Lack of Workforce Skills Hinders Corporate Ability to Succeed, Survey Indicates

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Most senior executives report their workforces lack the skills their companies need to achieve market leadership, and even their critical functions do not perform as strongly as they should, according to the Accenture High Performance Workforce Study (the Study). Accenture is a global management consulting, technology services and outsourcing company.

“The lack of essential skills is a vital issue for senior managers,” Peter Cheese, global managing partner in Accenture's Human Performance practice, said in a prepared statement announcing the Study results. “As the competitive environment grows more demanding and as markets become increasingly commoditized, the need to cultivate these skills - particularly in the critical functions – should be at the top of every corporate to-do list. Those companies that fail to develop their workforces risk losing their competitive edge.”

The Study is conducted approximately every 18 months to measure management trends among executives in large corporations in the United States, Europe, and Australia. This year's research, of more than 250 senior executives, found that only 14 percent of respondents described the overall skill level of their organizations' entire workforce as industry leading. Furthermore, just 20 percent of respondents said the vast majority of their employees understand their companies' strategy and what's needed to be successful in their industry.

“A company's ability to manage its workforce strategically and develop its capabilities will set it apart from its competitors,” Cheese explains. "Some companies focus well on one or two aspects of human capital management, such as learning or internal communications, but the best take a broad view of managing their workforce. These are the companies that vastly increase their chances of being industry leaders.”

Respondents also reported that even functions they consider critical – sales (62 percent), customer service (43 percent), finance (23 percent) and strategic planning (23 percent) – were not performing as strongly as they should. In fact, among those who rated these functions among the three, just 25 percent assigned the highest rating to the performance of their sales function, and under a third provided the same rating to their customer service (25 percent), finance (19 percent) and strategic planning (33 percent).

According to the research findings, these shortcomings can be attributed, in part, to several key findings related to human resources (HR) and training. For example, only 11 percent of respondents reported being very satisfied with the performance of their HR functions, while even fewer, 10 percent, were very satisfied with the performance of their training functions. The research uncovered a number of possible reasons for this, including:

  • A lack of connection to business drivers - Only 36 percent of respondents said their companies tailor their HR and training support to each function's needs and contributions to the organization.
  • Failure to measure the business impact of HR and training efforts - More than 40 percent do not evaluate the impact of HR and training efforts against profitability, and half (50 percent ) do not evaluate those efforts against revenues and sales.
  • Ineffective or non-existent knowledge capture and sharing capabilities - Forty-two percent of respondents described capturing and sharing knowledge as a challenge or a severe challenge for their companies. The most commonly cited impediments to better knowledge capture and sharing were: a lack of a common business culture across different locations, cited by 38 percent of respondents; no knowledge support infrastructure with dedicated people, cited by 37 percent of those surveyed; and the fact that knowledge sharing is typically not rewarded in the organization, cited by 32 percent of survey participants.
  • The talent time-bomb - Nearly 60 percent of respondents reported that, over the next five years, they expect to begin feeling the impact of the aging workforce and the impending retirement of baby boomers. Of those, 28 percent said they are feeling the impact now. Almost half (43 percent) of participants described talent sourcing as a challenge or a severe challenge, primarily because of a smaller or shrinking talent pool from which to choose.
  • Lack of functional leaders in people issues - Only a small percentage of respondents said the heads of customer service (29 percent), finance (31 percent), sales (34 percent) and strategic planning (37 percent) at their companies are highly involved in human capital management initiatives.

The research did identify a group of companies that Accenture refers to as “human performance leaders” – companies in which the three functions their executives deem to be most important, perform at the highest levels. These leaders, as opposed to the “laggards” – who said that none of their top three functions performs at the highest level – are more likely to be successful in addressing the organizational issues that contribute to strong financial performance. For example, respondents stated that their companies perform “very well” in the following areas:

  • 43 percent of leaders, compared to only 14 percent of laggards, report acquiring new customers and increasing market share
  • 52 percent of leaders vs. 17 percent of laggards, report encouraging strong customer loyalty and retention
  • Responding to changing market conditions was reported by 52 percent of leaders but only 14 percent of laggards
  • 39 percent of leaders report finding and developing talented leaders, compared to 7 percent of laggards
  • Generating superior business value from technology investments was reported by 35 percent of leaders but only 15 percent of laggards
  • 30 percent of leaders, vs. 12 percent of laggards, report attracting and retaining skilled staff

According to the findings, “human performance leaders" have more effective HR and training support. Among the practices helping them excel are: formal measures that gauge the impact of all HR and training support activities on their top functions; tailoring HR and training support according to the contribution of specific functions; and taking a more strategic approach to human resources and training, including viewing the HR function leader as a strategic business partner to the executive suite.

The Accenture High Performance Workforce Study, conducted between February and April 2006, explores trends, issues and developments in human capital management at organizations around the world. This year's data was collected via telephone surveys with 251 senior executives in the U.S., United Kingdom, France, Germany, Spain and Australia, representing seven broad industry segments: retail; travel and transportation; financial services; electronics and high tech; communications; energy and utilities.

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