- only a minority of C-suite execs believe their HR teams are ‘doing a good job’
- HR seen as relying on ‘instinct’ instead of ‘hard evidence’
- questions asked about the value provided by HR teams to their business
Business leaders across the globe say that their HR functions are ineffective and consistently fail to demonstrate any form of value to their organisation.
According to a new study conducted by the Economist Intelligence Unit and sponsored by KPMG, organisations will continue to view HR as a non-essential department, unless it meets the challenges faced by today’s business environment. The report also suggests that HR will remain the ‘poor relation’ at the Boardroom table until it fully embraces technology to move away from its tendency to report historical data, in favour of forward-looking analytics designed to improve business’ understanding of employee demands and desires.
‘Rethinking HR for a Changing World’ – based on the views of 418 C-suite executives – reveals that just 17 percent of respondents believe HR does a good job. Three-quarters of the executives questioned argues that their workforce is becoming increasingly global, virtual and flexible, but just 25 percent say HR teams within their company excel at sourcing and retaining international talent. A similar proportion (24 percent) are more scathing – arguing that HR teams are unable to support their company’s globalisation strategy, despite ‘hiring international talent’ being a key concern for the ‘globally-minded CEO’.
The study reveals that, over the past 3 years, 60 percent of businesses have increased their use of virtual workspaces and just over half (55 percent) have hired more contractual/temporary workers, than permanent staff. Yet despite the trend towards short-term commitments 76 percent of business leaders admit their HR department is poor when it comes to supporting an increasingly virtual and flexible workforce. Their criticism means that HR teams need to determine which role are appropriate for remote working and develop a support mechanism for them.
Robert Bolton, partner in KPMG Management Consulting and global lead of the firm’s HR Centre of Excellence, says: “This survey shows that, at the very least, HR has a perception problem, though in some cases it may have actually failed to deliver real value. Given the high unemployment rates in many countries you would be forgiven for thinking that retention is an easy task for HR, but with employee engagement levels an increasing concern, more effort must be put into understanding staff needs before today’s employees become tomorrow’s alumni.”
According to the respondents, many HR functions are trying to make better use of mobile apps and social media to provide employees and their managers with the data the HR teams believe is useful. With 31 percent citing its benefits, data analytics is also emerging as the area most likely to receive HR investment between now and 2015. The view is that, to succeed, HR must ‘no longer rely on instinct’ but instead ‘collect clear information on where demands for skills lie’. To demonstrate this, the report cites examples including BMW using data analytics to identify the skills gaps due to emerge in its workforce over the next 10 years as a wave of retirees exit the company. It also highlights how Nationwide’s HR team uses data analytics to improve training and development opportunities.
However, the move towards data analytics faces cynicism. Based on previous experiences, just 15 percent of survey respondents see HR as able to provide insightful and predictive workforce information.
Robert Bolton concludes: “Taking full advantage of data is not something that can happen overnight. HR needs to develop its abilities in a data-centric environment and then educate the business about how to analyse the available information. It’s a long process because, although companies are submerged in data, transforming it into meaningful and intelligent information is a greater challenge. HR teams must now seize on this as an opportunity to shift from being seen as providers of operational delivery to advisors providing counsel on business direction and strategy.”