Executive Briefing

A global study on obstacles to workforce change suggests that HR has its work cut out for it.

By Dori Meinert Nov 1, 2014

What’s Blocking Workforce Change?

Globalization, labor market shifts and technological advances are causing many organizations to rethink their operational models and workforce strategies. To survive, they need motivated, skilled employees who are quick to adapt.

Yet two-thirds of businesses acknowledge that they haven’t made significant progress toward building a workforce that will meet their long-term business goals, according to Workforce 2020: The Looming Talent Crisis, a global study conducted by Oxford Economics on behalf of software developer SAP.

The major obstacles cited include a lack of employee longevity or loyalty, inadequate leadership, and insufficient technology. The study also found a disconnect between what employees say is important and what executives say their companies offer.

“HR has a lot of work to do with the rest of business leadership to prepare for … the workforce of the not-very-distant future,” says Edward Cone, managing editor of thought leadership at Oxford Economics, which conducts research and economic analyses.

Researchers surveyed 2,718 executives and 2,872 employees and interviewed 29 executives in 27 countries earlier this year. They identified the following major workforce issues:

Compensation. Two-thirds of employees say competitive compensation is the most important attribute of a job, but only 39 percent of executives report offering it.

The skills gap. While executives complain about a skills gap, only 23 percent offer development and training as a benefit. Less than half of employees report that their company provides the technology training they need, and less than a third say their employer makes the latest technology available. In the U.S., only 49 percent of employees say HR has a good understanding of their skills.

Inadequate leadership. Almost half of executives say their plans for growth are hindered by a lack of access to the right leaders.

Misunderstood Millennials. While 51 percent of executives say the large number of Millennials entering the workforce greatly affects their strategy, fewer than a third pay special attention to these workers’ wants and needs—primarily because they don’t understand them. Millennials may be more tech-savvy than older workers, but they also have things in common with previous generations: Both Millennials and non-Millennials cite compensation as the most important benefit and value meaningful work, corporate values and work/life balance.

The changing workforce. Eighty-three percent of executives expect their companies to increase the use of contingent, intermittent or consultant employees—which puts a lot of pressure on HR to figure out how to build loyalty among these workers.

Shifting strategies. While a majority of executives say workforce development is critical for their companies’ future success, just 39 percent report using quantifiable metrics and benchmarking for workforce development. C-suite executives are more likely than HR executives to do so (42 percent vs. 36 percent), but only 42 percent of all executives say they know how to extract meaningful insights from the data available to them. Meanwhile, almost half report that workforce changes will require adjustments in compensation plans, training and HR technology.

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