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Building a Change-Ready Organization: Critical Human Capital Issues 2013
An i4cp Report

In this report. practical view of how human capital practices drive high-performance. About the Market Performance Index (MPI) i4cp’s Market Performance Index. Identify best and next practices for all levels of management. or MPI. and developing superior workforce planning and workforce analytics can transform change events from problems into opportunities. vendor-free network – in which peers collaborate to drive strategic research and share tools and insights – i4cp provides a unique. is based on self-reported ratings encompassing an organization’s performance in four key areas: market share. . The average of the four ratings determines MPI score. we work with our network of organizations to:    Reveal what high-performance organizations are doing differently. analysis of this year's critical issues survey data reveals that high-performance organizations are taking a more proactive approach to preparing their workforces for what's to come. Years of research make it clear that top companies approach their workforces differently.com to learn more. Visit i4cp. profitability and customer satisfaction as compared to the levels achieved five years previously. revenue growth. Provide the resources to show how workforce improvements have bottom-line impact. The five domains of high-performance organizations Through our exclusive. the issues with the strongest links to performance were identified by filtering high MPI scores to isolate those activities that show a clear relationship with higher market performance. Help set your organizations' human capital priorities for the coming year and find out how promoting leadership and organizational agility. About this report Change is in the air for 2013. and while a challenge for organizations at all performance levels.Critical Human Capital Issues 2013 About i4cp i4cp focuses on the people practices that make high-performance organizations unique. At i4cp. effectively managing talent.

................................................................................ 5 Wider and Deeper Capabilities are Needed to Manage Talent Well........................... 9 References ..................................................................... 9 ©2013 Institute for Corporate Productivity (i4cp) Use of all results....................................................................................................Contents The Critical Human Capital Issues of 2013 ................................. 9 About the Critical Issues Index ............................................................................................................................................................. 2 Preparedness is Enabled by Effective Management of Talent ............................................................................................... 1 Agility and Preparedness are Key to Managing Change Effectively.............. Problematic and Pursued Very Differently ........................................................ 8 Authors and Contributors ................................................ 9 About the Survey .............................................................................................................................................. 2 Agile Organizations Require Agile Leaders and Workers ........................... 4 Managing Talent Begins with Workforce Planning .............................................................................................. .................... 1 Change is Pervasive....................................................................................................................................... analysis and findings requires explicit permission from i4cp.................... 6 Conclusions and Recommendations .......

As you will read throughout this report.com ©2013 Institute for Corporate Productivity (i4cp) Page 1 | Proprietary . www. In fact. the ability of most HR organizations to effectively deal with them has stalled or deteriorated. the way that high-performing organizations (HPOs) and lowperforming organizations (LPOs) go about dealing with it most certainly is. HPOs plan for change and use effective talent management practices to support and shape the future. LPOs. as well as metrics and analytics to measure progress and to pinpoint gaps that impede effectiveness and impact. low performers are unable to align the efforts of the workforce with any longer-term organizational objectives. which has steadily increased in importance from #3 in 2011 to #2 in 2012. the top critical issues take on starkly different meaning. while the significance of these three issues continues to grow. This is a reflection of myriad factors. These result directly from uncertainty of the business strategy.Critical Human Capital Issues 2013 Time-to-full-productivity The Critical Human Capital Issues of 2013 The main theme emerging from i4cp’s Critical Human Capital Issues 2013 research study is the increasing urgency of dealing with change. In fact. Indeed. Change is Pervasive. and finally #1 in 2013. While change is neither new nor newsworthy. Moreover. Problematic and Pursued Very Differently Six of this year’s top 10 issues (among a list of 70) have remained the same over the past four years. In contrast. demographic shifts and increasing expectations among customers. focus mainly on short-term fixes and reactive initiatives. and lack the leadership and resources to see them through. three of the top 10 critical issues cited by organizations deal directly with change.i4cp. As a result. when viewed through the lens of HPO versus LPO. the shortage of critical skills in key markets. including the ability to manage and cope with change. which also place great emphasis on change. these issues are a consequence of the consistently ineffective attempts of many organizations to anticipate and respond to change. most predominately the increasing uncertainty and complexity that has resulted from economic instability. However. legislative and regulatory change.

