Creating People Advantage: How to Address HR Challenges Worldwide Through 2015

BCG (Boston Consulting Group) Report

[PDF] Creating People Advantage: How to Address HR Challenges Worldwide Through 2015
by Jean-Michel Caye, Andrew Dyer, Michael Leicht, Anna Minto, Rainer Strack
April 14, 2008

People challenges are greater than ever before at companies, thanks to globalization, an aging workforce, and employee desires for work-life balance. This report, which is based on a worldwide survey of more than 4,700 executives, lays out a comprehensive approach to enable companies to understand the HR environment and how they can create a people advantage. When companies that understand how to measure the effectiveness of their people and harness their talents, they will achieve a lasting edge. This PDF is an executive summary.

It is pretty short and well summarized, available on line at BCG website

Article from SHRM summarizing this report as well:

Global HR Professionals Learn They Are More Alike than Different

By Adrienne Fox

LONDON—Despite diverse languages, cultures and geographies, human resource professionals around the world face similar challenges. That’s the finding of a new survey conducted by The Boston Consulting Group (BCG), a global management consulting firm based in Boston, and the World Federation of Personnel Management Associations (WFPMA). The results were previewed at the associations’12th Annual World Congress here on April 14, 2008. The full report, Creating People Advantage: How to Address HR Challenges Worldwide through 2015, was to be released May 5.

Managing talent, improving leadership development and managing work/life balance are the top HR challenges in every region and industry, according to the survey of more than 4,700 HR and non-HR executives in 83 countries. The study was enhanced by in-depth interviews with 200 executives.

The survey asked respondents to rank 17 HR issues in order of their most critical future challenges and asked how they plan to address them through 2015. In North America, respondents reported that managing talent, managing demographics, improving leadership development, managing work/life balance and transforming HR into a strategic partner are most critical. Susan R. Meisinger, SPHR, president and CEO of the Society for Human Resource Management and a WFPMA board member, said the transformation of HR could be helped by establishing two distinct career paths in the way finance and accounting have become separate, and sales and marketing have two different tracks. “Both functions are critical to HR,” she said, discussing the survey findings at the WFPMA Heads of Nations meeting here on April 13. “But one would handle compliance and administration while the other would be strategic.”

Common Challenges

The top future HR challenges in Latin America are managing talent and work/life balance. “We have a permanent mixture of business and personal lives,” said Horacio Quiros of Buenos Aires, president of the Interamerican Federation of People Management Associations. “We are facing a new confusion because there is no separation. It has to fall to the individual to balance work and life.”

Ernesto Espinosa of Manila, who becomes president of the WFPMA at the conclusion of the World Congress, said HR is stumped on how to address work/life balance because the phrase is a “misnomer. It should be called work/life harmony.”

Executives in China and India added becoming a learning organization to their list of top challenges. Respondents in other parts of Asia put managing globalization among their top three concerns. Pacific Region executives added managing change and cultural transformation to their top future HR challenges.

In Europe, demographics and managing talent were identified as the key challenges. Rudolf Thurner of Vienna, president of the European Association of Personnel Management, said HR needs to change its view of who is talented. “We reject the notion that only 5 percent of the working population is talented and the rest is disposable,” he said.

WFPMA board member Tiisetso Tsukudu of Cape Town, South Africa, agreed. “Talent is only seen at the top, and we in HR need to change this because we need long-term talent from lower levels. Talent is not the same as genius. Everyone is capable of being talented.” In Africa, the survey found, the most pressing concerns in addition to talent, work/life balance and leadership development are managing globalization and diversity.

Solutions

In response to the talent management challenge, 70 percent of North American respondents said they would need to develop tailored career paths for employees, even though only 41 percent are currently using that solution; 61 percent believed they would need to develop specific compensation schemes for top talent, a strategy only 38 percent are using today; and 48 percent said in the future they would source talent globally, with only 22 percent saying they cast the net globally now. In all other regions of the world, these three strategies were identified as the most effective solutions to managing talent in the future.

To better anticipate change in demographics, globalization and corporate change and cultures, the report advises HR to restructure its organization to be more nimble: “While restructuring is commonly viewed as a cost-reduction exercise, the topic also applies to growth scenarios.”

HR functions should assess and improve all HR processes systematically to enable the organization, the report states, starting by separating administrative services from strategic tasks in HR to increase efficiency and effectiveness.

Next Steps

The Creating People Advantage summary concludes with advice on how to use the findings in your organization. The first step is to understand the external environment by analyzing general industry and economic trends, business challenges and the corporate strategy. Then understand the internal environment by conducting an HR audit. “Ask your business executives how HR rates on the 17 HR topics and then select the top three most critical ones for your business,” Rainer Strack, partner and managing director at BCG in Düsseldorf, Germany, told the World Congress attendees. Once you identify the three challenges, initiate projects with dedicated teams to address them.

The study found that executives rated the performance of their company’s HR function 18 percent higher when dedicated teams of employees inside and outside of HR oversaw critical issues. Finally, secure top management support, which may be easier if teams are cross-functional.

“Maintain rigorous quality control on all 17 HR topics,” said Strack. “But reduce emphasis on existing HR topics that are not as critical to your company success” and steer resources accordingly.

Adrienne Fox, a freelance writer and editor in Alexandria, Va., is former managing editor of HR Magazine.