Deloitte Report: Global Business Growth Jeopardized by the Failure of Organizations to Adjust to 21st-Century Workforce

One of the largest global surveys of its kind reveals that organizations are not ready to address the striking shift in employee expectations, potentially resulting in a crisis in retention and leadership

New York, March 11, 2014 — The highly connected and global 21st-century workforce is here and, according to the Deloitte Global Human Capital Trends 2014 report, organizations are not prepared to respond to the challenges it represents.

“As the world’s population grows, the global workforce is simultaneously getting younger, older, and more urbanized,” says Josh Bersin, principal and founder of Bersin by Deloitte, part of Deloitte Consulting LLP. “Millennials are reshaping the talent markets with new expectations; new technologies are changing work in countless ways; and we are more frequently competing and racing with machines for knowledge work. The findings of our global survey reveal that a majority of global organizations are not prepared to deal with these trends that are reshaping the workforce.”

According to the report, the single biggest challenge cited by most (86 percent) respondents is leadership development, followed by retention and engagement (79 percent), and reskilling the HR function (77 percent). Importantly, most respondents indicate that their organizations are not ready to address these challenges.

The Deloitte Global Human Capital Trends 2014 report brings together 15 years of research as well as one of the largest global talent management surveys to-date, incorporating the views of more than 2,500 business and HR leaders in 94 countries around the world.

“Given the radical shifts in demographics and technology, doubling down on the human capital practices of the past will not be enough to get the job done,” continues Bersin. “The research shows that organizations should re-imagine their approach to engaging people and move to re-engineer many of their HR practices. Attracting top talent has become a serious competitive issue that demands attention at the highest levels of the organization.”

Lack of leadership threatens competitiveness
Developing global leaders is the top issue facing these organizations, yet only 13 percent of respondents believe they do an excellent job in providing leadership programs across all levels; 66 percent believe they are “weak” in their ability to provide leadership programs for Millennials, and about half (51 percent) have little confidence in their ability to maintain clear and consistent succession programs.

Faced with a dire shortage of technical and professional skills, many organizations are resorting to the old-fashioned way of addressing the problem—i.e., trying to “hire the right person” to fill in the gaps—according to the report. Yet, the report indicates that as skills become obsolete more rapidly, organizations should learn to leverage Massive Open Online Courses and internal development resources to build a “supply chain for skills”–developing deep, specialized skills on the job.

Paycheck no longer enough to retain and engage talent
The second top challenge cited by respondents–retention and engagement of employees–is another area where executives rate themselves as either “weak” or just “adequate.” More than one-third (38 percent) report they are “weak” at integrating social, community, and corporate programs and aligning employee and corporate goals. Four-in-ten respondents (40 percent) state their organization is “weak” in helping employees balance their personal and professional lives, and only eight percent believe they have a strategy to help employees manage the barrage of information they receive every day.

“Twenty-first century employees have radically different expectations about work than those of previous generations,” says Bersin. “Today, people want to work for organizations that continually invest in developing their skills, thereby enabling them to stay relevant in the ever-changing workforce. They also want balance, passion, and purpose in their jobs. This changing employment value proposition requires organizations to align their business and corporate objectives with the professional, personal, and social goals of their employees and give them an opportunity to make a difference, not just earn a paycheck.”

HR playing catch up
The third top-rated issue is the need to reskill the HR function. Many HR teams lack the skills and data they need to understand today’s global business environment, local labor markets, evolving workforce demographics, shifts in technology, and the changing nature of work itself. In fact, more than one-third (34 percent) of the respondents report that their HR and talent programs are just “getting by” or even “underperforming.” Moreover, less than eight percent of HR leaders have confidence that their teams have the skills needed to meet the challenge of today’s global environment and deliver innovative programs that drive business impact.

“There’s no doubt that human capital strategies are now a major factor in business growth,” says Jason Geller, national managing director for U.S. human capital consulting at Deloitte Consulting LLP. “Yet, today’s HR departments are not equipped to face the challenges of this new role. When you add to this the rapidly changing landscape of HR technologies, such as cloud and big data, and their impact on attracting, retaining, and developing talent, it becomes clear that reskilling HR teams is arguably the most critical mission for organizations today.”