and effectively in anticipating. LPOs continue to view change traditionally—as in what’s happening to them in the present—and focus on the basics of how to deal with change through better management of culture and communications. What. how can I instill agility into my organization? The answer to these questions can be boiled down to a single word: preparedness. including the forces that affect it and the capabilities necessary to deal with it. This level of preparedness is also a reflection of the strength of its leaders. initiating.i4cp. HPOs on the other hand. To be agile.Building a Change-Ready Organization only three of this year’s top 10 issues are shared among both groups—two of which center on change and the other focuses directly on leadership development. HPOs work simultaneously from the inside-out (applying knowledge of readiness in terms of current supply of human capital versus anticipated demand) and from the outside-in (using knowledge of external factors. organizations must be prepared. and over four times better at managing organizational change. including what the market demands). decisively. They also outperform LPOs by a factor of four times in getting the current culture to embrace change. Increasing the agility of the leadership team often requires creating a new culture within that group. a plan to increase leadership agility can be formulated—it should emphasize reflective action and utilize methods such as one-on- Proprietary | Page 2 ©2013 Institute for Corporate Productivity (i4cp) www. Agile Organizations Require Agile Leaders and Workers Agility must be purposefully developed in leaders and employees.com . i4cp research (in a joint study with leadership expert William Joiner) revealed nine practices for increasing the agility of an organization’s leadership (shown in the sidebar on the opposite page). When it comes to change. They take a longer term view of their business. CEOs want to know how to get their organizations to be proactive—and anticipate change—instead of functioning purely reactively. They grapple with questions such as: How can I create a more flexible. They are reactive instead of proactive. decisive organization in which change is initiated and embraced rather than approached with fear and skepticism? And how can I get everyone to impartially evaluate performance on business metrics and plan accordingly? In short. and taking advantage of change. then. HPOs prepare for change better by approaching it both strategically and tactically. accounts for the variance in abilities of HPOs and LPOs to meet the change challenge? Agility and Preparedness are Key to Managing Change Effectively i4cp defines agility as the ability to move quickly. are far more adept at dealing with change—nearly three times more effective at managing and coping with change. A purposeful approach involves assessing the pace of change and degree of inter-dependence to determine the level of agility desired and the team’s current and optimal agility levels. Once this is done.

and action learning programs. This commitment to talent mobility builds not only the organization’s capacity to take advantage of change through growing its talent but also builds individual agility and resilience by encouraging staff to take on new roles and challenging developmental experiences. practices and nextsteps with strong focus on follow-through and results. merchandising roles. and break agility down into practical. Forthcoming collaborative research on global leadership development from i4cp and the American Management Association will reveal additional insights on developing leaders’ ability to better manage organizational change. the effectiveness among the majority of organizations with this critical competency is abysmal and getting worse. and if you want to eventually run one of our divisions.com ©2013 Institute for Corporate Productivity (i4cp) Page 3 | Proprietary . It also results in greater levels of engagement and retention among key talent by providing exposure to the broader business as well as the organization-wide career opportunities available to them. However. our research also reveals that while HPOs are four times more effective at it than LPOs. and/or across countries in order to address critical business needs. across businesses or business units.Critical Human Capital Issues 2013 Time-to-full-productivity one coaching.i4cp. manageable questions. www. One VP of human resources for a global food retailer with many different businesses recounts how the company is changing its development model and career planning to ensure and reward a more holistic understanding of the business. which refers to the ability to move workers within an organization across functions and roles. When done right. you're going to also have both Operations and Merchandising experience across more than one of our businesses”. Specifically. workshops. talent mobility allows greater organizational agility by quickly filling near-term talent needs as well as developing talent to fill critical job roles longer term. Agility can also be instilled into the broader workforce by promoting talent mobility. they are laying out a framework that supports “if you want to be promoted you need these types of experiences (category manager. It should both work simultaneously from the insideout and from the outside-in. etc.). i4cp’s research shows that teaching change management is one of the more important competencies in the development of agile global leaders.

