Deloitte human capital trends 2012

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For organizations to leap ahead in 2012, decisive action is required.It’s fitting that 2012 is a leap year, since a number of converging market trends are driving HR organizations to make significant leaps in capabilities and performance. HR faces a critical, dual imperative in 2012 — a focus on enabling both their organization’s overall growth agenda and on driving efficiency in the business of HR. This dual focus demands decisive action as the stakes are greater than ever.The top eight human capital trends outlined in the report include:In 2012 growth is job #1Operation globalizationFast-track to the topPeople risk is risky businessSeeing around corners#social #mobile @workClouds in the forecastStay in front with an effective sales forceBusinesses are calling on HR to leap ahead and help manage change in the face of complex challenges that touch so many parts of the enterprise. Understanding the 2012 Human Capital Trends — what they mean for both leading HR and for leading the business — is a great place to st

Transcript of Deloitte human capital trends 2012

  • 1. Human CapitalTrends 2012Leap ahead

2. PrefaceIts fitting that 2012 is a leap year, since a number of converging market trends are driving HR organizations to makesignificant leaps in capabilities and performance. HR faces a critical, dual imperative in 2012 a focus on enabling both theirorganizations overall growth agenda and on driving efficiency in the business of HR. This dual focus demands decisive actionas the stakes are greater than ever.Why the sense of urgency? Three reasons. Businesses are seeing light at the end of the economic tunnel, and CEOs are looking for every advantage they can find to drive growth. Talent is a key enabler of growth, of course, but it can also be a stumbling block if not managed properly. Especially in areas like salesforce effectiveness and building a leadership pipeline. Transformative technologies such as cloud, mobile, social, and advanced analytics are upending how work gets done, though many organizations are not yet ready to exploit their potential. HR should step in to help build the capabilities to use these tools effectively. Enterprise risk has moved firmly onto the C-suite agenda. Leaders have come to understand that people risks represent a significant area of potential exposure.Businesses today are calling on HR to leap ahead and help to manage change in the face of complex challenges that touch somany parts of the enterprise. Understanding the 2012 Human Capital Trends what they mean for both leading HR and forleading the business is a great place to start.Barbara AdachiDan Helfrich Michael Gretczko Jeff SchwartzNational Managing DirectorChief Marketing andPrincipalPrincipalHuman Capital Strategy Officer, PrincipalHuman CapitalHuman CapitalDeloitte Consulting LLP Human CapitalDeloitte Consulting LLPDeloitte Consulting LLPCo-Author Deloitte Consulting LLPCo-AuthorCo-AuthorCo-Author Welcome to Deloittes annual report examining important trends in human capital. Each year we begin with a wide range of potential topics, then work with clients, vendor teams, academics, analysts, and Deloitte practitioners to refine the list. We select as trends those topics that have the most potential business impact over the next 18 to 24 months. This years theme, Leap ahead, examines the broad impacts of eight trends that are reshaping both HR in the business and the business of HR.As used in this document, Deloitte means Deloitte LLP and its subsidiaries. Please see for a detailed description of the legalstructure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.2 3. ContentsIn 2012, growth is job #1 4Operation globalization 6Fast-track to the top 10People business is risky business 14Seeing around corners 17#social #mobile @work 20Clouds in the forecast23Stay in front with an effective sales force 26Human Capital Trends 2012 Leap ahead 3 4. 1 In 2012, growthis job #1 Growth is the top priority for many CEOs in 2012. To make it happen, HR is boosting its capabilities in three key areas.Growth is at the top of the CEO agenda for manyPractical implicationscompanies, with many organizations today focusing on In many cases, HR is no longer simply supporting the CEOsthree key strategies: emerging markets, mergers andgrowth agenda it is actively informing and helping toacquisitions (M&A), and innovation. Although these shape that agenda.strategies can offer significant growth opportunities, theyeach present a wide range of people-related challenges.Emerging markets. Developing economies have longCEOs expect Human Resources (HR) to play a much more been viewed as a source of cheap labor. Now, they areactive role in enabling these strategies.also being tapped for higher-value skills, such as research and development (R&D), knowledge processing, andWhats driving this trend? advanced analytics. At the same time, their rapid economicEmerging markets represent significant new growth presents new revenue opportunities by creatingopportunity. Developing economies are growinga new class of consumers with money to spend and anmuch faster than mature economies and are becoming unquenched thirst for the latest goods and services.a primary source for revenue, profits, and talent.Understanding the capabilities, employability, and To capitalize on these emerging opportunities, HR needscultural implications of talent in these markets isto help plan, create, and manage a truly global workforcecritical to effectively prioritizing growth objectives and matching new sources of employable talent with globalleveraging the opportunities they represent. demand that is constantly shifting and develop a strong pipeline of global leaders. HR also needs to identify andM&A is often the fastest way to expand a business. understand the labor and workforce challenges associatedBut its not just a numbers game. These days, more with entering new markets and then establish systemsand more companies are using M&A to obtain specificand capabilities that make the process fast, efficient, andcapabilities and talent in order to gain a competitive repeatable.edge. Sustaining that advantage through thoughtfultalent and organization planning is important to realizing Mergers and acquisitions. M&A can be one of the fastestthe expected strategic value of the acquired assets. ways to grow revenue and market share. It can also help a company expand its strategic capabilities. For example, aInnovation can drive growth, even in a sluggishlarge technology company might acquire a smaller firm ineconomy. A more holistic approach to innovationorder to fill a gap in its R&D pipeline or product portfolio.can enable companies to stimulate innovation broadly Similarly, a company looking to enter an emerging marketacross their workforces and more effectively capture the might use an acquisition or joint venture to establish anresulting strategic advantages.immediate local presence.4 5. In 2012, growth is job #1Traditionally, HRs role in M&A has focused on issues Help groom business leaders and managers whorelated to compensation, benefits, payroll, and Human can drive growth and innovation globally. VerifyResource Information Systems. While those issues are stillthat performance and compensation systems are inimportant, they have now become table stakes. HRs newplace to encourage and reward innovative thinking andM&A mandate is to effectively leverage culture, leadership, development of others. Design assignments and specialand talent to increase the return on investment (ROI) onprojects to build the skills, experience, and trainingM&A transactions. necessary to support the companys growth strategies.Identifying and developing the next generation ofCreating the preferred culture is one of the keys to fullyleaders across the global organization is essential in thecapturing the expected value of an M&A deal. Identifying, wake of imminent retirements and multiple waves ofpositioning, and retaining acquired talent are also downsizing that have many companies facing a hole inimportant. Handling these challenges effectively is criticaltheir leadership pipelines.for strategic deals, where a lack of appreciation for culturaldifferences may drive out the very talent, leadership, andBe a special teams coach to executive leadership.spirit of innovation that inspired the deal in the first place. U.S. football teams have a specialized coach whoThoughtfully integrating and leveraging the acquiredfocuses exclusively on critical plays such as kickoffs,organizations culture and talent is often the difference punts, and field goals events that often make thebetween value creation and value erosion. difference between winning and losing. HR leaders canplay a similar role in business, preparing the executiveInnovation. Many companies define innovation tooteam to achieve its goals in emerging markets, M&A,narrowly, placing all of their bets on a specific teamand innovation by counseling them in people-relatedof people and the products they develop. In contrast, areas, such as leadership, personal development,todays innovation leaders are defining innovationcommunications, and organizational influence.broadly to include services, processes, business models,communication, and cost structure improvements across Build and develop an HR team focused on informingthe enterprise. HR can help by aligning people-relatedand enabling growth. Continually assess the structurefactors, such as leadership, capabilities, processes, and capabilities of the HR team to confirm it aligns withtechnology, and organizational structures, around the companys growth strategies and that it has theinnovation to foster a more innovative organization and necessary depth and breadth to execute effectively.culture.Teaming with the CEO to drive growthLessons from the front linesCEOs are on the hook to deliver business growth,Based on our experience, here are some specific steps regardless of what the economy is doing. HR can helpHR can start taking right now to support the CEOby actively supporting the companys primary growthgrowth agenda.strategies. In many cases, that means preparing thebusiness to capitalize on revenue and talent in emergingManage talent with growth in mind. Growth and markets; effectively integrating acquired organizationsinnovation are heavily dependent on having the rightwithout losing or squelching key talent; and fostering atalent in the right places at the right time. HR needsculture of innovation across the enterprise. Businessesto understand the critical skills required to execute the with HR functions that excel in these three areas canCEOs growth agenda now and in the future and better position themselves to deliver the kind of growthdevelop a plan for acquiring, developing, and retaining that investors and shareholders expect.the necessary talent in light of forecasted supplyand demand.Human Capital Trends 2012 Leap ahead 5 6. 