Specifically, 43 percent of respondents to Deloitte’s survey indicated that their organizations are “weak” when it comes to providing HR with appropriate training and experiences, and 47 percent rank their organizations “weak” on preparing HR to deliver programs aligned with business needs.

To gain further insights into the report, including detailed information on specific countries or industries, click here to access the Deloitte Global Human Capital Trends Dashboard.

The 12 trends identified in the Deloitte Global Human Capital Trends 2014 report can be analyzed within three major categories: 1) attracting and engaging, 2) leading and developing, and 3) transforming and reengineering the HR function. Trends highlighted in the report include:

Attract & Engage

Reinventing talent acquisition: Even as the majority of respondents (62 percent) say their organizations rely on social tools for sourcing and advertising positions, when it comes to fully utilizing analytics for recruitment and staffing, more than half (54 percent) indicate that their practices are “weak.”

The overwhelmed employee: Information overload and the always connected 24/7 work environment are overwhelming workers, undermining productivity and contributing to low employee engagement. Sixty-five percent of executives responding to the survey rate the overwhelmed employee phenomenon as being an urgent or important trend, while 44 percent say that they are “not ready” to deal with it.

Engaging the 21st-century employee: Millennials will make up 75 percent of the workforce by 2015, and 66 percent of the respondents report “weak” capabilities when it comes to providing focused leadership programs for Millennials and 58 percent of executives report “weak” capabilities in “providing programs for younger, older and multi-generational workforces,” underscoring the challenges associated with a multi-generational 21st-century workforce.

Shifting from diversity to inclusion: Nearly all respondents say their organizations promote diversity, but most fail to realize the business benefits of a diverse workforce. About one-third (34 percent) of respondents say their organizations are unprepared in this area, while only 20 percent claim to be fully ready.

Lead & Develop

Developing leaders at all levels: Eighty-six percent of respondents in the Deloitte survey rate leadership as “urgent” or “important,” however, only 13 percent say they do an excellent job in developing global leaders.

The quest for workforce capability: While 75 percent of respondents rate “workforce capability” as an “urgent” or “important” challenge, only 15 percent believe they are ready to address it.

Time to replace “rank and yank”: Even as the nature of the work done by a majority of employees has changed dramatically, the way organizations evaluate employees has not. Only eight percent of respondents believe their organization’s performance management process drives high levels of value, while 58 percent say their current performance management process is not an effective use of time.

Corporate learning redefined: More than two-thirds (70 percent) of respondents surveyed see new learning methods, such as free online and mobile learning platforms, as “urgent” or “important,” yet only six percent say they have mastered the content and technology capabilities needed to make online learning accessible and compelling for their employees.

Transform & Reinvent

Delivering on big data: Talent analytics is starting to enable HR departments to make informed talent decisions, predict employee performance, and enable advanced workforce planning. While 78 percent of respondents from large organizations (with 10,000 or more employees) rated HR and talent analytics as “urgent” or “important,” enough to place analytics among the top three most urgent trends, 45 percent of the same respondents rated themselves “not ready” when assessing their readiness in HR analytics—among the lowest readiness rankings for any of the 12 global trends.

Racing to the cloud: Organizations are rapidly moving away from legacy systems to implement a new breed of highly integrated, cloud-based talent and HR systems. More than two-thirds (68 percent) of Deloitte’s respondents say that HR technologies are “urgent” and “important” and yet 56 percent report no definitive plans for their HR systems.

The global and local HR function: Global HR and Talent Management, an integrated global operating model that allows for customizable local implementation, is the second most “urgent” and “important” trend for large organizations around the world (those with 10,000 or more employees), according to the survey.

Reskilling the HR team: More than one-third (34 percent) of the respondents report that their HR and talent programs are just “getting by” or even “underperforming” and twice as many respondents rate HR and talent programs as “underperforming” (10 percent) compared to “excellent” (5 percent).

Access the report here.

About Deloitte’s Human Capital Practice
Deloitte helps organizations effectively manage their human capital to drive business growth. This is done by leveraging advanced analytics to develop talent management and business-driven HR strategies to deliver results. Deloitte is a leader in human capital consulting, bringing an effective combination of business, industry and HR knowledge, supported by the breadth of services and capabilities of a multidisciplinary professional services organization and global network. For more information, please visit www.deloitte.com/us/humancapital.

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