Review: Deloitte Global Human Capital Trends 2016

By | May 26, 2016

Deloitte 2016 Global Human Capital Trends was released here (5.6Mb). It is a 124 page manifesto of well-organized thinking on how the workplace is changing, what employees want, and how the old way of thinking about human resource (read: people) just does not work. In real consulting style, the survey is rigorous – interviews and surveys of more than 3,300 business and HR leaders in 106 countries. The subtitle of the report is Different by Design, noting that 92% of leaders felt a need to fundamentally change the way people are organized and engaged. The 10 trends are shown below by ranking of importance. You will quickly see that there is overlap and complementary concepts – of course.

Consultantsmind - Deloitte Human Capital 10 trends

Ten major themes. You can see on this cutesy graphic here, there at 10 major themes which group into a few buckets: new mission and purpose, new workplace, new HR, new leadership and careers, and new organization. Even without reading this long report, those of us who work in the corporate world can likely guesstimate the content.

Consultantsmind - Deloitte 10 Human Capital themes

Rise of teams. Deloitte notes that traditional functional structures and silos are slowly melting away and yielding to networked teams – more agile, customer-focused, and ideally flexible. It’s the on-demand economy, applied to human resources. Why have build-to-stock inventory of human capital when you can mass-customize teams.

Consultants are used to this. Fundamentally, we mix/match people for projects and cases depending on skills, geography, experience, and staffing leverage. Now companies are moving away from traditional functional structures: Only 38 percent of all companies and 24 percent of large companies (>50,000 employees) are functionally organized today.

Not easy to do. This all sounds great, but it’s tough stuff. This new mode of organization — a “network of teams” with a high degree of empowerment, strong communication, and rapid information flow — is now sweeping businesses and governments around the world. It is built on several fundamental principles:

  • Teams are lead by experts who are coach/players. Not professional managers
  • Allow teams to craft their own goals and decisions – a move away from the tops-down MBO process from the 1980s, popularized by Drucker and the Japanese.
  • Do not accept silos of data; religiously break-down data walls
  • Move people to bigger opportunities; allow teams to grow/shrink as needed

Leadership, the big gap. I am convinced that leadership provides the biggest ROI for any company; frankly, a good leader makes a difference. Last year, corporations invested $31 billion on leadership programs.  Yet, look at these survey results:

  • Only 7% of companies say they are “excellent” at building Millennial leaders
  • Only 13% of companies report they are “excellent” at building global leaders
  • Only 14% of companies described themselves as “strong” at succession planning

We have all attended crappy leadership training where you walk away “feeling good”, but without the tools, relationships, and accountability to really make a difference. Deloitte notes that a lot of training is not backed by evidence, science or principle. Also, the span of control for US companies continues to increase – so manager has more and more direct reports to manage, coach, recruit, retain, and promote.

Culture AND engagement. Interestingly, Deloitte separates these two concepts out. Culture is “the way things work around here” and engagement is “the way people feel about how things work around here.” It’s a key distinction, and something I will ruminate on more too. Unsurprisingly, employees are now like customers – with specific needs, wants, and aspirations. It takes more than a paycheck to keep people happy. My wife recently read some work by Ray Dalio – legendary investor and founder of Bridgewater Associates – and he talks a lot of about culture here (2.3Mb, 106 pages). I completely agree that culture trumps strategy, and it involves leadership and non-stop communication, demonstration, and reinforcement. It is just like parenting.

Corporate learning.  It’s more technology-enabled, customized, self-curated, and continuous. It is more than just video-recorded, boring training online. It involves education, exposure, experience, and a supporting environment. With the rise of the MOOCS, learning has become democratized and mass-customized. There is no excuse – if you want to learn and get better. . .the tools are there. Don’t be lazy.

HR as the experience architect? This part is a bit of stretch for me, but hear out this logic. Deloitte argues that HR needs to evolved from a process-centric (recruit, on-board, ensure compliance, process paychecks, mitigate risks) to more of design-thinkers who reduce the complexity of the businesses and improve the employee experience. While that does sound great – not sure if I have met HR teams that do that.

For the importance of the role – remember, Jack Welch advocated that the head HR role was as importance as the chief financial officer in his book Winning in 2005 – HR often does not have the influence, allegiance, or leadership to shake things up.

Human capital is changing, and so too should HR.  “Softer” areas such as culture and engagement, leadership, and development have become urgent priorities. Unfortunately, there is no cut-and-dry formula for these elements. It requires focus, and simplification from HR. More design thinking of what can truly improve the employee experience, and uncork people’s potential. It’s sounds mushy – and some of it is.

Consultantsmind - HR Importance and Readiness

HR Data and analytics desperately needed. Perhaps one way that HR can re-establish itself as a thought-leader, business adviser, and change agent is through better data. Too often, HR just processes transactions.  Not enough thinking.  Laszlo Block caused a stir when he wrote about his 9 years as the SVP of People Operations at Google in his book: Work Rules (affiliate link). Listen to a 24 min interview here.

Workforce on Demand.  Deloitte points out that “as many as 30 to 40 percent of all US workers today are contingent [workers].” This trend will likely only continue as companies put a premium on speed, agility, and flexibility. The world is flat, and the global workforce can be mixed/matched/assembled like a symphony of free agents. This all makes HR’s job harder, and yet, more strategic.

Performance management. Deloitte wrote quite a bit on this topic – but this will be a separate blog post. 11pm, time for bed. Once again, link to full report here (5.6Mb)..

What innovation have you seen with HR at your company or your clients?

How realistic is it that the CHRO (Chief HR Officer) will be at the same level as the CFO – as Jack Welch argues here

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