Week 6 Managing Human Talent and Teams

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Global Human Capital Trends 2016 The new organization: Different by design

Deloitte’s Human Capital professionals leverage research, analytics,

and industry insights to help design and execute the HR, talent,

leadership, organization, and change programs that enable

business performance through people performance. Visit the

“Human Capital” area of www.deloitte.com to learn more.

http://www.deloitte.com

Contents

Introduction: The new organization | 1 Different by design

Organizational design | 17 The rise of teams

Leadership awakened | 27 Generations, teams, science

Shape culture | 37 Drive strategy

Engagement | 47 Always on

Learning | 57 Employees take charge

Design thinking | 67 Crafting the employee experience

HR | 77 Growing momentum toward a new mandate

People analytics | 87 Gaining speed

Digital HR | 97 Revolution, not evolution

The gig economy | 105 Distraction or disruption?

The new organization: Different by design

Introduction

Sweeping global forces are reshaping the workplace, the workforce, and work itself. To help organizations and their leaders understand these changes, Deloitte presents the 2016 Global Human Capital Trends report, based on more than 7,000 responses to our survey in over 130 countries around the world.

THE theme of this year’s report—“The new organization: Different by design”— reflects a major finding: After three years of struggling to drive employee engagement and retention, improve leadership, and build a meaningful culture, executives see a need to redesign the organization itself, with 92 percent of survey participants rating this as a critical priority. The “new organization,” as we call it, is built around highly empowered teams, driven by a new model of management, and led by a breed of younger, more globally diverse leaders.

To lead this shift toward the new organization, CEOs and HR leaders are focused on understanding and creating a shared culture, designing a work environment that engages people, and constructing a new model of leadership and career development. In competition for skilled people, organizations are vying for top talent in a highly transparent job market and becoming laser-focused on their external employment brand. Executives are embrac- ing digital technologies to reinvent the work- place, focusing on diversity and inclusion as a business strategy, and realizing that, without a strong learning culture, they will not succeed.

Amidst these changes, the HR function is taking on a new role as the steward and designer of these new people processes. The mission of the HR leader is evolving from that of “chief talent execu- tive” to “chief employee experience officer.” HR is being asked to simplify its processes, help employees manage the flood of information at work, and build a culture of collaboration, empowerment, and innovation. This means

that HR is redesigning almost everything it does—from recruiting to performance man- agement to onboarding to rewards systems. To do this, our research suggests that HR must upgrade its skills to include the areas of design thinking, people analytics, and behavioral economics.

The new organization Different by design

After three years of struggling to drive employee engagement and retention, improve leadership, and build a meaningful culture, executives see a need to redesign the organization.

The new organization: Different by design

The forces of global change What are the forces driving this demand to

reorganize and redesign institutions around the world? We see a series of drivers coming together to create disruptive change in the talent landscape:

First, demographic upheavals have made the workforce both younger and older, as well as more diverse. Millennials now make up more than half the workforce, and they bring high expectations for a rewarding, purposeful work experience, constant learning and develop- ment opportunities, and dynamic career progres- sion. At the same time, Baby Boomers working into their 70s and 80s are being challenged to adapt to new roles as men- tors, coaches, and often subordinates to junior colleagues. Also, the global nature of business has made the workforce more diverse, demanding a focus on inclusion and shared beliefs to tie people together.

Second, digital technology is now every- where, disrupting business models and radi- cally changing the workplace and the way work is done. Technologies such as mobile devices, 3D printing, sensors, cognitive computing, and the Internet of Things are changing the way companies design, manufacture, and deliver almost every product and service, while digital disruption and social networking have changed the way organizations hire, manage, and support people. Innovative companies are figuring out how to simplify and improve the work experience by applying the disciplines of design thinking and behavioral economics, embracing a new approach that we call “digital HR.”

Third, the rate of change has accelerated. Fifty years of operating under Moore’s Law— the axiom that computing power doubles every

two years—have not only propelled technol- ogy innovation forward but also significantly increased the pace of change in business as a whole, requiring organizations to be more agile. Rapid business-model innovation from companies such as Uber and Airbnb is forc- ing organizations to respond and reposition themselves quickly to meet new challenges. In our highly connected, fast-changing world, “black swan” events (those of low probability and high impact) also seem to be more signifi-

cant, reinforcing the need for agility.

Fourth, a new social contract is developing between companies and workers, driving major changes in the employer- employee relationship. The days when a majority of workers could expect to spend a career mov- ing up the ladder at one company are over. Young people anticipate working

for many employers and demand an enriching experience at every stage. This leads to expec- tations for rapid career growth, a compelling and flexible workplace, and a sense of mission and purpose at work. Today, contingent, con- tract, and part-time workers make up almost one-third of the workforce,1 yet many compa- nies lack the HR practices, culture, or leader- ship support to manage this new workforce.

Our global research

Now in its fourth year, Deloitte’s 2016 Global Human Capital Trends report is one of the largest longitudinal studies of talent, leadership, and HR challenges and readiness around the world. The research described in this report involved surveys and interviews with more than 7,000 business and HR leaders from 130 countries. (See the appendix to this chapter for details on survey demographics.)

We see a series of drivers coming together to create disruptive change in the talent landscape.

Global Human Capital Trends 2016

The survey asked business and HR respondents to assess the importance of specific talent chal- lenges facing their organization.

The top 10 human capital trends for 2016

In 2016, organizational design rocketed to the top of the agenda among senior executives and HR leaders worldwide, with 92 percent rating it a key priority. Perennial issues such as leadership, learning, and HR skills con- tinue to rank high in importance, as they have in each of the four years of this annual study. Yet this year, a key shift is under way, as corporate leaders turn a more focused eye toward adapting their organization’s design to

compete successfully in today’s highly chal- lenging business environment and competitive talent market.

Culture and engagement are also a major concern for the C-suite. This reflects, in part, the rise of social networking tools and apps that leave companies more transparent than ever, whether they like it or not. Top executives increasingly recognize the need for a conscious strategy to shape their corporate culture, rather than having it defined for them through Glassdoor or Facebook.

Figure 2 presents this year’s trends ranked in order of their importance as rated by survey respondents.

Figure 1. The 2016 Global Human Capital Trends research identified 10 important trends

Graphic: Deloitte University Press | DUPress.com

The new organization: Different by design

Organizational design: The rise of teams

As companies strive to become more agile and customer-focused, organizations are shift- ing their structures from traditional, functional models toward interconnected, flexible teams. More than nine out of ten executives surveyed (92 percent) rate organizational design as a top priority, and nearly half (45 percent) report their companies are either in the middle of a restructuring (39 percent) or planning one (6 percent).

A new organizational model is on the rise: a “network of teams” in which companies build and empower teams to work on specific busi- ness projects and challenges. These networks are aligned and coordinated with operations and information centers similar to command centers in the military. Indeed, in some ways, businesses are becoming more like Hollywood

movie production teams and less like tra- ditional corporations, with people coming together to tackle projects, then disbanding and moving on to new assignments once the project is complete.

This new structure has sweeping implica- tions, forcing programs such as leadership development, performance management,

Graphic: Deloitte University Press | DUPress.com

Figure 2. The 10 trends ranked in order of importance

Organizational design

0%-10%-20%-30% 10% 20% 30% Percentage of total responses

Somewhat/not important Very important/important

40% 50% 60% 70% 80% 90%

Leadership

Culture

Engagement

Learning

Design thinking

Changing skills of the HR organization

People analytics

Digital HR

Workforce management

8% 92%

11% 89%

14% 86%

15% 85%

16% 84%

21% 79%

22% 78%

23% 77%

26% 74%

29% 71%

Global Human Capital Trends 2016

learning, and career progression to adapt. Challenges still remain: Only 14 percent of executives believe their companies are ready to effectively redesign their organizations; just 21 percent feel expert at building cross-functional teams, and only 12 percent understand the way their people work together in networks.

Leadership awakened: Generations, teams, science

Fully 89 percent of executives in this year’s survey rated the need to strengthen, reengi- neer, and improve organizational leadership as an important priority. The traditional pyramid- shaped leadership development model is simply not producing leaders fast enough to keep up with the demands of business and the pace of change.

More than half of surveyed executives (56 percent) report their companies are not ready to meet leadership needs. Only 7 percent state

that their companies have accelerated leader- ship programs for Millennials, although 44 percent report making progress—a jump from 33 percent last year. While investment in lead- ership development has grown by 10 percent since 2015, progress has been uneven. In fact, more than one in five companies (21 percent) have no leadership programs at all.2

Our findings suggest that organizations need to raise the bar in terms of rigor, evi- dence, and more structured and scientific approaches to identifying, assessing, and devel- oping leaders, and that this process needs to start earlier in leaders’ careers. This is likely to also involve teaching senior leaders to take on new roles to make way for younger leaders.

Shape culture: Drive strategy Last year, “culture and engagement”

ranked as the most important issue overall. This year, we asked executives about culture

Graphic: Deloitte University Press | DUPress.com

Figure 3. The relationship between culture and engagement

Culture: The way things

work around here

Mission and purpose

Hands-on management

Inclusion

The work environment

Clear goals

Recognition

Meaningful work

Compensation

Development and career

Risk and governance

Courage

Trusted leadership

Innovation

Reward systems

Engagement: The way people feel about the way things

work around here

The new organization: Different by design

and engagement separately—and both placed near the top of the importance list, with 86 percent citing culture as an important or very important issue.

Why the separate rankings? Both are critical human capital issues today, and each requires a CEO-level commitment and strong support from HR if they are to be understood, measured, and improved. However, they are different concepts and need a different focus and set of solutions. Culture describes “the way things work around here,” while engage- ment describes “how people feel about the way things work around here.”

That said, culture and engagement are also linked. When a company’s culture is aligned with its values, it attracts those who feel com- fortable in that culture, which in turn helps companies to motivate people, leading to a

high level of engagement (see figure 3). In this year’s survey, the percentage of

executives who believe their companies are driving the “right culture” rose from 10 percent to 12 percent—a small sign of progress. Yet fewer than one in three executives (28 percent) report that they understand their organiza- tion’s culture.

Engagement: Always on Employee engagement is a headline issue

throughout business and HR. An overwhelm- ing majority of executives in this year’s survey

(85 percent) ranked engagement as a top prior- ity (that is, important or very important).

Building a compelling and meaningful work environment is a complex process.3 At the same time, the world of employee engagement and feedback is exploding. Annual engagement surveys are being replaced by “employee listen- ing” tools such as pulse surveys, anonymous social tools, and regular feedback check-ins by managers. All these new approaches and tools have given rise to the “employee listening” officer, an important new role for HR.

In terms of readiness, companies are mak- ing progress. The percentage of executives who believe their organizations are “very ready” to deal with engagement issues increased from 10 percent in 2015 to 12 percent in 2016, while those who feel they are “fully ready” rose from 31 percent to 34 percent. These are hope-

ful signs, but even with this increase, only 46 percent of companies report that they are prepared to tackle the engagement challenge.

Learning: Employees take charge

This year, 84 percent of executives rated learning as important or very important. This focus on learning seems appropriate, as learning oppor- tunities are among the largest drivers of employee engagement and strong

workplace culture—they are part of the entire employee value proposition, not merely a way to build skills.

Compared to last year, companies appear to be making strides in adopting new technolo- gies and embracing new learning models. The percentage of companies that feel comfortable incorporating massive open online courses (MOOCs) into their learning platforms rose to 43 percent from 30 percent last year, while the percentage who said the same about advanced video tripled from 5 percent to 15 percent.

These gains signal increasing recognition among executives and HR leaders that learning

Culture describes “the way things work around here,” while engagement describes “how people feel about the way things work around here.”

Global Human Capital Trends 2016

must adapt to a world where employees demand continuous learning opportunities through innovative platforms tailored to their individual schedules. A new type of employee learning is emerging that is more “consumer- like” and that brings together design thinking, content curation, and an integrated model offering an end-to-end designed learning expe- rience. However, companies still face tremen- dous challenges in realizing this vision. Even as spending on learning rose 10 percent last year (to over $140 billion),4 only 37 percent of companies believe their programs are effective, and only 30 percent believe corporate learning is the center of learning today.5

Design thinking: Crafting the employee experience

Design think- ing is emerging as a major new trend in HR. Global Human Capital Trends highlighted the first inklings of this issue two years ago when we identified the “over- whelmed employee” as a significant talent con- cern, with employees struggling to deal with a flood of emails and information, grappling with demanding work assignments and being on 24/7. Last year’s Global Human Capital Trends report identified HR’s attempts to “sim- plify” the work environment as a response to the overwhelmed employee situation.

Now, innovative HR organizations are tak- ing their efforts a step further by incorporating design thinking into their approach to manag- ing, supporting, and training people. Instead of building “programs” and “processes,” lead- ing HR organizations are studying people to help develop interventions, apps, and tools that help make employees less stressed and more productive.

In this year’s survey, 79 percent of execu- tives rank design thinking as a high priority when it comes to meeting talent challenges. While only 12 percent of respondents overall believe that design thinking is prevalent in their current talent programs, 50 percent of those executives who rate their talent programs as excellent state that they apply design think- ing well, and self-identified high-performing companies are three to four times more likely than their competitors to be applying design thinking to their people practices. Clearly,

design thinking is emerging as a best practice for leading companies and innovative

HR organizations.

HR: Growing momentum toward a new mandate

Many HR organiza- tions appear to be “get- ting it” when it comes to upgrading the skills,

capabilities, and experi- ence of their teams. Compared to

last year, the percentage of execu- tives who rank HR skills as a top priority fell slightly. More than two-thirds of executives in this year’s survey (68 percent) report their companies have solid development programs for HR professionals, and 60 percent believe they are holding HR accountable for talent and business results—both a higher proportion than a year ago.

Best of all, HR organizations’ scorecard shows a marked and steady improvement. Four out of ten executives report their companies are ready to address the skills gaps in HR—an increase of 30 percent over 2015. And the percentage of executives who rate their HR organizations as “good or excellent” in deliver- ing business-relevant talent solutions increased as well.

For the first time in the four years of the Global Human Capital Trends report, there are

The new organization: Different by design

http://dupress.com/articles/hc-trends-2014-overwhelmed-employee/

http://dupress.com/articles/work-simplification-human-capital-trends-2015/

real signs of change and progress: HR teams are learning to experiment with new ideas; they are making significant steps to upgrade skills; and a new generation of younger, more business-savvy and technology-empowered people is entering the profession.

People analytics: Gaining speed As technology makes data-driven HR

decision making a possibility, 77 percent of executives now rate people analytics as a key priority, up slightly from last year. In response, companies are building people analytics teams, rapidly replacing legacy systems, and combin- ing separate analytics groups within HR into one strategic function. In 2016, 51 percent of companies are now correlating business impact to HR programs, up from 38 percent in 2015. Forty-four percent are now using workforce data to predict business performance, up from 29 percent last year.

One of the biggest new trends in people analytics is also starting to accelerate: leverag- ing external data—such as data from social networking platforms, employment brand data, data on hiring patterns, and external turnover and demographic data—to predict workforce trends and target top talent. Today, 29 percent of companies believe they are performing well in this area, and 8 percent rate themselves excellent.

A variety of new tools and data sources have entered this domain. Employee feedback and engagement systems, real-time narrative analysis, and off-the-shelf predictive models

from almost every talent management vendor are now available.

Companies are entering a “golden age” of people analytics—and progress

could accelerate.

Digital HR: Revolution, not evolution

The all-digital world is changing how we live and work, creating two major challenges. First, how will HR help business leaders and employees shift to a “digital mind-set”—a digi- tal way of managing, organizing, and leading change? Second, how will HR itself revolution- ize HR processes, systems, and organizations to adopt new digital platforms, apps, and ways of delivering HR services?

This year’s chapter on digital HR focuses on the second part of the challenge: how to reimagine HR and the employee experience in a digital world. Innovative HR organiza- tions are integrating mobile and cloud tech- nologies to build an app-based set of services designed to incorporate HR programs into an employee’s daily life. More than simply replac- ing old HR systems, digital HR means creating an entire platform of services built around ease of use. By bringing together design thinking and mobile technology, companies can now develop their own custom apps to make work easier, more productive, and more enjoyable.

This year, 74 percent of executives identified digital HR as a top priority, and it will likely be a major focus in 2016. The trend is moving rapidly: 42 percent of companies are adapting their existing HR systems for mobile, device- delivered, just-in-time learning; 59 percent are developing mobile apps that integrate back- office systems for ease of use by employees; and 51 percent are leveraging external social networks in their own internal apps for recruit- ment and employee profile management.

Companies are entering a “golden age” of people analytics—and progress could accelerate.

Global Human Capital Trends 2016

The gig economy: Distraction or disruption?

When it comes to meeting heightened talent needs, top HR organizations must increasingly learn to integrate and leverage the part-time and contingent workforce. More than seven out of ten executives and HR lead- ers (71 percent) ranked the trend as important or very important.

Operating effectively in the gig economy poses a number of questions. How can com- panies best use and schedule external staff to improve the productivity of their own workers and increase profitability? How can com- panies leverage contingent work- ers to access some of the most talented and highly skilled people in the workforce?

Many companies are struggling with the chal- lenge. Only 19 percent of executives surveyed believe their companies fully understand the labor laws that govern contingent workers, and only 11 percent have com- plete management processes for the contingent part of the workforce. This

suggests that companies need to take a more deliberate approach as the size and scope of the contingent workforce continues to grow in the coming years. Workforce management will also have to address the tremendous growth in cognitive computing and other smart tech- nologies that are likely to eliminate jobs, create new jobs, change the nature of work, and disrupt the workforce.

A year of change and disruption

Taken together, the 2016 Global Human Capital Trends report sketches out

a vast and varied series of changes and challenges. As

the pace of change accel- erates, business and HR leaders who move aggressively to address these trends will likely gain an advantage over

their competitors and find themselves on the

winning side in the global competition for talent.

The new organization: Different by design

Figure 4. Importance of challenges in different regions

AMERICAS EUROPE, MIDDLE EAST, & AFRICA ASIA PACIFIC

Region North

America

Latin & South

America

Nordic countries

Western Europe

Central and

Eastern Europe

Middle East

Africa Asia Oceania Southeast

Asia

Organizational design 90 92 87 92 88 93 95 95 88 91

Leadership 87 89 89 87 89 87 90 90 93 97

Culture 87 86 87 84 86 90 87 89 93 90

Engagement 86 85 79 85 84 80 86 86 91 92

Learning 79 87 75 81 83 89 87 88 80 91

Design thinking 70 80 71 75 78 83 85 85 81 84

Changing skills of the HR organization

73 78 67 76 81 73 86 80 78 87

People analytics 78 77 76 72 78 76 80 81 83 85

Digital HR 69 71 74 73 74 74 79 74 77 83

Workforce management

67 74 63 65 74 67 73 72 81 80

Appendix

SELECTED data from this year’s survey can be viewed by geography, company size, and industry using an interactive tool, the Human Capital Trends Dashboard. This tool, available at http:// www.deloitte.com/hcdashboard, lets you explore the data visually to see how talent priorities vary around the world.

This year’s survey results showed remarkable consistency across geographies.

Graphic: Deloitte University Press | DUPress.com

US 90

87 Australia

94 Brazil

95 Japan

97 China

91 India

France 90

Mexico 87

Germany 84

North America

Latin & South America

Nordic countries

Western Europe

Central & Eastern Europe

Middle East Africa Asia Oceania 90 92 87 92 88 93 95 95 88

Italy 90

UK 92

Canada 89

Belgium 96

94 Netherlands

Spain 92

91 South Africa

China

Belgium

Japan

Brazil

Netherlands

Spain

United Kingdom

India

South Africa

France

Italy

United States

Canada

Australia

Mexico

Germany

Percentages in selected countries

Percentages by region:

Europe, Middle East, and AfricaAmericas Asia-Pacific

Southeast Asia

Figure 1. Organizational design: Percentage of respondents rating this trend “important” or “very important”

Lower percentagesHigher percentages

Note: Figures represent the percentage of respondents who rated each issue “important” or “very important.”

Global Human Capital Trends 2016

http://www.deloitte.com/hcdashboard

Figure 5. Importance of challenges in different industries

Industry Consumer business

Energy & resources

Financial services

Life sciences & health care

Manufacturing Professional

services Public sector

Technology, media, &

telecommuni- cations

Organizational design 93 92 93 92 94 91 87 92

Leadership 88 86 91 89 92 90 85 88

Culture 89 83 89 88 86 86 80 85

Engagement 86 82 87 87 88 85 83 85

Learning 83 81 86 84 83 86 83 83

Design thinking 77 75 81 79 79 82 74 83

Changing skills of the HR organization

81 79 81 83 80 71 74 76

People analytics 79 77 80 80 76 74 73 78

Digital HR 73 72 76 75 68 72 73 78

Workforce management

69 73 65 68 73 71 74 69

Graphic: Deloitte University Press | DUPress.com

As with global regions, survey results were also similar across different industries, suggesting broad agreement on key trend priorities.

Graphic: Deloitte University Press | DUPress.com

US 90

87 Australia

94 Brazil

95 Japan

97 China

91 India

France 90

Mexico 87

Germany 84

North America

Latin & South America

Nordic countries

Western Europe

Central & Eastern Europe

Middle East Africa Asia Oceania 90 92 87 92 88 93 95 95 88

Italy 90

UK 92

Canada 89

Belgium 96

94 Netherlands

Spain 92

91 South Africa

China

Belgium

Japan

Brazil

Netherlands

Spain

United Kingdom

India

South Africa

France

Italy

United States

Canada

Australia

Mexico

Germany

Percentages in selected countries

Percentages by region:

Europe, Middle East, and AfricaAmericas Asia-Pacific

Southeast Asia

Figure 1. Organizational design: Percentage of respondents rating this trend “important” or “very important”

Lower percentagesHigher percentages

Note: Figures represent the percentage of respondents who rated each issue “important” or “very important.”

The new organization: Different by design

Graphic: Deloitte University Press | DUPress.com

Figures may not total 100 percent due to rounding. Source: Data from Human Capital Trends 2016 survey.

Latin & South America

Western Europe

Asia

Africa

North America

Central & Eastern Europe

Nordic countries

Southeast Asia

Middle East

Oceania

United States

China

Brazil

Mexico

India

Belgium

France

Costa Rica

South Africa

Germany

Spain

Canada

Kenya

Japan

United Kingdom

Ireland

Colombia

Austria

Australia

Norway

Switzerland

Uruguay

Chile

Luxembourg

Finland

Ivory Coast

Greece

Tunisia

661 560 378 243 239 230 229 215 213 209 203 196 163 150 140 135 131 123 114 111 102 102 90 87 86 86 79 79

Netherlands

Singapore

Peru

Trinidad and Tobago

Turkey

Ethiopia

Nambia

Nigeria

Thailand

Argentina

Cyprus

Ecuador

Jamaica

Italy

Denmark

Romania

Guatemala

Malaysia

Russian Federation

Poland

Dutch Caribbean

Gabon

New Zealand

Senegal

Panama

United Arab Emirates

Indonesia

All other countries

78 71 68 60 60 59 59 59 58 55 54 53 53 51 50 47 44 42 42 40 38 38 37 37 35 35 34

385

Region

23%

14%

12%

Country

Our survey includes data from 7,096 business and HR leaders.

Other, 14% Life sciences and health care, 5%

Energy and resources, 8%

Public sector, 8%

Industry

Professional services,15%

Financial services, 15%

Consumer business, 13%

Manufacturing,12%

Technology, media, and telecommunica- tions,11%

Non-HR, 32%

HR, 68%

Respondent job function

Large (10,001+), 24%

Medium (1,001 to 10,000), 29%

Small (1 to 1,000),

48%

Organization size

Respondent level

C-suite, 28%

Individual contributor, 21%

Mid-level, 51%

Figure 6. Survey demographics

Global Human Capital Trends 2016

Endnotes

1. Elaine Pofeldt, “Shocker: 40% of workers now have ‘contingent’ jobs, says U.S. government,” Forbes, May 25, 2015, www.forbes.com/sites/ elainepofeldt/2015/05/25/shocker-40-of-work- ers-now-have-contingent-jobs-says-u-s-govern- ment/.

2. Karen O’Leonard and Jennifer Krider, Leader- ship development factbook 2014: Benchmarks and trends in US leadership development, Bersin by Deloitte, 2014, http://marketing.bersin.com/ leadership-development-factbook-2014.html.

3. Josh Bersin, “Becoming irresistible: A new model for employee engagement,” Deloitte Review 16, January 26, 2015, http://dupress.com/ articles/employee-engagement-strategies/.

4. Raju Singaraju, Ben Carroll, and Eunyun Park, Corporate learning factbook 2015: Benchmarks, trends, and analysis of the US training market, Bersin by Deloitte, 2015, http://marketing.bersin. com/corporate-learning-factbook-2015.html.