2 OperationglobalizationMany companies are shifting toglobally integrated operatingmodels, where the home countryis just one of many markets.Many companies around the world are moving to newWhats driving this trend?global operating models, driven by the rapid rise of Rise of global customer markets. Different economiesemerging and developing economies both as customersaround the world are growing and recovering atand as sources of talent and by continuing pressure to different speeds. Mature markets in North America andreduce costs.Europe face flat or uneven demand, while emerging and developing markets such as China, India, LatinHistorically, companies doing business outside of theirAmerica, Southeast Asia, and the Middle East arehome country have tended to rely on one of two widely recognized as the primary engines for futureoperating models. First is a federated model (sometimesgrowth. In Brazil, economic growth continues on theknown as an international model) in which the rest ofstrength of its export economy, but also rising domesticthe world is subordinate to the companys home market. demand. An estimated 35 million people joined theSecond is an entrepreneurial model (sometimes knownmiddle class between 2003 and 2009, and 20 millionas multidomestic) in which multiple geographies are allmore are expected to be included by 2014.i In China, thetreated as distinct and separate.middle class is already larger than the entire population of the United States.iiLooking beyond these two established models, manyleading companies are increasingly shifting toward a third Rise of global talent markets. Over the past decade,model, where major business operations (including both the talent pool has become increasingly global andfront- and back-office functions) are globally integrated, not just for commodity activities, such as offshorewith the companys home market treated as just one ofmanufacturing, transactions, and call center operations.many global markets. Many companies are now using offshore resources for high-value activities, such as R&D, knowledgeThe move toward a globally integrated operating model is processing, and advanced analytics. The United Stateslikely to be one of the most significant transformations a used to lead the world in the number of 25- to 34-year-company will ever face. Much of it involves people-related olds with college degrees. Now, it ranks 12th among 36issues, such as change, talent, and HR operations anddeveloped nations.iii Also, China produces 10 times moreHR has important roles to play in this transformation. The natural sciences graduates than the United States.iv Whilequestion is how can HR leaders and their teams prepare tothe quality of science and engineering graduates frommeet the challenge?emerging markets may not be as high as those from developed markets, the overall trend is clear.6 7. Operation globalizationHyperconnectivity. Technology is accelerating the rise that are truly global. This will require new organizationalof global customer and talent markets by making it easystructures and governance models, including decisionfor people to communicate and collaborate, whether frameworks that specify who, how, and where decisionsthey are in adjacent cubicles or halfway around theare made. It will also require new approaches to rolesworld. In a business environment where everything is and responsibilities and new business processesconnected to everything else, geographic distances and that can harness the full strength of a workforce that isnational boundaries are almost irrelevant. increasingly boundaryless, collaborative, and virtual. This may involve rationalizing or consolidating some businessesCost pressure. The need to cut costs used to be theand functions. The biggest challenges are anticipated tomain reason for moving work to lower-cost locationsbe balancing the trade-offs of global scope, scale, andand remains a key driver thanks to a tough economy control versus local market responsiveness, innovation, andthat has prompted the most significant cost restructuringautonomy. Risk management and regulatory compliancein decades. However, reducing costs is now just oneacross national boundaries will also be significantof many important reasons for tapping the global challenges.talent pool. Managing global talent. In the future, its likely thatRegulatory and capital requirements. In the financialsome work activities will continue to be centralized inservices sector, increased regulation (both nationally and low-cost labor markets in order to reduce costs andglobally) and higher capital and solvency requirements capitalize on economies of scale. However, other activitiesare forcing many companies to adjust their globalwill increasingly be done in local markets in order to alignfootprints and change how they operate.with emerging sources of revenue and improve product localization and customer responsiveness. CompaniesPractical implications will likely need direction and support from HR to developAs many companies make the leap to global operatingglobal talent strategies that provide the new skills andmodels, they are rethinking virtually every aspect of theirtalent in new places. They will also need HR to help createoperations, including how work gets done, who does a pipeline of leadership that can be quickly redeployed toit, where people are located, and how they should be capitalize on global opportunities the moment they arise.organized. This metamorphosis is happening right beforeAlso, companies may face challenges in managing a moreour eyes and it is likely to continue, with or without diverse and complex workforce with vast differences inHRs help. nationality, culture, socioeconomic background, lifestyle, and education in addition to traditional diversityThe evolving vision for many is a flexible operating model factors, such as gender, race, ethnicity, and religion.where work can be shifted to whatever global locationmakes the most sense, based not only on the cost of labor, Leading change everywhere. For manybut also the areas future revenue potential and supply of companies, the shift to a globally integrated operatingskilled talent. Companies are looking for the right balancemodel represents a fundamental change of virtuallybetween customer and talent markets. Both are shifting.unprecedented scale, complexity, and importance. Leaders and employees tend to have a hard time coping withMany leading HR organizations are playing a number ofchange of this magnitude. In fact, many companies inimportant roles in this transformation process. In particular, the past even struggled to implement relatively simplethey are ratcheting up their capabilities and involvement in global operating models, such as offshore manufacturingthree areas. and offshore administration, largely due to change management challenges. HR can help by serving as aDesigning global operating models. As we moveleader and change agent, working with senior businesstoward a future where home countries are less dominant,executives to prepare for organizational resistance and tocompanies will need HR to help design operating models plan, organize, and execute a transition to new ways of making decisions and working. Human Capital Trends 2012 Leap ahead 7 8. Operation globalizationLessons from the front linesMoving to a global operating model will likely requireA leading beverage company with both local and global strong support from HR. Here are five actions that HRbrands wanted to increase its focus on global brandsorganizations can take right now to start getting ready.and boost growth in emerging markets by leveraging itsexpertise in areas such as supply chain, HR, and finance. Invest in HR leaders with the knowledge, skills, andTo do that, the company moved from an entrepreneurial motivation for global operations. New operatingmodel (based on geography) to a federated model, with models are anticipated to require new skill sets.strong integration of key functions across the global Develop or hire HR leaders with the skills andenterprise. competencies to be business driven and to leadand support business change.A global financial services company had grown by settingup independent business units in various countries. EachExpand HRs services. Rethink the services that HRunit was self-sufficient and had all of the resources and provides and how those services are delivered. Developfunctions of a stand-alone company, including its own new services and capabilities to support strategicregulatory compliance group. In the wake of the financial business activities, such as M&A and new-market entry.crisis, the company adopted a federated model to bettermanage risk. Functions such as Risk Management, Align HR around a global operating model. RedesignCompliance, HR, Finance, and Information Technology (IT)HRs organizational structure to align with and supportbecame global functions, while sales, marketing, and localbusiness operations that are truly global. Develop newcompliance remained in country. Product development was roles, responsibilities, and skill requirements for HR staff.both a local and global collaboration.Ratchet up HRs change management capabilities.A computer company that manufactures and sellsCreate a dedicated team with deep knowledge andhardware, software, and services had created a footprintexperience in managing large-scale change. Keyof individual country operations designed to serve localskills include leader and employee communication,customers as effectively as possible. However, many executive coaching, transition planning, and overcomingancillary functions, such as IT, finance, and HR were global. organizational resistance.In order to maintain its growth trajectory, the companydecided to focus more attention on its biggest and best Harness the power of advanced analytics. Despite thecustomers, which were also becoming increasingly global.proliferation of HR management and enterprise resourceThe company shifted to a globally integrated operatingplanning (ERP) systems and data, many companies stillmodel so that its products, services, and geography would lack important insights about people-related businessnot get in the way of serving global customers. issues. Advanced analytics can help a company manageits global workforce more effectively and focus its effortson business areas with the greatest need. For example,it can help predict talent supply and demand based ona wide range of factors, including leading indicatorssuch as customer demand forecasts and new homeconstruction. It can also help identify critical workforcesegments based on current and future businessrequirements.8 9. Operation globalizationTurning the corner on globalizationThats all changing. In 2012, forecasts predict that moreBusinesses have been going global for a long time. But than half of the worlds imports will be purchased byuntil recently, globalization was managed as a separateemerging markets while mature markets will likely faceactivity, with mature markets on one side of the portfolio uneven recoveries, flat growth, and declining talent pools.and emerging markets on the other. Many internationalMeanwhile, emerging economies are widely recognized ascompanies continued to define themselves based largely the primary engine for future growth, profits, and talent.on their success in established markets. They served In response, many leading companies are creating trulyemerging markets by creating local subsidiaries that global business and operating models that no longer treatwere separate from their core business back home. Andthe home market as the center of the universe. And theythey treated global talent as a niche of cheap labor for are increasingly looking to global talent pools for highcommoditized activities, such as offshore manufacturingvalue skills, not just cheap labor costs. This shift to newand transaction processing.levels of globalization is likely to be one of the biggest changes that organizations will face this decade. For HR leaders, the shift to new global operating models is an opportunity that demands attention and focus drawing on HRs particular ability to lead and shape the agenda around change, talent, and global HR operations.EndnotesiGrowing Middle Class Fuels Brazils Economy, Domm, Patti, April 28, 2011, (February 1, 2012)iiThe Biggest Story of Our Time: The Rise of Chinas Middle Class, Wang, Helen H., December 21, 2011, Forbesiii Once a Leader, U.S. Lags in College Degrees, Lewin, Tamar, July 23, 2010, The New York Times (February 1, 2012)iv OECD Development Centre, Working Paper No. 285, THE EMERGING MIDDLE CLASS IN DEVELOPING COUNTRIES, Kharas, Homi, January 2010Human Capital Trends 2012 Leap ahead 9 10. 