Global businesses are seeking new leadership models, speed, and new skills in the age of business agility, finds Deloitte survey

Published: 27 May 2013

Eighty-four percent of global business leaders and human resources (HR) executives say organizations must look for creative ways to develop new leaders, as traditional leadership models are not keeping pace with today's rapidly changing work environment. This is according to the Deloitte Touche Tohmatsu Limited (DTTL) Resetting Horizons: Human Capital Trends 2013 report.

The survey of over 1,300 organizations in 59 countries outlines 13 global trends that are driving critical business and human capital decisions. The report explores new approaches in HR, spanning from next generation leadership strategies and open talent economy to focusing on improving the execution of critical HR priorities. Key findings include:

• Faced with numerous challenges, 87 percent of business leaders expect organizations to demand more from their change initiatives by pursing customized strategies;
• To seize new growth opportunities, 82 percent of business leaders say boards are involving HR executives much earlier in the strategy planning process;
• Skill gaps and economic uncertainty are leading organizations to shift from recruitment to development;
• Organizations are continuing to prioritize areas such as talent, emerging markets and the HR organization.

"The survey results show that the human capital agenda is shifting to focus on global growth as businesses come out of the recession. Economic uncertainty is still part of the business landscape and companies are also shifting their center of gravity as they seek new growth opportunities in emerging markets," said Jungle Wong, Lead Partner, Human Capital, Deloitte Consulting in China.

He added China as one of the key emerging markets is playing an increasingly important role in human capital strategies. To address talent shortages in growth emerging markets, companies are more focused on developing local talent that can then be sent to other countries. In China, organizations are investing to create "global executives" who are developed in their countries and prepared for more senior positions in other developing markets throughout Asia and Africa.

Reviewing the country data for China, Mr. Wong cited that around 40 percent of Chinese companies are satisfied with their current human resources management structure and talent plan although it is difficult to come up with immediate solutions for some long-term problems, such as talent war and leadership development, which also trouble other companies in Asia and even globally.

Not surprisingly, 75 percent of Chinese companies perceive that they will continue to achieve business growth in 2013, but they have become more conservative about the level of business growth amid economic slowdown in China. "Another interesting finding is that Chinese companies admit that they are below the global standard in terms of human resources and talent development, but 22 percent of companies are confident that they are on par with world-class standard in some human resources aspects," he added.

Brett Walsh, Global Human Capital Leader, DTTL says: "Today's businesses are faced with unprecedented challenges including: generating profits in markets with flat or declining growth, establishing a presence in emerging countries to creating the next wave of disruptive innovation – and everything in between. Each of these challenges requires a unique kind of leader. One size does not fit all. Business leaders that successfully create more effective ways to retain and attract top talent as competition increases in the global work environment will reap the rewards in the bottom line."

There was a shared consensus among all survey respondents that five of the 13 trends identified in the study would become the top priorities for the business and talent leaders in the coming years. Jeff Schwartz, Global Leader for Marketing, Eminence, and Brand Human Capital, DTTL, says: "This is a significant finding in the study because the common view is that talent needs and practices vary from country to country. The fact that the results show that the top five trends are shared across all of the major economies is surprising. This demonstrates the increasingly global focus of organizations."

The top five key trends outlined in the report by Schwartz are: next generation leadership; accelerating organizational change; the war to develop talent; boards are changing the HR game; and transforming HR to meet new business priorities:

1. Next generation leadership
   The majority of organizations (84 percent) say that developing future leaders is relevant now and in the next three years, but organizations must seek a new leadership model for the age of agility. "Although there is clear focus on developing the next generation of leaders globally, HR executives still need to develop a different approach around development. These strategies must be specific to the business. It's pervasive and organizations must commit to getting the best results."
   
   
2. Accelerating organizational change
   Eighty-seven percent of respondents see the way in which organizations view change as a top trend. "In today's fast-paced environment, organizations need to adopt a new way of looking at change and become more results-orientated."
   
   
3. The war to develop talent
   Eighty-six percent of respondents reported the shift to development and upgrading skills as a critical trend. "As businesses struggle to fill critical positions at many levels, companies are putting renewed focus on building capabilities, not just finding them."
   
   
4. Boards are changing the HR game
   Eighty-two percent of respondents say a growing number of boards are focusing on the role and impact of talent on business performance and risk. This is a step away from the previous focus of boards which was centered on CEO succession and setting compensation for the most senior executives. "Today, organizations know that developing a strategy without considering the talent dimensions creates risks. Boards are recognizing that a business strategy often is a talent strategy."
   
   
5. Transforming HR to meet new business priorities
   Eighty-five percent of respondents indicated that organizations are developing HR capabilities that will not only support the business, but enable business strategy. "To fulfill its new role in accelerating business growth, organizations are using HR transformation to design HR and talent systems that can work across geographic boundaries, creating a framework that is flexible enough to support different business models."