IBM human capital study: looming leadership crisis puts growth strategies at risk
By Manufacturing Business Technology Staff -- Manufacturing Business Technology, 10/19/2007 2:33:00 PM
According to an IBM study of 400-plus human resource (HR) executives from 40 countries, more than 75 percent are concerned about their ability to develop future leaders.
Given the explosive growth in emerging markets and retirement of experienced personnel in more mature economies, the study suggests that companies are placing their growth strategies at risk if they cannot identify and develop the next generation of leaders.
Leadership issues are surfacing worldwide, with organizations in every corner of the globe being impacted. Companies in the Asia Pacific region are most concerned with their ability to develop future leaders (88 percent); followed by Latin America (74 percent); Europe, Middle East and Africa, (74 percent); Japan (73 percent); and North America (69 percent).
The Global Human Capital Study, Unlocking the DNA of the Adaptable Workforce, was developed by the IBM Global Business Services Human Capital Management practice and the IBM Institute for Business Value, with assistance from the Economist Intelligence Unit.
"In today's business environment, organizations worldwide need a pipeline of future leaders who can deliver on today's commitments, drive workforce and enterprise transformation, and lay the groundwork for future growth," says Tim Ringo, global leader, Human Capital Management, IBM Global Business Services. "Effective leadership not only guides individuals through turbulent business conditions, but creates a climate that attracts and retains high performers, who will be in increasingly short supply in the future."
• Key roadblocks
Rotating employees across divisions and geographies is an important way to hone future leadership talent. Yet according to the study, 36 percent of HR executives say rotating leadership talent is a significant challenge in developing future leaders. Another key challenge is the generation gap—i.e., passing on knowledge from older to younger employees (28 percent).
• Help wanted: Skills
In addition to being unable to develop effective leaders, 52 percent of HR executives surveyed say a significant workforce-related challenge facing their organizations is the inability to rapidly develop skills to address current and/or future business needs. Furthermore, more than one-third of participants state their employee skills are not aligned with current organizational priorities (36 percent).
"The ability of an organization to look ahead and identify the skills it will need, and then rapidly develop a critical mass of individuals with those skills in a cost-effective manner, will be a core competency for those companies looking to compete in the globally integrated world," says Randy MacDonald, senior VP of human resources, IBM.
• Talent wars
For many companies participating in the study, turnover continues to rise. Of organizations surveyed, 47 percent say employee turnover increased over the past two years, while only 16 percent say it decreased.
HR executives and line of business executives appear to be more concerned about developing existing employee skills than attracting new talent. Many believe their corporate reputations will allow them to attract and retain the people they need, and while 52 percent say an inability to rapidly develop skills is a primary workforce challenge, only 27 percent say the inability to attract qualified candidates is a problem.
Retention also seems to be less of a concern: only 18 percent believe this to be a high-priority workforce issue. However, changing trends in workforce demographics and mobility patterns suggest they may need to invest more resources in recruiting, selection, and retention.
An underlying cause is HR executives believe that despite the ongoing war for talent, they are more capable of attracting and retaining talent than their competitors. Almost 60 percent of HR executives surveyed believe they attract and retain talent better than their peers, while only 10 percent state they are less effective.
Developing an adaptive workforce
Due to various internal and external pressures, companies today are forced to be more responsive to shifting market needs, more flexible in how they operate, more focused on their core competencies, and more resilient to external threats. Developing a workforce that is adaptable to change is essential.
According to the study, however, only 14 percent of HR executives say their workforce is very capable of adapting to change.
The Global Human Capital Study identifies three success factors to developing an adaptable workforce:
• The ability to predict future skills.
Successfully anticipating future business scenarios enables organizations to know what key competencies to target in advance of critical market shifts. Only 13 percent of organizations surveyed believe they have a very clear understanding of the skills they will require in the next three to five years.
• The ability to locate experts.
While predicting future skills is important, so is the ability to apply existing knowledge and skills to new challenges. Expertise location is cited by respondents as critical in identifying and allocating resources to address new oopportunities and threats. Only 13 percent believe they are very capable of identifying individuals with specific expertise within the organization. Companies are using various techniques to improve expertise location capabilities. More than 50 percent of companies that rate themselves as very effective in locating experts use some form of employee directory, while only 39 percent of respondents says they are using them.
• The ability to foster collaboration.
Once the experts are located and identified, collaboration is the next step to foster innovation and growth. According to the study, only 8 percent of companies believe they are very effective in fostering collaboration across the enterprise. Surprisingly, technology is not the deterrent to effective collaboration, with only 28 percent of companies indicating this is a significant factor. Instead, organizational silos (42 percent) comprise the leading barrier of collaboration in an organization, followed by time pressures (40 percent) and misaligned performance measures (39 percent).