3 Fast-track to the top Developing the next generation of leaders to drive future growth The need for a stronger, deeper leadership pipeline isTrue high potentials are a precious asset that is critical to nearly universal. In a recent study by The Conference an organizations future growth and success. They are the Board, CEOs in every industry rated leadershipbest of the best and should be nurtured accordingly. development as a top three priority.i Yet, during the Cultivating the right mix of personal attributes, skills, and economic crisis, many organizations discovered they experience requires rapid evolution through a diverse didnt have the depth of leadership necessary to navigate range of leadership opportunities and career paths. todays challenging business conditions. Moreover, they Accelerated leadership development is about making lacked the data and insights to know which leadership this happen. candidates were truly worth developing and investing in particularly when facing sharp budget cuts. Whats driving this trend? Aggressive growth targets in global and converging The task of identifying and developing high-potential markets. Rapid expansion into new markets demands leaders is nothing new. Whats different now is thatleadership that can handle the unknown. With growth as a many organizations are getting much clearer about whatdominant business driver and the increasing importance high potential really means based on science, not of differentiation companies require leaders who can anecdotes and then investing in an integrated set ofmake change and innovation happen across converging data-driven activities to accelerate the development of industries and diverse cultures. their most promising leadership talent. Severe leadership pipeline shortages. High-potential Being ranked in the highest performance category does leaders are scarce especially executive succession not necessarily make someone a high potential employee. candidates. Many companies are finding it increasingly What really distinguishes these special leaders from theexpensive and risky to source senior leaders externally, rest of the pack are their critical leadership attributes and particularly for top jobs in global growth markets and the value they can provide to drive the companys growth. critical product/service segments. High-potential leaders must be able to operate on a globalIncreased scrutiny from boards and investors. scale and adapt quickly to change. They also need the Boards, investors, and analysts are taking a closer look at depth and breadth of skills and experience to work across leadership risks across the organization, not just at the converging industries. For example, high potentials in theCEO level. They are asking tough questions about the telecommunications world must be able to lead, manage,numbers and types of leaders necessary to meet growth and innovate across multiple business areas including commitments and navigate uncertainty. Also, they are computing, entertainment, and social media as well as demanding multiple options for critical positions and multiple geographic markets.arent willing to wait 10 years for an organization to close the leadership gap.10 11. Fast-track to the topRising expectations and declining loyalty of top talent.Requiring dual ownership of development. CompaniesCompanies want more from their leaders and leadersare providing candidates with guidance and simplewant more from their companies. When next-generationtemplates but are requiring high potentials to chartleaders believe their companies are underinvesting in their their own path. Many leading companies are engagingdevelopment, they will look elsewhere for opportunities the senior executive team to endorse each candidatesto grow often with competitors. They are expected todevelopment plan and to make specific commitmentsdo more with less yet are not being sufficiently challenged to help top candidates develop faster. This collectivewith the diverse set of experiences that can help themownership of development and engaging at the very topexpand their personal brand and value proposition in theof the organization help make sure this talent gets theenterprise. As a result, they grow impatient, especially as visibility and support required to develop at the pace thatopportunities start to open up elsewhere. is required.Demand for leadership ROI. Although the C-suite Balancing the three Es. Creating an integratedrecognizes the importance of developing the nextdevelopment ecosystem that balances experience,generation of leaders, it wants to see a tangible return on exposure, and education. This goes beyond traditionalits development investments. Are the right investments70-20-10ii approaches by coordinating all three elementsbeing made? What are the returns? How do you measureand actively creating development opportunities.current investments when they are building futurecapabilities? Beefing up the leadership pipeline can driveExperience. Moving high potentials througha companys growth agenda, reduce succession risk, andstretch assignments (such as full-time opportunities,deliver tangible business positions, and special projects).Assignments can be planned in advance, made availablePractical implications for HR through a competitive application process, or someAccelerating the development of next-generation leaders combination of the two as long as the career pathsrequires an integrated approach. Individual programs that and ground rules are clearly understood. Movementare not coordinated send mixed messages and often workcan be accelerated by putting the right governance inat cross-purposes which can slow down development place so senior executives can make the tough callsand increase retention risk. Top companies are taking clearing the path for next-generation leaders evenseveral steps to accelerate leadership development. when it means moving mediocre performers out of rolesto create space.Aligning leadership strategy with business strategy.Leading HR organizations are establishing up-to-date, Exposure. Next-generation leaders need clearforward-looking leadership strategies and models (i.e., sponsorship from the top. Coaching and mentoring arerequired capabilities and pipeline) that align with and still important but arent sufficient. This requires easy andanticipate their companies business strategies. This isfrequent access to existing senior executives who willtrue north for development efforts and investments, and be advocates and help open doors to new opportunitiesis specifically tied to the organizations growth agenda, across the enterprise. Strong sponsorship is especiallyincluding target growth markets and product segments. important to establish and develop a diverse leadershippipeline.Determining leadership potential using predictive, harddata. Top companies are using processes and tools thatEducation. Leading companies are creating learningare data driven and unbiased to identify leading indicatorsprograms that are experiential, blurring the linesof talent with accelerated development potential and thenbetween the classroom and the real world. Leader-ledengaging senior executives in the selection process so theyprograms that use simulations and storytelling areget to know promising talent early in the developmentpowerful methods to prepare up-and-coming talent toprocess. The goal is to identify next-generation candidatesoperate at the next level. They also provide exposurewith the potential to quickly develop the required depth to sponsors and accelerate the formation of personaland breadth of capabilities. networks within and across silos. Selective use of outside Human Capital Trends 2012 Leap ahead 11 12. Fast-track to the topexperts can jump-start thinking, share leading practices,Lessons from the front linesand offer fresh perspectives provided there is a strongAn integrated approach is only part of the solution forlinkage between the experts content and the companys accelerating the development of next-generation leaders.leadership model and business strategy.Leading companies are also paying attention to several critical success factors: Avoiding mixed messages. Aligning talent programs (e.g., selection and assessment, development planning,Work to avoid a leadership backlash. Changing the way performance and rewards, and succession management) you select and groom next-generation leaders can send so they accelerate leadership development, rather thansevere shock waves through the organization. To avoid hinder it. Poor alignment among development and talenta backlash, carefully manage reactions and resistance programs can slow down leadership development. Forat every level of leadership, starting at the top. Strong example, a compensation program that rewards short- support from the CEO and board, combined with careful term thinking and cutthroat behavior is unlikely to produce messaging, is critical. leaders who can see ahead and inspire the teamwork necessary to drive growth.Align development activities with leadership strategy. Decide whether you will primarily develop next-generation Measuring what matters. Leading companies baseleaders internally or hire them from the outside. This will their performance metrics on their leadership models andhave a major impact on your development strategies, business strategies not the other way around. programs, and investments. Note that there is more than one right answer as long as buy is not an excuse for your companys inability to build its own robust leadership pipeline. Leading companies optimize the Figure 1: Accelerated development model for next-generation leaders build-buy mix. Governance Walk the talk. Some organizations try to brand themselves as leadership meccas without creating the underlying leadership framework, brand, and holistic ng development system to support their claims. This approach nilan Pertp is especially likely to backfire