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How human capital and talent technology are influencing global business
Unied Human Capital Management and Talent Technology Survey Report
This presentation contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this presentation, rendering business, nancial, investment, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualied professional advisor. Deloitte, its afliates, and related entities shall not be responsible for any loss sustained by any person who relies on this presentation. Copyright 2011 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited
August 2011
Contents
1 2 3 4 6 10 12 13 14 15
Key ndings Talent retention now trumps cost reduction as a top business challenge HR and business leaders need to work together Many organizations lack an effective talent management strategy Holistic talent management is the new frontier for HR Cumbersome systems are constraining HR effectiveness Social media and collaboration tools are emerging as a new force HCM technology is a growing priority Ready, set, grow Survey demographics
17
Key findings
Thirty-nine percent of the respondents had the title of HR/Talent Director or Manager, with 18% holding a Senior VP or Director title. (Figure 18), and 69% of respondents work in HR/Talent department (Figure 19). More than one-half (58%) are located in the Americas (Figure 20).
Figure 19. Functional role in organization (Total survey)
Human resources/Talent Corporate management Business operations Information technology Finance Sales and marketing 8% 7% 6% 6% 4%
69%
In October 2010, Deloitte polled senior business leaders and human resource executives to gain insight into the post-recession talent trends and challenges that are expected to inuence global business over the next decade. The results, reported in Talent Edge 2020, showed that improving top- and bottom-line performance had re-emerged as the highest priority for many organizations a marked shift from their cost-cutting focus in 2009. While controlling costs continued to be a top concern, these executives reported a renewed interest in investing in innovation and R&D, expanding in global and new markets, and using technology to accomplish their goals. These ndings stoked our curiosity about exactly what role human capital technology would be expected to play in a growth-oriented environment. After all, to hit their growth targets, organizations need to have the right people, in the right place, with the right preparation, and there are many technology offerings that can help. In this report, we take a closer look at how businesses are using human capital management (HCM) technology to meet their growth goals. During the spring of 2011, we joined forces with Oracle Corporation to survey 126 corporate and HR leaders, representing a broad range of industries around the world. Of the 126 respondents, 45% represented large enterprises with revenues greater than $1 billion, and the remainder represented small-tomedium-sized businesses with revenues totaling less than $1 billion. Here are some highlights from our ndings: Talent retention is the leading business challenge: While cost containment continues to be a concern, talent retention is even higher on the priority list for many executives. Nearly two-thirds of the total executives surveyed identied talent retention as one of their top-two business challenges, followed by cost reduction.
Many organizations dont have a plan for retaining talent: Even with talent retention looming as a major concern, most of the surveyed executives (53%) reported that they did not have a formal talent management strategy and only 19% of these expect to have a strategy within the next 12 months. Talent management initiatives are a leadership priority and HR pain point: Business leaders are asking HR to focus on talent management specically performance management, talent assessments and reviews, recruitment, and succession planning. Unfortunately, these focus areas are also the ones that are causing HR the most trouble as they struggle to meet leaderships expectations. Cumbersome systems constrain HR effectiveness: For most organizations, the tools they currently have in place to assess talent needs are cumbersome, limited, or outdated. For the top leadership-driven talent initiatives, manual systems are commonplace. Only about one-fourth of the organizations have integrated talent and HR systems that can be used to efciently analyze talent risks and opportunities by providing a holistic view of individual employees and workforce groups. HCM technology solutions are moving up the priority list: Expanding or implementing talent management technologies is expected to be a growing priority for many organizations over the coming years. Many of the surveyed organizations (43%) indicated that improved technology would be a high priority in 2011.
R&D/Other 0% 0%
20%
40%
60%
80%
100%
58%
20%
Asia Pacic
16%
Other 0%
As used in this document, Deloitte means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. 16 Unied Human Capital Management and Talent Technology Survey Report 1
Survey demographics
During the spring of 2011, Deloitte joined forces with Oracle Corporation to survey 126 corporate and HR leaders, representing a broad range of industries around the world. Of the 126 respondents, 45% represented large enterprises with revenues greater than $1 billion, and the remainder represented small-to-medium-sized businesses with revenues totaling less than $1 billion. Almost one-fourth (22%) of the respondents had more than 25,000 employees (Figure 17).