performance management) must be planned and executed as part of an integrated talent management strategy. management of talent is results and outcomes oriented. talent management often represents an HR-centric. Purpose-Driven Performance Management in High-Performance Organizations. all business operational strategies must incorporate a talent strategy. In essence. As a result. The talent management strategy is created as an integral part of the overall business strategy. is a business-centric. Functional process or elements of talent management (e. not an HR issue. This ensures that the day-to-day execution of strategies is tied to overall objectives and goals. recruiting. procedures and processes associated with managing the employee life cycle. inside-out view of the policies. In contrast. This important distinction is further corroborated by i4cp’s research study The Future of HR: The Transition to Performance Advisor. In practice. This grows increasingly imperative as organizations seek to utilize human capital data for planning purposes. while necessary. on the other hand. Talent management. as well as gain more visibility into the performance and potential of their enterprise workforce. i4cp’s Talent Management in the Trenches research suggests that a few foundational elements are essential to move the focus from talent management to the management of talent:    Senior business leadership must view the organization’s talent management strategy as a business issue. To this end.g. a majority of organizations are ineffective in employing important talent capabilities. Talent management is activities-based. outside-in view of the capabilities needed to maximize talent performance. will be far from sufficient unless it fully enables the management of talent by the business. with their focus on the management of talent. There is a subtle but important distinction between talent management and management of talent. Management of talent.i4cp. For example:  HPOs demonstrate an advantage of two and a half times in performance management by employing a purpose-driven approach that fuses strategic and tactical approaches to managing organizational performance. for more on this high-performance approach). Proprietary | Page 4 ©2013 Institute for Corporate Productivity (i4cp) www.com . in which the HR organizations of HPOs were found to be focused on equipping line managers to be better managers of talent. Unfortunately. HPOs are vastly more effective at equipping the business to anticipate and deal with change.Building a Change-Ready Organization Preparedness is Enabled by Effective Management of Talent The level of agility in an organization is greatly affected by how talent is managed. the workforce is not performing to its potential and gaps in leadership and critical roles exist due to failure to develop adequate bench strength and ineffective development of leadership competences throughout the organization. (See i4cp's upcoming report.

analyze and draw insights from workforce data and quantify the value and ROI of human capital. To this end. With regard to workforce planning. thus ensuring better ability to quickly fill leadership gaps when they arise with qualified candidates. In general. HR organizations are not keeping up their ability to measure. This suggests that many HR organizations are doing little more than guessing at the workforce drivers of business performance and how to better manage talent. but also to tell people how to make educated decisions. More than 60% of HR groups indicated workforce analytics as important but only 14% indicated they had an effective capability.g. HPOs are nearly three times more effective than LPOs in leadership development.” Skip Spriggs CHRO.i4cp. both top 10 issues. this is what’s needed to run the business from a current headcount perspective (e. the most effective starting point is via knowledge of what you need as compared to what you’ve got.com ©2013 Institute for Corporate Productivity (i4cp) Page 5 | Proprietary . and driving it further down in the organization. You've got to be able to provide data.a more strategic level of workforce planning is referred to as tactical. Business leaders want information—they don't want more data. TIAA/CREF Operational . respectively. while these are nowhere to be seen among the top 10 critical issues of LPOs. an inability to measure and plan stifle HR’s capacity to respond effectively to change. workforce analytics and workforce planning rank #2 and #3. in terms of critical issues among HPOs. The ability to measure human capital value and performance was not much better—57% indicated it was important but only 16% were skilled in doing it. but to anticipate and respond more proactively to change. Only 38% of HPOs and 30% of LPOs indicate they pursue this level of workforce planning. staffing plans to accommodate seasonal demands or new store openings). Tactical . headcount forecasting to staff shifts).  Managing Talent Begins with Workforce Planning “The right people with the right skills in the right place at the right time”… this is often cited by many managers as the ideal workforce scenario.g.  www. This focuses on what’s needed to manage the business (e. Unfortunately. If this is the goal. which—given the increasing focus on line manager accountability (see Talent Management in the Trenches)—results in an organization that is better equipped to not only align the workforce with where the business is headed. In essence.the majority (including 62% of HPOs and 48% of LPOs) of organizations focus on operational workforce planning. That's information.Critical Human Capital Issues 2013 Time-to-full-productivity  More than three and a half times as many HPOs as LPOs indicate effectiveness in succession planning. i4cp’s research reveals three levels that are important to pursue and have strong impact on a company’s ability to improve market performance:  “The HR function provides a lot of data but not information.

