Human Capital Trends 2011

Events of the past few years have brought sweeping changes to business and new challenges for the Human Resources (HR) leaders who support them. Two broad themes — innovation and global markets — have taken a front-row seat in human capital organizations around the world.

In this episode of Insights, Barbara Adachi, the national managing director of human capital in Deloitte Consulting LLP, and Jason Geller, Global and U.S. HR Transformation Leader and principal in Deloitte Consulting LLP, discuss the trends that are transforming how human capital leaders and professionals create value for the organizations they serve, their people, and their communities — both inside HR and across the broader business along with the results of the survey, Human Capital Trends 2011.

Tune into the latest episode of Deloitte Insights to learn more about human capital trends.

Speakers

Barbara Adachi, the National Managing Director of Human Capital, Deloitte Consulting LLP
Jason Geller, Principal, Deloitte Consulting LLP

Transcript 

Sean O’Grady: Hello and welcome to Insights. Today, we are discussing the results of a new study titled “Human Capital Trends 2011.” It is an in-depth examination of the evolving human capital landscape. We have a number of items we are going to cover and we have two guests to help us better understand them. In San Francisco, we are joined by Barbara Adachi, the National Managing Director of Human Capital in Deloitte Consulting. And, sitting next to me here in New York is Jason Geller, a Principal in Deloitte Consulting. Thank you both for joining us, but Barbara, I would like to begin with you in San Francisco. I would like to understand a little bit more about this study. Can you please tell me what is it and why did you chose to conduct it?

Barbara Adachi (Barbara): Absolutely. First of all, we believe that the HR landscape is changing, and the role of HR professionals has actually evolved over the years as talent has become a strategic business priority. In fact, we see, human capital, as a top priority not only for HR professionals, but across the C-suite, so this includes CEOs, CFOs, and CIOs. From an external prospective, there is a lot going on, including changes in workplace demographics, globalization, and of course, the shortage of talent. So when we created this report, it was our goal to capture these key trends, identify some ideas on how to address them, as well as share our own prospective on these important issues.

Sean: Thank you for that Barbara. How about you Jason, why did you find this study important?

Jason Geller (Jason): Thank you. We have the opportunity to spend time with lots of leading organizations and they are consistently asking us questions about trends going on in the marketplace and want to hear our prospective about it. So we spent some time looking back at the work that we had done and really a couple things emerged — innovation and global markets, and as we started to dig deeper, we really looked at the categorization with those trends and there were some that fall in the category of revolutionary and some in the category of evolutionary, and we saw there is a great opportunity to bring them together and package them up into a single report for our clients.

Sean: Well, tell me a little bit more about those trends — the revolutionary and evolutionary.

Jason: Sure, if we were to look at revolutionary trends versus game-changing trends. They are an opportunity to do something radically different for an organization to really move the needle and make significant impact and differences. Evolutionary trends are clearly important, making a difference for an organization, and they move the needle forward, but in a more incremental way. The trick with evolutionary trends though, you can’t miss them. Meaning if you miss a number of evolutionary trends, you are going to play catch up moving forward for the organization.

Sean: And back to Barbara in San Francisco. Barbara, we have the trends up on the screen—the 12 key trends from your study. I would like to hear your prospective between the evolution and revolution. Why do you think these are important? Why are they clustered into two categories?

Barbara: I believe that, again, with all of the external forces that are going on out there that HR professionals as well as the C-suite in general has to keep track. As Jason mentioned, you can’t miss these, whether they are evolutionary or revolutionary, and it all depends on how organizations want to respond. One of the things that I mentioned earlier was there is a lot of change going on in workforce demographics and frankly, this has dramatically changed the workplace.

And, let me just give you a couple of thoughts there. First of all, we have flattened organizations today. Company structures are far more flat, like 25% flatter than they were 20 years ago. In addition to that, we have great technology, which has enabled organizations to allow the workforces to work virtually and in our own organization. We see that a lot of times people aren’t in the office every day, and then finally we have a multi-generational workforce.

We have four generations in the workforce today and that has created a lot of differences in terms of what are people for, both long term and short term. So, when we think about a revolutionary trend, it is really around the structure and model that we have really fit; and so companies are looking at things, such as more flexibility and being very provocative in that area.

They are also looking at changing career models to really adjust this, the differing types, and frankly, what we see as the traditional corporate model, really does not fit anymore. We are now moving into what we call a lattice model in which people can really INAUDIBLE to their careers and also tackle things differently and really customize what they need to progress in their own career path.

Sean: Thank you for that Barbara, and Jason, do you have anything you want to add on the revolutionary trends?

Jason: Thank you, yes. I would love to share an example. One of the trends we highlighted was cloud-based HR solutions. It is difficult these days to watch television or to walk through an airport and not see somebody advertising a cloud-based technology solution. From an HR prospective, it’s having a profound impact and there can be a lot of debate around whether cloud technology is revolutionary or evolutionary, but the impact that cloud-based technology is having on HR is absolutely revolutionary. It is changing the opportunities for HR organizations in terms of what they are able to do and how they are able to deploy their different technology solutions.

