Deloitte study: 73 percent report C-suite isn’t working together despite need for increased collaboration on human capital challenges
Organizations face skills gaps, workplace shifts, a more vocal and empowered workforce, and societal call to action, as nearly three-quarters of executives rate AI as a critical issue
Published: 4 April 2018
Amid concerns about automation, the need for new skills, an aging workforce and tightening labor markets, the make-or-break issue facing companies this year is the need for realignment among the C-suite to focus on business’ evolving role in society. In its 2018 Global Human Capital Trends report, “The Rise of the Social Enterprise,” which can be viewed via its digital-first, progressive web app on mobile, tablet or desktop, Deloitte also examines the increasing expectations of the individual and the breathless pace at which technology is shaping organizations’ human capital priorities.
“As society grapples with daunting demographic, technological and social challenges, people want business leaders to fill the gap, but our research shows they have a long way to go,” said Erica Volini, principal, Deloitte Consulting LLP, U.S. human capital leader. “This year’s report is a wake-up call for organizations to look beyond their own four walls and reimagine their broader roles in society. Integrating the C-suite to build a more social enterprise will be a differentiator for businesses to attract the right talent, drive customer loyalty and sustain long-term growth.”
With more than 11,000 HR and business leaders weighing in, this year’s Global Human Capital Trends report is the largest longitudinal survey of its kind. Respondents overwhelmingly point to the need for a symphonic C-suite — a team-based, cross-disciplinary approach to tackling complex issues — with 85 percent calling this trend important or very important. Survey results show companies where C-suite executives regularly collaborate are one-third more likely to be growing 10 percent more than companies whose leadership operates in siloes. Despite being necessary to advance the enterprise, 73 percent say their executives do not regularly collaborate.
“The majority of China's1 respondents recognise the importance of collaboration among C-suite executives within their organizations yet only 53 percent of them are ready to drive collaboration, meaning that more needs to be done to overcome the root causes of critical functions working in silos which will then lead to a more cooperative corporate culture. At present, China CXOs tend to manage their functions independently and only 18 percent of respondents said that their CXOs would collaborate on long-term interdependent work on a regular basis,” said Jungle Wong, Partner, Deloitte China, Deloitte Asia Pacific Human Capital Leader.
Filling society’s leadership vacuum
Increased transparency and heightened political awareness have drawn widespread attention to business’ role in society as a driver of change. Organizations find they are increasingly expected to exercise their ability to do social good, both externally for customers, communities and society, as well as internally for their employees. True social enterprises must take a total stakeholder approach to pressing public issues to maintain reputation and relevancy.
With more pressure on businesses to be good citizens and engineer solutions to critical social challenges, citizenship must be a core part of an organization’s identity and mission. In fact, 77 percent of survey respondents cited citizenship as important or very important. According to the “Deloitte Millennial Survey 2017,” millennials’ high expectations for corporate responsibility is a strong contributor, with 76 percent regarding business as a force for positive social impact. Despite the emerging link between social impact and companies’ financial performance, only 18 percent of respondents say citizenship is a top priority in corporate strategy. Thirty-four percent have few or poorly funded citizenship programs, and 22 percent are not focused on this at all.
“Corporate citizenship is now a CEO-level strategy and critical to a company’s bottom line,” said Josh Bersin, principal, Deloitte Consulting LLP, and founder and editor-in-chief of Bersin. “It’s not about check-the-box CSR initiatives, but integrating citizenship, fairness, inclusion, and purpose as core values across work practices. Customers and employees alike are holding companies to higher standards than ever before and rewarding companies who demonstrate socially-conscious behavior with unwavering loyalty.”
In China, respondents held mixed views about the commitment and maturity of their social responsibility programs, although over 50 percent believed that their organizations are making greater social impact when compared to five years ago. The survey revealed that only 11 percent of respondents suggested social responsibility as one of their top corporate priorities, which is indicative of further room for improvement for the awareness of good corporate citizenship in the country.
