Businesses need talented people?motivated, knowledgeable, high-performing employees?in order to thrive. That's always been true, but never more than now, as many CEOs view their workforce as the big differentiator in today's highly competitive business environment.
This raises pressing questions for corporate leaders:
Do their companies have the talent and skills they need to grow and innovate?
And do they have the human resources capabilities the systems, applications, cloud services, and internal processes required to get the most out of the employees they do have and the new ones they seek to bring on board?
In most cases, the answers to those questions are no, and CEOs are turning to their Chief HR Officers to come up with new strategies for developing, attracting, and retaining their human capital.They're looking to replace outdated HR practices and infrastructure with modern human capital management (HCM) capabilities.
At Oracle HCM World in Las Vegas (which ran from Feb. 4 to 6), CHROs, Chief Information Officers, and other CXOs and stakeholders talked about the business forces driving HCM transformation, and what their companies are doing to become HCM leaders. Here is my recap of 10 key trends they discussed.
1. Business growth often requires fresh talent. According to PwC's 2014 US CEO Survey, 89 percent of CEOs in the US expect their companies to deliver revenue growth over the next 12 months. During that same period, 62 percent expect to hire more people. See the correlation? Business growth and workforce growth often go hand in hand, which means that the future of business is shaping up to be a renewed battle for talent.
2. The skills gap is branching out and getting more complex. We already know that certain job skills are hard to find, but changing workforce demographics, such as retiring Baby Boomers, could make it even harder for employers to find the talent they need. In some countries, the working-age populations are declining. This helps explain why 70 percent of CEOs are concerned about the availability of key skills, according to PwC. A new generation of workers will help fill the gap (or gaps), but these younger employees have very different expectations about careers, collaboration, loyalty, and the tools they use to get things done. It also means that employers will have to get better at matching job requirements and skills availability across geographies.
3. Organizations must improve at talent and performance management. The key to closing the skills gap is talent management?the ability to attract people with the right experience and skills but that's not where it stops. Performance management is the art and science of maximizing employee contributions through systematic feedback, goal setting, rewards, and, where necessary, corrective measures. Done right, companies can achieve as much as a 30 percent improvement in employee performance, says Brian Kropp, managing director of the Corporate Leadership Council. Many organizations have room to improve in both areas.
4. Employee experience impacts customer experience. We've all heard about the critical importance of providing a great customer experience. Now, amid the global competition for talent, the employee experience has become every bit as vital. HCM and customer service have emerged as the two most important business apps of the 21st Century, Oracle CEO Larry Ellison says. That's because they both involve taking care of people?and employees are the ones who take care of your customers.
5. Collaboration is a force multiplier. What lies beyond personal productivity Kropp sees network performance the degree to which employees work together, share, and help one another as the bigger driver of business performance. His formula: Individual Task Performance + Network Performance = Enterprise Contribution. Larry Ellison says, Most jobs are bigger than can be done by one person. Modern HCM puts a premium on this way of working and provides the capabilities to support it.
6. New tech tools are required. Despite a new generation of cloud-based HCM capabilities, many businesses are still using yesterday's HR systems and apps. Only 4 percent of HR departments are on the latest release of their HR platforms, according to PwC. That's obviously out of sync with the business imperative to optimize the workforce and attract new talent.
7. Social is the new paradigm for HCM. As CHROs and CIOs look for ways to modernize HR capabilities, they should gravitate toward solutions that employees already know and love social apps. Modern HCM systems, by definition, are meant to be used by everyone in the company, not just HR specialists. And social isn't just a capability; it's a mindset?a way of collaborating that can raise enterprise performance. (See #5 above.) Modern HCM must also be mobile and cloud-based a phenomenon my colleague Bertrand Dussert, VP of HCM Transformation and Thought Leadership at Oracle, refers to as the consumerization of HR.
8. HCM has become a data-intensive, data-driven business discipline. A comprehensive HCM strategy tends to involve lots of data about employees, data by employees, and data for employees. The systems should provide lots and lots of actionable insights to everybody who uses them, says Larry Ellison. Thus, one goal of HCM transformation must be to manage all of that data in a way that can be shared with other parts of the enterprise, providing better visibility into business performance. There may very well be an HCM component to your company's Big Data planning and implementation.
9. HCM is selfish in a good way. Many employees have more comprehensive LinkedIn profiles than they do in the corporate HR system. That must change. With modern HCM, employees are encouraged to provide more information about themselves to support networking, collaboration, and career development. Cara Capretta, Oracle VP of HCM Transformation, says talent profiles can be mined by the business as a way of discovering and capitalizing on its people assets. The concept of the quantified self, where data about employee activity is generated by wearable technologies, takes this a step further. Think, for example, about the possibilities of a collaboration map of the workplace.
10. The robots are coming! Predictions of a future in which digital technologies displace human skills are no longer mere sci-fi. Check out The Second Machine Age, a book by MIT professors Erik Brynjolfsson and Andrew McAfee, to get a sense of the dramatic changes in the workplace that are coming in the form of digital disruption and automation. This trend means that certain human skills, such as curiosity and an ability to visualize data, will become more valuable, writes New York Times columnist David Brooks. This should be a wake-up call to businesses that are still doing old-style HR because change may be coming faster than they realize.