Human capital – The Number 1 Challenge

16/05/2013 -

A recent survey, which aims to gain insight into the challenges facing organisations around the world – with more than 700 respondents this year – identified human capital as the number one issue for CEOs.

Four of the top five challenges were the same in Europe, Asia and Australia: human capital; operational excellence; innovation; and customer relations.

Respondents were then asked, “What are you going to do about it?”

In Australia, the top strategies relate to growing talent internally; training and development; and enhancing the effectiveness of the senior management team. The focus on developing the senior management team is good news.

You cannot drive talent development from the bottom up. You cannot do it as an HR operator; you have got to ensure it’s done from the top down. It is important that your CEO thinks that way.

A cataclysmic shiftBUSINESS - TARGET. istock-illustration-12108618-target-market

The world is at a “really unique point” in economic history.

We’re moving over from a situation where 60 per cent of the world’s GDP was set in the West. At present, 50 per cent is now in the East. In 10 years’ time, 60 per cent of the GDP will be based in the East.

This cataclysmic shift has never been seen before. As a result we’re seeing turbulence in the market, but also seeing rapid growth in Asia. Hence the primary focus is on human capital, innovation and operational excellence.

Identifying high potentials

Leadership in Asia and Australia isn’t all that different … in that growing mid-level managers to managing directors, country heads and business unit heads is a top priority at the moment. Companies are closing the leadership gap within one or two years – as opposed to three or four.

However, not every individual with drive and training can become a successful executive. Studies show that if 20-25 per cent of an organisation’s middle managers are high-performing, only 10-30 per cent of those have high potential to become executives. With such a small group, there’s a lot more attention needed on getting selection criteria and definitions right.

The greatest challenges in managing key talent are: retaining top talent; accelerating leadership development; and engaging and motivating talent to get maximum productivity, engagement and commitment.

Growing your own talent – promoting people who understand the organisation’s business model and culture, and have existing relationships – involves less risk than hiring external talent.

The critical question is how to distinguish employees with high leadership potential from high performers.

Aspiration + agility = organisational confidence

While the need for agility is often mentioned in PD criteria, it is becoming increasingly important to assess mobility early in the performance review process – a potential leader’s willingness to relocate.

As part of the “rebalancing of economic mass from West to East”, a whole bunch of medium – large companies are preparing to go global. These companies know they need to move to more experience and exposure-based development of their people, across a range of organisational situations and workplace cultures.

Social and emotional intelligence training needs to become a higher priority for developing leaders, to significantly enhance their ability to self-manage, quickly gain situational acuity, and develop crucial relationships and networks.

Current risks

When tough times hit organisations and budgets need cutting, Learning & Development is often targeted. HR practitioners need to ensure the programs they run are ‘hitting the mark’ to provide the organisation with tomorrow’s leaders

CEOs must not drop the ball on this … without the right senior management team, organisations will not move forward in this globally competitive environment.
Workforce Vitality provides focused development on social + emotional intelligence skills … critical for leadership development.  

Adapted from HR Daily Article – 16 May


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