This year’s 11th Annual Global CEO Survey examines how CEOs perceive the business
environment in which they are operating, and how an increasingly connected world affects the
way their companies function and achieve success People issues remain a critical challenge
for the CEO. A staggering 89% agree or strongly agree that the people agenda is one of their
main personal objectives and where they are spending most of their personal time and effort.
CEOs are reporting that their businesses are being held back from growing and realising
strategic objectives because of issues relating to their people. Of the top three biggest threats
to business, the business environment and regulation are also significant, but people issues
are the only one of these three most significant barriers that businesses can control.
1. Talent attraction, retention and development is one of the greatest headaches for CEOs
In a competitive and uncertain environment - the right talent can mean the difference
between a business that fails and one that thrives. Businesses must be able to identify the
right talent with the agility needed to drive value in challenging conditions. More than six
out of ten CEOs believe they need to change their current talent strategy.
CEOs are recognising that existing and new generations of employees needs and
demands are evolving, and employers must work hard to earn their loyalty. CEOs are
looking to various methods within their organizations to both attract and retain. Many CEOs
(73%) are also increasing the remuneration they offer, but they are equally ready to use
more imaginative methods, which reflect the dynamism and complexity of modern working
life. These include:
- creating a more flexible working environment (76%)
- hiring and developing people from more diverse pools of talent (67%), and
- collaborating with networks of external specialists (66%).
The overwhelming majority of CEOs believe that the answer is in training and development
of the people within their organization. However, in the companies that were surveyed by
Saratoga (the PwC HR benchmarking platform), only 39% of the executive-level jobs were
awarded to the internal successors who had previously been designated to fill them when
those jobs fell vacant.
All CEOs recognize the importance of getting their people strategy right and the majority
are looking at internal methods to do this, but very few are measuring the direct impact that
people are having on their business objectives or measuring the success of these internal
programs.
2. The difficulties of managing people through change are blamed on middle and senior management.
In an environment of constant change (90% of CEOs have made up to eight major kinds of
changes in the way they operate in the last three years), the ability to mobilise people to
deliver change is essential. CEOs say they are confident that their leadership teams are
competent to drive change, but they do not see these efforts reflected in the results their
companies achieve. A considerable part of the blame for failing to realise the benefits of
major change programs lies with middle and senior management, but organisational
barriers, poor communications and internal politics are problems as well. A substantial 50%
of respondents say that lack of motivation on the part of middle managers is a major
obstacle, while 48% say that lack of change-management skills and experience at more
senior levels are serious barriers.
3. The HR function is not up to the job.
The ability to compete for talent is critical and the sort of skills that come with experience are
particularly hard to find, but few human resources functions are perceived to be sufficiently
effective in their approach. Only 43% of CEOs believe that their HR teams are equipped to
handle any change required to compete for talent. Four out of ten CEOs were unable to
answer this question at all, which perhaps indicates a perception that the HR function is a
service delivery function, and not a driver of strategy.
4. People issues - a barrier to successful M&As.
Three-quarters of CEOs believe that their main sources of competitive advantage are the
ability to adapt to change, first-rate customer service, and access to key talent. When
engaging in M&A activity, poor management of HR becomes a source of anxiety for 34% of
CEOs, and 30% are concerned about conflicting workforce expectations. More than one in
two CEOs heading companies with revenues in excess of $10 (€6.9) billion, worry about
handling cultural conflicts and capturing the value of the deals they undertake.
Key messages:
- CEOs need to revisit their people strategy and better understand the human
impact on the organisation through more sophisticated measurement and
evaluation techniques.
- CEOs need to change their approach to talent attraction and retention
strategies if they are to have the right skills in the business to be competitive in
the next decade. In addition, they need to look at the demands of the millennial
generation and understand whether their current incentive programs are
relevant for tomorrow’s world.
- CEOs need to put people at the centre of change in order to ’manage change
through people’. Understanding that strategies and objectives are delivered by
people and not by systems or processes, should mean that people are central
to any change management program. The reality is that the right people are
often engaged too late in the process, and at the management level they are not
fully bought into the vision.
Related Workforce Issue - Labour Laws
While CEO’s from many countries believe that taxation is one of the major regulatory
challenges facing business, an even greater number (42%) feel that labour laws are the
greatest challenge and an area in need of improvement. People represent the biggest
expense in most organisations so any reduction in unnecessary labour costs or ‘red tape’
could generate significant economic benefits. While the degree of emphasis varies from
country to country, many CEOs feel that businesses can benefit from taking more pro active
involvement with governments, designing labour regulations and influencing the content of
new regulation. Governments say that they would welcome more input from business before
legislation is introduced, but that business is not taking advantage of the opportunity.
For more information please visit our Human Resource Services or Executive Resourcing site.