with next-generation leaders fo rmen pman who typically become frustrated by the disconnectce lo ve an between actions and words.De dExperience re wa rd s Committing to leadership developmentStrategy conditions Developing the next-generation of leaders requires a strong commitment from the organization. This includes Capabilitiespipeline brand putting the greater good above the interests of individual Exposure Education business areas for example, moving promising leadersSe lec to other parts of the organization in order to broaden tio n t an entheir base of experience. It also includes enlightened demas gna governance by a dedicated group of decision-makers who se masson m i are willing to tackle tough decisions such as choosing ess encc tSu the right people and defining compelling career paths and then backing those decisions up with adequate funding and action so they dont get watered down.Metrics12 13. Fast-track to the topWhat defines a good leader? In whom should companies invest?If only we had better leaders, we could _________. Thats what we hear over and over from the companieswith whom we work. Whether they fill in the blank with expand into new markets or meet increasingregulatory demands or transform the company or some other pressing issue they know that improvedleadership is critical to meeting the challenge.But what makes a good leader?While leadership at times may seem to be more art than science, data from Kaisen Consulting Ltdiii reveal six keyattributes that define good leadership. According to Kaisens experience, the most effective senior leaders knowhow to consistently do the following:Drive business competitiveness and innovationBuild key relationships and win people over without using positionSet and effectively communicate vision and direction for peopleAchieve results through the performance of othersDevelop their people for the longer termInspire followership and model a true sense of collaborationAlthough these leadership capabilities can be developed over time, the rate of development varies widely. In fact,the research suggests that people with the greatest potential possess four additional attributes that enable themto develop leadership capabilities faster than others.Change potential. Driving and responding to change; seeing opportunity in uncertaintyIntellectual potential. Thinking quickly and flexiblyPeople potential. Adapting to changing and complex interpersonal demandsMotivational potential. Adapting personal drive and focus to perform well in new and changing contextsIn Kaisens view, current and future leaders who possess these four key attributes are the true high potentials andshould be the focus of accelerated development efforts. Investing in these types of people can produce greaterROI for your organization.EndnotesiGo Where There Be Dragons: Leadership Essentials for 2020 and Beyond, The Conference Board, 2010.iiCenter for Creative Leadership.iiiKaisen Consulting Ltd, a team of business psychologists based in Bristol, United Kingdom, with data and insights from more than15,000leadership assessments. Human Capital Trends 2012 Leap ahead 13 14. 4 People risk is risky business In a world of black swans and growing uncertainty, HRs role in managing enterprise risk is expanding. Black swans are low-probability events that haveHRs role in risk management used to focus on the tactical, far-reaching impact. Such events used to be exceedingly administrative, legal, and regulatory risks that were rare, but in todays hyperconnected world, they are directly under its domain such as ERISA (Employee increasingly common and have enormous destructive Retirement Income Security Act) compliance, workplace potential. The euro crisis is a textbook example of how discrimination, and sexual harassment and on making increased connectedness, interdependence, and scale can sure its own systems and processes passed the annual turn a local problem into a global threat. Other recent risk audit. Now, forward-thinking HR organizations are examples include the following: partnering with the core risk functions e.g., Risk, Legal The 2008 financial crisis that began with subprimeand Internal Audit to better identify, prioritize, and mortgages in the United States but eventually triggered a monitor people-related risks, including black swan events worldwide recession that could threaten the entire business. The Gulf of Mexico oil spill that sent shock waves Whats driving this trend? through global energy markets Black swans are becoming less rare. In a hyperconnected The tsunami in Japan that disrupted global supply chainsworld, small trigger events that in the past might have and caused countries around the world to reconsider been locally isolated now have the potential for global their use of nuclear powerimpact. Also, the dizzying pace of change increases the The Arab spring uprisings that are continuing to reshapenumber and frequency of trigger events, making it hard for the worlds political landscape organizations to stay on top of all the risks they are facing. Local flooding in Thailand that caused a worldwide People risks are headline news. Whether its a shortage of hard drives management team that cooks the books or a nationwide shortage of math and science talent, the tremendous On the surface, none of these events would be consideredimpact that people-related risks can have on a companys a people-related risk. But as organizations dig deeper, itbottom line, market value, and prospects for future growth becomes clear that people are at the core of each major is becoming better understood by business leaders. risk if not as part of the problem, then as part of the solution. To help navigate this increasingly uncertainThe view of human capital risks is expanding. HR environment, many leading organizations are expanding risk management used to revolve around regulatory the role that HR leaders play in managing risk across compliance and the avoidance of lawsuits. Now, the the enterprise. focus is expanding to include the broad range of people- related risks that can undermine a companys performance14 15. People risk is risky businessand prevent a business from executing its strategy. The Preparing for broad risk discussions. Many leadinggrowing significance of these risks has raised expectations CHROs are preparing themselves to speak with authorityabout what HR can and should be doing to identify,about both strategic people risks and HR functionalprioritize, monitor, mitigate, and report on people-related risks. In addition, HR organizations are starting to embedbusiness risks. formal risk management and benchmarking into theirorganizations, processes, and strategies to provide aRegulation is increasing. Although regulatory compliancebroader, more informed view of people-related no longer the sole focus of Risk Management, it remainsCHROs who arent doing this may miss the opportunityan important catalyst for action. In many cases, newto contribute with their C-suite peers on theseregulatory requirements provide the initial impetus for important issues.broader improvement efforts. Also, regulators todayare making examples of companies that fail to comply. Collaborating with the Risk Management function.The growing complexity of HR regulations and associated Many leading HR organizations are treating internalfinancial penalties, as well as the reputational risk for risk audits as an opportunity for useful feedback andnoncompliance, are raising the stakes and increasingimprovement not as a check-the-box activity. They arethe degree of difficulty in managing these nonnegotiableproactively engaging with the risk management teamrisks.early in the process, so auditors can understand the detailsof HR systems and processes and provide meaningfulPractical implicationsinsights. They are also establishing a collaborativeAs risk rises to the top of the corporate agenda, HRrelationship supported by ongoing dialogue. HR teams andorganizations are adjusting their own priorities accordingly. HR executives dedicated to risk issues often have dual-reporting lines to the functional leaders in both HR andTaking the lead on managing human capital risks.risk management.Responsibility for managing risk ultimately resides with thebusiness and functional leaders, managers, and employeesCreating a risk mind-set for day-to-day HR activities.across the organization not with internal monitoringLeading organizations are making risk management anfunctions, such as the Risk Management department, Legalintegral part of HRs operating processes. Too often in thedepartment, internal audit team, or even HR. But given thepast, the HR processes documented by risk managementstrategic importance of people-related risks, many leadingwere not the ones that HR actually used, which exposedorganizations are looking to HR to help the businessthe organization to unnecessary risk and complicated themanage these risks as effectively as possible. This often risk management process. Now, HR and risk managementrequires a dedicated team or executive within HR to focus are starting to work together to create a single set ofon human capital risks throughout the enterprise and to processes that are both practical and risk intelligent.coordinate with other risk-focused functions.Making the most of existing data. HR has a wealthChanging how HR works with the business. In order toof data that can help a company manage risk moreidentify people risks before they become problems, many effectively. Many cutting-edge HR organizations are usingleading HR organizations are engaging the business across advanced analytics to generate new insights about currentthe entire spectrum of risk-related activities, from strategy risks as well as predictions about the future so theyand planning to operations and compliance. They are can stay ahead of risks, instead of chasing them downgetting directly involved in the strategic planning process from behind. For example, employee turnover data areand are collaborating with the business to mitigate riskbeing used to raise a red flag about hidden risks, such asand measure effectiveness. Chief human resources officers incompetent management, fraud, or sexual harassment,(CHROs) also are joining risk committees and establishing thereby enabling business and HR leaders to addresspeople-related risk as a recurring agenda item at executive problems before they spiral out of and board meetings. Human Capital Trends 2012 Leap ahead15 16. People risk is risky business Understanding the risk impact of HR changes. Every Previous audits had mirrored the companys decentralized modification to a business has risk implications, and astructure of the company, with individual business units significant change to the HR function is no exception. and corporate functions each deciding for themselves Although such a change might create important benefits what the key risks were and assigning their own internal for the organization as a whole, it can also createaudit teams. This was a valid approach for business unit problems. Whether its a new HR process, policy, system, audits but created significant gaps and inefficiency for HR program, or vendor, most leading organizations are