Organizations are typically constrained around how they deploy HR technology to start with large markets and then move to smaller markets, or to start with core HR processes and then move on to the strategic HR processes. With cloud-based technology, it is a much more flexible approach to implementing the technology and the ability exist to start in emerging markets first, and then move backwards towards larger more established markets. The same things that hold true in terms of the progress focused, rather than focusing on core HR, there is an ability to lead with the more strategic talent processes, such as compensation, performance management, succession planning. So we are seeing a trend towards emerging-markets-led HR transformation or talent-led HR transformation, very different than what traditional technologies have been able to do, so revolutionary in terms of the impact.

Sean: Oh, thank you for that. So, that was the revolutionary cluster. I would like to move on to the evolution cluster, and Barbara, we will just begin with you over there in San Francisco again. Can you tell me a little bit about the trends in evolution?

Barbara: Absolutely. So, from an evolutionary standpoint we really have to look at things that are going in the outside world that impact our HR professionals. So, a couple examples in this world might be the impact of regulatory change and this includes health care reform and that has been kind of a slow process because it is going to take place over a couple of years and so HR organizations and organizations in general have to respond to that over a period of time and that’s where the evolution comes in.
Another would be the economic recovery, which, frankly, may be happened a little bit quicker than we anticipated, but again, companies have to respond. What we are finding in our own research, if we take a look at the economic recovery, is that companies today aren’t necessarily on top of this. For example, if you look at the number of people that are actually testing the job market now. In 2011, a research indicates that 65% of employees are testing the job market and that is up 10 percentage points from 55% just two years ago, and so companies really need to be re-looking at their recruitment and retention strategies, and their overall talent strategies at this point.

So what we really looking at is, how these things are changing over time, but what can companies do now. So, in our report, we hope to share some of the lessons learned from the frontlines around in our changing career models, what’s the role of leadership in this upturn economy, and how do companies actually prepare, and not be blind-sided if employees do start to leave because they have more options today?
So that’s a real life example right now what’s going on as we are starting to see the upturn in the economy and the impact on people.

Sean: Very interesting, thank you for that Barbara. Jason, I am interested in your prospective on the evolutionary category.

Jason: As I mentioned before, evolutionary trends are important to take advantage of, because they provide the platform and the foundation for more revolutionary change to come. One of the trends we have seen, a real focus on, is the emergence of the role of the HR Chief Operating Officer. This is a role that helps to drive a lot of the core operational and initiatives within an HR organization. So, there could be debate whether that’s truly evolutionary, is that truly new. We believe it is.

We are seeing more and more organizations identify somebody who is responsible for driving the operations across silos within an HR function. That allows that ability to drive not just more efficiencies and cost-effective delivery of HR services, but the ability to focus on those initiatives that cut across different silos within an HR function.

The example we often use is most organizations go through a tremendous amount of pain when it comes on to do the compensation process, each year. It requires a participation of technology, of the business partners, of the field-based HR organization, and of the compensation department of shared services. So if we think about an HR organization, we are cutting across all the different parts of the organization in order to do what seems to be a pretty simple process, help people figure out comp that should get as part of the each annual cycle.

Having a chief operating officer of HR allows somebody who has the responsibility to drive processes regardless of where the capability or the need sit within the organization. So, taking things that became significant projects for HR and making them everyday business.

Sean: So, streamlining. I guess, with all these trends in mind, my last question for both of you, and I will start with you Jason, is, where is this going? What does it mean for human capital professionals in the next few years?

Jason: Sure, it is a great question. Again, one of the challenges that we are trying to figure out are which ones make sense to follow? A trend is just that a trend, it is not something every organization must do and not every trend applies for each organization. So, one of things we would encourage organizations to do is to make sure they are actually current on what is happening in the marketplace. Not because it means you have to do everything, but simple because it is important to understand what the options are, and then pick and choose, make the appropriate bets, understand what changes and what trends will be most impactful to your organization based on what you are trying to accomplish from both the people and overall business prospective, but most importantly, don’t be afraid to change. Change is going to happen and identifying the right changes, both revolutionary and evolutionary to build foundation for growth in the future will be absolutely critical.

Sean: Well, thank you for that Jason. Barbara, final thoughts go to you over in San Francisco. What do you think are the most impactful trends and what does this mean for professionals in this industry?

Barbara: Well, I kind of a go back to where I started the conversation, and I would say continue to innovate. I think companies and organizations need to not be afraid to change. A lot of innovation can come out of this. And I think that second thing is with the evolving role of HR, continue to align with the business priorities of the organization, for HR to continue to provide value, we really need to understand and embrace the strategic priorities of their firms. So that would be our key advice to them in terms of whatever trend they follow or whatever they decide to respond to that it needs to be one of their business priorities.

Sean: Barbara, thank you very much. Jason, thank you very much, for joining us in the studio. All right, we have been discussing the results of the new study “Human Capital Trends 2011” with Barbara Adachi in San Francisco and Jason Geller here in New York. If you would like to learn about Barbara, Jason, or any of the topics we discussed on today’s broadcast, you can find that information on our Web site www.deloitte.com/insights/us. For all the good folks here at Insights, I am Sean O’Grady, we will see you next time.

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