The Most Significant Capital Challenge for Businesses
The answer may surprise you…
If you were asked to name the most significant capital challenge for businesses today, you might answer:Dwindling market share
Need to shrink overhead
Strategic workforce cuts
Surviving the downturn
The Society for Human Resource Management (SHRM) engaged the Hay Group to conduct an online survey covering 13 human capital issues. Findings cited are 6,024 global and national companies in over 32 different industries including Agriculture, Aerospace, Entertainment, Healthcare, Hospitality, Publishing, Retail, Wholesale and Utilities. Company grouping sizes were:
- Small 100 – 1000 employees
- Medium 1001 – 10,000 employees
- Large 10,001 – 75,000 employees
- Jumbo > 75,001 employees
Executives surveyed consisted of Human Resource (HR) and other executives such as CEOs, COOs, CFOs and CAOs.
Seventy-five percent of the respondents rated succession planning as “one of the biggest challenges” or “a significant challenge” for the future. In this 2007 study, “the future” targeted the next 2-5 years. Small companies came in at 72% and large companies came in at 76%.
A point of interest is that C-suite executives and the HR respondents agreed equally. To me, this indicates that HR and other company executives are forming better partnerships in organizational development and operations. The significance of this is that companies will determine better-targeted strategic goals and greater success in achieving those goals.
While nearly one third of the respondents ranked succession planning as the number-one concern, one third ranked recruiting and selecting top talent as their number-one concern. One in ten executives ranked “providing leaders with the skills they need to be successful and engaging and retaining talented employees.”
Other concerns were:
- Leadership development
- Culture transformation
- Change management
- HR technology
- Work/personal life balance
- Health care management
- Business ethics
Rising healthcare costs came in at 8%. Business ethics are last on the list but, while this article does not address ethics in particular, without an ethical foundation, organizations will face difficulty in successfully addressing other issues.
Challenges of Meeting Challenges
The report contained 8 pages of issues facing companies in resolving the challenges covering the 13 human-capital topics addressed by the study. Many themes regarding succession planning spill over into other areas including:
- Lack of strategic planning
- Lack of qualified candidates
- Identifying future leaders
- Convincing senior executives to make investments in preparing future leaders
- Fear of discussing who will succeed current leaders
- Forming, implementing and having top management buy into a plan
- Managing diverse workforces that cover diverse geography and environments
Adding an additional level of difficulty is the fact that C-suite executives “do not have a great deal of confidence that their companies have a plan or solution to address the top 6 human-capital challenges for the future.” Compared to medium and large companies, smaller companies have even less confidence in addressing these matters.
Tools, Support and Information to Address Challenges
The survey gave respondents the opportunity to identify what tools, support and information are needed for solutions to the 13 human-capital topics. Of interest is the lack of meaningful conclusions across demographics:
“We only display and discuss results for the total survey sample because the sample sizes for demographic groups (e.g., small, medium, large companies) for each human-capital challenge are too small to draw meaningful conclusions. For example, only the C-suite executives who identified Rising Healthcare Costs as one of their top three challenges for the future answered the question about the tools, support and information that would help them address their challenges around rising healthcare costs.”
As one who partners with organizations in solving hiring, retention, succession and benchmarking strategies, this statement raises a few red flags for me. Were these questions not answered because, C-suite executives:
- Simply overlooked the question
- Have no clue for solutions
- Don’t care enough to take the time and energy to respond
- Don’t want to appear uneducated about these issues
- Are part of the problem
- Feel these are someone else’s or some other department’s problems
Efforts toward solutions for these potential profit killers will require investments in time, education, resources and the “T” word (training). None can be implemented, or, resolved overnight or even during an executive weekend retreat. Clearly, the sooner organizations begin planning and implementation, the sooner a “happy ending” will be in sight.
So What’s an Organization to Do?
There are resources for both preventing and addressing existing issues that have already taken a bite out of your bottom line. Let’s take a brief look at how PSI can help your organization conquer threats to your company’s success.
- Hiring Right, Right from the Start — Benchmarking positions gives the organization a clear picture of the skills, attributes, and motivators required for optimal performance for each position
- Matching the Right Talent to the Right Position — Once a position has been benchmarked it is an easy step to then use assessments in your hiring process to ensure that excellent talent is put into place and that the person hired performs to the specifications that the job requires
- Mentoring Programs for High Potentials — Using the above hiring system will automatically help you identify future leaders. With PSI’s “turn-key” Leadership Development Program you can identify the 5 key qualities found in all true leaders. The program also has built-in guidelines on how to effectively approach the relationship between protégé and the mentor, dialoguing questions to help introduce the relationship, troubleshooting guidelines to keep the relationship moving forward, activities to help increase the program’s effectiveness and workbook-style entries on thought-provoking questions to promote dialogue and personal reflection.
- Case Studies and Succession Planning Programs – Our program is formulated on a case-study approach to leadership development and organizational growth and addresses:
- The Objectives of Succession Planning
- The Role of Business Strategies in Succession Planning
- Barriers to Succession Planning and Leadership Development
- Five lessons for Leadership Development and Succession Planning
- Human-capital planning
- Leadership rules and attributes
- The Leader as coach
- Action learning
- Innovative ideas for success