97% of Irish business leaders believe that redesigning the organisation is a critical priority for 2016
Human Capital Trends 2016
Irish leaders give their HR and talent programmes a C for overall performance
Largest ‘capability gaps’ identified in Irish businesses are in Digital HR and People Analytics
Responding to disruptive changes in digital technology, business models, regulation, and workforce demographics, 97% of Irish business and HR leaders have identified the critical need to redesign their organisations to meet business demands. This is according to Deloitte’s fourth annual report ‘Global Human Capital Trends 2016: The new organisation, different by design’ which reveals the top trends shaping the human capital agenda.
Overall, in line with last year’s findings, Irish business leaders give their HR and talent programmes a C grade for overall performance, slightly above their global peers, but still indicating room for improvement. 43% of respondents believed that their programmes were good, while 29% rated them as adequate. Findings also indicate that those planning to increase HR investment in 2016 has dropped 17% since 2015 – from 68% down to 51%, suggesting an increased requirement for HR to focus their investment on strategic HR and demonstrate return on investment.
Top Irish Trend: Organisation structure – the rise of teams
Corporate leaders in Ireland are turning a more focused eye toward adapting their organisation’s design to succeed in today’s market place. While 97% of Irish businesses have ranked organisation structure as the top trend this year, only six in 10 businesses are ready to respond. Furthermore, only 19% of executives surveyed in Ireland believe that their companies are ready to effectively redesign their organisation. As the focus of organisational structure moves towards a ‘network of teams’, only 32% of leaders feel expert at building cross-functional teams.
Commenting on the findings, Cormac Hughes, Partner, Human Capital, Consulting, Deloitte said: “Teams are becoming increasingly important as we’re seeing a shift from top-down hierarchy to a network of teams in order to deliver faster results. Demographic upheavals have made the workforce more diverse, demanding a focus on inclusion and shared values to bring people together. Millennials now make up more than half of the workforce, bringing with them a high expectation for rewarding, purposeful work experience, constant learning, development opportunities and dynamic career progression.”
In order to address the challenge of organisation structure, Irish companies need to consider eliminating organisation levels, developing teams of experts that can be positioned to focus on specific projects or challenges, and leveraging contingent workers. Another crucial element to successful change in organisational structure is rethinking performance management to put teamwork high on the agenda. The team-oriented approach to performance management focuses on frequent check-ins between team leader and team member, coaching and mentoring, and regular pulse surveys – a continuous and current measure of the conditions that leads to high performance.
Leadership remains a top challenge for Irish businesses
For the fourth year running, leadership has been identified as a top priority for Irish organisations and emerges as the second most important trend in this year’s survey. 94% of Irish leaders rate it as important and almost half (49%) report that they’re not ready to address it. With organisations becoming increasingly team-centric, the workforce becoming more diverse, technology driving fast-paced change, and business challenges becoming more global and intricate, traditional top-down leadership and training programmes are not delivering in this new world of work. This indicates a need for Irish organisations to raise the bar and explore new approaches to leadership development. A focused and targeted approach to growing leaders is crucial – identifying potential leaders earlier in their career, accelerating their development and tapping into new leadership cohorts such as Millennials.
Capability gaps identified in Digital HR and People Analytics
Amongst the trends identified in the study, Digital HR and People Analytics, which eight in 10 respondents cited as priorities, were the areas identified with the largest capability gaps.
Digital HR brings together social, mobile, analytics, robotics and cloud technologies and represents a new platform for improving both employee and job candidate experiences in line with their expectations of an employer. Less than a quarter (24%) of Irish respondents feel ready to address the Digital HR issue. The gap in this area for Irish companies is considerably higher than the gap identified globally – 57% compared to 41%.
Only 19% of companies are ‘ready’ for People Analytics, down a third from last year. In 2015, People Analytics was noted as a trend to watch, and while the topic has emerged as the biggest challenge for Irish organisations in terms of current capability gaps this year, the area is still not seen as one of the most important trends for Irish businesses, despite analytics being a significant resource for HR to demonstrate return on investment and influence key business decisions.
Valarie Daunt, Director, Human Capital, Consulting, Deloitte commented: “It’s vital that Irish companies embrace digital change across all functions of the business – HR is no different. Its role is important in supporting business leadership to succeed in a complex and disruptive business environment; to do so effectively, however, it too must be fully prepared to embrace change. HR’s digital transformation needs to begin with a change of mindset by prioritising connectivity, real-time operations, cloud technologies, robotics and automation, and mobile-first. HR need to focus on the employee and leadership experience. IT must also develop capabilities in People Analytics, which provides HR professionals with the opportunity to provide valuable and unique employee insights to solve critical business issues which can ultimately improve the business as a whole and bring benefits across all functions.”
Other top trends identified in the report include:
Engagement - 93% of respondents cited engagement as an important issue, particularly in the war to attract and retain talent. As the workplace becomes more diverse, organisations need to develop tools to understand engagement within their organisations and develop programmes to engage their employees and provide a sense of purpose.
Shape culture: Drive strategy - Culture remains integral to Irish companies with 92% citing this as an important or very important issue. In the 2016 results, the percentage of executives who believe their companies are driving the ‘right culture’ is only 12%, demonstrating a need for organisations to identify and develop their unique culture as a competitive talent advantage.
Learning: Employees take charge - 83% of Irish executives rated learning as important or very important for their businesses. The focus on learning is a key driver for a strong workplace culture and employee engagement, forming part of an organisation’s competitive employee value proposition.
About the survey
More than 7,000 business and HR leaders participated in the Global Human Capital survey. They represent businesses of varying sizes across a range of industries in over 130 countries. This special excerpt, the Ireland Human Capital Trends report, is based on results from 135 Irish respondents, and summarises the trends and priorities of HR and business leaders across the country. This report is designed to complement the Deloitte 2016 Global Human Capital Trends report. The reports are available at www.deloitte.com/ie.
*The Human Capital Capability Gap Index
Deloitte Human Capital Capability Gap Index is a research-based index that shows HR’s relative capability gap in addressing a given talent or HR-related problem. It is computed by taking an organisation’s self-rated readiness and subtracting its urgency, normalised to a 0–100 scale. For example, if an organisation feels that an issue is 100 percent urgent and it also rates itself 100 percent capable and ready to address the issue, the capability gap would be zero. These gaps, which are almost always negative, can be compared against each other.
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