5. Ibid.

The new organization: Different by design

Authors Josh Bersin, Bersin by Deloitte, Deloitte Consulting LLP | [email protected]

Josh Bersin founded Bersin & Associates, now Bersin by Deloitte, in 2001 to provide research and advisory services focused on corporate learning. He is a frequent speaker at industry events and a popular blogger. Bersin spent 25 years in product development, product management, marketing, and sales of e-learning and other enterprise technologies. His education includes a BS in engineering from Cornell, an MS in engineering from Stanford, and an MBA from the Haas School of Business at the University of California, Berkeley.

Jason Geller, Deloitte Consulting LLP | [email protected]

Jason Geller is the national managing director for Deloitte Consulting LLP’s Human Capital consulting practice in the United States. In this role, he is responsible for overall strategy, financial performance and operations, talent recruitment and development, and service delivery. He is a member of the global Human Capital executive committee and the US Deloitte Consulting management committee, and has also served as a US Deloitte Consulting board member, Deloitte India board member, global and US leader for HR Transformation, and US Human Capital chief strategy officer. Geller advises organizations on their HR and talent transformations.

Nicky Wakefield, Deloitte Consulting Pte Ltd | [email protected]

Nicky Wakefield is a partner and the leader of the Southeast Asia Human Capital consulting practice. With over 20 years of business consulting experience with clients across the globe, she is recognized as one of the leading strategic thinkers on complex organizational change and is admired by her clients as a practical, hands-on advisor and implementer. Wakefield has spent her career focused on the execution of business strategy and helping organizations make it real for their people.

Brett Walsh, Deloitte MCS Limited | [email protected]

Brett Walsh leads Deloitte’s global Human Capital practice and also serves as the HR Transformation practice leader for Deloitte UK. As a Deloitte UK partner, he consults with executives around the world on HR strategy, merger integration, and major transformation and technology programs, including back- office shared services and outsourcing. His particular expertise is in HR and change management. Walsh has an MBA from Warwick University and is a fellow of the Institute of Business Consultants.

Global Human Capital Trends 2016

Fast-moving global markets and digital disruption have forced companies to innovate rapidly, adapt their products and services, and stay closer than ever to local customers. This has prompted a resurgence of interest in business organization. Our findings in this area are startling: 92 percent of companies believe that redesigning the organization is very important or important, making it No. 1 in ranked importance among this year’s respondents. Companies are decentralizing authority, moving toward product- and customer-centric organizations, and forming dynamic networks of highly empowered teams that communicate and coordinate activities in unique and powerful ways.

IN his book Team of Teams, General Stanley McChrystal describes how the US mili- tary’s hierarchical command and control structure hindered operational success dur- ing the early stages of the Iraq war.1 After watching Al-Qaeda disrupt his army and win battles, McChrystal’s solution was dramatic: Decentralize authority to highly trained and empowered teams and develop a real-time information and operations group to cen- tralize information and provide all teams with real-time, accurate data about war activities everywhere.

McChrystal did not change the formal structure of the military. Rather, he created a new structure that allowed for dynamism and flexibility within the overall organizational structure. This new structure enabled officers to quickly move from their administrative positions to mission-oriented projects for a set purpose, knowing that they would once again have a home to return to within the larger organizational structure after the mission was completed.

This new mode of organization—a “network of teams” with a high degree of

Organizational design The rise of teams

• Many companies have already moved away from functional structures: Only 38 percent of all companies and 24 percent of large companies (>50,000 employees) are functionally organized today.

• The growth of the Millennial demographic, the diversity of global teams, and the need to innovate and work more closely with customers are driving a new organizational flexibility among high- performing companies. They are operating as a network of teams alongside traditional structures, with people moving from team to team rather than remaining in static formal configurations.

• Over 80 percent of respondents to this year’s global survey report that they are either currently restructuring their organization or have recently completed the process. Only 7 percent say they have no plans to restructure.

The new organization: Different by design

empowerment, strong communication, and rapid information flow—is now sweeping busi- nesses and governments around the world. It is built on several fundamental principles:

• Move people into customer-, product-, or market- and mission-focused teams, led by team leaders who are experts in their domain (not “professional managers”).

• Empower teams to set their own goals and make their own decisions within the con- text of an overarching strategy or business plan, reversing the tradi- tional structure of goal and performance management.

• Replace silos with an information and operations center to share integrated information and identify connections between team activities and desired results.

• Organize these teams around mission, product, market, or integrated customer needs rather than business func- tion. (For instance, a health care company might have an “Orthopedic and Rheumatology Institute” to bring together orthopedic surgeons, rheumatolo- gists, and counselors, rather than have them siloed in functional groups.)2

• Teach and encourage people to work across teams, using techniques like “liaison offi- cers” (the US military), “hackathons,” open office spaces that promote collaboration (Apple Inc. and Cleveland Clinic), and job rotation to give teams a common under- standing of each other.3

• Enable people to move from team to team as needed—similar to the way experts come together on Hollywood movie sets or in global consulting firms—and then

ensure that people have a home to return to once a team-based project is done. This changes the concept of a “job description” to that of a “mission specialist” or “technical specialist.”

• Shift senior leaders into roles focused on planning, strategy, vision, culture, and cross-team communication.

Examples of this new structure are appear- ing throughout business and government, in each case dramatically changing the effec- tiveness of the organization. The Cleveland

Clinic reorganized its entire hospital network around patient medical problems, moving beyond traditional functional medical prac- tices—which separated surgeons and medi- cal specialists—to combine personnel into patient-centric teams, dramatically improving patient outcomes. Hospitals and health care organizations around the world are similarly reorganizing around patient needs and away from traditional medical specialties.4 3M, Nestlé, and other innovation- and service- centric companies are decentralized and use shared service centers and information centers to help teams maintain productivity and alignment with overall business strategy.5 And companies like GE and IBM now post leaders in regional centers of excellence, dispensing

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.

Global Human Capital Trends 2016

with the notion that “leaders” only operate out of corporate headquarters.6

This new type of organization, which we call a “network of teams,” moves beyond the concepts of the unwieldy 1960s-era matrix organization. Integral to an effective network of teams is to define the mission of each team clearly, delegate responsibility, assign strong team leadership, and build a shared culture and set of information and communication tools that help teams align with each other.

Why is this trend so prominent now, with 92 percent of our survey respondents rating redesigning the organization very important or important? (See figure 1 for our survey respondents’ ratings of organizational design’s importance across global regions and selected countries.) Two major factors are driving change. First, the pressure to get products to market quickly, combined with a generally greater sense of empowerment among the

workforce, is making small teams a more natu- ral and productive way to work. Small teams can deliver results faster, engage people better, and stay closer to their mission.

Second, the digital revolution helps teams stay aligned. Today, teams can easily use web or mobile apps to share goals, keep up to date on customer interactions, communicate product quality or brand issues, and build a common culture. Rather than having to send messages up and down the corporate pyra- mid, people can access information immedi- ately, with companies using roles like “liaison officers” to make sure teams know what other teams are doing.

Academic research supports this strategy. Sociologist Robert Dunbar proved that the optimum number of people any individual can know well and communicate with is around 150, a phenomenon known as the Dunbar Effect.7 Smaller organizational units tap into

The new organization: Different by design

the human strengths of communication: People simply know each other better. As Jeff Bezos, CEO of Amazon, puts it, “If I see more than two pizzas for lunch, the team is too big.”8

To prevent silos from impeding effective- ness and to improve collective thinking, digital information centers help teams share common knowledge and see the relationships between elements. In the Iraq war, McChrystal set up an information center to monitor seemingly random attacks by Al-Qaeda so he could help teams see the patterns. Each team had a “liaison officer” responsible for communicat- ing with other teams when information was needed quickly.

The same principle applies in business. At Nestlé, a digital information center brings

together social network, TV, and news infor- mation about all of Nestlé’s food brands around the world to help product businesses see where a brand is succeeding or failing to gain traction. Corporate headquarters in Switzerland serves as a clearinghouse and stra- tegic planning center, distributing information everywhere and empowering the businesses to grow.9

A team-based organization structure can itself enable rapid business disruption. For example, in each new city into which it expands, Uber relies on a three-pronged leadership model consisting of a city general manager, a community manager, and a driver operations manager. The rest of the organiza- tion is built out based on the unique needs of the city.10

As organizations shift to this new model, so must vendors and consultants who serve them.

One major health product and pharmaceutical company is completely reorganizing its sales force to sell integrated solutions to meet the needs of its health care clients’ outcome-based organizations.11 A major IT provider that sells computers and servers is going through the same transition to meet the integrated needs of IT departments that are also now organized by team rather than technology.12

Team-based operating practices are part of a larger trend toward new models of manage- ment. Hierarchically structured organizations were designed around traditional management thinking in which leaders “tell people what to do, set goals, and create standards.”13 In con- trast, in many new management models, goals are set at the bottom, leaders are evaluated by

performance and not span of control, and perfor- mance management occurs continuously rather than once per year.14 (More than two-thirds of the compa- nies polled in our survey this year are redesigning their performance manage- ment practices.)

Middle management is continuing to thin out. Research shows that US companies today have an average span of control—the number of people reporting to a supervisor—of 9.7, ris- ing as high as 11.4 at large companies.15

Despite the massive changes underway, in this new world, formal and flexible structures will continue to coexist. Perhaps ironically, it still takes formal structure to ensure that a structure of teams works effectively. Putting this insight into practice, the ability to quickly build, deploy, disband, and reform teams is a critical skill for today’s organizations.

Functional organizations, then, are not going away, but they are being supplemented by “service centers” and “centers of excellence” to provide scale and consolidate administrative tasks. To enable this kind of operating model, functions like IT, HR, and finance must all be reorganized to support such teams locally.

Smaller organizational units tap into the human strengths of communication: People simply know each other better.

Global Human Capital Trends 2016

What does the “new organization” look like in practice? We envision a management model that draws clear distinctions between two necessary roles and types of management: the administrative or talent manager (reflecting the traditional, formal structure) and the mis- sion or project manager (representing the new, team-based structure) (see figure 2).

Managing two different types of functions in an organization can be challenging, but a few principles illustrate the shift in mind- set necessary to make this work. Companies should view employees fundamentally as resources of the organization rather than as resources of the manager. This is why the military developed the parallel ideas of administrative control and operational control. Administrative control refers to the employee’s home structure and to how an employee is developed and supported, the home to which an employee returns when a team-based project is finished. Operational control, by contrast, refers to the process of ensuring that the mission to which an employee is assigned is accomplished successfully. By its nature, it

includes performance management for the employee during that period.

Companies’ definitions of the line between administrative and operational control will vary, but the fundamental concept will not. In every organization, an important key to the success of this model is that each employee has a “home” to which he or she can return. Fear that one will not have such a home can weaken strong teaming and lead to perverse incentives for employees—an obstacle to success in a network of teams.

For HR, the implications of such changes to organizational design can be profound. Job titles and descriptions, to cite an example, are becoming more flexible and broad to account for an individual’s potential to be deployed to a variety of teams. HR organizations will need to adapt to address the concept of administrative and operational control as companies switch from highly functional and hierarchical mod- els to project-based organizations in which employees are constantly embedded in teams and ecosystems that form teams.

Performance management in an organiza- tion designed around empowered teams also

Figure 2. Two types of managers in a network of teams

Administrative or talent manager Mission or project manager

Focuses on the individual’s career and development goals Focuses on the project and mission objectives

Measures an individual’s achievement against individual goals capabilities, and potential

Measures an individual against contribution to mission, team, project, and organizational results

Listens to individuals’ long-term career goals and helps them reach those goals

Listens to individuals’ desires for that mission or project and helps align them with the project or mission needs

Gives the individual coaching and development toward their career capabilities, career goals, and specialization objectives

Gives the individual coaching and development toward their role in the team and the project, focusing on how they can contribute more and how they can work better with the team

Makes sure the individual has “rights of return” to another organization and takes care of “return trip” after each project completes

Focuses on getting the right people into the project or mission, regardless of their individual career journeys at the moment

Tracks and monitors the individual’s career progression and patterns of success or weakness

Tracks and monitors individuals’ contribution to the project or team and how they can improve their value to that team

The new organization: Different by design

looks significantly different. Traditionally, managers rate employees with little input from others, but this is not a sufficient test of performance under a team-centric approach. The critical question now, with all team members invited to weigh in, is: “Would we want this person on our team again?” It is not, “Did you make your manager happy?” In such an environment, engagement can improve as well, because employees generally feel more connected to their “team” than their “organization.”16

Lessons from the front lines

Cisco, one of the world’s most successful and enduring technology companies, sees a team-based organizational model as fun- damental to its strategy. According to John Chambers, executive chairman and former CEO, speed and time to market are central to the company’s success: “We compete against market transitions, not competitors. Product transitions used to take five to seven years; now they take one to two.”17

To address this continued disruption and the highly competitive nature of its business, Cisco has set up a new talent organization, Leadership and Team Intelligence, focused entirely on leadership and team development, team leader selection, performance manage- ment, and intelligence-gathering for Cisco teams and their leaders around the world. Ashley Goodall, the senior vice president who runs this group, is leading a wide-ranging redesign of Cisco’s talent practices and tech- nologies to focus on the optimization of team performance, team leaders, succession management, and talent mobility between teams. He plans to use real-time performance conversations, ongoing pulse surveys, and text analytics to monitor and benchmark team performance. The intent is to build informa- tion about how the best teams work together and how they drive results, and then embed these insights into the company with a direct focus on employee engagement, strengths, and empowerment.18

Global Human Capital Trends 2016

Where companies can start

• Revisit your organization’s design: Look at ways to bring functional experts into “mission-driven” teams focused on custom- ers, markets, or products.

• Set up a real-time information network: A successful network brings together dispa- rate information on customers or products to give team members integrated data on performance in real time. Look at how people seek and find information today using design thinking.

• Eliminate organizational layers: Departments whose mandate is to fix or service other parts of the organization should be converted to shared-service groups. Question the role and the need for middle managers.

• Rethink your rewards and goals: Optimize performance management around “team performance” and “team leadership” rather

than focusing solely on individual per- formance and designating individuals as leaders simply by virtue of their title or role. Reward people for project results, collabo- ration, and helping others.

• Adopt new team-based tools: Put in place tools and measurement systems that encourage people to move between teams, and share information and collaborate with other teams. Consider performing an orga- nizational network analysis.

• Let teams set their own goals: Teams should be held accountable for results—but let them decide how to perform and social- ize and communicate these goals among the team.

• Communicate shared vision and values from top leaders: Encourage senior leaders to focus on strategy, vision, and direction, and teach them how to empower teams to deliver results.

BOTTOM LINE

The days of the top-down hierarchical organization are slowly coming to an end, but changing the organization chart is only a small part of the transition to a network of teams. The larger, more important, and more urgent part is to change how an organization actually works. Now, more than ever, is the time to challenge traditional organizational structures, empower teams, hold people accountable, and focus on building a culture of shared information, shared vision, and shared direction.

The new organization: Different by design

http://dupress.com/articles/employee-experience-management-design-thinking

1. General Stanley McChrystal et al., Team of Teams: New Rules of Engagement for a Complex World (New York: Penguin Publishing Group, 2015).

2. Gillian Tett, The Silo Effect: The Peril of Exper- tise and the Promise of Breaking Down Barriers, (New York: Simon & Schuster, 2015).

3. Ibid; McChrystal et al., Team of Teams.

4. Tett, The Silo Effect.

5. “3M investments in Wroclaw,” November 2014, http://www.wroclaw.pl/en/3m-investments-in- wroclaw; Nestlé company executives, in meet- ings with Josh Bersin and others, May 2014.

6. Raghu Krishnamoorthy, “The corporate HQ is an anachronism,” Harvard Business Review, March 13, 2015, https://hbr.org/2015/03/the- corporate-hq-is-an-anachronism.

7. Drake Bennett, “The Dunbar number, from the guru of social networks,” January 10, 2013, Bloomberg Business, http://www.bloomberg. com/bw/articles/2013-01-10/the-dunbar-num- ber-from-the-guru-of-social-networks.

8. Vivian Giang, “The ‘two pizza rule’ is Jeff Bezos’ secret to productive meetings,” Business Insider, October 30, 2013, http://www.businessinsider. com/jeff-bezos-two-pizza-rule-for-productive- meetings-2013-10.

9. Nestlé executives, in meetings with Josh Bersin and others, May 2014.

10. Gwen Moran, “How Uber changed the way they hire,” Fast Company, April 1, 2014, http://www. fastcompany.com/3028390/bottom-line/how- uber-changed-the-way-they-hire.

11. Company executives, in conversation with Josh Bersin, October 2015.

12. Company executives, in conversation with Josh Bersin, October 2015.

13. Stacia Sherman Garr, High-impact performance management: Using goals to focus the 21st-cen- tury workforce, Bersin by Deloitte, 2014, http:// marketing.bersin.com/high-impact-perfor- mance-management.html.

14. Ibid.

15. Karen O’ Leonard and Jennifer Krider, Leader- ship development factbook 2014: Benchmarks and trends in U.S. leadership development (PPT), Bersin by Deloitte, 2014, http://marketing.ber- sin.com/leadership-development-factbook-2014. html.

16. Josh Bersin, “The five elements of a ‘simply irresistible’ organization,” Forbes, April 4, 2014, http://www.forbes.com/sites/joshber- sin/2014/04/04/the-five-elements-of-a-simply- irresistible-organization/#5a26d70f4cf3.

17. Krithika Krishnamurthy, “We compete against market transitions not competitors: John Cham- bers, Cisco,” The Economic Times, December 14, 2015, http://economictimes.indiatimes.com/ opinion/interviews/we-compete-against-mar- ket-transitions-not-competitors-john-chambers- cisco/articleshow/50168070.cms.

18. Ashley Goodall, personal communication to the authors, February 11, 2016.

Endnotes

Global Human Capital Trends 2016

Authors Tiffany McDowell, Deloitte Consulting LLP | [email protected]

Tiffany McDowell is a principal in Deloitte Consulting LLP’s Human Capital practice and serves as the national leader for the Organization Strategies practice. She has 16 years of business and consulting experience, delivering operating model, organizational design, talent strategies, decision optimization, and change management solutions. Her focus is on helping executives in health care effectively lead their organizations through transformation. McDowell holds an MBA and a doctorate in industrial/ organizational psychology.

Dimple Agarwal, Deloitte MCS Limited | [email protected]

Dimple Agarwal is the global leader of Organizational Transformation and Talent for the Human Capital practice. She consults at the C-suite level on operating model and organizational design, HR and talent strategies, leadership strategies and development, merger integration, and major transformation programs. Her 20-plus years of consulting experience includes working in the United Kingdom, Netherlands, France, Switzerland, India, Malaysia, Nigeria, and the UAE.

Don Miller, Deloitte Consulting LLP | [email protected]

Don Miller has more than 15 years of industry and consulting experience. In his current role, he serves on the global leadership team of our Organization Strategies practice, which focuses on helping clients improve performance by building organization structures to execute new capabilities through their people and on aligning a business’s capabilities, metrics, processes, and culture with its structure, leadership, roles, and talent. Miller also helps clients solve some of their top business challenges by creating tailored workforce transition, strategic change management, talent, and leadership development solutions.

Tsutomu Okamoto, Deloitte Tohmatsu Consulting LLC | [email protected]

Tsutomu Okamoto has almost 20 years of consulting experience with Deloitte Tohmatsu Consulting Human Capital. He leads the Talent Management and Workforce Planning and Analytics practice in Japan and has delivered HR consulting services in areas including HR management and strategy planning, headcount/labor cost management, talent management, organization design, restructuring, and simplification.

Trevor Page, Deloitte Africa | [email protected]

Trevor Page is the global leader of Organization Design for the Human Capital practice and is leading its organization design methodology and global capability development. As a partner in Deloitte’s Human Capital consulting practice in Africa, Page focuses on business transformation in large companies and on improving the effectiveness at people at work. He has directed projects related to HR strategy, process, and technology; strategic organizational change; and large-scale organizational redesign.

Contributors Andrea Derler, Ben Dollar, Amir Rahnema, and Yves Van Durme

The new organization: Different by design

Leadership continues to be a pervasive concern among HR and business leaders around the world, ranking higher in importance than it did in last year’s global survey. As organizations become increasingly team-centric, the workforce becomes both younger and older, technology catalyses faster change, and business challenges grow more global and diverse, fresh challenges in leadership development emerge. Organizations need to refocus on leadership as a whole to build versatile leaders earlier in their careers, form leadership teams that mix different generations and varieties of leaders, and develop leaders deeper in the organization—all with a structured and evidence- based foundation for leadership priorities, programs, and investments.

LEADERSHIP remains a top priority in C-suites worldwide, ranking second in overall importance in this year’s survey. (See figure 1 for our survey respondents’ ratings of leadership’s importance across global regions and selected countries.) The percentage of companies that rate this issue as important or very important grew to extremely high lev- els. Nor is this surprising, as the challenges are immense.

Today, organizations need to explore new approaches to leadership development. They should seek to apply rigorous, structured, scientific approaches to succession planning

and development, aiming to identify poten- tial leaders earlier and fast-track them into leadership positions. Also important is to find ways to develop leaders who can collaborate extensively, recognize the need for new leader- ship skills (such as conceptual thinking), and focus on new leadership cohorts (Millennials, women, and diverse individuals). All of this requires implementing a comprehensive cul- ture around leadership to address the leader- ship gap continuously and systemically.

While companies believe they are making progress in some areas—for instance, the per- centage of companies with strong role-based

Leadership awakened Generations, teams, science

• The leadership challenge is urgent and growing in importance. In 2016, 89 percent of companies see leadership as an important or very important issue (up from 87 percent in 2015), and 57 percent cite leadership as very important (up from 50 percent).

• Twenty-eight percent of respondents reported weak or very weak leadership pipelines.

• The profile for top leaders is complex and evolving. Organizations need to develop fundamental leadership capabilities among critical individuals and teams—capabilities that include the ability to collaborate across boundaries, conceptualize new solutions, motivate diverse teams, and develop the next generation of diverse and global leaders.

The new organization: Different by design

and experiential leadership programs grew from 9 percent last year to 20 percent this year—many major gaps remain:

• Only 7 percent of companies believe they are “excellent” at building Millennial leaders.

• Only 13 percent of companies report they are “excellent” at building global leaders.

• Only 14 percent of companies surveyed described themselves as “strong” at succes- sion planning throughout the business.

These data, along with the data gathered by Global Human Capital Trends over the past three years, suggest that the leadership development paradigm that many companies around the world follow is simply not deliver- ing what is expected and necessary.

Last year, companies spent nearly $31 bil- lion on leadership programs.1 Yet, as Barbara Kellerman of Harvard University (The End of Leadership) and Jeffrey Pfeffer of Stanford University (Leadership BS) have recently written, the leadership world continues to be dominated by stories, myths, and fads, often promoting superficial solutions that appear effective but fail to address the issue of help- ing leaders to learn and that do not deliver measurable impact and results.2 Indeed, 40 percent of our survey respondents believe that their current leadership programs provide only “some” value, and 24 percent report that they yield little to no value.

Why do organizations find this issue so intractable, even after investing heavily in leadership programs? If investment in IT and learning delivers results, why can’t HR show similar benefits from investments in leadership development? Why is it so difficult for so many

Global Human Capital Trends 2016

organizations to identify potential leaders and develop them?

First, despite a 10 percent increase in spending on corporate leadership programs last year,3 the quality, rigor, and investment for leadership efforts remain uneven across companies. High-performing companies outspend their competitors on leadership by almost four times.4 Not only do they spend more, they spend smarter. Surprisingly, most leadership programs are evaluated primarily by so-called “smile sheets”—in effect, feedback from participants on how they enjoyed the leadership program, instructor, and venue. Too few leadership programs are designed on a foundation of research, clear priorities, and assessments of needed leadership thinking and outcomes. Best-practice organizations are developing an integrated system of leadership that includes a specific leadership strategy, detailed pre- and post-program assessments to measure effectiveness, research-driven content, and blended learning programs with stretch assignments, intensive coaching, and continu- ous opportunities for leadership develop- ment—all relying heavily on data, evidence, and science-based approaches.

A second reason leadership remains a chal- lenge may be that, as organizational design shifts from a structured hierarchy to a network of teams, companies require different types of leaders and inclusion capabilities. As organi- zations grow flatter and more diverse, and as the global operating environment becomes increasingly more complex, there is a stronger demand for people who can lead at all levels of the company. Companies in this environ- ment are finding that they must identify

potential leaders much earlier in their careers and accelerate their movement through the leadership ranks.

