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A Center for CIO Leadership Summary
CIO Context
The IBM Global Human Capital Study 2005 focuses on how organizations are leveraging their human capital to improve workforce effectiveness and organizational performance. Over a period of many months, IBM Business Consulting Services engaged with Chief Human Resources Officers (CHROs) across the world to identify the key challenges facing them in today's business climate.
Some striking patterns emerged from the Study. It is clear that companies that invest in human capital, work to develop and retain valued employees, and measure and hold people accountable for that investment have a powerful competitive advantage. The Study sets out a challenge for you, as a CIO and driver of change in your organization. If people and talent are central to the successful addressing of the priorities of growth and responsiveness, then organizations aren't yet demonstrating it. Very few are measuring or rewarding their executive leadership or HR function by how they deliver on this vital agenda. The Study identifies five important findings for establishing a new human capital agenda.
Perspective 1: The Menace of Maturity
More than 50% of the Study participants described their markets as "maturing" or "declining." These companies also report less staffing flexibility, fewer management development programs, and fewer measurements of employee satisfaction and retention. They become more set in their ways—less and less able to identify and build the skills necessary to adapt to market change.
Companies in growing or emerging markets, in contrast, are far more likely to vigilantly maintain their focus on people and productivity rather than procedures.
Do you work in a maturing or declining market? If so, is there an element of self-fulfilling prophecy here? Would remaining employee-focused help your organization maintain its edge?
Perspective 2: Build-Buy Balance for Talent
Organizations that consider talent development to be a fundamental part of their face a dilemma: should they focus their investment on building or buying the capabilities they need?
Whether you are building or buying talent, according to the Study authors, what really matters is the contribution to performance. Who is core to the business strategy? What skills can you bring in on an as-needed basis to help you achieve your goals? Which strategy does your organization use? Have you answered these two questions? The balance between build/buy is key, according to the Study. You must balance flexibility against long-term development as well as investing in people against the cost of that investment. How does your organization manage these tradeoffs?
A high percentage of North American companies have adopted cost-cutting strategies; at least partially as a result, many of these companies are heavily weighted toward "buy" rather than "build." These practices support a highly mobile, "free agent" workforce. Is this your experience?
Furthermore, the Study identifies an important correlation between management development and profitability: organizations that invest more heavily in the development of middle managers report higher profits per full-time equivalent (FTE). Does this correlation make sense to you? If not, why not? How much does your organization invest in the development of middle managers?
Perspective 3: Retaining Key People in a Fast-Moving World
Most organizations have not adopted a positive, proactive approach to talent retention, regardless of the proven benefits to workforce effectiveness and profitability from such an approach. Work/life programs, flexible hours, and child-friendly policies have all been shown to reduce management churn. And there are bottom line benefits to such policies: Organizations that offer telecommuting and options for reducing travel time do report higher profits per FTE.
To retain employees and maximize their productivity, organizations must be in tune with their employees, their needs, and their priorities. What do you know about your employees or their needs? What programs do you have in place to retain employees and maintain their productivity?
Perspective 4: Where Organizations Fall Short
According to the Study authors, organizations do not act like they believe that people and talent are crucial to achieve their growth and responsiveness priorities. Very few companies, they say, measure their employees' performance in terms of steps they have taken to help the company become more flexible, more growth-oriented, and more responsive. More than 75% measured effectiveness based on employee satisfaction.
At your company, is there a gap between the expressed belief that people are important and the way in which this area is managed and measured? How can you help make the impact of human capital management on business results more tangible and visible to the executive leadership team?
Perspective 5: Regional Perspectives
Geographical location has a significant impact on human capital management, alongside sector and market maturity. Each region displays its own characteristics in specific areas of HR management. For example, Asia Pacific firms tend to have a young, flexible, and mobile workforce; and firms in Europe, Middle East, and Africa are less likely to focus on measurement and use of human capital data. What regional trends in talent management have you noticed?
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