Internal and external social forces are also driving attention to the aging global workforce. Extended life expectancies raise questions on how long careers will last and how aging workers will impact economies and public policy. Fifteen percent of survey respondents report that their organizational perspective is that older employees are getting in the way of rising talent. Despite the aging global workforce and the competitive advantages older talent offers, 49 percent of respondents indicate their companies have done nothing to help older workers find new careers as they age, and another 15 percent say older workers are viewed as an impediment to rising talent. However, the aging workforce remains an untapped resource of experience and knowledge for social enterprises to use to their advantage.
As constituencies look to how companies treat their own employees, tackling the alternative workforce takes center stage for socially-conscious organizations. By 2020, 37 percent of organizations expect a growth in contractors, 23 percent in freelancers, and 13 percent in gig workers. Despite this anticipated growth, only 16 percent said they have an established set of policies and practices to manage this variety of worker types. It is critical to successfully implement hybrid workforce strategies because they can have a significant impact on an organization’s employment brand and external reputation.
The power of the individual requires a holistic approach to jobs and careers
In the past year, organizations have become laser-focused on how automation induced job shifts will impact individuals. The Deloitte research shows that more than 4 in 10 companies believe automation will have a major impact on jobs, and 61 percent are now actively redesigning jobs around AI and robotics. Additionally, 72 percent of HR and business leaders rated the topic of AI as important or very important.
In China, research indicates the growing adoption of AI/robotics, where over half of respondents claimed that their organisations are currently using chatbots, machine learning and automation at work. Of this group of China respondents, 50 percent report using AI/robotics to actually replace repetitive tasks with the other 50 percent claiming to drive efficiency and work restructuring through people and robots collaboration.
Against this backdrop, companies and individuals realize the traditional career model is becoming defunct. Forty-seven percent of those surveyed consider building new career models and skills as very important. More than 54 percent have no programs in place to build the skills of the future, and only 18 percent feel they give employees opportunities to develop themselves. Espousing their role as drivers of change in the social enterprise, companies need to work to develop and implement robust solutions to decrease the growing skills gaps.
In addition to investing in employees’ professional development, organizations must also rethink how they invest in their employees on a personal level. Forty-three percent of those surveyed say well-being reinforces their organization’s mission, 60 percent say it improves employee retention, and 61 percent say it improves productivity and bottom-line results. However, according to Bersin research, only 3 percent of companies think their reward offerings are very effective at motivating talent. In a new social enterprise, companies must explore more frequent rewards and other incentives like vacation time or student-loan forgiveness.
“Personalized incentives and well-being strategies are key differentiators in talent acquisition and retention, particularly in a tight labor market,” said Volini. “Once-a-year reviews and bonuses are table-stakes in today’s enterprises. Expanding rewards and well-being strategies is critical for the C-suite if they want to attract and retain the right individuals.”
Leveraging technology for sustainable growth
With the deployment of AI, robotics, automation, and people analytics showing no signs of slowing down, companies are reconciling a demand for human skills and the need for increased productivity. While 72 percent of respondents see this area as important, only 31 percent feel ready to address it.
“Automation is here to stay and will improve scale, speed and quality,” said Brett Walsh, global human capital leader, Deloitte Global. “But it’s important to remember that as routine work is automated, new jobs will be created — jobs that are more service-oriented, interpretive, social, and play to our essential human skills. Only companies whose C-suite embraces this transformation and redesign how work gets done to leverage these skills will be able to stay a step ahead of their competition.”
Executives anticipate a growing requirement for complex problem-solving (63 percent), cognitive abilities (55 percent), and social skills (52 percent). To that end, 70 percent of respondents believe workers will spend more time on collaboration platforms in the future and 67 percent anticipate a growth in “work-based social media.” As a flood of new workplace communications tools augments team-based work, 47 percent of organizations cite the productivity of the hyperconnected workforce as a very important issue.
As technology permeates the workplace, people analytics is at the top of executives’ minds, with 84 percent of respondents rating it as important or very important, while only 10 percent of respondents feel very ready to deal with this challenge. With 64 percent of companies actively managing legal liability related to their organization’s people data, only 22 percent have excellent processes to safeguard this data, exposing them to additional risks that can threaten their status as a social enterprise if not proactively managed.
1 "China" herein refers to the Chinese Mainland and Hong Kong SAR