Yet another challenge is that the entire concept of leadership is being radically rede- fined. The whole notion of “positional leader- ship”—that people become leaders by virtue of their power or position—is being challenged. Leaders are instead being asked to inspire team loyalty through their expertise, vision, and judgment. The number of employees super- vised by each first-line manager is increasing, to more than 10 among US companies and as high as 13 in industries such as health care.5 This broad span of control demands leaders who are skilled coaches, not strictly supervi- sors—leaders with the ability to attract, inspire, and retain great people, not just make the numbers. Collaboration, too, is becoming a critical leadership skill: With organizations continuing to evolve rapidly beyond vertically integrated enterprises to networks and eco- systems, groups of leaders are being forced to work together in new ways, including collabo- ration across generations, geographies, func- tions, and internal and external teams.

Lastly, the demographic realities of an aging population cut in different directions, causing a leadership shortage at some companies and limited leadership opportunities for younger employees at others. At companies where senior leaders are reluctant to yield up their responsibilities, HR should develop solutions that promote development among up-and- coming leaders. These solutions could include implementing active career management for high-potential employees, constructing teams with multigenerational leadership, and offer- ing other opportunities for younger leaders to develop experience before they are ready. The goal is to create a robust pipeline of new, more innovative leaders that takes advantage of the strengths and skills of both younger and older leaders.

Surprisingly, 59 percent of respondents to our survey report little to no investment in diverse leaders, with similar findings for

Why is it so difficult for so many organizations to identify potential leaders and develop them?

The new organization: Different by design

http://dupress.com/articles/organizational-models-network-of-teams

Millennials (59 percent) and women (49 per- cent). Such investments, though, are extremely important to allow companies to leverage the strengths of Millennial leaders—often well- suited to fast learning and conceptual think- ing—and Baby Boomer leaders in their 50s and 60s—who often bring strengths in behavior and influence along with valuable institutional knowledge. The challenge is to combine and build the strengths of leaders at all levels and of all descriptions.

This leads to an important question: Are companies ready for the new leaders who are needed today? Many organizations may not be prepared to accept a new generation of leaders, or even to build an environment that allows them to emerge. Yet consider some of today’s leaders. Google’s Larry Page was 38 at the time of his appointment; PetSmart’s David Lenhardt, 43; GameStop’s J. Paul Raines, 46. This new breed of CEOs is younger, more global, and more digitally savvy than their pre- decessors. They rose up from the ranks, often leapfrogging incumbents to go on to transform their businesses.6

At the same time, the impact of leaders is too high to simply jettison one generation of leaders for another. As organizations become flatter and more dispersed, companies need better strategies for developing leaders to perform both as individuals and in teams— to operate in dyads and triads as well as on one’s own.

Important to this effort is to think system- atically about leadership. A portfolio approach that simply assembles a selection of offerings from different vendors is unlikely to promote consistency in leadership development or to ensure that future leaders receive the train- ing they need to direct today’s team-focused organizations. Identifying and developing exceptional leaders require a far more rigorous process, including:

• The use of evidence and analytics to identify game-changers who may be going unnoticed

• Expanding the use of online tools to enable organizations to identify high-potential employees earlier in their careers and potential leaders around the world

• Better use of leaders in the later stages of their careers to team with, mentor, and develop the next generation of leaders

• The development of a comprehensive leadership system—not simply a collection of training packages—that can effectively assess talent across the organization; focus training on high-potential employees; and provide opportunities for younger leaders to gain the skills, experiences, and insights they need to thrive in leadership roles

Global Human Capital Trends 2016

Every aspect of leadership—from strategy and assessment to leadership development and program evaluation—should be executed with a degree of rigor and the use of data that is simply not part of most leadership programs today.

Lessons from the front lines

In 2012, Macquarie Group Limited, a global investment banking and diversified financial services group, reevaluated its leadership development programs.7 The company’s goal was to ensure that leadership offerings contin- ued to build capability at the director level in order to allow Macquarie to identify and take advantage of new opportunities in a complex and rap- idly evolving market. Macquarie aimed to design and deploy a best-in-class global leadership develop- ment experience. The new program would have a clear focus on fast-tracking leaders and on further broadening its leaders’ perspectives. The program needed to be highly practical and business-focused, while also underpinned by a strong scientific foundation and rigorous learning methodology.

Following a six-month analysis and design process, Macquarie launched a pilot program in early 2014. Offered to a selection of associate directors located in Macquarie’s major hub cit- ies in Europe, Asia, Australia, and the United States, the program consisted of two three-day workshops delivered over a 12-month period, supplemented with a series of one-on-one coaching sessions, a 360-degree assessment, and a skilled volunteering experience.

Recognizing that Macquarie staff lean strongly toward intellectually challenging and practical learning, the associate director

program provided Macquarie leaders with a strong mental framework as well as easily digestible and readily applicable tools for their day-to-day work. The cornerstone of the pro- gram’s success was to not give participants a set of generic answers, but instead to teach leaders a set of questions they could ask themselves to help solve their own unique challenges. They were not taught how to behave, but how to think: The program’s catchphrase is “Think. Lead. Act.” Built around six core capabilities such as “setting direction,” “inspirational lead- ership,” and “collaboration,” this flexible and innovative approach to learning allowed the

content to be applied easily across business lines and geographies.

Since 2014, over 500 associate direc- tors have enrolled in the program. Feedback from both participants and the business has been overwhelmingly posi- tive, indicating that the program’s com- mercially focused and

cognitive approach to development was much more effective than more traditional, static approaches. Participants reported the ability to readily apply their newly gained knowledge to their roles, enabling directors to thus focus more on commercial priorities. In addition, in Macquarie’s recent global staff survey, alumni of the program were significantly more posi- tive in their attitudes toward career progres- sion and development opportunities than their peers.

Based on the success of the associate direc- tor program, Macquarie designed and piloted a program at the division director level in 2015. This program builds upon the associate director program’s highly practical approach to broadening participants’ thinking through simple and memorable concepts, while integrating several new learning innovations.

Rigorous analysis and evidence should inform every step of the leadership development process.

The new organization: Different by design

These include a “lab-based” approach to learn- ing in which participants work on challenges as a group, supported by several coaches in the room. The program also focuses on establish- ing greater connections between participants, giving them a more integrated understanding of each arm of the business as well as help- ing them identify commercial synergies and potential client opportunities.

Where companies can start

• Take a fresh, hard look at leadership development strategy: Many companies find that this is the best place to start. Nearly two in three of our respondents (61 percent) report that they have updated their leadership strategy in the last year or are currently doing so. Perhaps most impor- tant is to challenge the current strategy: Is it delivering the impact, results, leadership pipeline, and caliber of leaders the business needs now and in the future?

• Cast a wider and deeper leadership net: Many organizations are trying to broaden the definition of leaders and leadership, yet too often that definition is still not broad enough. The potential leadership pool must expand teams and networks of teams beyond organizational boundaries.

• Build leadership programs on a founda- tion of evidence, data, and analytics: Insights from data can help organizations identify the DNA of successful leaders. Rigorous analysis and evidence should inform every step of the leadership devel- opment process, including candidate identification, development, coaching, and career progression. Leadership programs should be evaluated by their impact— their ability to strengthen leaders and the results they deliver—and rapidly move beyond the edutainment focus of many of today’s programs.

• Broaden and deepen leadership capabili- ties: Today’s leaders need both traditional leadership capabilities and new skills. Rotational programs may be an effective way to identify and develop future leaders. Stretch programs across functions and busi- nesses, as well as in nontraditional areas (for example, the social and not-for-profit sectors), can offer opportunities to develop and test emerging leaders.

• Identify and foster teams of leaders: An important goal for most organizations is to develop new models of leadership teams, combining leaders of different generations and perspectives. For many organizations, this is a new focus and will be critical in the future, when organizations will need both teams of leaders and leaders who can drive and motivate teams.

• Focus on young, diverse leaders: Identifying great leaders as early as possible is an important way to deepen the leader- ship bench and promote dramatic change.

• Rethink leadership investment: Simply spending more money on leadership pro- grams is unlikely to be enough. To deliver a superior return on investment, leadership spending must be far more focused on and targeted at what works. Leading companies both spend more and spend more wisely, with a focus on evidence and results.

Global Human Capital Trends 2016

BOTTOM LINE

We have written in the past of the “overwhelmed employee.”8 Today, perhaps the theme should be the “overwhelmed leader”—underscoring the need to identify new leaders early and develop them appropriately.

Is the organization’s leadership strategy, pipeline, and programs up to the task? Our data on this question over the past several years suggest not. To make progress on the perennial and pervasive challenges of leadership, companies need to ask hard questions. Who in the organization is likely to be a true game-changer? Does the organization tend to promote people who look and think like current leaders? Do current leaders conduct deep analyses to identify and develop people with potential, wherever and whomever they may be? How much time do leaders in the organization spend on elevating team effectiveness? Are the strategy, focus, and rigor of leadership programs up to the needs, skills, and challenges of the future? Only by answering such questions can organizations find ways to effectively cultivate the leadership talent that they will need to compete—today and in the future.

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1. Karen O’Leonard and Jennifer Krider, Leader- ship development factbook 2014: Benchmarks and trends in U.S. leadership development, Bersin by Deloitte, 2014, http://marketing.bersin.com/ leadership-development-factbook-2014.html.

2. Barbara Kellerman, The End of Leadership (New York: HarperCollins, 2012); Jeffrey Pfeffer, Lead- ership BS (New York: HarperCollins, 2015).

3. Raju Singaraju, Ben Carroll, and Eunyun Park, Corporate learning factbook 2015: Benchmarks, trends, and analysis of the US training market, Bersin by Deloitte, 2015, http://bersinone.bersin. com/resources/research/?docid=19202.

4. O’Leonard and Krider, Leadership development factbook 2014.

5. Ibid.

6. Roselinde Torres, “The rise of the not-so-experi- enced CEO,” Harvard Business Review, Decem- ber 26, 2014, https://hbr.org/2014/12/the-rise- of-the-not-so-experienced-ceo.

7. Murray Priestman (global head of talent, Mac- quarie Group Limited), in conversation with Juliet Bourke, January 2016.

8. Juliet Bourke, The overwhelmed employee: Sim- plify the work environment, Deloitte, 2014, http:// www2.deloitte.com/au/en/pages/human-capital/ articles/overwhelmed-employee-simplify-envi- ronment.html.

Endnotes

Global Human Capital Trends 2016

Authors Nicky Wakefield, Deloitte Consulting Pte Ltd. | [email protected]

Anthony Abbatiello, Deloitte Consulting LLP | [email protected]

Anthony Abbatiello is a principal in Deloitte Consulting LLP’s Human Capital practice and the global leader of Deloitte Leadership. He specializes in leadership development, culture transformation, and HR strategy. Abbatiello has led industry and functional human capital practices, provided thought leadership, and developed practitioners to deliver business results to clients. He serves global clients as a senior advisor in leadership development, talent strategy, and digital HR.

Dimple Agarwal, Deloitte MCS Limited | [email protected]

Karen Pastakia, Deloitte Canada | [email protected]

Karen Pastakia has over 15 years’ experience in the area of HR and talent consulting. Currently, she leads the integrated Talent Management Strategies practice across Canada. She works with her clients to ensure alignment between their talent objectives and investments and overall business strategy. Pastakia is also one of Deloitte Canada’s marketplace inclusion leaders and has been intimately involved in the evolution of Deloitte University globally.

Ardie van Berkel, Deloitte Consulting BV | [email protected]

Ardie van Berkel is Deloitte’s Human Capital practice leader for the Europe, Middle East, and Africa (EMEA) region and a member of Deloitte’s global Human Capital executive committee. Van Berkel is also a member of Deloitte’s supervisory board in the Netherlands, as well as an active market-facing client service partner. She consults on merger integrations, organizational design, HR strategies, and change management to support major transformation programs, primarily in the public sector.

Contributors Juliet Bourke, John Crump, Andrea Derler, Marjorie Knight, Jeff Schwartz, and Yves Van Durme

The new organization: Different by design

Culture has become one of the most important business topics of 2016. CEOs and HR leaders now recognize that culture drives people’s behavior, innovation, and customer service: 82 percent of survey respondents believe that “culture is a potential competitive advantage.” Knowing that leadership behavior and reward systems directly impact organizational performance, customer service, employee engagement, and retention, leading companies are using data and behavioral information to manage and influence their culture.

FEW factors contribute more to business success than culture—the system of values, beliefs, and behaviors that shape how real work gets done within an organization. Its close connection to performance is not lost on HR and business executives: Nearly nine in ten (87 percent) of our survey respondents say that culture is important, and 54 percent rate it as very important, nine percentage points more than last year. (See figure 1 for our survey respondents’ ratings of culture’s importance across global regions and selected countries.)

Culture brings together the implicit and explicit reward systems that define how an organization works in practice, no matter what an organizational chart, business strat- egy, or corporate mission statement may say.

A staggering number of companies—over 50 percent in this year’s survey—are cur- rently attempting to change their culture in response to shifting talent markets and increased competition.

In an era in which bad news travels instan- taneously and an organization’s culture is both transparent and directly tied to its employment brand, great companies consciously cultivate and manage their culture, turning it into a competitive advantage in the marketplace. Have you ever wondered why certain compa- nies hire great engineers, deliver seemingly endless innovations, and generate consistent growth, while others always seem to be rein- venting themselves? A large part of the answer, in one word, is culture.

Shape culture Drive strategy

• Culture is a business issue, not merely an HR issue. The CEO and executive team should take responsibility for an organization’s culture, with HR supporting that responsibility through measurement, process, and infrastructure.

• While culture is widely viewed as important, it is still largely not well understood; many organizations find it difficult to measure and even more difficult to manage. Only 28 percent of survey respondents believe they understand their culture well, while only 19 percent believe they have the “right culture.”

• Culture can determine success or failure during times of change: Mergers, acquisitions, growth, and product cycles can either succeed or fail depending on the alignment of culture with the business’s direction.

The new organization: Different by design

http://dupress.com/articles/employee-engagement-culture-human-capital-trends-2015/

The importance of culture is readily appar- ent when things go wrong. When two large companies merged last year, for example, it became clear that one company had a culture of “low cost” while the other had a culture of “quality service.” Employees received mixed signals for months until the new management team took the time to carefully diagnose and redefine many business processes throughout the company.

Given the importance of culture and the consequences of cultural issues, many com- panies are proactively defining culture and issuing culture “manifestos.” The Netflix cul- ture presentation,2 often used as an example, has been downloaded more than 12 million times since 2009.3 The presentation clearly describes a culture that combines high expec- tations with an engaging employee experience: Generous corporate perks such as unlimited vacation, flexible work schedules, and lim- ited supervision balance a strong focus on

results with freedom and appreciation for the expected achievement.4

The financial services industry, still restor- ing its brand after the 2008 financial crisis, is sharply focused on culture. One organization is using a variety of initiatives to help employ- ees understand “how the bank does business,” including offering speaker series on topics such as compensation packages, customer satisfac- tion, and maintaining regulatory standards. Citigroup has an entire committee focused on ethics and culture and has implemented a series of web-based videos detailing real workplace ethical dilemmas. Bank of America is focusing its corporate culture transformation on encouraging employees to report and esca- late issues or concerns, as well as incorporating a risk “boot camp” into their current training. Wells Fargo is increasing its efforts to gather employee survey feedback to understand cur- rent trends and potential areas of weakness in its culture.5

This year, unlike in past reports, Global Human Capital Trends treats culture and engagement as two distinct topics. Why? Because, while the two issues are intimately connected, the differences between them are significant, and the importance of each has risen to justify a separate treatment and a separate, well-defined approach to tackling it.

Culture describes “the way things work around here.” Specifically, it includes the values, beliefs, behaviors, artifacts, and reward systems that influence people’s behavior on a day-to-day basis. It is driven by top leadership and becomes deeply embedded in the company through a myriad of processes, reward systems, and behaviors. Culture includes all the behaviors that may or may not improve business performance. Today, culture is a CEO-level issue and something that can be measured and improved to drive strategy.

Engagement, in contrast, describes “how people feel about the way things work around here.” It is a way of describing employees’ level of commitment to the company and to their work. According to our model, engagement encompasses five broad areas: meaningful work and jobs, management practices and behaviors, the work environment, opportunities for development and growth, and trust in leadership.1 When engagement is poor, employees feel uneasy or uncommitted, resulting in high turnover, low performance, and low levels of innovation and customer service. New tools are enabling companies to monitor engagement on a detailed, real-time basis, delivering specific, actionable information to continuously improve the work environment.

The two are connected. When a company’s culture is clearly aligned with business strategy, it attracts people who feel comfortable in it, which in turn should produce a high level of engagement. Conversely, programs to improve engagement often discover cultural issues, forcing the company and its leadership to question and change its values, incentives, programs, and structure. Both culture and engagement require CEO-level commitment and strong support from HR to understand, measure, and improve.

Global Human Capital Trends 2016

A new industry of culture assessment tools has emerged, enabling companies to diagnose their culture using a variety of well-established models.6 Yet despite the prevalence of these tools, fewer than 12 percent of companies believe they truly understand their culture.7 That’s where HR can help. As businesses try to understand and improve their culture, HR’s role is to improve the ability to curate and shape culture actively. An organization’s capa- bilities to understand and pull the levers of cul- ture change can be refined and strengthened. HR has a natural role to play in both efforts.

As operations become more distributed and move to a structure of “networks of teams,” culture serves to bind people together and helps people communicate and collabo- rate. When managed well, culture can drive execution and ensure business consistency around the world. HR has an opportunity to assume the role of champion, monitor, and

communicator of culture across, and even out- side, the organization. Once culture is clearly described, it defines who the company hires, who gets promoted, and what behaviors will be rewarded with compensation or promotion.

To effectively understand and manage their organization’s culture, business and HR leaders must collaborate to answer a daunting set of questions. For example:

• How do we create more high-impact customer and employee experience moments and ensure that we deliver them consistently?

• How well does our performance manage- ment or compensation system reinforce or improve our culture?

• Are we willing to reduce productivity tem- porarily to invest the time it takes to build a culture of learning?

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• What cultural issues lie behind problems such as fraud, loss, or compliance issues? Is punishing the offenders and reinforcing good behavior enough, or does supporting ethical conduct require changing cultural norms that enable or even encourage bad behavior?

• In M&A situations, how can cultural barriers to integration be identified and addressed before they become problematic?

• In today’s competitive talent environment, how does our culture affect our employ- ment brand and ability to attract, hire, and retain top talent?

CEOs and senior business leaders should work with HR to take a hands-on, data-driven approach to managing culture. To monitor and reinforce culture, companies must regularly assess employee behavior and revisit reward systems and business practices in all areas of the company.

The good news is that there are many new ways to research, measure, and monitor cul- ture, enabling companies to approach the issue rigorously and systematically. Just as employee engagement is being transformed by internal and external tools for feedback, corporate culture is now transparent and open. Indeed, many companies’ cultures are constantly being discussed, shaped, and rated for the entire world to see on social media platforms like Glassdoor and LinkedIn.8

Some companies are taking action to actively manage and change their culture:

• Nordstrom has formed a People Lab Science Team in an effort to define and curate a culture that will attract top talent and enable the retailer to compete with tech companies such as Tableau and Microsoft. The team takes a multidisciplinary approach to designing programs to define and reinforce Nordstrom’s culture.9

• Starbucks analyzed thousands of social media entries to gain an objective view of its culture through the eyes of its employees and take specific actions to reinforce its cultural strengths and address cultural weaknesses.10

• Securitas Belgium has defined the behaviors associated with its vision for culture, per- formed an analysis of its current state, and developed a detailed, measurable change plan for 150 of its managers.11

• Software giant SAS was recently rated the best place to work by the Great Place to Work Institute. It is also highly successful, with 37 consecutive years of record earn- ings (it earned $2.8 billion in 2012). SAS has identified trust as a critical cultural attribute and regularly surveys its employ- ees on elements of trust: communication, respect, transparency, and being treated as a human being.12

Once an organization develops a clear understanding of its culture and decides on a direction for cultural change, it is critical to move rapidly from analysis to action. Moving from talking to doing is the only way to build momentum. For companies pondering a cultural transformation, the time to start is now—because many companies are already way ahead.

Given the importance of culture and the consequences of cultural issues, many companies are proactively defining culture and issuing culture “manifestos.”

Global Human Capital Trends 2016

http://dupress.com/articles/employee-engagement-and-retention

Lessons from the front lines Culture is particularly important dur-

ing times of great change, such as mergers and acquisitions or corporate divestitures, which offer an opportunity for a fresh start on culture.

Take the example of HP Inc., a global technology company headquartered in Palo Alto, CA, which began when Hewlett-Packard Co. split into HP Inc. and Hewlett-Packard Enterprise on November 1, 2015. The company used the separation as a unique opportunity to reinvent the sales culture and create an envi- ronment that supports high-performing sales organizational behaviors for the entire global sales team of more than 6,500 employees. It took a systematic approach, using a quantita- tive tool to assess sales behaviors for all regions and sales roles. Analyzing the complex inter- section of sales behaviors, activities performed by salespeople, sales competencies, and com- pensation has provided insights that create top-performing sales representatives, sales managers, and teams. The findings from this multifaceted analysis has enabled HP’s top sales leaders to make “culture commit- ments” at their global sales meeting in an effort to begin to transform the company’s sales culture.13

As another example, following its July 2015 spin-off of PayPal, eBay took the opportunity to implement a deliberate approach to redefining and actively manag- ing its culture.14 eBay’s CEO has declared himself to be “chief culture officer” to emphasize his personal commitment to driving change. On the first day of the new company, he introduced a refreshed com- pany purpose and five new values that are intended to create a more brand-focused, inventive, and bold work environment. eBay is relying on new company values to turn its culture aspiration into reality. The value statements are being monitored using a quantitative approach to measur- ing and disseminating them: eBay’s team

of organizational development experts and data scientists actively measures the strength and adoption of these new values, regularly surveying eBay employees on over 50 cultural attributes that are mapped to the five recently formulated values, and conducting employee engagement surveys. This data is then com- bined with operational metrics to assess the extent to which compliance with cultural values impacts the business.

To compare the internal view—that of eBay’s employees—with an external view, the analysts also conduct both thematic and natural-language analysis on news articles and Glassdoor content, to gain a data-driven understanding of the ways that people discuss eBay’s culture in the open market. This strong effort has enabled eBay to quantify elements of its culture and gain a more accurate under- standing of how people both inside and outside the company view it.

The new organization: Different by design

Where companies can start

• Culture cannot be delegated—it must be on the CEO’s list of top priorities: C-suite executives must clearly understand their company’s cultural values, determine how they relate to business strategy, and take responsibility for shaping them, while also analyzing whether their own behaviors reinforce the desired culture.

• Understand both the current and the desired culture: Business leaders should closely examine current business processes step by step to identify which practices are aligned with the desired culture and which are destructive and require change—which begins by uncovering the values and behav- iors that allowed those practices to develop. While many HR organizations are building teams to better communicate leaders’ vision of the desired culture, these teams do not

always connect cultural change programs to behaviors and business strategies.

• Examine the organization to determine whether the targeted culture is taking hold: Executives can drive permanent cultural change throughout the organiza- tion by reminding employees that culture is a tangible set of attributes and behaviors that can be clearly recognized at visible “touchpoints” among employees and people outside the firm.

• Measure culture: Use empirical tools to understand employee attitudes and actions. If measurement reveals that current behav- iors conflict with desired cultural values, refine the program to communicate and model culture throughout the organization. HR should take the lead in this effort.

BOTTOM LINE

Although HR has a distinct and proactive role to play in driving cultural change—one that leading HR organizations have already embraced—the challenge of culture should be owned at the highest level: by the leaders who are responsible for business strategy. Just as the CEO is ultimately responsible for business strategy, the CEO is ultimately responsible for culture.

In short, leaders must understand that their beliefs and actions are the primary drivers of the organization’s culture. In the “new organization,” senior leaders must drive cultural change just as they do other cross-organization issues, reinforcing the behaviors necessary to support the business strategy. Start by identifying the practices that need to change before any cultural transformation can take hold, and then use the new tools available today to measure and manage culture toward alignment with business goals.

Global Human Capital Trends 2016

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Endnotes

1. Josh Bersin, “Becoming irresistible: A new model for employee engagement,” Deloitte Review 16, January 26, 2015, http://dupress.com/ articles/employee-engagement-strategies/.

2. Netflix, “Netflix culture: Freedom & respon- sibility,” www.slideshare.net/reed2001/cul- ture-1798664, accessed December 31, 2015.

3. Steve Henn, “How the architect of Netflix’s inno- vative culture lost her job to the system,” Planet Money, NPR, September 3, 2015, www.npr. org/2015/09/03/437291792/how-the-architect- of-netflixs-innovative-culture-lost-her-job-to- the-system.

4. Patty McCord, “How Netflix reinvented HR,” Harvard Business Review, January–February 2014, https://hbr.org/2014/01/how-netflix- reinvented-hr.

