generation management. Yet most organizations in northern Europe—with the notable exception of German companies—are not prioritizing those topics. (See “Transnet Has a Clear View of Future Employment Needs.”)

    Countries in southern Europe are facing a ­different set of challenges, namely sluggish growth and high unemployment. In general, the closer a country is to economic crisis, the more companies in that country will need to differentiate among their employees, to ensure that they can keep the most promising workers in the event of staff reductions. 

    Industry: Energy and Financial Institutions Stand Out

    An industry breakdown shows similar differences among the relative levels of urgency of specific subtopics. While leadership, talent management, and behavior and culture were ranked as the three most urgent across most industries, we uncovered several key insights. (See Exhibit 12.)

    exhibit

    In the energy sector, leadership was rated the most urgent topic. Leaders in the oil industry are facing significant challenges, such as growing demand for environmentally sustainable processes, bad publicity from recent spills and other accidents, and pressure on financial results. Because of these factors, they have to move from traditional (technical) competencies in the sector to more twenty-first-century skills, such as how to manage uncertainty. Also, in the utilities sector, there are significant uncertainties with respect to supply, which means that leaders must navigate among, and negotiate with, multiple stakeholders. Talent management was the second most urgent topic in the energy sector, mainly due to the lack of talent—especially skilled technical workers—needed to meet the strong demand for new oil and gas projects.

    Among financial institutions, several differences stand out. These companies are slowly resuming growth after the financial crisis. ­Accordingly, rewards and recognition were ranked as more urgent priorities than in other industries. By contrast, behavior and culture were seen as less urgent than in other industries. Given the fact that many financial-services companies promised to change the way they work after the crisis, this subtopic should be a bigger priority in the sector.