performance management and leadership development functions. Pivotal roles are those that are not prohibitive by skills or competencies. In fact. Once an organization has defined its critical roles. Wider and Deeper Capabilities are Needed to Manage Talent Well In addition to workforce planning. Nearly twice as many HPOs (32%) than LPOs (17%) are doing the strategic level of workforce planning. This requires orchestration among an organization’s learning. what markets will it enter/leave.e. Extending this process to Proprietary | Page 6 ©2013 Institute for Corporate Productivity (i4cp) www. 2. Define what the business needs to look like over the next three-to-five years. an even more revealing finding is how HPOs are taking their succession planning initiatives to layers below the executive level. along with its talent acquisition function (i. However. High-performance organizations are especially rigorous in their approach to workforce planning.i4cp. yet the most impactful on market performance. Only one of these (leadership development) is ranked among the 10 most critical issues for LPOs. This typically looks 18 months out or longer (three-to-five years) and focuses on what is needed in order to lead the business and ensure the organization is best prepared to anticipate and adapt to change. then skills. what products/services will be added/retired. as well as understand the organization’s critical and pivotal talent segments. and coaching). Nearly nine in 10 HPOs (89%) indicate succession planning is important to their organizations in 2013. Critical roles are ones essential to the organization’s success and require skills or competencies that are difficult to find or develop. These organizations: 1. They start by conducting talent reviews in order to identify high-potential employees. Gain deeper understanding of talent segments and risks. leadership development. The goal of talent segmentation is to identify roles first. whereas only one-third (34%) of LPOs indicate the same. but can make incremental impact on key business measures such as customer satisfaction. succession planning for both executives and non-executives. is strategic workforce planning. and what skills/competencies will be required. integrated talent management). more than one-half (54%) of HPOs are expanding the reach of this process.Building a Change-Ready Organization  Strategic – the most elusive level of workforce planning.com . as compared to only 56% of LPOs. it must plan to fill them. five of the top 10 critical issues among HPOs deal directly with managing talent (performance management. then individuals.

calibration sessions.Critical Human Capital Issues 2013 Time-to-full-productivity non-executive job roles reinforces the notion that critical roles are not ones that are isolated to the executive ranks. along with virtual town hall meetings or Q&A lunch sessions. Furthermore. and also prepares the organization to adapt more quickly and effectively to change. Developmental plans for each period ensure focus and progress on acquiring new skills and experiences. Practices such as these. which are both critical enablers of individual agility and resilience. Goal setting for the upcoming timeframe ensures that individual goals change and adapt to major shifts in the business environment. This creates a mindset of continuous learning and ongoing development. enable employees to see and hear that leaders back PM’s importance.i4cp. critical metrics discussions and progress reviews in open forums. An exemplar of effective performance management in practice is Corning. www. goal alignment. ongoing goal review and feedback provides opportunities to recognize new realities and shifting priorities and to make necessary adjustments in goals and methods. i4cp’s research on the performance management practices most strongly correlated to market performance shows that several are also important contributors to the organizational agility. For example.com ©2013 Institute for Corporate Productivity (i4cp) Page 7 | Proprietary . (See i4cp’s Nine Keys to Performance Management white paper for more information). top executives’ recognition of employee success stories and customer accolades help to connect personal efforts with key corporate success measures. The leadership team at the company is highly involved in the PM process and participates in competency identification.