5. Emily Glazer and Christina Rexrode, “What banks are doing to improve their culture,” Wall Street Journal, February 2, 2015, http://blogs.wsj. com/moneybeat/2015/02/02/what-banks-are- doing-to-improve-their-culture/.

6. Josh Bersin, “Feedback is the killer app: A new market and management model emerges,” Forbes.com, August 26, 2015, http://www.forbes. com/sites/joshbersin/2015/08/26/employee- feedback-is-the-killer-app-a-new-market- emerges/#45b7a7286626.

7. Deloitte, Global Human Capital Trends 2015: Leading in the New World of Work, 2015, http:// www2.deloitte.com/global/en/pages/human- capital/articles/introduction-human-capital- trends.html.

8. Glassdoor, “Top companies for culture and val- ues,” www.glassdoor.com/Top-Companies-for- Culture-and-Values-LST_KQ0,36.htm, accessed December 11, 2015.

9. Nordstrom executives, interview with Josh Ber- sin, December 2015.

10. Jess Stein, Sophie Sakellariadis, and Alex Cole, “Making sure the cup stays full at Starbucks,” Monitor 360, http://monitor-360.com/ideas/ making-sure-the-cup-stays-full-at-starbucks, accessed December 31, 2015.

11. Securitas CEO, interview with Yves Van Durme, May 2015.

12. Mark Crowley, “How SAS became the world’s best place to work,” Fast Company, January 22, 2013, www.fastcompany.com/3004953/how-sas- became-worlds-best-place-work.

13. Based on client work.

14. Margarita Constantinides (senior director of tal- ent analytics, eBay), interview with Ben Dollar, December 28, 2015.

The new organization: Different by design

Authors Marc Kaplan, Deloitte Consulting LLP | [email protected]

Marc Kaplan is the US leader for Deloitte Consulting LLP’s Organization Transformation and Talent practice. He has more than 16 years of experience in change management, talent management, training, and organizational design. Kaplan has led the development and implementation of change management and talent management solutions for business leaders across the C-suite. He specializes in serving life sciences clients and has delivered large organizational transformations at many Fortune 500 companies.

Ben Dollar, Deloitte Consulting LLP | [email protected]

Ben Dollar is a principal in Deloitte Consulting LLP’s Human Capital practice. He focuses on organizational design, talent management, and process improvement in manufacturing companies. Dollar has helped some of Deloitte’s largest defense, automotive, and industrial products manufacturing clients achieve tangible benefits through organizational design, process adoption, and human capital management. He holds a BA from Vassar College and an MA from the University of Texas at Austin.

VerÓnica Melián, Deloitte SC | [email protected]

Verónica Melián is a consulting partner and the Human Capital practice leader for Deloitte LATCO. She has over 20 years of industry and consulting experience, specializing in large-scale transformation projects such as HR transformation and strategic change. Melián leads regional projects helping global companies to implement their strategic initiatives in Latin America. She is a frequent speaker on HR trends, organizational change, and culture.

Yves Van Durme, Deloitte Consulting | [email protected]

Yves Van Durme is a partner in Deloitte’s Belgian consulting practice and the global leader of Strategic Change for Deloitte’s Human Capital practice. He specializes in leadership and organizational development and talent and HR strategy in business transformation contexts. Van Durme has over 17 years of experience as a consultant, project manager, and program developer on human capital projects for multiple European, Japanese, American, and Belgian multinationals, family businesses, and small and medium enterprises. His experience with high-performance coaching in sports gives Van Durme a special affinity for leadership and organizational development work, focusing on the balance between processes, structures, and systems on the one hand and cultural and people-related elements on the other hand.

Jungle Wong, Deloitte Consulting (Shanghai) Co. Ltd. | [email protected]

Jungle Wong leads the Human Capital practice in Greater China and Asia Pacific. He has extensive experience working with multinational enterprises located in China, as well as state-owned enterprises, on solving talent and HR issues. He is a frequent speaker at HR conferences and an assessor for the Chinese Business Leaders’ Awards. Wong is a regular writer for HR magazines in China.

Contributors Anthony Abbatiello, Xu Bin, Sonny Chheng, David Mallon, Sonia Storr, and Haike van Dyck

Global Human Capital Trends 2016

Employee engagement continues to be a challenge for businesses, with 48 percent of this year’s survey respondents citing it as very important. The demands and expectations of today’s diverse, multi-generational, mobile workforce require a more flexible, employee-centric work environment, one which companies are just beginning to learn to develop. This year will see a strong focus on listening to employees, workforce health and well-being, job redesign, and an enterprise-wide analysis of all dimensions of employee engagement—all factors in what we call the “simply irresistible” organization.1

Employee engagement, like culture, has become a CEO-level issue. Companies now compete to win “best place to work” surveys and monitor social media carefully. There is an escalating war to design great workspaces, provide flexible benefits, and create great corporate cultures in an effort to drive higher engagement. Nearly nine in ten executives (85 percent) in this year’s survey rated engagement as an important (38 percent) or very important (48 percent) priority for their companies. (See figure 1 for our survey respondents’ ratings of engagement’s importance across global regions and selected countries.)

In the chapter on culture, we define both the connections and the differences between culture and engagement. Culture is the sense of “how things are done around here”; engage- ment is “how employees feel about how things

are done around here.” Engagement is an aspect of workplace life that can—indeed, should—be continuously monitored in a pro- active way. It is about the future of an organiza- tion; it is a measure of corporate health and a key window into the potential for future issues and workers’ support for change.

Three factors stand out as driving this focus on engagement. First, there is intense competi- tion for talented Millennials, many of whom are less loyal to organizations than ever before. Second, companies face a continued need to attract workers with technological and other specialized skills, as every company digitizes its business. And third, an organization’s employ- ment brand is now open and transparent, so job candidates can easily see if a company is a great place to work.

Engagement Always on

• Employee engagement is a business imperative for leaders at all levels—above all, the CEO—and no longer something to be measured just once a year by taking a look in the rear-view mirror.

• Despite the emergence of many tools for frequently evaluating employee sentiment, 64 percent of organizations still only measure employee engagement annually.

• Managers and leaders are now accountable for engagement, but HR has to be proactive, implement the right tools, and give business leaders a continuous stream of data with which to make future decisions, promote a culture of listening, and ensure that reward systems are consistent with engagement and retention goals.

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http://dupress.com/articles/employee-engagement-culture-human-capital-trends-2015/

The role of employee engagement within HR is changing as well. Today, we find Chief Learning Officers who own the engagement challenge and executives with titles like “Chief Employee Listening Officer.” These new titles show how the topic of engagement has become broader and more embedded in everything HR must do.

Many companies still conduct some form of employee engagement survey. Indeed, 64 per- cent of senior executives in this year’s Global Human Capital Trends survey noted that their companies survey employees on engagement. Yet many traditional engagement models have fallen behind, precluding a more complete view of the problem. Instead, engagement today demands understanding a highly inclu- sive, empowering work environment.

For one thing, today’s workforce is more diverse than ever. Companies must man- age as many as five generations of workers,

dispersed global teams, and a heterogeneous mix of genders, races, cultures, and sexual orientations. They also have many types of workers in the mix: full-time and part-time people, employees working at home, and workers employed by contract agencies. Yet despite this highly diverse population, research finds that only 11 percent of companies have a highly inclusive work environment, and 47 percent have cultural barriers preventing the use of part-time people. Only 4 percent of our respondents believe they are very good at engaging Millennials and other generations in the work environment.2

This is insufficient in a workplace in which everything seems to be changing at once.

Employee demands are changing. Today’s workers place a higher premium on flex- ibility, creativity, and purpose at work. The structure of companies is changing, putting a greater emphasis on empowered teams and

Global Human Capital Trends 2016

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team leadership. Companies are becoming dependent on a new breed of empowering, supportive, and open leaders at a time when companies still struggle to find the leaders they need.

The nature of careers is also changing. Companies used to invest heavily in employees with the intention of keeping them for decades and seeing them grow and contribute for the foreseeable future. Today, because employees change jobs more rapidly, employers must pro- vide development more quickly, move people more regularly, provide continuous cycles of promotion, and give employees more tools to manage their own careers.

Engagement, in many ways, is the tempera- ture gauge of a company’s ability to proactively address all these issues on behalf of the work- force. And research clearly shows that when employees feel empowered and have a sense of ownership for their jobs, their engagement is significantly higher.3

Companies are just now beginning to adapt to a new, implicit social contract between employers and employees—one where people can now easily explore new jobs or new companies online. This new reality is pushing employers to think of talent as “volunteers” and constantly consider how they can make work more meaningful and rewarding. After all, in a world of social media recruiting sites such as LinkedIn, employees are “always on” the hunt for new possibilities.

Engagement likewise needs to adopt an “always on” approach. Fortunately, new solu- tions have emerged in the marketplace to assess employee engagement. A new genera- tion of “pulse” survey tools and open anony- mous feedback systems can allow employees to rate managers, executives, and just about everything else at work on a near-real-time basis. The thoughtful use of such tools can create a true “listening environment” for employees while giving leaders critical insight into what’s working and what’s not working in the company.4

The movement toward this “always on,” feedback-based approach to engagement is growing rapidly, disrupting traditional models of measuring and managing employee engage- ment. A number of companies are adapting to more complex employee demands by listen- ing more closely, trying new approaches, and actively addressing operational problems:5

• A food retailer that operates coffee and food services around the world began soliciting anonymous employee feedback. Through this feedback, the company found that the drive-through window was chronically understaffed, forcing teams to run back and forth between different types of custom- ers, which reduced quality while adding stress and extra work. A store manager implemented a dedicated drive-through role, dramatically improving engagement and productivity; the rest of the company followed suit.

• One software executive pulses his sales team every week and asks a simple ques- tion: “How happy are you at work this week, and what can we do to make things better?” Employees offer suggestions about things that he could be doing better, and he claims that he can actually predict the following week’s sales based on the feedback he gets the Friday before.

Engagement, in many ways, is the temperature gauge of a company’s ability to proactively address all these issues on behalf of the workforce.

The new organization: Different by design

http://dupress.com/articles/identifying-future-business-leaders-leadership

• An electric utility that suffered from a major outage looked at employee feedback and engagement data and discovered that the outage could have been predicted (and prevented) by more carefully monitoring employee feedback. Now, the company uses a real-time text analysis tool to monitor open feedback from line workers around the region.

As these examples show, just as companies like Yelp, Glassdoor, and TripAdvisor offer feedback everywhere in the outside world, companies are also starting to offer open feedback systems internally. Yet not all com- panies are taking part in this transformation. Surprisingly, nearly one in five executives we surveyed (18 percent) reported that their companies do not formally measure employee engagement at all. Another 54 percent report

they are not fully ready to adopt an always- on approach. And only 8 percent of the executives we surveyed state that they measure employee engagement on a monthly or more frequent basis.

Nor is merely measuring engagement the whole answer. Engagement, retention, and employee productivity are complex and multi-faceted problems. Employees today are overwhelmed with too much work, manag- ers are under pressure to build the right work environment, HR is trying to build programs for well-being and work-life balance, and the business itself is trying to focus more heavily on customers. The task around engagement,

then, is not simply to have an engagement index but rather the far broader and more sig- nificant challenge of building an “irresistible” organization.6

Almost everything that happens at work has a direct impact on employees’ commitment to their work: how they are coached and evalu- ated; the work environment and the tools with which they work; their opportunities to grow and develop; and, of course, their relation- ships with managers and peers. Traditional definitions of engagement, therefore, need to be expanded to include five key elements that drive engagement: meaningful work, hands- on management, a positive work environ- ment, opportunities for growth, and trust in organizational leadership.

Finally, topics such as “mission,” “val- ues,” and “contribution to society” are driv-

ing engagement more than ever. Indeed, employees value “culture” and “career growth” at almost twice the rate at which they value “compensation and benefits” when selecting an employer.7 That is why culture and work environment have become the new drivers of employment brand and employee passion. The new model for “listen- ing” must be coupled with a focus on “vision” and “values” in lead- ership as well. Engagement with

a mission has a magnetism no matter how troubled an organization as a whole may be.

Lessons from the front lines

Quicken Loans, one of the United States’ largest providers of home loans with revenues of more than $2.8 billion, operates in one of the most traditional businesses in financial services. Yet through a special combination of leadership focus, employee programs, and an innovative work environment, the com- pany has been recognized as one of Fortune’s 100 best companies to work for in 2014,

Companies are just now beginning to adapt to a new, implicit social contract between employers and employees—one where people can now easily explore new jobs or new companies online.

Global Human Capital Trends 2016

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http://dupress.com/articles/employee-engagement-strategies/

2013, and 2012.8 How does Quicken Loans accomplish this?

Quicken Loans looks at employee engage- ment as core to its strategy of providing excel- lent customer service. Its CEO, Bill Emerson, is responsible for identifying engagement prob- lems, creating solutions, and working with his HR leadership to maintain the highest levels of engagement in the industry.

One of Quicken Loans’ tools is a beautifully written color book called The Quicken Loans ISMs.9 ISMs are simple, easy-to-read principles and examples, which the book illustrates with pop art, that inform every business decision at the company. Examples include, “Every client, every time, no exception, no excuses”; “Obsess with finding a better way”; “Yes before no”; and “Ignore the noise.”10 These principles, coupled with stories and examples, help employ- ees feel empowered to do the right thing for customers.

The company is located in Detroit, yet its office feels like a high-tech startup. Open offices, bright colors, and lots of flexible work spaces help employees feel empowered, col- laborative, and rewarded. The space is carefully designed to feel like an outside street, with minimal noise but lots of fun. Melissa Price, Quicken Loans’ HR leader—as well as the CEO of dPOP!, the design company that created the office space—focuses heavily on feedback and openness. “We want [workers’] feedback, and then we immediately do something about it. And that just encourages and promotes more feedback and inclusion.”11

The company also offers child care, exer- cise classes, snack food, and other amenities not typically provided by many businesses. Team members receive personal notes from executives for anniversaries, birthdays, and holidays—and the company gives away game tickets, cash, and free trips when employ- ees go the extra mile for customers. CEO Emerson even gives employees his personal phone number.12

The example of Quicken Loans clearly shows that you don’t have to be a fast-growing

technology company located in Silicon Valley to create an amazing, highly engaged place to work.

Where companies can start

• Redefine engagement: Engagement is not simply about turning an organization into a great place to work. It also means reaching down to the team and individual levels to foster highly engaged teams of employees doing work they love to do.

• Create a sense of passion, purpose, and mission: Free food and ping-pong tables are fun perks, but companies that succeed in having highly engaged employees focus intently on driving meaning, purpose, and passion among workers.

• Focus on all three levels: Engagement must be created, measured, and monitored at the organization, team, and individual levels.

The new organization: Different by design

http://dupress.com/articles/unlocking-the-passion-of-the-explorer/

http://dupress.com/articles/worker-passion-employee-behavior/

• Link compensation to engagement: Managers must embrace engaging their teams as one of their primary responsibili- ties. Tying team leaders’ compensation to their team members’ engagement sends a powerful signal and drives a sense of accountability about engagement efforts.

• Consider “stay” interviews: Many compa- nies conduct “exit” interviews to find out why employees are leaving. It is far better

to also use “stay” interviews to learn what it would take for an employee to stay at a company.

• Final check: Is your engagement effort “always on”? Perhaps the biggest challenge for HR in leading engagement programs is shifting from a transactional, once-a-year mind-set, to an “always on,” continuous lis- tening approach to monitoring engagement.

BOTTOM LINE

Engagement is an issue not merely for HR but for the entire executive team. Leading companies work proactively on engagement: They continuously ask themselves why their employees would commit to working at the organization for any length of time and what they can do to make their organization more attractive. Surveys may be important in determining levels of engagement, but engagement fundamentally comes back to the question of exerting a continuous attraction for workers in the open talent economy.

Engagement is not reactive but proactive. Efforts to build engagement should be “always on” through extensive data use and analysis by business leaders. HR, too, must be proactive in engagement efforts. Leading companies have made this their goal and are reaping the benefits; all organizations that want a passionate workforce should follow suit.

Global Human Capital Trends 2016

Endnotes

1. Josh Bersin, “Becoming irresistible: A new model for employee engagement,” Deloitte Review, Deloitte University Press, January 2015, http://dupress.com/articles/employee-engage- ment-strategies/.

2. Stacia Sherman Garr, The diversity and inclu- sion benchmarking report: An analysis of the current landscape, Bersin by Deloitte, 2014, http://bersinone.bersin.com/resources/ research/?docid=17320.

3. James B. Avey, Bruce Avolio, Craig Crossley, and Fred Luthans, “Psychological ownership: Theo- retical extensions, measurement, and relation to work outcomes,” Journal of Organizational Behavior 30 (2009): pp. 173–191, http://digitalc- ommons.unl.edu/managementfacpub/18/.

4. Josh Bersin, “Feedback is the killer app: A new market and management model emerges,” Forbes.com, August 26, 2015, http://www.forbes. com/sites/joshbersin/2015/08/26/employee- feedback-is-the-killer-app-a-new-market- emerges/#45b7a7286626.

5. Ibid.

6. Bersin, “Becoming irresistible: A new model for employee engagement.”

7. Proprietary research by Glassdoor and Bersin by Deloitte.

8. Rebecca L. Ray et al., The DNA of engagement: How organizations create and sustain highly engaging cultures, The Conference Board, Febru- ary 2015, TCB_R-1564-14-RR, https://www. conference-board.org/publications/publication- detail.cfm?publicationid=2902.

9. “The Quicken Loans ISMs,” http://www.quicken- loanscareers.com/about/culture/.

10. Ray et al., The DNA of engagement.

11. Ibid.

12. Venessa Wong, “This CEO gives every employee his cell number (seriously),” Bloomberg Business, October 22, 2012, http://www.bloomberg.com/ bw/articles/2012-10-22/this-ceo-gives-every- employee-his-cell-number-seriously.

The new organization: Different by design

Authors David Brown, Deloitte Touche Tohmatsu | [email protected]

David Brown, a consulting partner, leads the Human Capital practice in Australia. A member of the global Human Capital practice leadership team, Brown has over 30 years’ experience in the human capital space in both corporate HR and advisory roles. He has considerable international experience in HR management across North America, Europe, and Asia, specializing in HR strategy and execution, strategic change, workforce productivity/engagement, and talent management/development.

Josh Bersin, Bersin by Deloitte, Deloitte Consulting LLP | [email protected]

Will Gosling, Deloitte UK | [email protected]

Will Gosling leads the UK CHRO Transition and Development program. He advises private sector clients in the areas of organization transformation, employee engagement, and HR effectiveness, specializing in the technology, media, and telecommunications industry. Gosling also leads Deloitte’s digital leadership research, and has founded a professional community for digital leaders and talent across the United Kingdom. His work has received industry recognition, winning the MCA HR Consulting and CBI Human Capital awards.

Nathan Sloan, Deloitte Consulting LLP | [email protected]

Nathan Sloan is a principal in Deloitte Consulting LLP’s Human Capital practice. Based in Charlotte, NC, he works with global companies to determine the organizational structures, talent programs, and HR priorities required to implement their business strategies. Sloan is the Human Capital leader for the retail and wholesale distribution sector and also leads Deloitte’s National Talent Strategies practice, overseeing the development of all talent management solutions.

Contributors Dimple Agarwal, David Dye, Robin Erickson, Marc Kaplan, Robin Lissak, Jeff Schwartz, Jaime Valenzuela, and David White

Global Human Capital Trends 2016

The pressure on organizations to improve learning and development continues to intensify. Advances in technology, shifts in demographics, and the constant competitive necessity to upgrade workforce skills are disrupting corporate learning. These forces are pushing companies to develop new ways to put employees in charge of the learning experience and foster a culture of learning throughout the organization. This year, the big change is a shift beyond internal programs aimed at developing people to innovative platforms that enable people to develop themselves.

LEARNING continues to be important to HR and business executives worldwide as they strive to adapt to the disruptive change that is sweeping through corporate learning and development organizations. (See figure 1 for our survey respondents’ ratings of learn- ing’s importance across global regions and selected countries.) Several factors are driving the demand for change that has accelerated to warp speed over the past year.

First, nearly every CEO and CHRO reports that their companies are not developing skills fast enough or leaders deeply enough.1 In today’s highly competitive global economy and intensely competitive talent market, the C-suite clearly understands that companies that do not constantly upgrade skills and rapidly build leaders will not be able to execute their business plans. In today’s business environ- ment, learning is an essential tool for engaging

employees, attracting and retaining top talent, and developing long-term leadership for the company.

Second, the ubiquity of always-connected mobile devices makes learning potentially available everywhere and accessible to every- one at any time. Employees can now take a course on nearly any subject online, search for an expert video or podcast to learn a quickly needed skill, and even earn a college degree in a new topic like data science without leaving their desk—or a couch or coffee shop. This new world of consumer-centric learning puts employees, not L&D departments, in charge.

Third, employees at all levels now recog- nize that “the learning curve is the earning curve,”2 and they are demanding access to dynamic learning opportunities that fit their individual needs and schedules.3 Millennials and other young employees have grown up

Learning Employees take charge

• More than eight in ten executives (84 percent) in this year’s survey view learning as an important (40 percent) or very important (44 percent) issue.

• Employees at all levels expect dynamic, self-directed, continuous learning opportunities from their employers.

• Despite the strong shift toward employee-centric learning, many learning and development organizations are still struggling with internally focused and outdated platforms and static learning approaches.

The new organization: Different by design

in this self-directed learning environment. They expect it as part of their working lives and careers—and they will move elsewhere if employers fail to provide it. Already, 30 percent of executives in our survey see learning as the primary driver of employee development.

While many organizations are struggling to adapt to these challenges, high-performing companies are seizing the opportunity to promote a new culture of learning, upend- ing traditional models and transforming how employees learn. These organizations are adopting new mind-sets, fundamentally rethinking what “learning” and “develop- ment” mean in the context of their business. They place the employee at the center of a new architecture and new vision that treats learning as a continuous process, not an episodic event, and as a company-wide responsibility, not one confined to HR (figure 2).4

Supporting this new vision, learning and development organizations at these innovative companies are adopting new and expanded learning architectures.5 They see their role as not simply to push out content they have developed, but to enable employees to access content from a wide range of internal and external sources to create individual learn- ing programs. To facilitate the effort to help employees “learn how to learn,” L&D teams are building internal knowledge-sharing programs, developing easy-to-use portals and video sharing systems, and promoting collab- orative experiences at work that help people constantly learn and share knowledge.

These efforts seek to leverage the profound shifts taking place in the learning industry. Traditional learning management system companies are rapidly evolving in their ability to deliver modern, compelling experiences

Global Human Capital Trends 2016

for learners. Now, a new breed of disruptive, platforms is starting to arrive. New money and ideas are pouring into this sector. CB Insights, which tracks venture investments, estimates that more than $3 billion was invested in new learning and educational start-ups in the first six months of 2015. Almost $1 billion of this went into tools, content, and companies that focus on the corporate market.6

Much of this investment is directed at tools to harness video, new mobile learning apps, and an explosion of content marketplaces. Today, any employee can browse through content from Coursera, Udemy, Udacity, or a dozen other providers and instantly access a lecture, course, or workshop on a needed skill. Such platforms offer learning opportunities at little or no cost and even allow employees to interact online with experts in the field—learn- ing exactly what they need, when they need it, at a time that fits their schedules.

This kind of technologically enabled, on-demand learning experience rarely exists within a corporation, and it is a world away

from the traditional learning programs still used by most L&D organizations. In particular, many companies are still struggling to ride the wave and integrate external platforms as part of their employee learning. In our survey, respondents cited a wide range of external learning opportunities that could impact internal development, including external certificates (32 percent), MOOCs (18 percent), and external, self-directed learning powered by social media (14 percent). Still, despite this robust array of choices, 61 percent of execu- tives report challenges in moving their organi- zations toward external self-directed learning.

The goal is no longer to craft a learning pro- gram but to move beyond programs to curate the learning experience. Corporate training departments must become “learning experi- ence architects” (to use a term from design thinking), building a compelling and dynamic experience for employees and helping employ- ees learn how to learn.

Figure 3 describes some characteristics of this new mind-set and the ways in which

Graphic: Deloitte University Press | DUPress.com

Source: David Mallon and Dani Johnson, The learning architecture: Defining development and enabling continuous learning, Bersin by Deloitte, 2014, http://bersinone.bersin.com/resources/research/?docid=17435.

Immediate Performance support and other tools for point-of-need learning Q: What do I need to support my success in the moment?

Intermediate Current job development and competency expansion Q: What do I need to grow in my current role?

Transitional Development of skills and relationships that will meet long-term business goals Q: What do I need to grow in my career?

