HR And Training Not Delivering Skilled Workforces

June 23 2006 - Recent international research conducted for Accenture shows that most senior executives surveyed consider that their workforces lack the skills needed by their companies to achieve market leadership, and even critical functions are not performing as well as they should. Moreover, only 11% of respondents said they were very satisfied with the performance of their human resource (HR) function with marginally fewer (10%) rating their training function very highly.

Just 14% of executives surveyed believed that the overall skill level of their organizations' entire workforce was industry leading. And only 20% felt that the vast majority of their employees understood their companies' strategy and what was required to be successful in their industry.

Peter Cheese, global managing partner in Accenture's Human Performance practice, commented:

"The lack of essential skills is a vital issue for senior managers. As the competitive environment grows more demanding and as markets become increasingly commoditized, the need to cultivate these skills - particularly in the critical functions - should be at the top of every corporate to-do list. Those companies that fail to develop their workforces risk losing their competitive edge."

Accenture attributes these shortcomings, in part, to a number of HR and training issues, including:

• Lack of connection to business drivers. A mere 36% of survey respondents said that their organizations tailored HR and training support to each function's needs and contributions to the business.
• Failure to measure the business impact of HR and training efforts. Over two-fifths (40%) did not evaluate the impact of human resource and training efforts against profitability. 50% did not evaluate those efforts against revenues and sales.
• Inadequate knowledge capture and sharing capabilities. 42% of respondents said that the process of capturing and sharing knowledge was a challenge or a severe challenge for their organizations. The following reasons were most commonly cited:
• lack of a common business culture across different locations (38%)
• no knowledge support infrastructure with dedicated people (37%)
• knowledge sharing typically not rewarded in the organization (32%)
• The talent time bomb. 60% of respondents expected to begin feeling the impact of the aging workforce and impending retirement of baby boomers within the next five years. 28% of these were already feeling the impact. 43% of all survey participants said that talent sourcing was a challenge or a severe challenge, primarily because of the talent pool was shrinking.
• Lack of functional leaders' involvement in people issues. Few of the survey respondents said their heads of functions were highly involved in human capital management initiatives. Specific percentages were: customer service (29%), finance (31%), sales (34%) and strategic planning (37%).

Human Performance Leaders

A number of companies were identified that Accenture refers to as "human performance leaders". These were defined as organizations in which the three functions their executives deemed to be most important performed at the highest levels. Compared to the 'laggards' in which none of the top three functions were high performers, performance leaders were more likely to be succeed in addressing organizational issues that contributed to strong financial performance. The following were identified as high performing areas:

• Acquiring new customers and increasing market share (43% of 'human performance leaders' compared to 14% of 'laggards')
• Encouraging strong customer loyalty and retention (52% against 17%)
• Responding to changing market conditions (52% against 14)
• Finding and developing talented leaders (39% against 7)
• Attracting and retaining skilled staff (30% against 12)
• Generating superior business value from technology investments (35% against 15)

The findings show that 'human performance leaders' possess more effective HR and training support. The practices that help them excel include:

• Formal measures to measure the impact of all HR and training support activities on their top functions
• Tailored HR and training support to match the contribution of specific functions
• A more strategic approach to HR and training, including viewing the HR function leader as a strategic business partner to the executive suite.

"A company's ability to manage its workforce strategically and develop its capabilities will set it apart from its competitors," said Peter Cheese. "Some companies focus well on one or two aspects of human capital management, such as learning or internal communications, but the best take a broad view of managing their workforce. These are the companies that vastly increase their chances of being industry leaders."

The study was conducted by GfK NOP Limited on behalf of Accenture between February and April 2006. It included telephone surveys with 251 senior executives - chief executive officers, chief operating officers, chief financial officers and chief information officers, human resource leaders, chief learning officers - in the United States, United Kingdom, Australia, France, Germany, and Spain. Respondents' companies came from seven broad industry sectors: retail, travel & transportation, financial services, electronics & high tech, communications, energy and utilities.