audits. Also, there was a significant learning curve as new recognizing that changes within the realm of HR canpeople rotated into the HR audit team. directly or indirectly affect the risk profile of the entire organization. When undertaking a large-scale improvement The company decided to make an investment, bringing to HR service delivery, for example, the potential risktogether the Risk Monitoring function, the HR function, impacts need to be evaluated and documented and then and outside specialists to define and develop an improved incorporated into the overall risk management process. HR audit based on how the company was organized,the HR operating model, the responsibilities of the Risk Recognizing the importance of aligned incentiveMonitoring function, and the business risks that were most compensation programs. Changes to incentivecritical for the industry and company. Although the fix was compensation are especially significant from a riskconceptually simple, it represented a dramatic shift from perspective. Done right, they can reduce risk by the status quo. Given the complexities of HR operations creating stronger alignment between risks and rewards. and the deep technical knowledge required to evaluate Done wrong, they can reward and encourage riskierHR risk combined with the fact that HR risk transcends behavior. New regulations and increased scrutiny are organizational silos the company created a dedicated raising awareness of this issue for company boards and team responsible for auditing HR risk across the entire compensation committees, who expect their HR leaders enterprise. In addition, HR appointed its own internal team to understand and clearly articulate the link betweento focus specifically on assessing, mitigating, monitoring, incentive compensation and risk. and reporting on HR risks. Initial results show the auditsare going smoothly and providing company leaders with Helping to transform risk management. As risk exposure greater insight about potential HR risks, while minimizing and complexities increase, enterprises are starting to makegaps, redundancies, and friction between HR and internal risk management a core competency by embedding riskauditors. management into the very fabric of the organization. To manage risk effectively, people need to know what to do, HR takes on risk how to do it, and most important why they need Given the heightened risks in todays business world to do it. This transformation requires close alignment and increasing recognition of the critical role that between the risk management program and HR-related people play in avoiding and managing risk CHROs find areas, such as the organization, leadership, performance themselves in the risk spotlight as never before. As usual, management, and learning programs. they are expected to stay on top of risks in traditional HRareas, such as HR operations and regulatory compliance. Lessons from the front lines But now, HR leaders are also expected to be actively A senior audit director was preparing to audit HR forinvolved in addressing all business risks that relate to the third time when he realized his team did not truly people. Thats a big job. But it is also a big opportunity. understand the business and functional risks associatedAnd in a world where once-in-a-lifetime events now seem with HR. Although the team had performed successfulto be an almost monthly occurrence, its an opportunity HR audits in the past, he knew something wasnt right. HR cant afford to miss.16 17. 5 Seeing aroundcorners Advanced tools are turning workforce data into powerful insights that help businesses navigate uncertainty.Many leading companies are using workforce reporting Whats driving this trend?and analytics to help make better, more informed decisions The need to look ahead. In todays fast-paced businessabout their human capital. By capitalizing on the latest environment, companies need predictive solutions thatanalytical tools and techniques, they are improvingcan help address critical business issues, such as retention,acquisition, retention, and rewards; reducing labor costs; before they become problems.improving productivity and employee effectiveness; andmanaging risk more effectively.Workforce complexity and cost pressure. As workforces become more global and complex, managementWorkforce reporting and analytics traditionally used challenges increase exponentially. Advanced analyticshistorical data to improve decision-making and businesshelp HR and business leaders cut through the complexityperformance. And it still does. But now, advancedto control labor costs and generate more value fromanalytical tools and techniques, such as predictivethe workforce.modeling, are also making it possible for organizations toglimpse into the future and make informed predictionsUntapped data. Widespread deployment of ERP andthat they can then develop into targeted solutions.other people-related systems is creating vast amounts of useful workforce data. Yet much of that data remainsFor example, advanced analytics is helping leading locked up in organizational silos. Workforce reportingorganizations retain top talent and mitigate churn byand analytics can increase the return on a companysidentifying employees who are potential flight investments by helping to turn mountains ofThis kind of analysis may include everything from past raw data into nuggets of valuable insight.and current employee data and performance ratings tomentoring relationships, compensation levels, personal Cloud reduces barrier to entry. Cloud services can givenetworking activity, and even daily commute time.HR more control over its own tools. HR can decide for itselfAdvanced analytics tools are also helping organizationswhat reporting and analytics capabilities it needs and canbeef up their leadership pipelines by looking deep intothen gain quick access to those capabilities with a smallertheir workforces to anticipate which employees are mostcapital investment and faster time to implement. Also,likely to reach the top. cloud applications are frequently updated to reflect the latest business practices, which makes it easier for HR to stay on the cutting edge.Human Capital Trends 2012 Leap ahead17 18. Seeing around corners Practical implications Talent potential and progression. Assessing the Many organizations have been focusing the bulk ofreal-world effectiveness of development programs their reporting and analytical resources on core businessby mapping them against actual career progression. activities such as sales, marketing, and financial Developing a healthy leadership pipeline by using reporting and will likely continue to do so. However, as advanced analytics to identify employees with strong people and talent gain recognition as a key differentiator,leadership attributes deep within the organization, not an organization needs deeper insights about its workforcejust near the top of the organizational chart. in order to guide its strategy.Proactive retention. Talented people tend to leave for Workforce issues, such as managing and retaining talenta combination of reasons, not just one. Many forward- and controlling labor costs, are some of the top challengesthinking companies are retaining top talent by using for organizations today. A company that understandsmultivariate predictive modeling to help identify key its workforce needs better than its competitors do can employees who may be flight risks and then applying compete more effectively in the labor market and can the resulting insights to develop individualized retention unlock more value from its workforce. Organizations that strategies. have invested in workforce analytics supported by the right processes and infrastructure for example, integratingLessons from the front lines HR and talent systems; collecting comprehensive andMany leading companies are starting to combine data and consistent information across functions; and managinganalytics from a variety of business functions as well as operational, management, and historical data can outside sources in order to sharpen their insights. This uncover powerful insights. broader approach is likely to be the future of workforceanalytics. Here are some examples of specific areas where workforce reporting and analytics are having a major impact: For example, one company is combining CRM (customerrelationship management) data about customer buying Forward-looking workforce planning. Using modeling behavior (what they buy, when they buy, share of wallet, to anticipate future talent supply and demand, bothetc.) with HR data in order to improve how its workforce is locally and globally. Identifying critical workforce allocated. It is using the output of this analysis to rethink how segments based on current and future business needs. it does business and improve efficiency. For example, instead These improvements touch virtually all aspects of theof having everyone work a standard eight-to-five schedule, organization, including finance and operations.employees are assigned different times and work locationsbased on their individual skills and the unique requirements Managing talent acquisition. Measuring recruitingof the customers they are likely to be serving. The company effectiveness. Using automated resume screening to not is also analyzing whether operating its sales force from a only guess which candidates are most likely to be hired, geographical perspective is the most cost-efficient approach. but which ones are likely to rise in the organization over the long term. Another company is using external data such as marketforecasts and new housing starts to anticipate the Workforce performance. Analyzing and managing topfuture availability of local talent. performers to confirm they are being used as effectively as possible. Understanding how performance evaluations In our experience, there are a number of important issues to and compensation link to retention. Designing an consider when deploying workforce reporting and analytics: effective management structure.Start small and build momentum. Work in manageable Diversity effectiveness. Identifying diversity issues chunks and use data to drive practical decisions. Effectivebefore they become problems. Measuring the true efforts typically start with data integration and basiceffectiveness of diversity programs.reporting and gradually work their way up to advancedanalytics. Once the organization starts to see value,additional investment will likely be easier to secure.18 19. Seeing around cornersFocus on capabilities, not just point solutions. Point Consider cloud to jump-start the effort. A cloudsolutions for workforce reporting and analytics can help vendor can host your reporting and analyticsdeliver significant value, but they arent the end of theinfrastructure and provide analytics support based onstory. Broad solutions that go beyond technology tendleading practices and industry knowledge. This reducesto deliver better, more sustainable results over the longyour costs, lead time, capital expenditures, and internalhaul. Desirable capabilities include the skills to designsupport requirements.the analytics, interpret the findings, and translate thefindings to action.Use what you learn. Reporting and analytics can quickly become shelfware if they point toward actions that youLeverage existing technology investments. Workforcedont take.reporting and analytics can be done using the systemsand data you already have but with better integrationand controlled access. You dont need to buy newtechnology in order to get started.Figure 2: The workforce reporting and analytics journey What might be happening? Predictive analyticsWhy is it happening?Cross-process Organization, job, andand functionalHR information maturityworkforce predictive analysisanalytics Cause and effect Integrated analyticsWhat is happening?Basic analytics Multiple sources of dataConsolidated Process-specific analytics reporting Single source of data Data and basic Data integrity and quality reporting Basic employee lists and extracts Compliance reportingTransactionalIncreasing business valueStrategicSource: DeloitteSeeing around cornersWorkforce reporting and analytics solutions deliver valuable insights to enable smarter decision-making. They can providepowerful reports that give business and HR leaders the integrated view necessary to effectively manage a complex, globalworkforce. And thanks to advanced predictive modeling, they can provide a glimpse into the future so companies can seearound corners and get ahead of potential workforce opportunities and risks.Human Capital Trends 2012 Leap ahead19 20. 