More than 25,000 10,000-25,000 5,000-10,000 2,500-5,000 12% 14% 2% 10% 14%
22%
Talent retention Cost reduction Lack of business analytics (i.e., reports, metrics, data, etc., summarizing status across the organization) Technology infrastructure/disparate systems Other
0% 20%
Talent retention Lack of business analytics (i.e., reports, metrics, data, etc., summarizing status across the organization) Cost reduction Technology infrastructure/disparate systems Other
0% 20%
Digging Deeper After talent retention, large enterprises with revenues greater than $1 billion appear to view their lack of business analytics as their second greatest challenge even greater than cost reduction (Figure 2). The results for smaller organizations were in line with the overall ndings, with retention and cost reduction topping their list.
HR/Talent Director or Manager SVP/VP/Director Manager CHRO/Chief Talent Ofcer CFO/Treasurer/Comptroller CEO/President/Managing Director Other HR or talent executive Other c-level executive Other
1% Board Member 0%
10%
20%
30%
40%
50%
1 Talent Edge 2020: Blueprints for the new normal, December 2010, page 3. 2 Talent Edge 2020: Building the recovery together, April 2011, page 3.
2 Unied Human Capital Management and Talent Technology Survey Report 15
As organizations anticipate the return of a growing economy, many executives recognize that one of their highest hurdles will be retaining and developing the talent they need to compete. Leadership is looking to HR to focus on initiatives that will address their employee-related concerns, especially performance management, talent assessments, recruitment, and succession planning. Unfortunately, these focus areas are also the ones that are causing HR the most pain as they struggle to meet leaderships expectations. One factor that limits HRs effectiveness is outdated systems and processes. The good news is that many organizations recognize that they are not ready to take advantage of potential growth opportunities, and are making plans to address their technical and strategic limitations.
Leadership is looking to HR to focus on initiatives that will address their employee-related concerns, especially performance management, talent assessments, recruitment, and succession planning.
Lack of critical talent in key areas of the organization/Retention issues Lack of comprehensive business plan for the HR department Ineffective leadership Antiquated technology systems or disparate systems that create data accuracy challenges Lack of comprehensive business plan for the organization Other 0% 18% 20% 40%
60%
80%
100%
These results suggest that many organizations have talent and leadership gaps that must be filled to improve effectiveness.
14
47% 47%
53%
Figure 16. Implementation of new talent technology Total Survey (Scale of 15)
23%
43%
45 (High)
54% 56%
11%
29%
Yes No
3 (Moderate)
30% 29%
28%
12 (Low)
16% 15%
0%
10%
20%
30%
40%
50%
60%
How much of a priority is Workforce Management technology in 2011? How much of a priority is Workforce Management technology in the next 2-3 years?
CEO
95%
CEO
97%
CFO
71%
CFO
79%
COO
59%
COO
59%
CIO
0% 20% 40%
55%
60% 80% 100%
CIO
0% 20% 40%
56%
60% 80% 100%
Expanding or implementing talent management technologies is expected to be a growing priority for many organizations over the coming years.
13
Digging Deeper Most large enterprises surveyed (62%) reported that they do have a formal talent management strategy in place. However, of the responding enterprises without a talent strategy, only 14% expect to have one in place within the next 12 months (Figure 6)
Figure 14. Collaboration tools used internally behind the rewall (Total survey)
62%
38%
Shared folders Instant messaging Video chat/conferencing Online discussion forums Wikis Web chat rooms 0% 24% 19% 20% 40% 60% 33% 52% 63%
78%
Yes No
Figure 15. Leverage social network tools for recruiting, awareness, client contact, other (Total survey)
In addition, organizations with advanced talent management capabilities are positioned to anticipate future talent needs. These capabilities allow organizations to stay ahead of business demand by providing more lead time to source and develop talent to meet future needs.
