Lack of workforce skills hinders corporate ability to succeed

Jun 23 2006 by Brian Amble Print This Article

Senior executives worldwide have blamed lack of effective HR and training support for their workforces lacking the skills they need to achieve market leadership, with even critical functions failing to perform as strongly as they should.

Accenture's High Performance Workforce Study, which surveyed more than 250 senior executives in the United States, Europe and Australia, found that only one in seven (14 per cent) of respondents believe that the overall skill level of their organisations' entire workforce is industry leading.

Furthermore, just one in five said that the vast majority of their employees understand their companies' strategy and what's needed to be successful in their industry.

Respondents also reported that even functions they consider critical - sales, customer service, finance and strategic planning - are not performing as strongly as they should.

In fact, among those who rated these functions among the top three, just a quarter awarded the highest rating to the performance of their sales function, while under a third provided the same rating to their customer service, finance and strategic planning functions.

"The lack of essential skills is a vital issue for senior managers," said Peter Cheese, global managing partner in Accenture's Human Performance practice.

"As the competitive environment grows more demanding and as markets become increasingly commoditised, the need to cultivate these skills - particularly in the critical functions - should be at the top of every corporate to-do list. Those companies that fail to develop their workforces risk losing their competitive edge."

According to the research, these shortcomings can be attributed, in part, to several key HR- and training-related failings..

Only one in 10 was satisfied with the way that HR and training functions performed
Prime among these is a deep-seated and widespread dissatisfaction with the performance of HR and training functions. Indeed, only one in 10 of those surveyed was satisfied with the way these areas performed

A lack of connection to business drivers, failure to measure the business impact of HR and training efforts and ineffective or non-existent knowledge capture and sharing capabilities were some of the most widespread criticisms levelled at hapless HR departments.

Only around a third of respondents said their companies tailor their HR and training support to each function's needs and contributions to the organisation, more than four out of 10 do not evaluate the impact of their HR and training efforts against profitability.

A similar proportion described capturing and sharing knowledge as a challenge for their companies.

This vote of no confidence in HR departments echoes the findings of the Economist Intelligence Unit's annual CEO Briefing survey, published last March, in which HR was rated as the worst-performing of all business functions, with more executives assessing its performance bad than good.

Meanwhile, the looming impact of the talent time bomb is another major concern to emerge from the Accenture research, with six out of 10 respondents expecting to feel the impact of the aging workforce and the impending retirement of baby boomers over the next five years.

Almost a half (43 per cent) of participants said that talent sourcing was already a challenge, primarily because of a smaller or shrinking talent pool from which to choose.

Compounding these issue is functional leaders' lack involvement in people issues. Only around a third of respondents feel that the heads of customer service, finance, sales and strategic planning at their companies are highly involved in human capital management initiatives

However while the overall picture is bleak, the research did identify a group of companies that Accenture refers to as "human performance leaders" - companies in which the three functions their executives deem to be the most important perform at the highest levels.

These leaders, as opposed to the "laggards" - who said that none of their top three functions performs at the highest level - are more likely to be successful in addressing the key organisational issues that contribute to strong financial performance.

These included acquiring new customers and increasing market share, encouraging customer loyalty and retention, responding to changing market conditions, finding and developing talented leaders and attracting and retaining skilled staff.

Unsurprisingly, the research found, these "human performance leaders" also have more effective HR and training support.

Among the practices helping them excel are: formal measures that gauge the impact of all HR and training support activities on their top functions; tailoring HR and training support according to the contribution of specific functions; and taking a more strategic approach to human resources and training, including viewing the HR function leader as a strategic business partner to the executive suite.

"A company's ability to manage its workforce strategically and develop its capabilities will set it apart from its competitors," Peter Cheese said.

"Some companies focus well on one or two aspects of human capital management, such as learning or internal communications, but the best take a broad view of managing their workforce. These are the companies that vastly increase their chances of being industry leaders."