6 #social #mobile @workSocial media and mobiledevices are raising the baron HR service delivery. Change is happening. Again. As social media and mobile The introduction of social and mobile technologies is not devices quickly become essential parts of our daily lives, only expanding HRs service delivery options, it is also they are starting to influence how HR services are delivered increasing HRs value to the business. Although social and and the direction HR transformation efforts take. Beyond mobile technologies will not entirely replace traditional HR just being the next new thing, integrating social media andchannels, social and mobile tools are easing the burden mobile devices with HR service delivery can provide a real while providing customers with a richer experience that is opportunity to restore some of the personal touch that more engaging and often more convenient. was lost in previous pushes for improved HR efficiency.Whats driving this trend? Traditionally, HR service delivery has been based on Social media and mobile devices are effective tools that structured and specialized interactions between thecan help improve HRs service and responsiveness. services HR provides and its customers (e.g., employees, managers, recruits). Typical scenarios might involve anBreakthrough technologies. Mobile devices and social employee who updates benefit options through an online media are revolutionizing the way people interact, a self-service system or who contacts an HR call centermaking it easy to communicate and share knowledge with specific questions about benefits.without regard to time, geographic location, ororganizational boundaries. Now, HR has an opportunity to use social media tools to create communities for sharing knowledge andBusiness acceptance. Mobile devices and social media to support employees through direct, yet informalhave become standard business tools. According to a communication. Additionally, mobile devices can providerecent study, less than 15 percent of business executives convenient, on-demand access to this knowledge and still view social media in business as a fad.i experience from almost anywhere in the world. Instead of contacting a call center, for example, an employee withRising expectations. In their personal lives, many benefits questions could use a smartphone to view andpeople have already come to expect the rich, engaging participate in a discussion thread where specialists and experiences that mobile devices and social media can other community members share their own knowledge, deliver. Now, they are looking for the same thing from opinions, and questions. their interactions with current and potential employers.A recent article on featured a how to guideon using social media to land a job.ii20 21. #social #mobile @workPractical implications Lessons learned from the front linesThe gauntlet has been thrown down. If HR does notFor most HR organizations, developing and implementingadapt, it may become obsolete. Fortunately, social media a strategy for mobile devices and social media is no longerand mobile devices are sparking numerous opportunities a luxury; it should be considered a necessity. Heres howfor HR to remain relevant. to do it.Social and mobile technologies can reinvigorateCreate a holistic strategy and value propositionpersonalized HR service. Over time, the relentless pushwith other business functions. The rise of mobilefor efficiency and economies of scale tended to make HRdevices and social media affects a wide range ofservices less personal. Ironically, technology is helping to functions beyond HR, including Marketing, Legal andreverse this trend by enabling HRs customers to develop Public Relations. CHROs should work closely with otherreal relationships with real people in a virtual leaders to define the benefits and execute aCustomers can tap the communitys collective expertise coherent strategy. Decision-makers will likely be lookingin a highly personal and interactive way, instead of being for a rigorous business case and solid ROI numbers;limited to scripted conversations with anonymous callhowever, many of the benefits associated with mobilecenter representatives.devices and social media are difficult to quantify. That doesnt necessarily mean they are less valuable; it justHR service centers can evolve into communities.means they need to be evaluated from a strategicShared Services Centers can become Shared Services perspective.Communities where employees, managers, vendorsand alumni help each other by sharing knowledge andEnable HR to drive social and mobile adoption.finding innovative ways to improve services, processes Mobile devices and social media have far-reachingand policies. Similarly, Centers of Expertise can become implications and require an HR function empoweredCommunities of Expertise, where people are ablewith broad responsibilities that include direct influenceto access broader knowledge and insights through over HR processes, technology, and service delivery.collaboration inside and outside the enterprise. Without empowering HR, companies may miss the opportunity to embed these critical technologies intoHR portals are morphing into social platforms. HRthe fabric of their organization.portals have traditionally been structured around staticcontent and predefined transactions. Now, they are Consider the specific needs of each customerevolving into platforms for personalized content and segment. The new model and tools should be viewedemployee engagement. Social media capabilities enableas a complement to existing HR delivery channels, not aemployees to interact with HR and other parts of the replacement. Some people may be unable or unwillingorganization, as well as with external vendors, alumni,to use mobile devices and social media. Forcing everyoneand colleges. Mobile devices help deliver on-demandto switch could alienate or exclude key user segments.service through easy-to-use apps that are availablealmost anywhere. Define success. Identify the desired outcomes for the three main stakeholders: HR, employees, and the overallTraditional forms of HR service delivery are still business. Different organizations will have differentneeded. In the same way that online and mobile needs and expectations about investing in a strategybanking havent eliminated the need for bank branches, for mobile devices and social media: some will see it associal media and mobile devices are not eliminating thesimply a way to stay current; others may recognize it as aneed for traditional forms of HR service delivery (e.g., valuable opportunity to improve their operating models.manager and employee interactions, phone calls andemails to a service center, recruiting via campus visits and Develop and implement an integrated solution.job fairs, and desktop and classroom learning). In someGiven the excitement and urgency surrounding mobilecases, users have limited access to the required tools and devices and social media, its tempting to dive right intoconnectivity; in other cases, they simply prefer the old point solutions. Cloud services add to the temptation byway of doing things.Human Capital Trends 2012 Leap ahead 21 22. #social #mobile @workallowing individual process owners to acquire their ownOn the social front, we have created an internal platformsolutions without going through IT. This is especially truecalled D Street that allows our people to connectfor talent management activities, such as recruiting and with each other and share ideas and information. Itperformance management, which tend to have moreprovides features similar to other social media platformsfunding and organizational clout and are actively beingbut is integrated with the knowledge repositories andtargeted by cloud vendors. Although individual solutions collaboration tools that support our business. Peoplemay work fine on their own, failing to integrate themcan build relationships and improve their personal brandinto HRs overall service delivery model can lead to datawhile accessing the systems and information they needproblems and a bewildering array of user interfaces that to do their jobs. Community managers and other controlundermine HRs value.mechanisms help maintain order and create a clear distinction between authoritative information and opinions Manage social and mobile risks. Social media a distinction that is absolutely essential in a business like platforms can easily become forums for spreadingours. D Street is also integrated with our email system, so rumors and misinformation. Mobile devices can weakenpeople can stay involved and participate without having to security for sensitive information that is private or make a special effort to check in. confidential. These kinds of risks are not deal breakers, but they should be actively identified and managed. On the mobile front, we have developed a wide range of tablet and smartphone apps to deliver everything from Play the role of facilitator and moderator. Socialnews alerts and timesheet management to on-the-go media discussions tend to spring up organically;D Street access. Custom apps address the specialized however, HR can add significant value by seedingneeds of our highly mobile workforce, including a hoteling the dialog and helping connect the dots. Also, whileapp that enables employees to reserve office space for discussions tend to be self-policed, fact checking andtimes when they happen to be in town and a travel app moderating can help ensure they stay on track and dont for managing trip information with interactive maps for propagate rumors and false information. The need forupcoming destinations. fact checking and moderating, which didnt exist before, has created an opportunity for HR to actively involve The people have spoken itself in social media. Mobile devices and social media are here to stay. In the years ahead, we expect to see more and more people Continue to grow and improve. Social media andusing smart devices and social media to collaborate, mobile devices can provide a platform for ongoing communicate, and conduct their daily business. growth and improvement. HRs role as curator Organizations that adopt a wait-and-see approach seeding and nurturing communities and encouraging could be forced to play catch-up as they find themselves people to participate is essential for the long-termoutpaced and outmaneuvered by nimbler competitors. sustainability of a social model for HR service delivery. Right now, HR has an opportunity to lead from the front on this issue by harnessing the power of mobile devices These examples and insights arent just theories; theyand social media to transform how HR services are are based on real-world experiences. Deloitte is just one designed and delivered. Its time to get started. of many companies that are actively capitalizing on the effectiveness of social media and mobile devices to deliver and empower HR.iii Endnotes iCapgemini Survey Reveals the Rising Importance of Social Media to Customer Care,, July 25, 2011,(ttp:// iiHow to Use Social Media Sites to Land a Job, , 23. 