LinkedIn Facebook Twitter Blogs Online discussion forums MySpace 0% 6% 20% 40% 14% 24%
55%
19%
50%
57%
10%
12%
60%
80%
100%
3 Talent Edge 2020: Blueprints for the new normal, December 2010, page 5.
12 Unied Human Capital Management and Talent Technology Survey Report 5
The limits of homegrown Many organizations nd that homegrown solutions are acceptable for day-to-day HR operations, but fall short when it comes to providing integrated, consistent processing and data across job titles, business units, work areas, or geographies to inform key decisions. Even organizations that outsource or use point solutions are often left without the capability to integrate talent data with their HR system and ERP to provide a consistent global view of the organization and the ability to slice-anddice data to answer strategic human capital questions. Because of the time required to consolidate data, reports could be out of date by the time they are produced, not reecting the current state of the organization. Without integrated systems, its difcult for organizations to execute talent strategies consistently. For example, when compensation and succession planning systems are not integrated, some organizations may nd that they are not rewarding the right people adequately to keep them in their jobs. They fall short of a pay-for-performance culture that could be fostered by integrated processing and data administration combined with holistic analysis. While homegrown systems may supply a custom mix of data or processes that are meeting a particular organizational need, they are often expensive to maintain. Homegrown solutions may also rely on a few skilled employees who hold the knowledge needed to make them work. This dependency can be a signicant risk to the organization, even when the homegrown solution is providing value. The latest HCM systems can provide organizations with the ability to unify data across the organization improving effectiveness across human capital, talent, nancial, and project management by providing real-time reports and analysis for these processes. Organizations that have the ability to create effective performance plans ones that are tied to organizational goals and that are visible to employees are more likely to identify and retain top talent and improve job satisfaction.
13% 10% Point solution 10% 21% 16% 21% 11% ERP 5% 16% 21% 46% 42% Home grown 33% 43% 34% 37% 4% 5% 10% Outsourced 0% 11% 10% 4% 12% 9% Unsure 16% 7% 11% 9% 11% Other 6% 15% 10% 7% 0% 10% 20% 30% Succession Planning Learning Management Compensation 40% 50% 19% 24%
Home grown 14% 17% 10% Outsourced 10% 6% Unsure 8% 6% 13% 2% Other 0% 0% 4%
21%
29% 33%
10%
20%
30%
40%
50%
Time management
11
Performance management
The ndings indicate that few organizations have integrated talent and HR systems that can be used to efciently analyze talent risks and opportunities by providing a holistic view of individual employees and workforce groups. Most of the surveyed executives (73%) reported that they are not able to automatically connect talent data with their core HR system. The responses were similar for all size organizations.
Recruitment
Compensation
Workforce Analytics
Compensation
55% 45%
Self-service
Learning management
Compliance
Succession planning 15% 85% 60% 40% 37% 63% 57% 43% 0% 10% Automated Manual 20% 30% 40% 50% 60% 70% 80% 90%
Employee Portal
Recruitment
Core HR
Benets
Performance management
Time Management
Payroll
Help desk
0%
10%
20%
30%
40%
50%
Priority Talent/HCM Areas for business leaders Total Survey Priority or Challenging Talent/HCM Areas for HR Total Survey
10
Figure 10. Leadership priority areas vs. HR challenge areas (Large Enterprises)
Performance management 46% 46% 46% 35% 42% 33% 37% 21% 33% 39% 19% 28%
Point Solution 12% 11%
Digging Deeper Workforce analytics is high on the large enterprise leadership priority list. One-third (33%) of large enterprises in the survey ranked workforce analytics as a top-three talent/HCM leadership focus area (Figure 10). Unfortunately, 39% of those large enterprises also see workforce analytics as one of their most challenging areas. One reason that HR is having difculty providing useful data could lie within their technology solutions. Homegrown solutions are most commonly used by large enterprises for workforce planning (39%) and analytics (30%) (Figure 11). These results indicate that, even among large enterprises, few have integrated data solutions that allow them to easily access consolidated data.
Succession planning
Recruitment
Workforce Analytics
Compensation
16% 18%
ERP
19% 11%
Self-service
Compliance
Core HR
Outsourced
2% 0%
Time Management
Unsure
23% 26%
Benets
4% 5%
16% 16% 0% 5% Workforce Analytics Workforce Planning 10% 15% 20% 25% 30% 35% 40% 45%
Help desk
2% 2% 2%
5% 0% 0%
Employee Portal
Payroll
0%
10%
20%
30%
40%
50%
Priority Talent/HCM Areas for business leaders of Large Enterprise Priority Talent/HCM Areas for HR of Large Enterprise
8 Unied Human Capital Management and Talent Technology Survey Report 9