Andy Peck, Deloitte’s Atlantic Canadian human capital consultant in Halifax, has a global view of human resource issues, partly because he worked in Australia for five years. He works mostly with medium to large organizations but says many HR issues are the same no matter the size of the company.

Peck and I talked at the offices of Progress magazine in Halifax and later by telephone. The focus was a recent Deloitte forum of managers in Atlantic Canada on the subject of Succession Planning for Critical Workforce Segments.

By David Holt, Editor Emeritus of Progress

What is the biggest HR issue facing organizations in Atlantic Canada?
The biggest long-term issue is the lack of talent-management strategies and the relationship with changing demographics. By 2008 many baby boomers will be retiring, which will put enormous pressure on the workforce. One day companies will wake up and ask, “Where are the people?” It could be cataclysmic. Besides the lack of personnel, we are not planning how to fund pensions or how to transfer the knowledge of older workers onto younger ones.

You can make an analogy with Y2K, which also had a known deadline. People waited until the eleventh hour before making a plan to keep the lights on. The level of awareness about this problem is modest at best.

What about the issues we’re facing right now?
In Atlantic Canada there is a large chasm between strategy and the ability to execute. A key reason is that strategy isn’t translated into an understanding of the core capabilities that are needed in specialized areas like R&D, finance and marketing.

The plans might be good, but where organizations fall down is in the ability to execute. They are limited by the inability to identify the capabilities and talent that will be needed. Organizations try to apply skills that they already have in-house, or they need skills that are not available in their market or that are too expensive for them to acquire by recruiting or that they don’t provide training for. Part of the problem is that HR is seen as a support mechanism and not as part of the team that adds strategic value.

As an aside, we have a similar problem in marketing. We push what we have instead of listening to what the customer wants.

What is bringing this issue to the forefront?
There are two factors. First, organizations need more sophisticated technology to automate their businesses, so they need new skills to use the technology effectively.

Also, technology provides new data that reveal new value opportunities, but only 10% to 20% of this value is captured by many organizations. The challenge is not only to upgrade the technology, but also to have people who can create profit from this new value.

The second driver is globalization, which creates more competition. Businesses are under constant pressure to provide better work more quickly and more cost effectively.

How do we see this play out in our region?
In Atlantic Canada, we are passionate about our history and want to maintain a threshold of traditional resource industries, but we need to be receptive to new kinds of knowledge-based industries, too.

Traditional resource industries are being replaced by knowledge-based services. We need to redefine productivity and figure out how to manage our knowledge resources, which can be hard to measure. We can’t escape the increased competition. Capital markets are always looking for value. We have to move up the value chain.

How do our approaches to work compare to Australia? Is there anything we can learn from there?
My perception is that, in North America, we feel we have to be at our desk working hard until six or seven at night. We are production oriented. In Australia, they have a different work ethic. They work their ‘x’ hours and then go home. You see senior executives surfing during lunch. Their approach seems to be to work enough to enjoy their lifestyle. Their economy is booming, so it seems to be working. Maybe they are working smarter and finding that elusive work-life balance.

Let’s go back to demographics. As boomers will be retiring as a group over the next five to 10 years, what changes can we expect?
It will happen in many industries, with a few exceptions like retail, and in the public sector, including health care. If there is an upside, it is that it will open doors to be more innovative in how we accomplish our goals. But we are largely unprepared; we discuss the issue but we don’t prepare for it.

Why are we not planning for the inevitable?
There are several reasons. One is that the workforce is already stretched. Managers juggle multiple projects and don’t have time to think ahead. Another reason is that a company will put all of its eggs in one basket, relying too much on the 10% who can move fast and adapt. These high fliers get called on to do too much. They get burnt out and leave after three or four years, while the other 90% don’t get the training and grooming they need to be better employees. It’s a double-edged sword.

How can companies break out of this trap?
One approach is to figure out a way for the 10% to get out of operations for a while. Let them do some long-term planning and come up with a succession plan.

Let’s get back to the issue of retention, especially how to keep critical talent and top performers. How do you increase the odds of getting these people to stay?
Retention studies like the one conducted by the Conference Board of Canada in the late 1990s show that the reasons people leave are based on motivation. Number one is lack of leadership by the direct supervisor. Number two is that the individual isn’t getting the opportunity to stretch and grow. Next comes the lack of a well-articulated career path within the organization. A lack of fair compensation is last on the list.

Most organizations that can’t retain key people at whatever level have leadership issues. Those who stay feel they don’t have other options. The organization is selecting for mediocrity. This often points to a gap between the proven ability of senior management compared to middle managers and supervisors; it’s a knowledge-transfer issue. Senior managers may be aware of this gap, but they don’t know how to address it. You need to develop leadership at all levels.

Smaller organizations face the same issues, the same need for leadership. In smaller ones, it’s all hands on deck. There is no time to plan for future needs.

How do organizations get better at leadership?
They need to invest in people with leadership ability — people who can be found at any level of the organization. Studies have shown that the best way is to provide more on-the-job opportunities to develop and grow and to let people know that they’ll be supported even when they make mistakes.

From an individual’s point of view, how can someone increase their own leadership ability?
On an individual level, people need to ask themselves two questions: How can I be a leader in my sphere? Am I being encouraged to be innovative in my job?

 Return to our series on Talent Management

This article originally appeared in the May 2005 edition of Progress Magazine, an Atlantic Canada-based publication designed to help the region’s decision-makers grow their businesses. For more information, www.progresscorp.com