Figure 2. A continuous learning model

Education

Environment

Exposure

Experience

The new organization: Different by design

http://dupress.com/articles/employee-experience-management-design-thinking

it could reshape the role of L&D organiza- tions that embrace it. Of these shifts, the most fundamental for HR to make is to think of learning from the perspective of a user’s daily experiences and career aspirations, rather than as a series of processes and programs that the learning function wants to roll out. The chief learning officer has the opportunity to lead the charge to make L&D professionals more like product managers working for custom- ers who have unfulfilled needs, rather than simply designers of courses that employees are required to complete.

The transformation of learning is a power- ful story, and most organizations are still in the first or second act of this multi-act drama. But

the trend is clear: The learning organization must help learners figure out how to obtain the learning they need for themselves, from both inside and outside the company. If your orga- nization has not yet embarked on this journey, the time to start is now.

Lessons from the front lines

MasterCard has been on a journey, trans- forming itself from a traditional payments pro- cessing company into a technology company that provides the infrastructure that connects consumers, banks, and businesses.7 With its underlying business model evolving to address new opportunities and competitive threats,

Figure 3. Learning, today and tomorrow

Today Tomorrow

Learning is a series of corporate programs built around L&D-designed content and L&D-approved experts.

Learning is an “environment” and an “experience,” leveraging experts, content, and materials sourced and recommended by external communities as well as by other employees and internal experts (not just L&D).

The learning environment is managed by a corporate learning management system—essentially a large catalog filled with courses.

The learning environment feels like a consumer website that provides videos, courses, content, and access to experts—as well as recommendation engines that help people find precisely what they need.

L&D, business, and compliance experts push out training, identifying required courses to be completed by employees based on roles.

Employees pull learning, navigating and accessing opportunities from inside and outside of the company.

The focus is on internal training sanctioned by the company. External training is available from any digital content source.

Learning professionals are generalists who do everything from design to development, logistics, and measurement.

Learning professionals are specialists who are excellent at the component they own.

Training follows a lecture-based model guided by an expert. Training is experiential, relying on simulations, case studies, and flipped classrooms.

Employees learn specific skills through expert-guided instruction.

Employees learn how to learn through facilitation and coaching.

Organizations create detailed, exhaustive, skills-based competencies that drive the learning agenda.

Organizations create high-level frameworks that outline broad capabilities.

The learning organization plays a lead role in what a person learns and focuses on delivering work experiences, interactions with others, and formal training in the traditional 70-20-10 ratio.

The learning organization plays a supporting role in what a person learns, expanding the 10 to include “inside” and

“outside” learning; shifting the 20 to include internal and external networks; and redefining the 70 to include corporate, community, and social experiences.

Global Human Capital Trends 2016

the company is seeking to build capabilities to stay agile and keep new products and services flowing. And with an increasingly diverse workforce—now more than 40 percent Gen Y—it is becoming harder to engage employ- ees with traditional learning approaches.

Janice Burns, chief learning officer and head of Global Talent Development and Organizational Effectiveness, chal- lenged her team to reinvent their approach to learn- ing by constructing responsive, agile, and personal solutions that would meet the organization’s evolving demands along with employees’. To do that, she first had to lead a mind-set shift within her own organiza- tion—away from periodic programs owned

by learning professionals to self-directed solutions owned by individual employees. No longer would her learning team focus on telling people what to learn but instead show them what they can learn, providing access to

resources, tools, and connections to enable individuals to do their jobs and build their careers better.

Key to refocusing her team on the indi- vidual was segment- ing audiences and getting to know their needs, which she did by aligning Global Talent Development (GTD) leaders with specific busi-

ness units to work with operational leaders. She also empowered her team to experiment with new learning tools and technologies, encouraging them to work lean, fail fast, and

The transformation of learning is a powerful story, and most organizations are still in the first or second act of this multi-act drama.

The new organization: Different by design

scale up successes. Trying something that did not work became acceptable—in some ways a sign of tangible progress toward a culture of innovation.

As they explored new learning formats, the GTD team’s attention shifted from traditional courses and programs pushed to employees solely via the learning management system (less important in any high-performing learning organization), to more employee- driven solutions such as mobile perfor- mance support, massive open online courses (MOOCs), on-demand micro-learning, and online communities.

One new learning platform taking off with MasterCard’s Operations & Technology (O&T) group, for example, is Degreed. The system, which enables self-serve career development, empowers individuals and subject matter spe- cialists to curate their own learning “playlists,” mixing and matching internal and external learning content from a variety of sources and formats. Articles, videos, MOOCs, podcasts, and webinars can all be woven together into a personalized learning experience to help employees develop the skills they want to focus on.

The initial feedback from the roll-out to the company’s O&T function is promising. Stories highlight that managers and profes- sionals now feel equipped with tools to drive their own development. “I am willing to invest more into the tool because it will follow me no matter where my career takes me,” said one systems analyst. Similar feedback will continue to emerge as MasterCard deploys the platform

more broadly across the rest of the enterprise.

MasterCard is in the early stages of its journey toward a culture of entrepreneurship and empowerment. However, having the GTD organization act as a living example of this new cul- ture through its own experimen- tal approach has already enabled

it to become a meaningful catalyst for change within MasterCard.

Where companies can start

• Recognize that employee-learners are in the driver’s seat: Learning organiza- tions should think deeply about how the user experiences a company’s learning offerings. Employees need to be viewed as customers to be satisfied, rather than as students to be pressured into traditional learning classrooms.

• Become comfortable with the shift from push to pull: Switching from a content- centric “push” approach to a learner-centric “pull” approach requires a cultural shift within learning organizations. Giving up full control over learning content, sched- ules, and platforms may not be easy, but learning organizations that embrace this shift can deliver more effective learning throughout the organization.

• Use design thinking: Learning organiza- tions should think less about developing content and more about the month-by- month, day-by-day, and hour-by-hour experience of the learner.

• Use technology to drive employee-centric learning: Mobile, social, and web-based platforms that can deliver on-demand learning content are “must-have” capabili- ties. The best systems can easily integrate

Employees need to be viewed as customers to be satisfied, rather than as students to be pressured into traditional learning classrooms.

Global Human Capital Trends 2016

http://dupress.com/articles/employee-experience-management-design-thinking

BOTTOM LINE

Shifting from an internally focused, corporate-centric learning universe to a learner-centric one upends many long-held beliefs in the HR community. Employees will likely find it easier to make this pivot than HR departments because this new world is already part of their mobile, social, and online lives. For their part, business, learning, and HR leaders must embrace a new mind-set that puts learners in the driver’s seat, redesigning programs to harness the power of technology and the amazingly diverse wealth of instantly available external content, and offering great user experiences to learners.

any type of digital content and allow learners, as well as learning professionals and business managers, to add and suggest content. Companies should be cautious before investing in massive new systems, and they should monitor developments from innovative vendors to help build effec- tive learning applications.

• Realign and reengage: HR and learning leaders must align the learning function with business needs and goals. For many learning teams, doing so can also be an opportunity to reengage with employees, as many learners have stopped looking to their corporate learning departments for training and are already immersed in the

enormous range of available digital learning and content.

• Adopt a learning architecture that sup- ports an expanded vision for develop- ment: Rethink what “development” means in the context of the organization. If such a vision does not yet exist, adopt one and communicate it broadly.

• Adopt a learning architecture that sup- ports continuous learning: Dedicate resources, set expectations, and align corporate culture with the goal of enabling employees to get the learning they need, when they need it, at every stage in their careers.

The new organization: Different by design

Endnotes

1. The Conference Board, “The Conference Board CEO Challenge 2016,” https://www.conference- board.org/publications/publicationdetail. cfm?publicationid=6071.

2. Josh Bersin, “The use of MOOCs and online education is exploding: Here’s why,” December 30, 2015, http://joshbersin.com/2015/12/the- use-of-moocs-and-online-education-is-explod- ing-heres-why/.

3. Josh Bersin, “Spending on corporate train- ing soars: Employee capabilities now a pri- ority,” Forbes, February 2014, http://www. forbes.com/sites/joshbersin/2014/02/04/ the-recovery-arrives-corporate-training-spend- skyrockets/#2bccf9de4ab7.

4. David Mallon and Dani Johnson, The learn- ing architecture: Defining development and enabling continuous learning, Bersin by Deloitte, 2014, http://bersinone.bersin.com/resources/ research/?docid=17435.

5. Bersin by Deloitte defines a learning architec- ture as an organization’s unique map of agreed- upon learning needs, learning strategies, and de- livery strategies for all of its talent. This provides both the L&D function and the business a clear view of what types of problems the organization will solve, how they will solve them, what tools they need, and which approaches the organiza- tion will take. It deliberately limits the orga- nization’s options by deciding how and where the L&D function will focus its efforts—and it builds upon the organization’s culture and his- tory of learning. (Source: Mallon and Johnson, The learning architecture.)

6. Proprietary research by CB Insights, www. cbinsights.com.

7. Based on client work at MasterCard.

Global Human Capital Trends 2016

Authors Bill Pelster, Deloitte Consulting LLP | [email protected]

Bill Pelster has more than 20 years of industry and consulting experience. In his current role, he is responsible for leading the Integrated Talent Management practice, which focuses on issues and trends in the workplace. In his previous role as Deloitte’s chief learning officer, Pelster was responsible for the total development experience of Deloitte professionals, including learning, leadership, high-potentials, and career/life fit. Additionally, he was one of the key architects of Deloitte University and a US Consulting board member.

Josh Haims, Deloitte Consulting LLP | [email protected]

Josh Haims is a principal with Deloitte Consulting LLP. He is a senior leader in Deloitte’s Learning Solutions practice, co-founder of Deloitte’s Chief Learning Officer Forum, and sponsor of the Wall Street Learning & Development Executive Roundtable. Dedicated to the discipline of learning, Haims’s career spans more than 20 years in the field of corporate learning. He has supported Fortune 100 clients to help them reimagine their learning strategies, enhance the learner experience, and improve the learning and

development function’s operational performance.

Jen Stempel, Deloitte Consulting LLP | [email protected]

Jen Stempel has more than 20 years of experience in corporate learning and leads Deloitte’s US Learning Solutions practice. She works with large, complex global companies to optimize their learning functions and help them realize value from their learning spend by improving their programs’ effectiveness, operational efficiency, and alignment with business strategy. Stempel is a contributor to Deloitte’s Global Human Capital Trends report and a frequent writer and speaker on learning and talent topics.

Bernard van der Vyver | [email protected]

Bernard van der Vyver is a leading advisor on human capital matters, focusing on learning and development. By merging his background in technology and its effective use with the development of people, van der Vyver brings a unique strength to the HR domain. As Deloitte’s global learning solutions leader, he aspires to grow and strengthen the global learning community by leveraging the organization’s knowledge and expertise to deliver learning solutions that create unique value for clients.

Contributors Jason Galea, Dani Johnson, Praveen Kaushik, and Jeff Schwartz

The new organization: Different by design

Employees are overwhelmed with technology, applications, and a constant flood of information. Deloitte research shows that people collectively check their phones more than 8 billion times each day,1 yet productivity is barely rising.2 To relieve the overwhelmed employee and develop HR applications that can help manage complexity, HR must adopt design thinking, which puts the employee experience at the center.3 Design thinking moves HR’s focus beyond building programs and processes to a new goal: designing a productive and meaningful employee experience through solutions that are compelling, enjoyable, and simple.

TRADITIONAL HR solutions are typically programs or processes to train people, assess performance, ensure compliance, or document a practice at work. Most were built around forms, process steps, formal training, or classroom events. While these strategies work to a degree, today’s employees are already overwhelmed with a flood of email, messages, meetings, and other workplace distractions. Two-thirds of companies now believe com- plexity is an obstacle to business success and a barrier to growth in business productivity.5 Perhaps this is one reason why 79 percent of executives in this year’s Global Human Capital Trends survey rated design thinking an important or very important issue. (See figure 1 for our survey respondents’ ratings of design

thinking’s importance across global regions and selected countries.)

Design thinking casts HR in a new role.6 It transforms HR from a “process developer” to an “experience architect.” It empowers HR to reimagine every aspect of work: the physical environment; how people meet and interact; how managers spend their time; and how companies select, train, engage, and evalu- ate people. One CHRO calls herself the “chief employee experience officer,” which effectively summarizes this powerful new mandate.

Simply described, design thinking means focusing on the person and the experience, not the process. At its core, working as a designer involves studying people at work, and develop- ing “personas” and “profiles” to understand

Design thinking Crafting the employee experience

• Design thinking provides a means to focus on the employee’s personal experience and to create processes centered upon the worker. The result: new solutions and tools that directly contribute to employee satisfaction, productivity, and enjoyment.

• HR departments should upgrade their skills to incorporate key design thinking concepts such as digital design, mobile app design, user experience design, and behavioral economics.

• Design thinking is important, and it works. In this year’s survey, respondents at companies where HR delivers the highest levels of value are almost five times more likely to be using design thinking in their programs than their peers.4

http://dupress.com/articles/hc-trends-2014-overwhelmed-employee/

http://dupress.com/articles/work-simplification-human-capital-trends-2015/

employee demographics, work environment, and challenges. It relies on generating ideas quickly and testing prototypes that generate further ideas, digital tools, and solutions.7

Applying design thinking to the work expe- rience compels HR to ask, “What does a great employee experience look like from end to end? How can we facilitate collaboration and learning in everything we do? How can we take advantage of location-aware mobile devices to make people more productive? How can we give employees a few easy-to-understand choices so they can make decisions faster?”

Many companies are relying upon design thinking. GE, for example, has made simplifi- cation a core new business strategy.8 It is intro- ducing design thinking, a simplified model for performance management, new mobile apps for goal management and collaboration, and a new set of principles for work. The company now uses agile methodologies throughout

product development and is teaching managers how to help teams “do less” and “focus more.”

One fundamental idea in design think- ing is the use of behavioral economics. Many HR practices can be replaced with “intelligent choices,” using the principles of behavioral economics to encourage better decisions.9 Should a company, for example, give people 10 options for 401(k) plans? Or rather select three that offer the best performance? Such “choice architecture” can make work far easier and more enjoyable for employees—and increase employee participation in the program.

Design thinking—or lack of it—can make a huge difference in how companies are perceived. Take recruiting. The Talent Board found that more than half the candidates who find the job-application experience difficult develop a negative impression of the company’s products and services.10 Companies such as Zappos and others design the candidate

Global Human Capital Trends 2016

experience to attract high-performing people and make it easy to find the right job and apply quickly.11

Other companies are using design think- ing to improve learning dramatically. Deckers Brands,12 Nestlé,13 and Qualcomm14 have used design thinking to develop highly intuitive, experiential learning programs. Experiential learning programs begin with the individual and the context of an employee’s work rather than a model in which the presenter is the focus. They offer learning programs that are much more stimulating and engaging and lead to higher skills retention. In addition, they do not depend on a learning management system but can leverage new learning technologies to promote continuous learning.

The data from our survey this year sug- gest that the more importance an organization places on design thinking and the more ready it is to embrace it, the faster the organization grows. Companies growing by 10 percent or more per year are more than twice as likely to report they are ready to incorporate design thinking, compared to their counterparts that are experiencing stagnant levels of growth.

Exciting new digital tools that employ design thinking are also making routine HR tasks more efficient and easy, while improv- ing the employee experience. Australia and New Zealand Banking Group developed an easy-to-use mobile app that allows employees to manage their time and attendance, benefits, and vacation schedule, while also enabling them to collaborate with colleagues.15 DuPont completely redesigned its online HR portal around the end user’s experience, dramatically reducing the time employees spend on tradi- tional HR management processes.16 Beyond recruiting, learning, and other HR processes, design thinking has been used to improve performance management and coaching at companies such as Adobe,17 and Autodesk,18 and New York Life.

Organizations are also starting to use employee personas to understand the unique needs of distinct employee segments. At one

Australian government agency, eight per- sonas were considered as the agency was designing a new HR portal. The organization found that 27,000 of its 45,000 employees were remote field workers who do not use company-sponsored technology and function independently. Through focus groups and a survey, the agency uncovered surprising and

practical insights around communication, col- laboration and knowledge management, and self-service administration across all personas. For example, the biggest frustration for these remote employees was the inability to access their work schedules, submit absence requests, or order uniforms using their personal tech- nology. These insights guided the systems design. Today, the employee persona profiles are a standard component of the agency’s orientation program.19

With more companies embracing design thinking, we see it connecting many of the trends we highlight this year, including:

• Organizational design, which can incor- porate design thinking when restructuring roles or the organization itself

• Engagement, which research shows can be driven by using design thinking to make work easier, more efficient, more fulfilling, and more rewarding

• Learning, in which new, self-directed learn- ing experiences can be shaped by design thinking’s central principle of putting the user experience ahead of the process

Design thinking—or lack of it—can make a huge difference in how companies are perceived.

The new organization: Different by design

http://dupress.com/articles/organizational-models-network-of-teams

http://dupress.com/articles/employee-engagement-and-retention

http://dupress.com/articles/fostering-culture-of-learning-for-employees

• Analytics, in which data analysis and design thinking can be linked to rec- ommend better solutions directly to the employee

• HR skills, which must be upgraded to incorporate an understanding of digital design, mobile application design, behav- ioral economics, machine learning, and user experience design

• Digital HR, where design thinking is criti- cal in developing new digital tools that can make work easier and better

Just as successful companies continually ask how to improve customer experiences and how those experi- ences compare to their competitors’, HR can approach employee experiences with the same rigor. While design thinking may involve significant changes to workplaces, systems, processes, and other business ele- ments, its focus is on people.

As a recent Harvard Business Review article by Jon Kolko noted, “People need their interac- tions with technologies and other complex sys- tems to be simple, intuitive, and pleasurable.” Because “design is empathetic,” the article con- tinues, “it implicitly drives a more thoughtful, human approach to business”—one that makes the workplace more attractive to both current and prospective employees.20

Successful design thinking integrates an understanding of human behavior. What motivates people? How do they see them- selves? What do they value? How do they express those values in typical office behav- ior? In seeking to answer these questions, HR

teams do not have to start from scratch—often, they can look inside the organization for ideas and inspiration.

Lessons from the front lines Telstra is Australia’s leading telecommu-

nications and information services company, offering a full range of communications services and competing in all telecommunica- tions markets. As with all telecommunications companies, Telstra hires thousands of employ- ees each year.21 New employees have to learn

a dizzying number of systems, products, pricing plans, and ways of doing their job, so turnover and engagement are always issues. To address this strategic challenge, Telstra used design thinking to develop a new “90-Day” onboarding experi- ence for all employees as well as an indi- vidualized executive induction program.

The process included:

• Focusing questions: “Discovery inter- views” with leaders to frame the challenge and set objectives for the program

• Ethnographic research: Interviews and focus group sessions with employees, HR, and managers to explore challenges and needs across the first 90 days’ experience

• Synthesis: Comparing insights from the ethnographic research with HR demo- graphic and turnover data to identify key transition points and work task areas that could be dramatically improved to “delight” employees

The data from our survey this year suggest that the more importance an organization places on design thinking and the more ready it is to embrace it, the faster the organization grows.

Global Human Capital Trends 2016

http://dupress.com/articles/people-analytics-in-hr-analytics-teams

http://dupress.com/articles/changing-role-of-hr-skills-crisis

http://dupress.com/articles/digital-hr-technology-for-hr-teams-services

• Prototyping: Developing low-fidelity tools and solutions that were tested and refined multiple times to allow for “fast failure” and the integration of lessons learned

• Visualisation: Using persona-based blue- prints that describe the onboarding journey in an engaging way, allowing leaders and others to emulate the project team’s journey and increase engagement in the design.

Through this design thinking process, Telstra gained important insights into key pain points, needs, and challenges of the current onboarding process during the first 90 days. The research proved that employees who succeeded in the first 90-day period were far more productive over the entire course of their employment than those who struggled.

Using insights from this research, Telstra designed the onboarding approach around four elements:

• Join: Make the experience personal, but also easy and clear on how to quickly become part of the organization

• Learn: Provide time and space to allow for key learning to happen as quickly as possible

• Contribute: Provide guidance, support, and coaching to foster productivity

• Grow: Provide acknowledgement and cel- ebrate achievements to motivate continuous growth in a new role

The result: Productivity rose, employees became more committed and engaged, and new hires became more quickly integrated into the organization.

Now a huge fan of design thinking, Telstra has applied the process to improve leadership development, the HR services experience, change management programs, and other employee development programs.22

The new organization: Different by design

Where companies can start

• School HR in design thinking: HR should move away from “process design” to “human-centered design.” This means studying what employees do, visiting their workplaces, and observing their behavior. Based on these insights, solutions and pro- grams can be designed that improve pro- ductivity, boost engagement, and increase employee satisfaction while also providing training or other HR services.

• Learn from design thinking in customer service: Many companies use design think- ing in developing their customer service

BOTTOM LINE

With its focus on people, HR leaders have an opportunity to be designers, creating a more engaging and effective HR solution. Applied correctly, design thinking is a rigorous, disciplined method of problem-solving. It represents an opportunity for HR to reshape how it works with the organization and to redesign its own procedures, using technology to ensure positive employee interactions.

Done well, design thinking promotes a virtuous cycle, generating higher levels of employee satisfaction, greater engagement, and higher productivity for the company. In their new role as designers, talent leaders should ask: How can HR take the lead in crafting and shaping the employee experience? How can HR design overall experiences that engage employees at all stages, from candidates through alumni? Equally important, how can HR help build and reinforce design capabilities throughout the organization?

programs. To gain understanding, HR should visit great retail stores, restaurants, or universities. By examining satisfying experiences outside of work, HR can use these examples in HR design.

• Prototype, pilot, test, and learn: New programs should be prototyped and then piloted with a small group. By understand- ing what this group loves and what it dislikes, HR can improve the end-to-end employee experience.

Global Human Capital Trends 2016

Endnotes

1. PR Newswire, “Deloitte survey: Americans look at their smartphones in the aggregate more than 8 billion times daily,” December 9, 2015, www.prnewswire.com/news-releases/deloitte- survey-americans-look-at-their-smartphones- in-the-aggregate-more-than-8-billion-times- daily-300190192.html.

2. Deloitte, Global mobile consumer survey: Rise of the always-connected consumer, 2015, www2. deloitte.com/us/en/pages/technology-media- and-telecommunications/articles/global-mobile- consumer-survey-us-edition.html.

3. James Guszcza, Josh Bersin, and Jeff Schwartz, “HR for Humans: How behavioral economics can reinvent HR,” Deloitte Review 18, January 25, 2016, http://dupress.com/articles/behavioral- economics-evidence-based-hr-management/.

4. Among respondents who rated their HR per- formance as “excellent” or “good,” 24 percent said that the use of design thinking was “very prevalent” at their organization. Among the rest of the respondents (those who rated their HR performance as “adequate,” “getting by,” or

“underperforming”), only 5 percent said that the use of design thinking was “very prevalent.”

5. Ardie van Berkel and Jeff Schwartz, The over- whelmed employee, Deloitte, 2014, http://dupress. com/articles/hc-trends-2014-overwhelmed- employee/.

6. Design thinking has been one of the most dis- cussed topics in business over the past year. For example, see Jon Kolko, “Design thinking comes of age,” Harvard Business Review, September 2015, https://hbr.org/2015/09/design-thinking- comes-of-age.

7. Robert I. Sutton and David Hoyt, “Better service, faster: A design thinking case study,” Harvard Business Review, January 6, 2016, https://hbr. org/2016/01/better-service-faster-a-design- thinking-case-study.

8. Raghu Krishnamoorthy, “GE’s culture challenge after Welch and Immelt,” Harvard Business Re- view, January 26, 2015, https://hbr.org/2015/01/ ges-culture-challenge-after-welch-and-immelt.

9. Guszcza, Bersin, and Schwartz, “HR for Hu- mans.”

10. Talent Board, CandE Awards, www.thetalent- board.org/cande-awards/, accessed February 11, 2016.

11. Andrew Greenberg, “How 4 top employers use candidate experience for competitive advantage,” Recruiting Division, January 6, 2015, www. recruitingdivision.com/4-top-employers-use- candidate-experience-competitive-advantage/.

12. Dani Johnson, Giving learners what they want: How Deckers Brands transformed its learning and engagement organization to align with learner needs and support business goals, Bersin by Deloitte, December 8, 2015, www.bersin.com/ Practice/Detail.aspx?id=19396.

13. Nestlé executives, interviews with Josh Bersin and others.

14. Kim Lamoreux, Fostering innovation through Learning: Qualcomm builds culture of entrepre- neurship, creativity and risk taking, Bersin & As- sociates, December 15, 2009, www.bersin.com/ Practice/Detail.aspx?id=11859.

15. New Zealand Trade and Enterprise, “Better by design: Design thinking masterclass—interview with Ross, ANZ,” March 27, 2014, https://youtu. be/EqfINYA7l9k.

