Human Capital Investments Being Questioned: Survey

By Theresa Minton-Eversole Mar 18, 2013
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Many companies are starting to question whether their investments in their workforce are paying off, according to survey results released March 12, 2013, by global consulting firm Mercer.

According to Mercer’s new Talent Barometer Survey, 60 percent of organizations worldwide report increasing their investment in talent in recent years. However, only 24 percent say their plans are highly effective in meeting immediate and long-term human capital needs.

What’s more, 77 percent of respondents said they have a strategic workforce plan in place. But when asked whether it is part of their longer-term strategy, only 12 percent said they had plans that extended for five years or more.

“Effective workforce planning is an essential part of positioning talent as a strategic asset and maintaining a competitive business advantage,” said Mercer President and CEO Julio A. Portalatin, in a statement about the survey results. “With the information and data analytics available today, employers can measure and manage their talent like never before. The question is whether the increased attention and efforts deliver the intended results.”

Mercer’s Talent Barometer Survey, which assesses the effectiveness of workforce practices in driving the short- and long-term success of organizations’ talent plans by region and industry, includes responses from HR and talent management executives at 1,260 organizations worldwide. The organizations surveyed varied in size from fewer than 1,000 employees to more than 10,000, included government and nonprofit organizations, and represented a wide variety of industries. The survey identified several innovative practices that are associated with effective workforce plans.

Accelerating Talent Effectiveness

The survey revealed key accelerators of talent effectiveness. Among the accelerators examined for their impact on successful workplace practices were education, health and wellness, and career experience.

Significantly, more than half (57 percent) of the organizations surveyed reported that they are not confident that educational institutions will generate the talent their businesses need today. This sentiment did not improve even when respondents predicted as far out as five years from today.

“This lack of qualified talent is a real concern for employers and one that requires a multistakeholder approach to solving,” said Pat Milligan, region president at Mercer and member of The World Economic Forum’s Global Agenda Council on Education and Skills. “We have found companies that are most optimistic about the future are actively involved in shaping it” through means such as internships, apprenticeships and teaching high-demand skills in secondary and tertiary institutions.

Specifically, Mercer’s data show that organizations that rate their workforce plan as effective are more likely to:

  • Partner with tertiary schools (bachelor’s, master’s, doctoral programs) or have programs that target students at tertiary schools.
  • Engage in or offer apprenticeships.
  • Engage in or offer internship programs.
  • Offer job fairs/portals.
  • Participate in university advisory councils and in shaping academic curricula.

Accelerating Healthy Workforce Engagement

As for health and wellness, Mercer’s survey found that less than half of organizations worldwide apply the basic elements of a health management program, such as ensuring a healthy workplace and establishing health-related policies and procedures. Only 31 percent reported using a formal, written multiyear strategic plan for health and wellness.

“The research suggests a strong link between employers’ focus on health and wellness and employee engagement and productivity,” said Dave Rahill, president of Mercer Health & Benefits. “This means that employers are missing out on one of the greatest tools available to enhance their strategic workforce plans.”

Companies typically move through different stages of development as they create best-practice wellness and health management programs. Nearly half of respondents (48 percent) indicated they are at the beginning two stages on the continuum, which are focused on more limited and often ad hoc measures such as basic education and risk screening. Just 36 percent are at more advanced stages: employing targeted interventions for high-risk individuals and providing programs that include awareness, health assessments and disease management. The remaining 16 percent don’t offer any support for employee health beyond coverage for treatment in accordance with local legal requirements and market practice.

Mercer asked whether organizations were involved in driving systemic changes designed to enhance employee health and wellness (e.g., working with governments, insurers, health care providers and other employers). Few indicated they were taking significant action in this area, and about half are taking no action, viewing this as not their role or not an effective way to bring about change.

The analysis revealed that organizations that rate their workforce plan as effective are more likely to:

  • Measure individual health status improvement.
  • Share data across health programs to understand the population’s health profile.
  • Promote a healthy and safe workplace.
  • Use high-impact communication (campaigns, themes, and messages) to motivate change.
  • Use team activities and social media to get employees to change.

Accelerating Careers

According to Mercer’s survey, organizations worldwide take the issue of career experience seriously, with the majority (80 percent) conducting regular (annual or semiannual) talent reviews. Still, far fewer take other actions to enhance talent availability and quality, such as assessing supply and demand of critical talent, putting a strategic succession plan in place and developing programs for high-potential employees. Buying talent from the marketplace is more common than building talent from within.

Mercer’s analysis found that organizations that rate their workforce plan as effective are more likely to:

  • Assess their supply of and demand for critical talent.
  • Have access to reliable information on labor-pool availability outside their home market.
  • Have succession plans that include external candidates.
  • Have leaders who conduct regular (annual or semiannual) talent reviews.
  • Offer fast-track career development programs for high-potential workers.

In addition, organizations that develop their critical talent internally tended to perceive their workforce plan as more effective, compared with those that rely more heavily on buying critical talent from the market.

“Simply having a wellness or talent practice in place does not guarantee the success of those programs,” the survey report states. “Employers with higher levels of effectiveness have created the underlying infrastructure necessary to enable those programs. Enablers include leadership support, formal measurement systems, and communication and engagement programs.”

The report also notes that “organizations with effective workforce plans appear to make HR activities more of a priority, creating specific HR positions to support the talent fulfillment task. These organizations typically have senior leaders who foster a culture of talent development, continually assessing talent, and managing the succession pipeline, as well as continually and consistently communicating people strategy and talent investments to key stakeholders.”

Theresa Minton-Eversole is an online editor/manager for SHRM.

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