7 Clouds inthe forecastCloud services are changing theway business operates, and HRhas a key role in helpingorganizations adapt.Cloud computing is changing the way people andacross organizations. Reduce training costs thanks tobusinesses work, upending conventional ideas about time-improved ease of use and browser-based, service levels, infrastructure needs, and more. Reduced capital investments. Replace capital expensesWith cloud, systems and data are typically located outsidewith operating expenses. Pay only for what you use.of an organizations four walls and accessed through theFaster implementation. Get up and running quickly byInternet. This has fundamental impacts on many partsavoiding the need to acquire hardware or to developof the business, transforming the nature of work andand configure applications.accelerating the pace of change across the enterprise.Agility. Adjust to changing demand and marketIn this emerging cloud services environment, HR has a requirements. Scale up or down as needed. Takeresponsibility to help the organization adjust its people advantage of vendor best practices, which are drawnand processes to operate more effectively. HR is uniquely from multiple organizations and rolled out quickly.positioned to do this not just because HR is responsibleSmarter decisions. Take advantage of cutting-edgefor the overall talent agenda, but also because manytools that support fact-based decision-making.HR organizations learned valuable lessons as early cloudadopters. Leading HR organizations are already usingPractical implicationscloud technology to improve how HR services areAs more and more businesses adopt cloud services, leadingdelivered. And now, they are looking for opportunities toHR organizations are taking the lead in addressing theshare their hard-earned experience and insights with themany people and talent impacts of moving to of the business.Some of these impacts are direct and immediate. ForWhats driving this trend?example, HR is helping IT organizations tackle the massiveCloud offers benefits that in many cases are too compellingchanges associated with cloud, which is redefining theto ignore. The technologies and processes associated withvalue of the IT function and transforming the roles,cloud are rapidly maturing and are now gaining acceptanceobjectives, and purpose of the IT workforce. This shiftas standard business practices. Recent forecasts for 2012requires new responsibilities and skills, including anpredict that 80 percent of new software applications willincreased focus on supplier management, businesstarget the cloud and that spending on cloud services willrequirements, and customer needs. It also requiresexceed $36 billion which indicates a rate of growth fourorganizational structures that align with a technologytimes faster than the IT industry average.i Key drivers formodel in which systems, applications, and data are nowcloud adoption include the following:located in the cloud and, in many cases, are operated andCost reduction. Improve utilization and save moneymanaged by a third party. The rise of cloud may lead tothrough consolidation of servers and data centers.reduced staffing levels for in-house IT, especially for lower-Capitalize on economies of scale by sharing resources value activities that are being commoditized by cloud.Human Capital Trends 2012 Leap ahead 23 24. Clouds in the forecast But clouds impact isnt just limited to the IT function. The Lessons from the front lines move to cloud is also changing how entire businesses areA large media company that operates in more than 100 organized by blurring geographic and physical boundaries. countries chose a cloud-based ERP solution to replace People can now operate as part of a cohesive unit while hundreds of local HR applications and radically transform working from the field, from home, or from halfwaythe way HR services are delivered. The cloud solution around the world. It is also blurring the line betweencreated common standards and business processes across an organization and its service providers, enabling and the companys entire global footprint, which enabled HR requiring new kinds of business simplify its systems and improve performance while helping the business become more agile and flexible. At the same time, cloud services are accelerating the paceBusiness leaders and managers now have access to the at which businesses operate. Organizations that usedinformation they need to make smart workforce decisions. to wait months or years for IT to upgrade their systems The cloud solutions advanced security capabilities allow are now seeing a constant stream of new features andsecurity policies to be designed, administered, and improvements emerge from the cloud. Also, a cloud-enforced consistently all over the world. And its extensive based technology model puts daily IT decision-makingself-service capabilities allow end users to access HR in the hands of end users, giving business leaders andservices 24/7 from a wide range of devices, including PCs, managers more autonomy and influence over the systems,smartphones, and tablets. processes, and data they use every day. This is a dramatic departure from the traditional top-down approach to ITThis experience and others revealed a number of practical decision-making.lessons that can help HR accelerate cloud adoption and ease the transition to cloud across the enterprise. To be effective in this new environment, organizations must make cloud services part of their DNA. Doing soMind the organization. Many cloud initiatives start out requires new skills and behaviors, including practices foras tool swaps, replacing traditional systems with cloud- managing a highly distributed workforce that may includebased solutions. However, significant organizational outside IT vendors. It also requires new learning and changes are often necessary to align the workforce with development techniques to help users adjust to a never- the new strategic vision and delivery model. ending stream of technology changes and enhancements. Increased accountability is also important, since cloud Create a cloud culture. In a cloud environment, technology gives business users more autonomy and organizations have an opportunity to make better control over which tools they use.decisions faster. This is driving a shift away from a methodical, consensus-driven culture toward an agile organization with clearly assigned decision-makers. Attract, manage, and develop cloud-savvy talent. The rapid rise of cloud services has sparked a talent war for employees with cloud-related skills. To fill the gap, leading organizations are retraining staff and developing better ways to attract, retain, and motivate workers with these valuable capabilities.24 25. Clouds in the forecast evelop cloud-savvy leaders. In a cloud-enabled world,DTaking the lead on cloudbusiness and HR leaders are more directly involved inMany HR organizations have already adopted cloud fortechnology decisions. To make the right calls, they need a variety of services, and this trend is likely to improve their understanding of cloud technology and Leading HR organizations are going a step further bythe business value it can deliver. leveraging their experience and expanding their role in helping the rest of the enterprise manage and acceleratePrepare for warp speed. With cloud, new features and the transition to cloud. The IT function is facing theimprovements are released on a timescale of days orgreatest short-term impact and requires the mostweeks not months or years and are simultaneously immediate support from HR. But over the long term,available to multiple organizations. This rapid pace clouds greatest impact is likely to be at the enterpriseof innovation requires HR to strengthen its change level, where it is literally changing how businesses capabilities. It also requires on-demandBy taking a lead role on cloud, HR is easing the transitionlearning and development techniques that can deliver and helping organizations acquire and develop the cloud-training quickly and efficiently.savvy talent needed to capitalize on the full potential of cloud services.EndnotesiIDC Predictions 2012, Competing for 2020, IDC, December 1, 2011.Human Capital Trends 2012 Leap ahead25 26. 