16. Based on client work performed at DuPont.

17. Stacia Sherman Garr, Reengineering for agility: How Adobe eliminated performance appraisals, Bersin by Deloitte, September 10, 2013, www. bersin.com/Practice/Detail.aspx?id=16806.

18. Stacia Sherman Garr and Candace Atamanik, Evolving performance management series (part 2): How Autodesk redesigned its performance management system, Bersin by Deloitte, August 27, 2015, www.bersin.com/Practice/Detail. aspx?id=19245.

19. Based on client work.

20. Kolko, “Design thinking comes of age.”

21. Telstra, Bigger Picture 2015 Sustainability Report, page 18, www.telstra.com.au/content/dam/ tcom/about-us/community-environment/pdf-e/ bigger-picture-2015-sustainability-report.pdf, accessed February 12, 2016.

22. Based on client work performed at Telstra.

The new organization: Different by design

Authors Josh Bersin, Bersin by Deloitte, Deloitte Consulting LLP | [email protected]

Marc Solow, Deloitte Consulting LLP | [email protected]

Marc Solow is a director in Deloitte Consulting LLP and responsible for leading Deloitte’s HR Shared Services market offering in the United States. He has nearly 25 years of experience as a consultant and HR practitioner. Solow has led the consulting services in support of several global HR transformation, shared services, and outsourcing projects for large and complex clients in a variety of industries, including insurance, health care, life sciences, consumer and industrial products, and energy.

Nicky Wakefield, Deloitte Consulting Pte Ltd. | [email protected]

Contributors Garth Andrus, Mike Brinker, Ben Dollar, Leon Doyle, Peter Hughes, Andy Peck, Ruth Schmidt, and Kate Sweeney

Global Human Capital Trends 2016

HR is under increasing pressure from business leaders to drive innovative talent solutions, improve alignment with business imperatives, and turn data into actionable insights. Is HR up to the task? Good news: This year’s survey and other research show an improvement in the HR organization’s skills, business alignment, and ability to innovate. While HR organizations have significant work to do, HR leaders are adapting more quickly now to changing business demands and stronger skills requirements.

OVER the last several years, a cottage industry of business writers has made headlines by sharply criticizing HR. Some believe the HR function should be split in two.2 Others advocate doing away with it altogether.3 The typical complaint is that HR is too bureau- cratic, too administrative, and not innovative enough; HR professionals are not well-aligned with the business and lack the analytical skills to make data-driven decisions.

Last year, Deloitte was part of that cho- rus. Our 2015 Global Human Capital Trends report concluded that HR needed an “extreme makeover.” We noted that HR skills were weak, companies were not spending enough on developing HR professionals, and HR itself was too focused on service delivery and not enough on building consulting skills.

While some of these complaints remain valid, this year we take a contrary view. In fact, we believe HR is turning the corner.

Our research shows that the percentage of respondents rating HR’s performance “good” to “excellent” has been trending upward over the past few years (figure 1). There has been signif- icant progress in the areas of employee engage- ment, culture, analytics, and the adoption of cloud-based HR technology. While HR teams still face daunting challenges—particularly in leveraging design thinking, digital HR, behav- ioral economics, and real-time feedback—a new generation of inspired HR leaders is enter- ing the profession, and the progress is real.

HR teams are on the move. Organizations’ readiness to deal with employee engagement and culture rose by 13 percent this year; their

HR Growing momentum toward a new mandate

• HR’s role is expanding beyond its traditional focus on talent management, process, and transactions. HR is becoming an innovative consultant with a broader responsibility to design, simplify, and improve the entire employee and candidate experience.

• This year, HR teams are more focused on innovation, analytics, and the rapid adoption of cloud and mobile technologies to make the work experience better.

• Respondents’ rated readiness in the area of HR skills has increased 14 percent since 2014,1 and the percentage of respondents who rate their HR teams “good or excellent” has risen 6.2 percent. Companies with leading HR practices are now celebrating them publicly, raising the bar for organizations of all sizes.

The new organization: Different by design

readiness in analytics jumped by 11 percent, and their readiness to address leadership development went up by 14 percent (see figure 2).4 Thanks to this progress, the percentage of executives who believe HR is “underperform- ing” or just “getting by” has fallen 11 percent over the last two years.

Three factors contribute to our positive conclusion this year:

• HR is innovating—and improving: In 2015, 56 percent of surveyed companies believed their HR teams were innovative; in

2016, this rose to 60 percent. Companies in consumer products, financial services, pro- fessional services, and life sciences scored even higher.

• HR is embedding itself and aligning with the business: In 2015, 58 percent of com- panies rated themselves positively in this area, and in 2016, this number increased to 64 percent.

• HR is beginning to reskill: In 2015, 66 percent of companies were focused in this area; in 2016, this increased to 68 percent, with the percentage of organiza- tions rating themselves “excellent” jump- ing from 11 percent to 15 percent—a 36 percent increase.

This progress, admittedly, is not consis- tent; our survey found differences in the rated importance of HR skills across the globe. Companies in Southeast Asia and Africa have a greater need to change HR skills, while countries such as Japan and Italy have not progressed as far in modernizing their HR functions. (See figure 3 for our survey respon- dents’ ratings of the importance of the chang- ing skills of the HR organization across global regions and selected countries.)

Graphic: Deloitte University Press | DUPress.com

Figure 1. HR’s rated performance has steadily improved over the past few years

2016

2015

2014

2013

Underperforming ExcellentGoodAdequateGetting by

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

9% 21% 33% 5%32%

10% 22% 31% 5%32%

10% 24% 30% 5%31%

14% 23% 21% 3%38%

Figure 2. Increase in HR organizations’ readiness to address specific issues

Company capabilities in talent practices

Percent change in readiness index from

2015 to 2016

Leadership development 14%

Employee engagement and culture

13%

Analytics 11%

Learning 7%

Note: See endnotes 1 and 4 in this chapter for an explanantion of the readiness index.

Global Human Capital Trends 2016

While companies may be tempted to look at this progress and take their feet off the acceler- ator, this is no time to slow down. Only 17 per- cent of HR teams report they have a very good understanding of their company’s products and profit models; a mere 14 percent believe they are highly skilled at addressing global HR and talent issues; and only 8 percent have a very good understanding of cybersecurity issues.

This year, therefore, HR organizations should build on their momentum by tack- ling the remaining challenges.5 As companies change the way they are organized, HR must adapt its operating model as well.

Today, high-impact HR organizations6 are moving away from a “service provider” mentality to becoming valued talent, design, and employee-experience consultants. They are now deeply embedded in the business through senior business-partner leadership roles. At the same time, traditional HR generalist roles are

being moved to highly efficient HR operations centers that are enabled by powerful mobile HR apps.

In this new model, HR professionals must be more business-oriented specialists, possess- ing critical new skills in the following areas:

• Organizational networks: Analyzing, building, and developing network capabili- ties and expertise

• Team-building and team leaders: Cultivating team leaders who can coach and develop people, not just give direction

• Employee engagement and culture: Measuring and improving the workplace culture, and understanding culture models

• Design thinking: Becoming “experience architects”

The new organization: Different by design

http://dupress.com/articles/organizational-models-network-of-teams

http://dupress.com/articles/identifying-future-business-leaders-leadership

http://dupress.com/articles/employee-engagement-and-retention

http://dupress.com/articles/employee-experience-management-design-thinking

• Analytics and statistics: Becoming evi- dence-based leaders who embrace behav- ioral economics and testing

• Digital: Moving beyond mobile and cloud applications by building true digital HR platforms and apps

• Employment experience and brand: Crafting and communicating the company’s value proposition

As HR makes this major shift from com- pliance and service provider to steward and champion of the total employee experience, some companies are beginning to think about HR in new ways.

Companies like Airbnb7 and Deckers Brands8 are creating roles such as “chief culture officer” and “chief employee experience officer” to reflect HR’s new mandate. Following the establishment of offshored shared services in 2010, one energy company introduced a head of process center of excellence (CoE) to drive simplification, and later introduced a new head of HR analytics to drive better insights alongside investments in learning systems and training.9

Companies such as Philips and Nestlé are changing their learning and development func- tions to focus on “learning experience design.” This shift encompasses not just delivering learning programs, but creating innovative new learning environments.10

Commonwealth Bank of Australia11 and Telstra12 are focusing on “user-centric design” and design thinking to build new apps and new experiences for employees based on the new disciplines of digital HR. And many companies are switching to new “business- embedded” HR roles, responsible for being the “VPs of HR” for their organizations.

Part of this transformation includes HR teams implementing talent management for themselves. These development and leadership efforts include:

• Job rotation programs, including mov- ing HR people into the business and businesspeople into HR. Companies like Halliburton13 and Google14 now hire businesspeople for HR roles and give them aggressive rotational assignments so they can learn the HR domain and gain experi- ence advising business leaders at all levels.

• Developing internal certification pro- grams, research groups, and developmental assignments to find high-potential lead- ers within HR and offer them breadth and global experience. UnitedHealth Group15 and Halliburton16 have adopted similar programs to speed up the development of HR leaders.

• Attracting younger, Millennial HR profes- sionals who intuitively understand the life, needs, and expectations of the new genera- tion of workers.

One CHRO tells HR leaders to “spend their time where the company makes money.” Another believes that “half of our HR profes- sionals will have MBAs within the next five years.” These stories reveal a quantum shift in the redefinition and reinvention of HR.17

As a profession and as a function, HR is turning the corner and is now accelerating in the right direction. Despite this progress, the speed of business change continues to increase, and in 2016, HR organizations must adapt faster than ever.

Today, high-impact HR organizations are moving away from a “service provider” mentality to becoming valued talent, design, and employee-experience consultants.

Global Human Capital Trends 2016

http://dupress.com/articles/people-analytics-in-hr-analytics-teams

http://dupress.com/articles/digital-hr-technology-for-hr-teams-services

http://dupress.com/articles/gig-economy-freelance-workforce

http://dupress.com/articles/fostering-culture-of-learning-for-employees

Lessons from the front lines EDF Energy is one of the United Kingdom’s

largest energy companies, employing more than 14,000 people. The company serves 5 million residential and business custom- ers and produces 20 percent of the United Kingdom’s electricity.18

In an effort to optimize training, learning, and development, EDF Energy is introducing a sustainable framework for developing its cur- rent and future workforce by building a series of business line academies (BLAs) that provide professional education, personal development, and career development for employees in all the company’s major functional areas (HR, IT, finance, and other service functions). The first such academy was the HR BLA, which launched in May 2014.

EDF Energy’s HR BLA is supported by senior business sponsors from across the busi- ness and managed by a dedicated learning and development team. The company used a sys- tematic approach to build a curriculum, assess- ments, and career models for the 500-plus HR professionals—including health, safety, and environment staff—employed throughout the company. While the curriculum is based on the competency model developed by the Chartered Institute of Personnel and Development,19 which describes the skills and capabilities needed for a wide range of HR roles, the con- tent is specifically adapted to the needs of EDF Energy. The BLA includes an online learning platform, digital tools, competency self- assessments, career maps, and formal train- ing programs (for example, course schedules, webinars, reading materials, and videos). The company assigns senior learning and develop- ment specialists to help subject matter experts develop custom programs to make sure all training investments are relevant to local busi- ness priorities throughout EDF Energy.

Now 18 months old, EDF Energy’s HR BLA has already saved EDF Energy significant money in ad-hoc training and education costs. It is an example of a new breed of HR profes- sional programs starting to emerge that focus on keeping HR professionals up to date, giving them ongoing career guidance, encouraging them to collaborate, and making the HR func- tion fully aligned and skilled in its support of business operations.20

The new organization: Different by design

BOTTOM LINE

HR is turning the corner. Highly regarded HR teams are now actively building expertise in design thinking, new organizational structure and teams, and business-integrated HR. This is not a time for complacency, however, but for continuing to look in the mirror and ask hard questions. Is HR an exciting place to work? Is turnover declining relative to other functions in the business?

HR organizations and their leaders should invest further to build new capabilities. Without HR pushing itself to develop the skills it needs, it will not happen. HR’s future lies in its ability to evolve to improve culture and engagement, build a new generation of leaders, and leverage technology to implement digital HR and design thinking. Only in this way can HR enhance the employee experience and build the talent leaders the organization needs.

Where companies can start

• Understand HR’s changing mandate, mission, and role: Some elements of the mandate are new; others are consistent with past work. Understand the differences and act on them.

• Rethink the HR structure: Are enough specialists and business partners embedded in the business? Are HR centers evolving from service centers to real-time operations centers that are efficient and operationally excellent? Is there a clear view on which skills the HR organization will need in the future?

• Upgrade technology: More than 40 per- cent of all companies are embarking on a

replacement of core HR technology with modern cloud systems. Is the organization far enough down that path and pushing mobile and app-enabled HR fast enough? Continue to leverage technology as a way to upgrade skills and move away from tradi- tional HR transactional work.

• Reimagine HR capability development: Companies should consider tailored devel- opment programs specifically designed to help HR professionals understand new roles and grow their capabilities to meet height- ened business expectations. Rotational programs in both directions—from HR to the business and from the business into HR—are a critical part of this effort.

Global Human Capital Trends 2016

Endnotes

1. Respondents’ “readiness” in HR skills was as- sessed using readiness index scores, which were computed as follows: We asked survey respon- dents to rate their organization’s readiness to ad- dress each of several issues (including HR skills) on a four-point scale: “not ready,” “somewhat ready,” “ready,” and “very ready.” These ratings were indexed on a 0–100 scale in which 0 rep- resents the lowest possible degree of readiness (“not ready”), and 100 represents the highest possible degree of readiness (“very ready”). An overall readiness index score was then calcu- lated for each issue using these scores.

2. Ram Charan, “It’s time to split HR,” Harvard Business Review, July–August 2014, https://hbr. org/2014/07/its-time-to-split-hr.

3. Lauren Weber and Rachel Feintzeig, “Compa- nies say no to having an HR department,” Wall Street Journal, April 9, 2014, http://www.wsj. com/articles/SB100014240527023048190045794 89603299910562.

4. Respondents’ “readiness” to address each area was assessed using the readiness index scores described in endnote 1. To obtain the 2016 readiness index score for “engagement and culture,” since engagement and culture were assessed separately in the 2016 survey, we took the average of the readiness index scores for engagement and for culture.

5. Josh Bersin, “Is there a HR skills crisis? Or does HR have an identity crisis?” Inside HR, De- cember 3, 2015, http://www.insidehr.com.au/ is-there-a-hr-skills-crisis/.

6. Josh Bersin, David Mallon, Brenda Kowske, and Karen Shellenback, High-impact HR: Building organizational performance from the ground up, Bersin by Deloitte, 2014, http://bersinone.bersin. com/resources/research/?docid=17743.

7. Airbnb, “Employee experience,” https://www. airbnb.com/careers/departments/employee- experience, accessed February 11, 2016.

8. Dani Johnson, Giving learners what they want: How Deckers Brands transformed its learn- ing and engagement organization to align with learner needs and support business goals, Bersin by Deloitte, 2015, http://bersinone.bersin.com/ resources/research/?docid=19396.

9. Based on client work.

10. Based on client work performed at Philips and Nestlé.

11. Katherine Jones, Fostering change and driving productivity: How the Commonwealth Bank of Australia leveraged analytics and mobile technology to spur efficiency, Bersin by Deloitte, 2015, http://bersinone.bersin.com/resources/ research/?docid=18735.

12. Based on client work performed at Telstra. For more on Telstra’s design thinking efforts, see Erica Volini, Art Mazor, Frank Schaefer, Akio Tsuchida, and Brett Walsh, “Design thinking: Crafting the employee experience,” Global Hu- man Capital Trends 2016, 2016, http://dupress. com/articles/employee-experience-manage- ment-design-thinking.

13. Stacia Sherman Garr and Karen Shellen- back, Energizing HR’s capability: Halliburton drives scalable and sustainable business value via its college of HR, Bersin by Deloitte, 2015, http://bersinone.bersin.com/resources/ research/?docid=19304.

14. Company executives, in conversations with Josh Bersin, December 2015.

15. Kim Lamoureux and Laci Loew, Twenty-five best practices for building a multilevel leader- ship development curriculum model, Bersin & Associates, 2011, http://bersinone.bersin.com/ resources/research/?docid=13959.

16. Garr and Shellenback, Energizing HR’s capabil- ity: Halliburton drives scalable and sustainable business value via its college of HR.

17. Company executives, in conversations with Josh Bersin, March 2015.

18. EDF Energy, “What do we do?,” https://www. edfenergy.com/about/how-we-operate, accessed February 10, 2016.

19. Chartered Institute of Personnel and Develop- ment, “CIPD Profession Map,” http://www.cipd. co.uk/cipd-hr-profession/profession-map/, ac- cessed January 14, 2016.

20. Company executives, in conversations with Josh Bersin, February 2016.

The new organization: Different by design

Authors Erica Volini, Deloitte Consulting LLP | [email protected]

As the leader of Deloitte Consulting LLP’s HR Transformation practice, Erica Volini is responsible for the overall strategy, financial performance, and delivery of HR Transformation services across the United States. Throughout her career, Volini has worked with organizations to determine how best to deliver HR services that enable global growth and drive enhanced profitability. Volini serves on Deloitte Consulting LLP’s board of directors and on the Human Capital management committee, and also sits on the governance committee for the firm’s campus recruiting efforts.

Art Mazor, Deloitte Consulting LLP | [email protected]

Art Mazor is Deloitte’s global leader for HR Service Delivery and a thought leader in HR transformation strategy. He collaborates with global clients to achieve business impact with a focus on transforming human capital strategies, programs, and services. With a balance of strategic planning, operating model and organizational design, process transformation, technology deployment, governance, and change management, Mazor helps generate tangible results through innovative and pragmatic solutions.

Frank Schaefer, Deloitte Consulting GmbH | [email protected]

Frank Schaefer leads Deloitte’s HR Transformation service line in Germany. With 20 years of human capital consulting experience, he has a strong track record in various aspects of HR transformation, including overall HR service delivery model/HR organization design, HR shared services design and implementation, HR outsourcing, and retained HR/HR business partner organization design and implementation. Schaefer is also the global Human Capital practice leader for the manufacturing industry.

Akio Tsuchida, Deloitte Tohmatsu Consulting Co., Ltd | [email protected]

Akio Tsuchida is the Human Capital leader in Japan. With more than 15 years of human capital consulting experience, he has rich expertise in total rewards and performance management, executive compensation, workforce planning, and talent management. Tsuchida has led large-scale business transformation projects related to cross-border mergers and acquisitions, post-merger integration, corporate restructuring, and globalization. He has a master’s degree in labor relations and human resources from Michigan State University.

Brett Walsh, Deloitte MCS Limited | [email protected]

Contributors Gary Johnsen, David Mallon, Pascal Occean, Amy Sobey, Michael Stephan, Nicky Wakefield, and Roberta Yoshida

Global Human Capital Trends 2016

The people analytics revolution is gaining speed. While HR organizations have been talking about building analytics teams for several years, in 2016 we see a major leap forward in capabilities. Businesses have recognized they need data to figure out what makes people join, perform well in, and stay with an organization; who will likely be successful; who will make the best leaders; and what is required to deliver the highest-quality customer service and innovation. All of this can be directly informed by people analytics. Companies are hiring people analytics staff, cleaning up their data, and developing models that help transform their businesses.

AFTER several years of discussing the need for analytics within the HR func- tion, last year’s Global Human Capital Trends report concluded that the drive for analyt- ics was “stuck in neutral.”1 Companies were investing heavily in HR systems replacement projects and talking about analytics, but few were actually making progress in this vital new business function.

This year, the situation has changed for the better. Driven by competitive pressures and the greater availability of more integrated systems, organizations are aggressively building people analytics teams, buying analytics offerings, and developing analytics solutions. Fully 77 percent

of all organizations believe people analytics is important. (See figure 1 for our survey respon- dents’ ratings of people analytics’ importance across global regions and selected countries.) And more than half (52 percent) of the organi- zations now rate themselves as excellent and 38 percent as adequate at conducting multi-year workforce planning.

The name of this trend—“people analyt- ics”—reflects the use of people-related data to improve and inform all types of management, business, and HR decisions throughout the company. The focus areas vary based on indus- try and specific business issues.

People analytics Gaining speed

• This year, the percentage of companies that believe they are fully capable of developing predictive models doubled, from 4 percent in 2015 to 8 percent in 2016. In 2015, only 24 percent of companies felt ready or somewhat ready for analytics; this year, that number jumped by one-third, to 32 percent.

• People analytics today brings together HR and business data from different parts of the business and is now addressing a wide range of challenges: analyzing flight risk, selecting high-performing job applicants, identifying characteristics of high-performing sales and service teams, predicting compliance risks, analyzing engagement and culture, and identifying high-value career paths and leadership candidates.

• Analytics technology is now available off the shelf, embedded in most ERP and talent management systems, engagement tools, text and semantic analysis tools, and recruitment and learning platforms.

The new organization: Different by design

http://dupress.com/articles/people-and-hr-analytics-human-capital-trends-2015/

What are companies doing? Examples of positive momentum can be found in a number of different areas:

Sales performance and recruiting

• Insurance companies have analyzed the profiles of top salespeople and now know that screening candidates for grade point average or academic pedigree is no longer considered a strong indicator of future sales performance.

• A high-tech company developed an ana- lytics model that accurately predicts job candidates who are likely to become “toxic employees” (those who lie, cheat, or com- mit crimes) and dramatically reduced this population among its hires by scrutinizing special parts of the interview process.

Productivity

• Software companies, retail banks, and man- ufacturers are looking at the characteristics of top salespeople, realizing that their per- sonal networks, how they work internally, and the time they spend with customers predict results much more accurately than the amount of sales training or experience.

• IT and HR departments are now looking at email metadata to understand why some people are more productive than others, then reducing the number of internal meet- ings to improve output.

• A large cosmetics manufacturer set up a “sales productivity center of excellence” in HR to study hiring patterns, training, com- pensation, and other people practices in the sales force to optimize productivity using HR and people-related data.

Global Human Capital Trends 2016

• A UK retailer found that by linking retail sales data to the recruitment of store managers, analytics improved profitability dramatically both at the store level and for the organization as a whole. In short, the data showed precisely how better leaders, higher offer acceptance rates, and reduced time to hire drove store profitability.

• Automobile companies are studying the patterns of unplanned absences to predict when people are likely to take a day off, pre- scheduling extra staff to make up for known periods of absence.

• The Ministry of Energy of the Government of Mexico is using a predictive workforce planning and analyt- ics model to identify current and future talent and skills gaps in critical oil and gas occupations over a 10-year horizon.2 The model leverages a number of adjustable macroeconomic variables such as oil price and exchange rates that correlate strongly to the demand and supply of skilled labor. Based on an understanding of these gaps in critical skills, the ministry is able to work proactively with multiple stakeholders to address them. Building off from this initia- tive, the ministry has expanded the use of workforce planning and analytics to cover other sectors it is responsible for, such as renewable energy and sustainability.

Retention

• A pharmaceutical company and a software company are now collecting data from LinkedIn and other social networks to pre- dict the “high-flight-risk” candidates among their high-potential employees.

• Companies like Deloitte Canada are experi- menting with smart badges, using them to gather data suggesting that offices with larger shared work rooms, more light, and more inter-company collaboration have higher retention and productivity.3

• MasterCard is developing predictive models directed at improving the employee experi- ence through a range of data sources. The company is analyzing patterns in people data that will allow decision makers to assume accountability for issues such as retention of high-potential employees and predicting attrition.4

Compliance and risk

• Banks are studying patterns of fraud and noncompliance, and can now pre- dict behaviors that will likely result in unethical behavior.

• A UK financial services company uses analytics to evaluate individual employees, spotting potential “rogue traders” and other compliance breaches as a part of proactive risk management.

• A large electric utility that recently had an accident analyzed employee feedback and engagement data and realized it could have predicted some of the problems before they occurred, and is now monitoring these data more regularly.

Driven by competitive pressures and the greater availability of more integrated systems, organizations are aggressively building people analytics teams.

The new organization: Different by design

Culture

• A team of organizational development experts and data scientists from eBay measures the strength and adoption of its cultural values through a combination of internal and external data metrics. To com- pare eBay employees’ views with external perspectives, the team also conducts the- matic analysis and natural-language-based analysis on news articles and Glassdoor to get a view of the external market perspec- tive of eBay’s culture.5

Each of these examples (and there are hun- dreds more) reveals the opportunity to take people data (some from HR, some from out- side HR, and some external to the company) to make better man- agement decisions. Google, Twitter, and most other tech firms have people analytics teams.6

Today’s people analytics teams often call them- selves the “employee listening” depart- ment. They bring together data from a range of sources, including core HR systems, employee engage- ment data, survey data, external data (from LinkedIn, Glassdoor, and other systems), and text data from employee comments. Then they analyze these data to understand company culture, find opportunities to improve reten- tion or performance, or diagnose management weaknesses or other operational problems.