Review and feedback must be frequent to help staff stay in tune with shifting priorities. Proprietary | Page 8 ©2013 Institute for Corporate Productivity (i4cp) www. Sight lines of development plans should be short to enable frequent adjustments if needed. Performance management should be adjusted to promote agility. The research findings and insights presented in this paper suggest the following actions to increase organizational preparedness and ability to respond to change: 1. 2. the situation will likely worsen unless new strategies for building capabilities are implemented that enable organizational agility. 4. Once completed. Shift the focus of HR from talent management to managing talent – Promote a business-centric. Make sure they are tied directly to measures of market success. Based on the trend over the past four years. 3. Strategic and tactical goals need to be constantly checked to ensure alignment. Invest in specific training initiatives such as one-on-one coaching. Promote talent mobility to build experience with change and increase the organizational flexibility of talent deployment. Build strategic workforce planning capabilities – This should include operational workforce planning to support day-to-day activities. Focus on critical roles and performance throughout the entire organization – This will require an expansion of succession planning focus and capabilities in many organizations. outside-in view of the capabilities needed to maximize talent performance. as well as mitigate business risk. workshops and action learning programs. Develop agility in leaders and workers – Individuals at all levels of the organization can be trained to think and behave in ways that promote agility. and lastly the individuals that currently demonstrate them or have the capacity to develop them. but what is worrisome is how consistently unprepared and ineffective many organizations have been in managing change.i4cp. not just at the top.Building a Change-Ready Organization Conclusions and Recommendations Change is the dominant theme of the HR agenda in 2013. Define key roles wherever they exist in the organization.com . tactical workforce planning to manage the business and strategic workforce planning to ensure the ability to anticipate and respond to shifts in market demand. This alone is not significant. focus on the critical skills needed for these roles.

(2012). aids our members in setting organizational priorities. www.Jamrog@i4cp. The Critical Human Capital Issues of 2011. Talent Management in the Trenches.com). www. Purpose-Driven Performance Management in High-Performance Organizations. senior editor. Previous iterations of this survey—formerly titled the Major Issues Survey—have been conducted by i4cp over the past three decades and provide rich longitudinal perspective that informs our research and. VP of research.com www.i4cp. The Best Get Better: Critical Human Capital Issues of 2012.com). SVP or research.i4cp. Breakouts by organization size.Davis@i4cp. chief research and marketing officer.i4cp. Additional analysis and input was provided by Jay Jamrog (Jay. if addressed well.000 or more employees. The Future of HR: The Transition to Performance Advisor. authored and oversaw development of the findings discussed in this report. edited this report and Eric Davis (Eric. About the Critical Issues Index The Critical Issues Index (CII) is calculated by multiplying the mean score for the importance of an issue by another number related to effectiveness. (2010).Martin@i4cp.DiRomualdo@i4cp. result in the greatest boost to organizational performance. References Institute for Corporate Productivity. (2012).com Institute for Corporate Productivity.i4cp.com Institute for Corporate Productivity. About the Survey This report provides analysis of the results for i4cp’s 2013 Critical Human Capital Issues Survey.com Institute for Corporate Productivity.com). Lorrie Lykins (Lorrie. www.Critical Human Capital Issues 2013 Time-to-full-productivity Authors and Contributors Tony DiRomualdo (Tony.i4cp.i4cp. www. Issues with a high CII score are considered prime areas of focus that could. provided graphic design. industry and other demographic factors are available in the interactive data workbook for this study.com Institute for Corporate Productivity.i4cp. www. which is available to all member organizations through the i4cp website. (coming in 2013).com). www. which was conducted in December 2012 and had 313 respondents.com). (2012). (2011). managing editor and director of research services.com ©2013 Institute for Corporate Productivity (i4cp) Page 9 | Proprietary . and Kevin Martin (Kevin. Data for this study have been filtered for organizations with 1.com Institute for Corporate Productivity.Lykins@i4cp. in turn. Organizational and Leadership Agility Survey.

com Peers. . Tools. Contact us at: 1-866-375-i4cp (4427) or at www.i4cp enables high performance in the world’s top organizations. Research.i4cp. Data.