8 Stay in front with an effective sales force A multichannel environment is creating the need for a different kind of sales force. The classic image of a sales rep is a one-man armyWhats driving this trend? drumming up business through a combination of personalEconomic pressure. A deep recession and uneven charm, inside information, guile, chutzpah, and single- recovery have made todays buyers more demanding minded determination. But thats not how most sales than ever while putting pressure on sales organizations battles are won these days. to work miracles. Although a sales force still needs heroes, todays buyers New technologies. Technologies, such as smartphones, demand more. Thanks to the Internet, they now havetablets, social media, and the Internet, have unprecedented access to product and pricing information fundamentally changed how buyers gather information and can make purchases at the touch of a button. Also,and make decisions and how salespeople sell. Buyers they increasingly rely on virtual relationships built through now have a world of information at their fingertips, social media. In this technology-driven, multichannel making purchases through a variety of channels and environment, its hard for traditional salespeople to defineusing social media to build new kinds of relationships. their full value. Sales forces should learn to use these technologies to their advantage, instead of falling victim to them. Meanwhile, the global economy continues to sputter. Buyers are demanding more for their money, even as salesRisk sensitivity. Todays headlines are filled with stories organizations face increasing pressure to reduce costs. about individual employees who cost their companies Also, companies in frantic pursuit of growth are rapidlybillions and put entire businesses in jeopardy through shifting their sales focus toward emerging markets, which fraud and excessive risk-taking. This development is are widely viewed as the primary engine for future revenuedriving increased regulatory scrutiny and putting a and profits.tighter leash on the sales force. These new challenges and complexities are giving rise to aGlobalization. For established companies in mature new way of selling and a new kind of sales force aeconomies, developing markets are widely seen as shift that has HR implications ranging from talent strategies the primary source of future growth. Yet many sales and organization design to learning and development,organizations are struggling to manage the complexity compensation, governance, and change management.of selling in a global marketplace and are still looking for the right balance between local responsiveness and global control and efficiency.26 27. Stay in front with an effective sales forceAnalytics. Advanced analytical tools can giveAt the high end, salespeople have become the first line ofsalespeople deeper insights about their customers than defense against threats of commoditization. A new typeever before. Using analytics, sales organizations can driveof sales rep is emerging one who doesnt just pushmuch more nuanced segmentation and evaluate whereproducts but has the business savvy to help customersto dedicate sales time and helping drive customers toimprove their companies and create business value. Thesethe most appropriate sales channel. Some customers high-end roles are being developed alongside teams ofwill be handled through face-to-face interaction, others more volume-based representatives who target buyerswill receive outbound calls, and others will be served unwilling to pay a premium for value. In addition, cross-primarily through the Internet. Analytics can also bechannel integration is creating an urgent need for salesused to anticipate which salespeople will likely be most reps who can be effective in an environment where buyersproductive.have many other sources of information.Practical implications The sales force is evolving toward an intelligent network,Some buyers are looking for the lowest possible prices and where team selling across multiple channels andarent willing to pay extra for personal service, although customer segments is driven by advanced analytics andthey still expect to be served. Others are willing to pay adeep insights about customer preferences. Increasedpremium but expect more from a sales rep than a little selling sophistication remains a priority, but its impact ischarm and firm handshake.enhanced by harnessing the entrepreneurship, insight, and networking capabilities of the team in the field.Figure 3: One possible 2015 scenario: from a well-oiled sales army to an intelligently networked sales organizationA well-oiled sales army sells smarter An intelligently networked sales organization sells differentlythan before Smarter segmentation Leverages insights from a new field and connects/spreads across Upskilled salespeoplethe sales team Clear marching orders Rethinks organizational design, incentive compensation, and data Aligned and personal support tools for leanness and to handle new challenges Keeps the way to win as smiple as possibleSource: Deloitte Human Capital Trends 2012 Leap ahead 27 28. Stay in front with an effective sales force Making the leap to the sales force of tomorrow requiresGovernance that balances control and flexibility. strong support from HR. Although many core elements of Many leading companies are developing governance sales force effectiveness have stood the test of time andstructures and internal controls that manage risk and remain a key focus for example, improved customerrogue behavior without stifling innovation and initiative. segmentation, skill set development, and sales support Intelligent risk-taking is needed. there are other areas where leading HR organizations are working in new ways with the sales force to improveStronger integration across channels and functions. performance. These days, more and more customers are buyinggoods and services without interacting with a sales rep. Different talent for a different way of selling. ManyIn this environment, many customer touchpoints companies are choosing to hire a different breed of salesincluding customer service and technical support are rep for high-value roles. People with business savvy, notimportant to the sales process. All of these customer- just product pushers. Team players, not cowboys. facing activities are increasingly being integrated andcoordinated. New skills and competencies. To be effective in this more challenging environment, sales reps need to Effective sales management. Skilled sales managers learn and develop new skills. How to work with otherscoordinate the various aspects of the sales process and and sell as a team. How to operate in a multichannel allocate resources to improve results. They also are environment. And how to leverage sales support and the front line for measuring performance, monitoring advanced analytics to drive revenue and create morerisk, and determining coaching needs and appropriate value for customers. development strategies to identify, grow, and retaintalent in this more complex sales organization. New organizational structures that foster collaboration. Many leading HR organizations are Overcoming resistance to change. The new approach helping to develop new structures that foster team to selling is fundamentally different and requires new selling and cross-channel coordination. They are behaviors and new ways of thinking. Many salespeople designing global organizations that balance the need may have trouble adapting to change of this magnitude for scale efficiencies and global coordination against the especially ones who have been successful selling need for local innovation and responsiveness to localin the traditional model. Effective adoption requires market requirements. And they are creating centers ofmanipulation of both the carrot (compensation) and excellence for sales support that help guide local sales the stick (threat of replacement) to motivate the teams while sharing leading practices across regions.desired behaviors. The sales force is a unique group andwill likely continue to need special handling. Rewards and incentives that drive the desired behaviors. New compensation models should balance short-term sales wins with longer-term relationship development. Incentives might include a short-term measure (e.g., commission) and a periodic longer-term measure (e.g., quarterly growth against targets) to determine total rewards. Noncash compensation can help foster desired behaviors, such as skill development and team selling.28 29. Stay in front with an effective sales forceLessons from the front lines Creating the sales force of the futureA financial services organization was suffering from several In the past, many sales organizations preferred toyears of negative growth in most of its business units. An handle their own improvement initiatives with little orassessment of its sales model and customer base revealed no involvement from HR. But the current transformationsynergies between products across business units, as in selling is happening faster than most business leaderswell as significant overlap in the types of customers each predicted just a few years ago. It will ultimately touchbusiness unit serves. To improve cross-penetration, thenearly all aspects of the sales organization from thecompany is adopting new value propositions based ontype of talent that is acquired and developed to the waycustomer segments and is using advanced analytics to people are organized, governed, and rewarded. Achievingidentify cross-selling opportunities. Also, it is creating new this future vision will require HR leaders who understandtraining and short-term compensation programs to drive front-line sales issues, the customer experience, and thedesired sales force behaviors and installing a dedicated particular DNA of tomorrows sales to support sales activities across the enterprise. Tohelp the improvements stick, the company has stepped upits communication and change management efforts.ClosingDifferent organizations will have different views on which Incremental improvements may still make sense, and cantrends matter most for their HR and business agendas.have big impacts. Continuing to upgrade capabilities inChoose your path carefully. Attempting to leap ahead onworkforce analytics, for example, is always worthwhile.all eight trends covered in this report could be a recipe forSo is helping your business leaders become more riskfrustration. Look instead for the two or three trends that intelligent.offer the greatest potential for leverage in light of yourcompanys current position and strategic business priorities.Every HR organization and every business will require aFocus there for big improvements.specific combination of human capital investments to make the leap ahead and drive breakthrough performance.If your business is speeding ahead toward the postdigitalBy focusing on the trends that matter most for yourworld of cloud, social, mobile, and analytics, put those enterprise, youll be doing exactly what your businesstrends at the top of your HR agenda and make sureleaders expect: creating more value.theyre aligned and integrated. If your CEO is signaling anurgent new commitment to growth, get moving to addressthe trends that support that priority. Human Capital Trends 2012 Leap ahead29 30. Authors Barbara AdachiMarty DiMarzio Principal, Deloitte Consulting LLPPrincipal, Deloitte Consulting LLP [email protected] Daniel Helfrich Jeff Schwartz Principal, Deloitte Consulting LLPPrincipal, Deloitte Consulting LLP [email protected] Michael Gretczko Principal, Deloitte Consulting LLP [email protected] 2012 growth is job #1 Operation GlobalizationKaren Bowman Robin LissakPrincipal, Deloitte Consulting LLP Principal, Deloitte Consulting [email protected] [email protected] KnowlesJeff SchwartzPrincipal, Deloitte Consulting LLP Principal, Deloitte Consulting [email protected] [email protected] Kwan Dan RudinPrincipal, Deloitte Consulting LLP Principal, Deloitte Consulting [email protected] [email protected] UsdinPrincipal, Deloitte Consulting [email protected] to the topPeople Risk is Risky BusinessBill Pelster Mike FuchsPrincipal, Deloitte Consulting LLP Principal, Deloitte Consulting [email protected]@deloitte.comMarc KaplanKaren BowmanPrincipal, Deloitte Consulting LLP Principal, Deloitte Consulting [email protected] [email protected] Neveras Robin LissakSenior Manger, Deloitte Consulting LLP Principal, Deloitte Consulting [email protected]@deloitte.com30 31. Authors Seeing around corners Stay in front with an effective sales force Rishi Agarwal Rob Dicks Principal, Deloitte Consulting LLPPrincipal, Deloitte Consulting LLP [email protected] [email protected] Russ Clarke Ed Basanese Director, Deloitte Consulting LLP Principal, Deloitte Consulting LLP [email protected] John Houston Pri