What is driving the upsurge in people analytics adoption?

First, companies are now rapidly adopt- ing more integrated cloud-based HR systems, giving them an opportunity to look at their HR data in an integrated way for the first time. Nearly 40 percent of all global firms are either replacing or plan to replace their core HR sys- tems over the next two years.7

Second, people with analytics backgrounds are coming into HR.8 Companies are now bringing industrial and organizational psychol- ogists, statisticians, and analysts from other domains into HR; they are attracted to analyt- ics because it is an exciting, new, and still-fluid area. Data science careers are now hot profes- sions for college graduates and more people are coming to this profession than ever before.

Third, the vendor market is exploding. Nearly every ERP vendor and talent manage- ment provider now offers off-the-shelf analyt- ics tools, and many include embedded models. Some are starting to offer analytics services that provide repeatable solutions across clients. In addition, organizational data are more use- ful than before: This year, 42 percent of survey

respondents said the data supporting HR analytics were “good” or “very good”; only 17 per- cent still rated their data as “poor.”

Fourth, there is now a small army of people science experts, many of whom were pio-

neers at some of the early adopters, available to consult with large companies. They are sharing ideas and bringing expertise to companies new to the domain.

Finally, CEOs are reading about this topic in the business press, so they are pressing their CHROs to build this capability. For instance, a CHRO of one of the largest health care insur- ance providers is investing in a three-year, multi-million-dollar program just to clean up employee data, so the company can take a lead in analytics within four to five years.

While there has been much progress, there is much room for improvement. In this year’s survey, 62 percent of organizations rate them- selves as “weak” in using big data in recruiting. Some 55 percent of organizations similarly

We expect the trend toward analytics-driven HR to continue gathering strength over the coming year.

Global Human Capital Trends 2016

report being weak at using HR data to predict workforce performance and improvement.

We expect the trend toward analytics- driven HR to continue gathering strength over the coming year. As this happens, analytics will penetrate deeper within HR, extending beyond talent acquisition to learning and development and operations. In fact, the Global Human Capital Trends survey data show us that HR is now more convinced of people analytics’ importance than the business, with 82 percent of HR respondents viewing it as important or very important, compared to only 69 percent of business people viewing it as important or very important. HR has the opportunity to show the value and ROI that investment in analytics can bring, which will result in a will- ingness to invest further and spur acceleration in analytics capabilities.

Unsurprisingly, all this leads back to greater investment in HR, generating a virtuous cycle where higher ROI justifies greater analytics investment. The success of analytics comes down to measuring the value of people to an organization—and analytics is key to unlock- ing that value.

However, providing great data and insights is only part of the solution. The real value is in turning these insights into change that delivers

business value. The hardest part of people analytics is implementing the changes recom- mended by the models, which call for people analytics to be accompanied by sound change management practices. One large company recently discovered it was underpaying its high performers and overpaying its mid-level performers. It took several years to teach managers (and the organization itself ) that it makes business sense to offer a large raise for high performance and a middling raise for fair performance. The key is to invest simultane- ously in analytical skills and in interpretative and transformational skills to ensure that the insights deliver value to the business.

Lessons from the front lines

In September 2015, GE brought together all the digital and analytics capabilities across the company into one organization, GE Digital. At the same time, the organization put for- ward the goal to be a top 10 software company by 2020.9

Developing an integrated talent manage- ment strategy was critical in making the move from a center of excellence to a full-fledged business with ambitious goals in a competitive talent market. One of GE Digital’s initial focus

The new organization: Different by design

areas was strategic talent planning linked to learning and recruiting; the unit gathered fresh data in a rigorous process. This was combined with other GE people data to assemble a data set of more than 6,000,000 data points to use in a variety of talent decisions.

GE Digital has been able to complete robust talent planning by leveraging detailed informa- tion on what success looks like in terms of skill level, number, and location and by using pre- dictive modeling to identify gaps. The organi- zation’s strategies include recruiting as well as targeted training (when recruitment will not be able to meet needs), and these data have also informed acquisition strategies to help acquire specialized talent.

GE Digital has also developed a strong link between talent planning and learning. It uses data analysis and predictive models to support organizational design to inform hiring prac- tices, to identify reskilling needs, and to refash- ion leadership development programs—all areas of future focus for the GE Digital team.

The most critical success factors have been business involvement and employee trans- parency. The business has been instrumental in defining key capabilities and identifying learning requirements. Employees now under- stand the critical skills required for success in the organization and have been given tools to identify gaps and strengths as well as to develop needed skills, all of which have been positively received.10

Where companies can start

• Stay focused on business priorities: Avoid the problem of spending a great deal of time on a problem only to find later that it is not on the CEO’s agenda. Start with problems the CEO or senior business lead- ers care about, such as sales productivity, product quality, risk, growth, or customer retention. Spend time where the company makes money, and people analytics projects will rapidly pay for themselves.

• Build a single people analytics team: To embark on this effort, companies must recruit the right talent and/or integrate dis- parate analytics efforts—that is, employee engagement, recruitment analytics, learn- ing analytics, compensation analytics, and workforce planning. This is a key ingredient of successful analytics projects.

• Build a team that can consult: Remember that building a model alone will not solve a business problem. The analytics team should include people who also serve as a business partner or consultant, so they can engage directly with the business and help apply the findings to real interventions or management changes.

• Leverage analytics skills outside HR: Enlist the support of IT, marketing analyt- ics, and other analytics teams in the com- pany. Many of them are ready to join in this exciting effort.

• Join an external, industry-specific people analytics working group: There are now dozens of places HR professionals can meet with other companies to learn and explore this area.

• Explore new technologies: There are many tools in the market to explore. Teams should learn about new analytics vendors to find the right tapestry of technologies.

The success of analytics comes down to measuring the value of people to an organization—and analytics is key to unlocking that value.

Global Human Capital Trends 2016

• Invest in cleaning data: Do not let data management be your biggest barrier. The highest value in analytics comes after the company is running an integrated, valid, and reliable database. This effort may take time and involve IT, but it pays off.

• Focus on security, privacy, and anonym- ity: Many leading organizations define security policies as part of their people analytics governance early in the process.

BOTTOM LINE

Companies are no longer “stuck in neutral” in their deployment of people analytics. As analytics moves into the corporate mainstream, organizations that are still in the early stages of adopting technology and building teams with data skills risk being left behind.

In the not-too-distant future, it will become impossible to make any HR decisions without analytics. Indeed, analytics capabilities will be a fundamental requirement for the effective HR business partner.

HR departments are well-served to under- stand the complex issues surrounding data security, privacy, and identity protection.

The new organization: Different by design

Endnotes

1. Carl Bennett and Laurence Collins, “People ana- lytics: Stuck in neutral,” Global Human Capital Trends 2015, February 27, 2015, http://dupress. com/articles/people-and-hr-analytics-human- capital-trends-2015/.

2. Case study based on client work performed for the Ministry of Energy of the Government of Mexico.

3. Josh Bersin, Predictions for 2016: A bold new world of talent, learning, leadership, and HR technology ahead, Bersin by Deloitte, 2016, http://bersinone.bersin.com/resources/ research/?docid=19445.

4. Geetanjali Gamel (HR Workforce Analytics, MasterCard), in conversation with Nicky Wake- field, December 2015.

5. Margarita Constantinides (senior director, Tal- ent Analytics, eBay), in conversation with Ben Dollar, December 28, 2015.

6. Google and Twitter analytics teams, in conversa- tions with Josh Bersin, May 2015.

7. Katherine Jones, The buyer’s guide to select- ing HCM Software, Bersin by Deloitte, July 17, 2014, http://bersinone.bersin.com/resources/ research/?docid=17733.

8. Josh Bersin, “The geeks arrive in HR: People an- alytics is here,” Forbes, February 1, 2015, http:// www.forbes.com/sites/joshbersin/2015/02/01/ geeks-arrive-in-hr-people-analytics-is- here/#542b6d707db3.

9. Business Wire, “Creation of GE digital,” Sep- tember 14, 2015, http://www.businesswire.com/ news/home/20150914006029/en/Creation-GE- Digital#.Vfb33_nBzRY.

10. Heather Whiteman (GE Digital executive), per- sonal communication to the authors, February 16, 2016.

Global Human Capital Trends 2016

Authors Josh Bersin, Bersin by Deloitte, Deloitte Consulting LLP | [email protected]

Laurence Collins, Deloitte MCS Limited | [email protected]

Laurence Collins leads Deloitte’s HR and Workforce Analytics practice in the United Kingdom. He focuses on HR transformation, helping organizations develop measurement and analytic capabilities that create business value. From predictive technologies for managing workforce risks to simulations of process improvements, Collins helps organizations apply analytic approaches across the HR function through a concept known as “HR Intralytics.” Collins’s work includes tracking the value of this capability and linking the resulting business impacts back to HR performance improvement.

David Mallon, Bersin by Deloitte, Deloitte Consulting LLP | [email protected]

David Mallon is head of research for Bersin by Deloitte, setting strategy, ensuring high-quality efforts, and driving continuous innovation for the organization’s research team. He is the former steward for Bersin by Deloitte’s learning and development research practice and has been the primary force behind its work in continuous learning, learning cultures, high-impact learning organization maturity, and learning management systems. He is also central to developing thought leadership related to HR’s operating models, governance, and the evolution of key roles such as the HR business partner.

Jeff Moir, Deloitte Canada | [email protected]

Jeff Moir is a partner in Deloitte Canada’s Human Capital practice. With more than 20 years of financial services experience in both business strategy and human resources, Moir focuses on operating model design. He has assumed leadership roles on restructuring initiatives, enterprise and functional-level talent strategy implementation, organizational cost reviews, and merger integrations.

Robert Straub, Deloitte Consulting LLP | [email protected]

Robert Straub is a director in Deloitte Consulting LLP’s Human Capital practice. Since joining Deloitte more than 11 years ago, he has helped large global clients across various industries implement technology-enabled programs that have transformed their human resources organizations. Straub has led Deloitte’s HR Technology strategic planning practice, which is focused on connecting the latest HR technology capabilities with strategic business objectives. He is also leading Deloitte’s efforts to deliver workforce analytics solutions to clients.

Contributors Carl Bennett, Jen Cowley, Stavros Demetriou, Dave Fineman, Nicky Wakefield, Juan Vargas, and Van Zorbas

The new organization: Different by design

The all-digital world is changing how we live, how we work, and how business is organized and conducted. For HR and business leaders, this digital transformation poses two fundamental challenges. First, HR can help business leaders and employees shift to a digital mind-set, a digital way of managing, organizing, and leading change. Second, HR has the opportunity to revolutionize the entire employee experience by transforming HR processes, systems, and the HR organization via new digital platforms, apps, and ways of delivering HR services. Our discussion of this trend focuses on the second part of the digital HR challenge: how to reimagine HR and the employee experience in a digital world.

THE era of true digital disruption has finally hit HR, transforming the way HR delivers solutions to employees. With the founding of Workday in 2005, the acquisition of SuccessFactors by SAP in 2011, and the pur- chase of Taleo by Oracle in 2012, HR remains at the forefront of the move to digital and the cloud in the workplace. The barriers between work and personal life are dissolving through the use of mobile devices. Mobile has become the channel of preference for workers, giving organizations an opportunity to drive adoption of mobile HR technologies to an extent rarely seen with traditional HR platforms.

Imagine integrated apps that can manage time and attendance automatically; pinpoint every appointment and meeting location; deliver on-demand video learning to par- ticipants in a new project; send messages to a team when someone is running late for a meeting; monitor stress levels and recom- mend when it is time to take a break; and even review 401(k) plans and offer intelligent recommendations. This is the new vision for digital HR—integrating SMAC technologies to redefine the employee experience and make work easier, real-time, more productive, and more rewarding—while, we hope, improving work-life balance.

Digital HR Revolution, not evolution

• Today there are more than 7 billion mobile devices in the world,1 and more than 40 percent of all Internet traffic is driven by these devices.2 Yet HR teams remain far behind in deploying mobile solutions. Fewer than 20 percent of companies deploy their HR and employee productivity solutions on mobile apps today.3

• Designing mobile apps and considering the end-to-end user experience are new disciplines for HR, combining design thinking with apps, video, social, and mobile technologies.

• Digital HR, which brings together social, mobile, analytics, and cloud (SMAC) technologies, represents a new platform for improving the employee and candidate experience. While vendors are now delivering solutions, companies should build their own integrated digital HR strategies and programs.

The new organization: Different by design

As discussed in the design thinking chapter, HR teams are now rethinking the way people work and adding digital tools to make these solutions better. The impact of design think- ing may be most profoundly experienced with digital “appification.” Rather than building an onboarding system, a learning system, a per- formance management system, and a collabo- ration and coaching system, design thinking brings these solutions together in seamless apps that improve employee experiences across the board.

When these functions are moved to apps in a thoughtful way, HR can receive 10 times as many responses from employees compared to traditional systems.4 Employee produc- tivity can improve. Data quality can rise. Unsurprisingly, leading companies across all industries are embracing this trend.

DuPont, for instance, embarked on a major project to replace, simplify, and combine all of

its HR and learning systems into one inte- grated portal.5 Rather than offering a tradi- tional “self-service” application, the company developed a streamlined interface that has improved productivity.

Telstra, one of Australia’s largest telecom- munications companies, is using an app to transform its first-year employee experience. By using design thinking, studying the behav- ior and frustrations of first-year employees, and creating personas, Telstra developed an integrated onboarding program that dra- matically improved employee engagement and retention.6

Despite impressive results at these and other companies, too many HR depart- ments have yet to embrace this transforma- tion. Today, only 7 percent of companies use mobile technology for coaching, 10 percent for performance management, 8 percent for time scheduling, 13 percent for recruiting and

Global Human Capital Trends 2016

http://dupress.com/articles/employee-experience-management-design-thinking

candidate management, and 21 percent for leave requests.7 The power of digital transfor- mation is only beginning to emerge.

This new world of digital HR is arriving fast, but, according to this year’s survey, only 38 percent of companies are even thinking about it and only 9 percent are fully ready. Nearly three-quarters of companies, or 72 percent, believe this is an important priority and 32 percent define it as very important, so it will be a major area of opportunity for HR in 2016. (See figure 1 for our survey respondents’ ratings of digital HR’s importance across global regions and selected countries.)

Digital HR, however, is more than just building apps. It encompasses developing a new mobile platform with a wide range of apps built with cloud and analytics technol- ogy behind the scenes. This platform can be used for hundreds of apps: from time and attendance to employee wellness, to recruit- ment, collaboration, goal-setting, and more. The design is integrated, the user experience is location-aware, and integrated data are used to inform and make recommendations to users throughout the day.

Consider the difference between current HR service delivery models and digital HR, illustrated in figure 2, to understand how

radical and profound the digital HR transfor- mation will be.

This approach represents a completely new way of thinking about HR solutions. While the replacement of legacy systems into the cloud is a major part of the transition, so is the adoption of design thinking, integrated mobile app design, and real-time HR operations. The principles of behavioral economics, the use of analytics, and constant iteration on design also underpin these efforts. To succeed in this new paradigm, HR teams will likely have to partner with IT, adopt design thinking, use integrated analytics, and analyze vendor solutions care- fully. It represents a new world for HR technol- ogy and design teams, one that will open up new career opportunities and transform the impact HR has on the business.

Lessons from the front lines

Reliance Jio, the 4G telecommunications and digital services company headquartered in Mumbai and owned by Reliance Industries, began its employee launch of digital telecom services in early 2016.8 The company’s vision is to provide video-quality digital mobile Internet service to 1.2 billion customers across all 29 states and 7 union territories within India.

Figure 2. Differences between current HR service delivery models and digital HR

Current HR delivery Digital HR

Transactions and processes Integrated HR platform (policy, process, systems, operations)

Systems with web browser access Mobile-first apps

Paper-based forms moved to web forms Digital design

Process-based design Human-centered, experience-driven design

SLAs (service level agreements) Real-time (once and done)

HR (and shared) service centers Operations centers

Periodic reports Real-time interactive dashboards

Analytics add-ons Integrated analytics platform and dashboards

The new organization: Different by design

For several years, the company’s focus was on building out the network infrastructure; in late 2014, the focus turned to starting up the busi- ness operations and recruiting and onboarding employees across the country. As one of the largest start-ups in the world, Jio’s leader- ship crafted a strategy suited to the business’s growth, scale, and the current state of HR tech-

nology by designing a mobile-first, cloud-first, digital-powered approach to Jio’s HR strategy and launch.

The business goals for Jio are to build a national 4G network across 18,000 cities and towns in India to serve hundreds of millions of customers; deploy the largest start-up 4G net-

work in the world; hire and manage a work- force of 50,000; and orchestrate a national network of hundreds of thousands of retail- ers and distributors.

From the start, the HR strategy was based on an employee value proposition to support candidates, employees, and business manag- ers with an experience that would be easy to use, quick, and safe. The HR program was digital-first; it allowed recruiters, candidates, employees, business managers, and HR

staff to complete HR tasks and reporting by leveraging real-time apps and secure, cloud- based services using mobile devices.

Second, all HR processes, policies, and technologies (including SAP and a series of cloud apps such as Salesforce.com) were integrated into an HR platform to support the apps, reporting, and HR operations.

Third, with the goal of end- to-end digitization and real-time HR, the company is challenging itself to eliminate its shared ser- vices organization. Core activities were automated and streamlined to be conducted, reviewed, and approved in hours (in some cases, minutes) and not days. The HR platform is being run by an HR operations center tasked with

clearing all inquiries and exceptions on the day they are received while working with HR cen- ters of excellence and HR IT to continuously improve the platform.

Further, the HR platform and HR opera- tions center have been designed and built using an agile approach that included multiple releases of both the systems and operations center. This agile approach has enabled the HR process, policy, HR IT, and business teams to learn and build capabilities in the new digital HR environment.

Where companies can start

• Challenge HR to start with a digital-first HR strategy. The digital enterprise and digital HR are a revolutionary leap forward, not an incremental step. The combination of mobile and cloud solutions and the per- vasive access to smartphones as powerful as laptops and desktop computers of just a couple of years ago, are redefining how HR processes are designed, delivered, accessed, and operated. The shift to a mobile and platform way of thinking is at the forefront of this challenge.

The digital enterprise and digital HR are a revolutionary leap forward, not an incremental step.

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• Embrace design thinking. Social, mobile, analytics, and cloud tools are only useful if employees adopt them. HR must begin with employee needs and the user experience. Incorporating design thinking throughout the process will help companies maximize the impact of new digital technologies.

• Leverage an agile approach integrating HR, technology, employees, and business leaders in the process. HR has the oppor- tunity to use agile development—rapid development by integrated teams deliver- ing prototypes and solutions in succes- sive releases and waves—as a new way of operating in HR and supporting similar programs across the company. Unlike the traditional waterfall development process, agile development requires HR special- ists, system and app developers, designers, employees, and business leaders to work together as a team.

• Share digital strategies and experiences across the company: HR has the oppor- tunity to learn from early digital adopt- ers in the company, generally customer marketing and operations. A community of practice can share digital experiences and implementation learning across the company. HR can learn from the digital savvy across the company and, in turn, help develop the enterprise’s digital mind-set and capabilities.

• Imagine HR and the employee experience in real time: One of the biggest changes in moving to a digital HR strategy is the focus on real-time access, decision-making, and results. This involves a significant step beyond many recent HR efforts, which have focused on shared services and HR service centers and SLAs (service level agreements). Digital HR is also a call to automate many areas of HR. With every employee having a smartphone, HR teams can automate, streamline, and adopt more real-time and digital-first operations rather than process forms and transactions.

• Integrate analytics and reporting as part of the digital platform, not an add-on: Most HR teams today have dedicated teams that collect information from process and transaction systems for basic HR reports and analysis. Instead, HR management information should be an automated part of the HR digital platform. It should provide managers with real-time information and leaders with real-time analysis, decreasing the time spent on reports and increasing the time HR and business leaders spend on analyzing data and solving problems. Analytics and reports can be configured and integrated into a business intelligence layer of the HR platform, linking apps directly to leadership reports and analysis.

BOTTOM LINE

HR’s digital transformation begins with a change of mind-set within the HR organization, prioritizing connectivity, real-time operations, platforms, automation, and mobile-first. For many organizations, both in HR and across the enterprise, this is a revolutionary opportunity. The digital HR journey focusing on the employee and HR experience is one part of the larger digital HR challenge: to answer the question, “How can HR play a role in developing the overall digital enterprise strategy, organization, and culture?”

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Endnotes

1. Jason Dorrier, “There are 7 billion mobile de- vices on earth, almost one for each person,” Sin- gularity Hub, Singularity University, February 18, 2014, http://singularityhub.com/2014/02/18/ there-are-7-billion-mobile-devices-on-earth- almost-one-for-each-person.

2. Mary Meeker, “Internet trends 2015,” Kleiner Perkins Caufield Byers, 2015, http://www.kpcb. com/internet-trends.

3. Katherine Jones and Sally-Ann Cooke, Smart- phone support in talent and HR applications 2015, Bersin by Deloitte, 2015, http://bersinone. bersin.com/resources/research/?docid=18536.

4. Katherine Jones, Fostering change and driving productivity: How the Commonwealth Bank of Australia leveraged analytics and mobile

technology to spur efficiency, Bersin by Deloitte, 2015, http://bersinone.bersin.com/resources/ research/?docid=18735.

5. Based on client work performed at DuPont.

6. Louise Sporton (engagement lead, Telstra), per- sonal communication, January 2016.

7. Jones and Cooke, Smartphone support in talent and HR applications 2015.

8. Pankaj Doval, “Reliance Jio launches 4G for employees,” Times of India, December 27, 2015, http://timesofindia.indiatimes.com/tech/tech- news/Reliance-Jio-launches-4G-service-for- employees/articleshow/50345198.cms.

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Authors Michael Stephan, Deloitte Consulting LLP | [email protected]

Michael Stephan is the global leader for HR Transformation. A principal with Deloitte Consulting LLP, Stephan develops and integrates HR service delivery models across the operations and technology spectrum, with a targeted focus on optimizing the delivery of HR services. His global consulting experience includes HR strategy, HR operating model design and implementation, HR business process outsourcing (BPO), global technology deployment, and enterprise transition management.

Shinichiro Uzawa, Deloitte Tohmatsu Consulting LLC | [email protected]

Shinichiro Uzawa leads the HR Transformation practice in Japan. With more than 15 years of HR- related experience at both Deloitte and a major Japanese corporation, he has expertise in HR strategy, HR transformation, change management, and digital HR consulting, and boasts extensive experience in global HR transformation management and global HR cloud solution deployment. Uzawa also lectures and publishes on HR-related topics; recent publications include Work style transformation and As one: Individual action, collective power.

Erica Volini, Deloitte Consulting LLP | [email protected]

Brett Walsh, Deloitte MCS Limited | [email protected]

Roberta Yoshida, Deloitte Brazil | [email protected]

Roberta Yoshida is the Human Capital practice leader in Brazil and the Latin American leader for the HR Transformation practice. She has more than 15 years of experience in HR and strategic transformation consulting services, leading projects related to HR transformation and strategic compensation and talent management. Yoshida holds a master’s degree in organizations and human resources from the Pontifical Catholic University of São Paulo and studied business administration at the School of Economics, Business, and Accounting of the University of São Paulo. She is a native Portuguese speaker and is also fluent in English and Spanish.

Contributors Pooja Bajpai, Michael Gretczko, Nicky Wakefield, and Jannine Zucker

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From the increasing use of contingent freelance workers to the growing role of robotics and smart machines, the corporate workforce is changing— radically and rapidly. These changes are no longer simply a distraction; they are now actively disrupting labor markets and the economy.

THREE years ago, Deloitte introduced the concept of the open talent economy, predicting that new labor models—on and off the balance sheet—would become increasingly important sources of talent.2 Today, they are.

Granted, respondents to this year’s survey rated workforce management the least impor- tant of the trends we explored. (See figure 1 for our survey respondents’ ratings of work- force management’s importance across global regions and selected countries.) Nonetheless, rapid changes in the nature of the workforce, through new labor markets and models and through automation, present important chal- lenges for business and HR leaders.

Today, more than one in three US workers are freelancers—a figure expected to grow to 40 percent by 2020.3 This year’s survey con- firms that the contingent workforce has gone global. Fully 51 percent of executives in our

global survey plan to increase or significantly increase the use of contingent workers in the next three to five years, while only 16 percent expect a decrease.

Companies such as Airbnb and Uber embody this trend, but they are not the only organizations profiting from the “gig economy.” Companies in all sectors—from transportation to business services—are tapping into freelance workers as a regular, manageable part of their workforces. Cost structure is one factor driving this trend, with some companies opting to pay purchase orders instead of salaries. The avail- ability of talent is another factor; data scien- tists, for example, may not be willing to move to a company’s remote headquarters but could be engaged remotely and temporarily.

