Global CEO Survey 2008 Key Human Resource Issues Arising

This year’s 11th Annual Global CEO Survey examines how CEOs perceive the businessenvironment in which they are operating, and how an increasingly connected world affects theway their companies function and achieve success People issues remain a critical challengefor the CEO. A staggering 89% agree or strongly agree that the people agenda is one of theirmain 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 realisingstrategic objectives because of issues relating to their people. Of the top three biggest threatsto business, the business environment and regulation are also significant, but people issuesare 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 differencebetween a business that fails and one that thrives. Businesses must be able to identify theright talent with the agility needed to drive value in challenging conditions. More than sixout of ten CEOs believe they need to change their current talent strategy.CEOs are recognising that existing and new generations of employees needs anddemands are evolving, and employers must work hard to earn their loyalty. CEOs arelooking 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 usemore imaginative methods, which reflect the dynamism and complexity of modern workinglife. 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 developmentof the people within their organization. However, in the companies that were surveyed bySaratoga (the PwC HR benchmarking platform), only 39% of the executive-level jobs wereawarded to the internal successors who had previously been designated to fill them whenthose jobs fell vacant.

All CEOs recognize the importance of getting their people strategy right and the majorityare looking at internal methods to do this, but very few are measuring the direct impact thatpeople are having on their business objectives or measuring the success of these internalprograms.

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 ofchanges in the way they operate in the last three years), the ability to mobilise people todeliver change is essential. CEOs say they are confident that their leadership teams arecompetent to drive change, but they do not see these efforts reflected in the results theircompanies achieve. A considerable part of the blame for failing to realise the benefits ofmajor change programs lies with middle and senior management, but organisationalbarriers, 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 majorobstacle, while 48% say that lack of change-management skills and experience at moresenior 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 areparticularly hard to find, but few human resources functions are perceived to be sufficientlyeffective in their approach. Only 43% of CEOs believe that their HR teams are equipped tohandle any change required to compete for talent. Four out of ten CEOs were unable toanswer this question at all, which perhaps indicates a perception that the HR function is aservice 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 theability to adapt to change, first-rate customer service, and access to key talent. Whenengaging in M&A activity, poor management of HR becomes a source of anxiety for 34% ofCEOs, and 30% are concerned about conflicting workforce expectations. More than one intwo CEOs heading companies with revenues in excess of $10 (€6.9) billion, worry abouthandling cultural conflicts and capturing the value of the deals they undertake.

Key messages:

CEOs need to revisit their people strategy and better understand the humanimpact on the organisation through more sophisticated measurement andevaluation techniques.
CEOs need to change their approach to talent attraction and retentionstrategies if they are to have the right skills in the business to be competitive inthe next decade. In addition, they need to look at the demands of the millennialgeneration and understand whether their current incentive programs arerelevant for tomorrow’s world.
CEOs need to put people at the centre of change in order to ’manage changethrough people’. Understanding that strategies and objectives are delivered bypeople and not by systems or processes, should mean that people are centralto any change management program. The reality is that the right people areoften engaged too late in the process, and at the management level they are notfully bought into the vision.

Related Workforce Issue - Labour Laws

While CEO’s from many countries believe that taxation is one of the major regulatorychallenges facing business, an even greater number (42%) feel that labour laws are thegreatest challenge and an area in need of improvement. People represent the biggestexpense in most organisations so any reduction in unnecessary labour costs or ‘red tape’could generate significant economic benefits. While the degree of emphasis varies fromcountry to country, many CEOs feel that businesses can benefit from taking more pro activeinvolvement with governments, designing labour regulations and influencing the content ofnew regulation. Governments say that they would welcome more input from business beforelegislation 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.