In addition to broader economic and social changes driven by the gig economy, new labor models are expanding beyond contingent

The gig economy Distraction or disruption?

• Almost half of the executives surveyed (42 percent) expect to increase or significantly increase the use of contingent workers in the next three to five years; 43 percent anticipate greater deployment of robotics and cognitive technologies. Three out of four executives (76 percent) surveyed expect automation will require new skills in the workforce in the next one to three years.

• The concept of “contingent workforce management” is being reshaped by the “gig economy”— networks of people who make a living working without any formal employment agreement—as well as by the increased use of machines as talent.

• New regulations that mandate pay for overtime, increase the minimum wage, and tighten rules for part-time status are becoming more important than ever, with a growing public policy debate over how to regulate and measure new labor models.1

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http://www2.deloitte.com/global/en/pages/human-capital/articles/open-talent-economy1.html

workers to include the rapidly growing integra- tion of robotics and cognitive technologies into the workforce. These automated “employees” represent a new form of talent that HR must be prepared to engage and manage.

Within the next three years, 42 percent of executives surveyed expect to increase the use of robotics and cognitive technologies. But, contrary to some news headlines, most organi- zations do not expect workers to be replaced by machines. In fact, 20 percent expect automa- tion to increase hiring levels, while 38 percent see no impact.

At an even more basic level, companies are struggling to understand who (and what) their workforces are composed of and how to man- age today’s incredibly diverse combination of worker types, including workers on and off the balance sheet as well as part-time, contingent, and virtual workers. Across all organizations, industries, and geographies, a new work and

social contract is emerging. Today’s HR orga- nization needs to adapt to these changes in the 21st-century workforce.

These new additions to the workforce, after all, work side-by-side with those on the bal- ance sheet. Many have been recruited through the procurement office rather than HR sys- tems. But all affect the company’s reputation and brand. How can HR manage and motivate all these types of workers?

Many HR teams struggle to understand the forces shaping today’s workforce, particu- larly when translating these new realities into attractive and cost-effective workforce prac- tices that comply with government regulations. According to this year’s survey, 71 percent of executives believe their companies are “some- what” or “very” able to manage contingent workers. The top three challenges cited include legal or regulatory uncertainty (20 percent), a corporate culture unreceptive to part-time

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and contingent staff (18 percent), and a lack of understanding among leadership (18 percent).

The move toward automation, robotics, and cognitive technology in the workforce also poses significant challenges. Three out of four executives in this year’s survey believe auto- mation will require new skills over the next several years. When asked about their organi- zation’s capabilities to redesign work done by computers to complement talent, only 13 percent of executives rated them “excel- lent”—34 percent (1 out of 3) described them as “weak.”

Consider some of the challenges: One major tele- com company measures its workforce as either 18,000 (payroll), 30,000 (includ- ing contractual workers), or 57,000 (including those who are building out its network)—a huge vari- ance, depending on how the workforce is measured. Uber has three million drivers under contracts that offer the company tremendous flexibility. Are they part of its workforce? And who will decide that ques- tion—regulators or the business itself ? Could benefits for these workers be allocated through micropayments, for instance?

These questions present a number of chal- lenges. HR can modify policies and programs, but when even a figure as simple as the number of workers at an organization is open to so much interpretation, HR’s task becomes highly complex.

In short, leading organizations are explor- ing how to make real the promise of the open talent economy. Fundamental questions con- front business and HR leaders:

• Who, where, and what is the workforce?

• How can HR, procurement, and IT col- laborate to plan and manage the 21st- century workforce?

• How can the best workers be attracted, acquired, and engaged for an optimal cost, no matter what type of work contract they have?

• How can companies leverage automa- tion and smart technologies to improve productivity and create more meaningful and engaging work where employees “race with—not against—machines”?4

There is no simple formula to help compa- nies figure out the optimal mix of talent, skills, and type of worker. Resolving this challenge remains a dream for the future, but that does not relieve organizations of the responsibility to understand and take control of this trend.

One approach is to address whether there are ways in which a blended workforce may be managed more consistently in the organiza- tion. Perhaps this push itself will help orga- nizations begin to understand and measure their total workforce and labor costs, rather than simply abandoning the task as HR focuses only on the full-time workforce. And how many people with responsibilities for tal- ent acquisition are proactively working with the CIO to ask if there are machines that can perform jobs?

Today’s disparate time collection, labor procurement, scheduling systems, and con- tingent workforce management solutions do not provide the necessary insights. Disjointed and owned by separate business functions,

At an even more basic level, companies are struggling to understand who (and what) their workforces are composed of and how to manage today’s incredibly diverse combination of worker types.

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these systems are tough to align with the new programs needed for the new workforce. Many of today’s applicant-tracking systems are in some ways merely automated filing cabinets. Without these insights, though, no one is truly managing the workforce.

Companies face a new and far more subtle competition for talent, especially as unem- ployment falls in some markets and voluntary turnover rises.5 Organizations will need new technologies, new ways of measuring costs, and even a new language of talent management for the 21st century.

Lessons from the front lines

The gig economy poses significant ques- tions and opportunities for companies and their workforce talent strategies.

First, in a growing number of industries, technology-enabled talent markets—operating through platforms—are offering new sources

of competition. Consider Uber and Lyft for transportation-for-hire services, Topcoder for programming, Handy for household repair projects, Tongal for ads and videos, Hourlynerd for consulting projects, and many others. Companies need to assess how to compete with firms that use talent plat- forms as their primary means of organizing their workforce.

Second, and perhaps more important: How can companies utilize and leverage gig econ- omy markets to complement their talent and workforce strategies?

One example is how companies are lever- aging their creative teams and traditional agencies with new, on-demand models. Tongal advertises itself as “the world’s first studio on demand,” and provides online markets and contests to connect businesses with creative talent around the world to produce ads, videos, music videos, and other products.6 Tongal’s corporate clients include some of the largest companies in the world: Johnson and Johnson, Dannon, LEGO, Ford, and Lenovo.7

To integrate models like Tongal will likely require procurement, business, and HR man- agers to work together to access and coordinate new models—like on-demand talent markets and crowdsourced competitions—with more traditional in-house teams and outside adver- tising and creative agencies.

A second example comes from Thomson Reuters, the global information services company. With 55,000 employees and 17,000 technologists, the company launched a crowd- sourcing model inside the company. The program posed technology challenges to the company’s engineers to solve problems in other Thomson Reuters divisions—breaking down internal silos and leveraging the insights of the company’s own internal network.8

Where companies can start

• Take a new view of 21st-century talent: Organizations must understand the open talent economy and their needs for different

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types of workers and automation over the medium term (3 to 5 years) and longer term (5 to 10 years). The process starts with an expansive workforce plan that proactively incorporates on- and off-balance sheet talent, as well as combinations of robot- ics, thinking machines, and new labor/ technology collaborations.

• Designate a “white space” leadership team for workforce and automation planning: Workforce planning for the new work- force is a “white space” exercise. Corporate technology, procurement, and business strategy teams should join HR to produce robust plans for different types of labor and technology combinations.

• Focus on acquisition—both of people and machines: Once companies have a sense of the specific outlines of their talent needs, they can focus on acquiring and engaging each segment of employees with the overall plan in mind. Sources of talent should include people that companies recruit and engage in different ways. Technologies

and machines can be used to complement employees on corporate payrolls.

• Broaden and sharpen the focus on pro- ductivity: Productivity, and its flip side, engagement, are being reimagined by new workforce and automation opportunities. These new workforce models and new combinations of talent and technology are critical for improving corporate productiv- ity. New workforce planning approaches integrating multiple workforce segments, automation, and cognitive technologies will enhance productivity and product and service quality.

• Develop new workforce and automation models that focus on engagement and the skills of your critical workforce: Increasing employee engagement is one of today’s most important workforce challenges. Companies today must learn how to use new workforce segments and technologies to improve the quality, meaning, and value of the work of their employees.

BOTTOM LINE

The design of the 21st-century workforce will present new challenges to HR, technology, and business leaders that require deeper levels of collaboration to develop solutions. The open talent economy and the new workforce-machine age are coming into focus, redefining “talent” to include people and machines working in different places under different contracts.9

This is not simply a distraction; it’s the beginning of a 21st-century workforce transformation. Leading companies are tackling the questions that need to be answered to compete successfully for talent in this new environment. Who and what will the workforce be composed of? How will it be acquired? How can its productivity be measured? How can the organization optimize the new mix of workers from different sources? Given that many segments of a workforce have an impact on products and customers, what are the appropriate ways to engage all of those segments? And who will lead these efforts?

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1. Dennis M. Mulgrew, Jr., “DOL announces pro- posed revisions to FLSA regulations doubling the minimum salary requirement for exempt employees,” National Law Review, July 2, 2015, http://www.natlawreview.com/article/dol-an- nounces-proposed-revisions-to-flsa-regulations- doubling-minimum-salary-require.

2. Andrew Liakopoulos, Lisa Barry, and Jeff Schwartz, The open talent economy: People and work in a borderless workplace, Deloitte Devel- opment LLC, 2013, http://www2.deloitte.com/ global/en/pages/human-capital/articles/open- talent-economy1.html.

3. Lauren Weber, “One in three U.S. workers is a freelancer,” Wall Street Journal, September 4, 2014, http://blogs.wsj.com/atwork/2014/09/04/ one-in-three-u-s-workers-is-a-freelancer/.

4. Erik Brynjolfsson and Andrew McAfee, Race Against the Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy (Lexington, Massachussets: Digital Frontier Press, 2011).

5. Robin Erickson, Jeff Schwartz, and Josh Ensell, “The talent paradox: Critical skills, recession, and the illusion of plenitude,” Deloitte Review 16, January 2012, http://dupress.com/articles/the- talent-paradox/.

6. Tongal, “Facebook homepage,” https://www. facebook.com/Tongalinc?_rdr=p, accessed Janu- ary 14, 2016.

7. Tongal, “Current projects,” https://tongal.com/ project/, accessed January 12, 2016.

8. Nicole Laskowski, “Thomson Reuters uncovers internal engineering talent with crowdsourcing,” TechTarget, April 2014, http://searchcio.techtar- get.com/opinion/Thomson-Reuters-flushes-out- internal-engineering-talent-with-crowdsourcing.

9. David Schatsky and Jeff Schwartz, Machines as talent: Collaboration, not competition, Deloitte, February 27, 2015, http://dupress.com/articles/ cognitive-technology-in-hr-human-capital- trends-2015/.

Endnotes

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Authors Jeff Schwartz, Deloitte Consulting LLP | [email protected]

A principal with Deloitte Consulting LLP, Jeff Schwartz is the global leader for Human Capital Talent Strategies and Marketing, Eminence, and Brand. A senior advisor to global companies, his recent research focuses on talent in global and emerging markets. He is a frequent speaker and writer on issues at the nexus of talent, human resources, and global business challenges.

Udo Bohdal-Spiegelhoff, Deloitte Consulting GmbH | [email protected]

Udo Bohdal-Spiegelhoff is the Human Capital practice leader for Germany. He is recognized in the market as a thought leader in change management, strategy execution, leadership, organizational development, large-scale facilitation, and HR advisory capabilities. He has led many complex global transformations such as large-scale reorganizations, HR and people strategy implementations, and post- merger integrations for clients in a variety of industries.

Michael Gretczko, Deloitte Consulting LLP | [email protected]

Michael Gretczko has more than 16 years of experience in business transformation and focuses on leading global, multifunctional initiatives for Fortune 100 companies. His consulting experience includes work on business strategy, cost reduction, service delivery and operating model transformation, shared services, and outsourcing. He helps clients develop enabling strategies, create new operating models, redesign processes, design and integrate enabling technologies, reduce operating costs, and improve the effectiveness of business operations. He also helps clients manage the change, communications, and training implications of business transformations.

Nathan Sloan, Deloitte Consulting LLP | [email protected]

Contributors Cathy Benko, Jen Cowley, Lisa Disselkamp, Robin Erickson, and Ina Gantcheva

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Executive editors

Bill Pelster Deloitte Consulting LLP [email protected]

Bill Pelster has more than 20 years of industry and consulting experience. In his current role, he is responsible for leading the Integrated Talent Management practice, which focuses on issues and trends in the workplace. In his previous role as Deloitte’s chief learning officer, Pelster was responsible for the total development experience of Deloitte professionals, including learning, leadership, high-potentials, and career, life fit. Additionally, he was one of the key architects of Deloitte University and a US Consulting board member.

Jeff Schwartz Deloitte Consulting LLP [email protected]

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Bersin by Deloitte research team David Mallon, vice president, head of research, Bersin by Deloitte, Deloitte Consulting LLP

David Mallon leads the Bersin by Deloitte research team. He has been the primary force behind much of Bersin by Deloitte’s past work in learning and development, which has covered topics including continuous learning, learning cultures, and high-impact learning organization maturity. He is also a key contributor to Bersin by Deloitte’s thought leadership related to HR’s operating model, governance, and the evolution of key roles such as the HR business partner. Mallon holds a BA in English literature from Emory University and an MS in digital media from the Georgia Institute of Technology.

Sarah Andresen, vice president, benchmarking research and data products, Bersin by Deloitte, Deloitte Consulting LLP

Sarah Andresen leads benchmarking research and the development of online tools, diagnostics, and assessments that serve the corporate membership programs at Bersin by Deloitte. Andresen has a broad background in product management, sales, marketing, research, and economics. She holds a master’s degree in economics from the University of California, Santa Barbara, and bachelor’s degrees in history and economics from California Polytechnic State University—San Luis Obispo.

Robin Erickson, vice president, engagement, retention, and acquisition research, Bersin by Deloitte, Deloitte Consulting LLP

Robin Erickson, PhD, directs Bersin by Deloitte’s talent acquisition, engagement, and retention research practice, where she draws on her deep experience in talent strategies consulting and related research for Deloitte’s Human Capital practice. Erickson holds a doctorate from Northwestern University in organizational communication and change, a master’s degree in communication from Northwestern University, a master’s degree in theology from Northern Seminary, and a bachelor of arts degree from the University of Chicago.

Stacia Sherman Garr, vice president, talent management research, Bersin by Deloitte, Deloitte Consulting LLP

Stacia Sherman Garr leads Bersin by Deloitte’s talent and HR research practices. She is responsible for Bersin by Deloitte’s research on human resources, talent strategy, integrated talent management, performance management, career management, diversity and inclusion, employee recognition, competencies, and workforce planning. Garr holds an MBA from the University of California, Berkeley, a master’s degree from the London School of Economics, and bachelors’ degrees in history and political science from Randolph-Macon Woman’s College.

Dani Johnson, vice president, learning and development research, Bersin by Deloitte, Deloitte Consulting LLP

Dani Johnson is vice president of learning and development research at Bersin by Deloitte. She has spent the majority of her career writing about, conducting research in, designing, and consulting on human capital practices. Johnson led the Human Resource Competency Study with the University of Michigan and six other professional organizations around the world, and co-authored the resulting book, HR Competencies: Mastery at the Intersection of People and Business (Society for Human Resource Management, 2008).

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Candace Atamanik, research manager, performance management research, Bersin by Deloitte, Deloitte Consulting LLP

Candace Atamanik is a research manager in Bersin by Deloitte’s talent management research practice. Her research focuses on talent strategy, talent management, performance management, and competencies. Atamanik’s work has been featured in Fast Company, The Atlantic, and Academic Leader as well as in Leader to Leader and Organizational Dynamics. She has a BS in psychology from Pepperdine University and an MS in industrial and organizational psychology from Florida International University, and was a PhD candidate in industrial and organizational psychology at Florida International University.

Madhura Chakrabarti, research manager, people analytics research, Bersin by Deloitte, Deloitte Consulting LLP

Madhura Chakrabarti, PhD, is a research manager at Bersin by Deloitte focused on talent analytics. She has a bachelor’s degree in psychology from the University of Delhi and an MA and PhD in industrial/organizational psychology from Wayne State University, Michigan. Previously, Chakrabarti worked at Dell, Ford Motor Company, and Aon Hewitt in various roles spanning people analytics, employee engagement, and pre-employment assessments.

Janet Clarey, research manager, learning and development research, Bersin by Deloitte, Deloitte Consulting LLP

Janet Clarey is a manager focused on learning and development research at Bersin by Deloitte, where she has done work in the areas of learning culture, high-impact learning organization maturity, and learning technology. She holds a BA in communications from the State University of New York at Oswego, a master’s degree in instructional design for online learning from Capella University, and has completed coursework toward a doctorate from Syracuse University in instructional design, development, and evaluation.

Andrea Derler, research manager, leadership research, Bersin by Deloitte, Deloitte Consulting LLP

Andrea Derler, PhD, leads the leadership and succession management research practice for Bersin by Deloitte. She holds a doctoral degree in economics (leadership and organization) and a master’s degree in philosophy. Prior to joining Bersin by Deloitte, she collaborated closely with organizations in the United States as well as Europe to conduct practice-oriented leadership research.

Denise Moulton, research manager, middle-market HR research, Bersin by Deloitte, Deloitte Consulting LLP

Denise Moulton is a research manager in mid-market research at Bersin by Deloitte. She has several years of practitioner experience, focusing on talent acquisition, talent management, and human resources operations. Previously, Moulton was a talent acquisition leader at Hasbro, Inc., where she provided recruitment management for global and commercial business units. She holds a bachelor of arts degree from the University of Rhode Island and is a certified Internet recruiter.

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Acknowledgements Global Human Capital Trends 2016 is the result of the efforts of a global team working over the past 12 months, including hundreds of contributors from across the global Deloitte network as well as the counsel and input of our clients.

Special thanks

Julie May for overall direction of the Global Human Capital Trends program throughout the year. You guided us in handling the hundreds of details and decisions, including managing dozens of country champions and an editorial team with a myriad of authors and contributors, that go into delivering a global survey and report. We appreciate your focus on the many activities needed to produce a global report of this scope and complexity. Your insights and editorial pen are evident in every chapter of the report.

The core Global Human Capital Trends team: Josh Bersin, Ben Dollar, Nicky Wakefield, David Mallon, Luke Monck, Jen Stempel, and Shrawini Vijay. Your dedication throughout the year, involving many early mornings and late nights, made this project possible. Your probing analy- sis and curiosity guided our thinking on this year’s trends, survey development and analysis, and report writing.

Ina Gantcheva, Elizabeth Chodaczek, Rebecca Griffiths, Lana Koretsky, Sarthak Mittal, and Antonio Romo Fragoso for leading the Global Human Capital Trends program management office.

Junko Kaji, Matthew Lennert, Sonya Vasilieff, Kevin Weier, and the remarkable Deloitte University Press team, led by Jon Warshawsky, for their editorial and design skills. You con- tinued to push us to sharpen our thinking and writing to produce (we hope) insightful and actionable messages.

Katrina Drake Hudson and Andrea Sacasa for leading our integrated marketing program, devel- oping a series of initiatives to share the global report and survey through a growing web of digital, traditional marketing, and social media channels. Thanks as well to Melissa Doyle for managing the public relations programs.

And last but not least, a special thank you to Brett Walsh and Jason Geller, the global and US lead- ers of our Human Capital practices. We are grateful for your support and encouragement every step of the way in producing this report.

Global survey and research team

Research leaders Shrawini Vijay, Ankita Jain, Rahul Kolhe, Mankiran Kaur, and Ekta Khandelwal

Research team Vasvi Aren, Alka Choudhury, Srishti Dayal, Rahat Dhir, Garima Tyagi Dubey, Mukta Goyal, Shivank Gupta, Bhumija Jain, Ankita Khaneja, Archit Khare, Sukhmani Lamba, Maansi Pandey, Gauri Paranjpe, Divya Patnaik, Deepika Sharma, Goral Shroff, Aparajita Sihag, Abhishek Tiwari

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Global Human Capital leaders

Brett Walsh Global Human Capital leader Deloitte MCS Limited [email protected]

Dimple Agarwal Global Organization Transformation & Talent leader Deloitte MCS Limited [email protected]

Michael Stephan Global HR Transformation leader Deloitte Consulting LLP [email protected]

David Foley Global Actuarial, Rewards, and Analytics leader Deloitte Consulting LLP [email protected]

Nichola Holt Global Employment Services leader Deloitte Tax LLP [email protected]

Jeff Schwartz Global Human Capital leader, Marketing, Eminence, and Brand Deloitte Consulting LLP [email protected]

Human Capital country leaders

Americas & Chile

Jaime Valenzuela Deloitte Audit y Consult. [email protected]

United States

Jason Geller Deloitte Consulting LLP [email protected]

Canada

Heather Stockton Deloitte Canada [email protected]

Mexico

Tomas Fernandez Deloitte Consulting Mexico [email protected]

Uruguay, LATCO

Verónica Melián Deloitte SC [email protected]

Argentina

Leonardo Pena Deloitte & Co. S.A. [email protected]

Americas

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Asia Pacific & China

Jungle Wong Deloitte Consulting (Shanghai) Co. Ltd, Beijing Branch [email protected]

Australia

David Brown Deloitte Touche Tohmatsu [email protected]

India

Sanjay Behl Deloitte India [email protected]

Japan

Akio Tsuchida Deloitte Tohmatsu Consulting Co. Ltd [email protected]

Korea

Kihoon (Alex) Jo Deloitte Consulting [email protected]

New Zealand

Hamish Wilson Deloitte [email protected]

Southeast Asia

Nicky Wakefield Deloitte Consulting Pte Ltd [email protected]

Asia Pacific

Brazil

Roberta Yoshida Deloitte Consultores [email protected]

Colombia

Beatriz Dager Deloitte Ases. y Consulto [email protected]

Costa Rica

Arturo Velasco Deloitte & Touche S.A. [email protected]

Dutch Caribbean

Maghalie van der Bunt Deloitte Dutch Caribbean [email protected]

Ecuador

Roberto Estrada Andeanecuador Consultores [email protected]

Panama

Jessika Malek Deloitte Consultores [email protected]

Peru

Alejandra D’Agostino Deloitte & Touche SRL [email protected]

Venezuela

Maira Freites Lara Marambio & Asociados [email protected]

Americas (cont.)

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EMEA

Ardie Van Berkel Deloitte Consulting BV [email protected]

United Kingdom

Anne-Marie Malley Deloitte MCS Limited [email protected]

Africa

Werner Nieuwoudt Deloitte Consulting Pty [email protected]

Austria

Christian Havranek Deloitte Austria [email protected]

Belgium

Yves Van Durme Deloitte Consulting [email protected]

Central Europe

Evzen Kordenko Deloitte Advisory s.r.o. [email protected]

CIS

Christopher Armitage CJSC Deloitte & Touche CIS [email protected]

Cyprus

George Pantelides Deloitte Ltd [email protected]

Denmark

Ylva Ingeborg Brand Beckett Deloitte Denmark [email protected]

Finland

Kirsi Kemi Deloitte Oy [email protected]

France

Philippe Burger Deloitte Conseil [email protected]

Guy Aguera Deloitte Conseil [email protected]

Germany

Udo Bohdal-Spiegelhoff Deloitte Consulting GmbH [email protected]

Greece

Petros Mihos Deloitte Business Solutions S.A. [email protected]

Ireland

Cormac Hughes Deloitte & Touche [email protected]

Israel

Zohar Yami Brightman Almagor Zohar & Co. [email protected]

Italy Lorenzo Manganini Deloitte Consulting SRL [email protected]

Kenya

Kimani Njoroge Deloitte Consulting Ltd [email protected]

Europe, Middle East, and Africa

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Luxembourg

Basil Sommerfeld Deloitte Tax & Consulting [email protected]

Middle East

Ghassan Turqieh Deloitte & Touche (M.E.) [email protected]

Netherlands

Petra Tito Deloitte Consulting BV [email protected]

Nordics

Eva Tuominen Deloitte Oy [email protected]

Norway

Eva Gjovikli Deloitte AS [email protected]

Poland

Magdalena Jonczak Deloitte Business Consulting S.A. [email protected]

Portugal

Nuno Portela Belo Deloitte Consultores, S.A. [email protected]

Spain

Enrique de la Villa Deloitte Advisory, S.L. [email protected]

Sweden

Jonas Malmlund Deloitte Sweden [email protected]

Switzerland

Sarah Kane Deloitte Consulting Switzerland [email protected]

Turkey

Tolga Yaveroglu Deloitte Turkey [email protected]

Europe, Middle East, and Africa (cont.)

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The new organization

Different by design
Organizational design

The rise of teams

Leadership awakened

Generations, teams, science

Culture

Shape culture, drive strategy

Engagement

Always on

Learning

Employees take charge

Design thinking

Crafting the employee experience

Growing momentum toward a new mandate

People analytics

Gaining speed

Digital HR

Revolution, not evolution

The gig economy

Distraction or disruption