Companies struggling to fill leadership pipelines

Citation

Haen, P. (2011), "Companies struggling to fill leadership pipelines", Strategic HR Review, Vol. 10 No. 4. https://doi.org/10.1108/shr.2011.37210daa.002

Companies struggling to fill leadership pipelines

Article Type: Strategic commentary From: Strategic HR Review, Volume 10, Issue 4

Thought leaders share their views on the HR profession and its direction for the future

Many companies are having trouble filling their senior leadership positions and planning their workforce needs for the future, according to a global report by The Boston Consulting Group (BCG) and the World Federation of People Management Associations (WFPMA), called Creating People Advantage 2010: How Companies Can Adapt Their HR Practices for Volatile Times (Strack et al., 2010).

The report is based on an online survey of 5,561 human resources and business-unit executives from 109 countries and numerous industries, supplemented by detailed, face-to-face interviews with more than 150 senior executives, mostly from multinational companies.

Challenges of talent management at leadership level

The report shows that on a global level, talent management needs are particularly critical at the leadership levels of the organization. Succession planning needs to be integrated with leadership development programs, and this practice has to be standardized. The challenge for HR is to bring talent management practices of executives to the next level in order to support business growth.

In addition, companies find it difficult to get a clear and accurate picture of the composition, age structure and capabilities of their people in order to undertake strategic workforce planning. Only 9 percent of companies surveyed deploy a sophisticated workforce supply-and-demand model. Rainer Strack, a coauthor of the report and a senior partner in BCG’s Düsseldorf office, says: “Strategic-workforce- planning capabilities such as advanced analytics and scenario simulations have a long way to go.”

Four critical HR issues

The report surveyed executives on 21 HR topics, of which respondents deemed the following four to be critical:

1. 1.

   Managing talent – identifying, attracting, and retaining the right people – continues to be perceived as the most important topic for companies’ futures. But corporate capabilities in this area have improved only slightly since the last (2008) global survey on HR topics.

2. 2.

   Improving leadership development has risen in perceived importance over the past two years. Of survey respondents 56 percent cited a critical talent gap for senior managers’ successors. In volatile times, leaders who can convey the company’s vision and motivate employees are invaluable. It is generally easier and more effective for homegrown talent to step into leadership roles. Yet, companies fill more than half of their executive positions from outside, suggesting that internal leadership-development programs, such as corporate “universities,” need to be improved.

3. 3.

   Strategically planning the workforce has moved higher on the agenda as companies return to growth after the economic crisis and recession. Companies need a clear and accurate picture of the composition, age structure and capabilities of their people. Executives rated current capabilities low in this regard. Business volatility and uncertainty increase the need to rely on advanced analytics, scenario simulations and other sophisticated workforce-planning levers.

4. 4.

   Employee engagement suffered during the past two years, as many companies resorted to layoffs and other cutbacks. The survey found that flexibility measures such as job mobility and flexible work arrangements can help improve engagement. Strengthening the corps of middle managers, who supervise the majority of employees, is another means of bringing engagement back.

Practices of high-performing companies

In terms of perceived HR performance, respondents who were asked which company has the best HR practices overwhelmingly chose Google, followed by Procter & Gamble and Microsoft.

Perceptions aside, the research sorted the responding companies by revenue and profitability over the past three years and then adjusted for industry-specific differences. Comparing the ranking of HR capabilities by high- and low-performing companies yielded several insights.

• •

  First, improving employee performance management and rewards was ranked the second-highest capability by high-performing companies, but only ninth by low performers.

• •

  Second, in general, HR departments are conducting too many initiatives, with mediocre outcomes. High-performing companies focus their efforts on fewer, more carefully chosen HR-related projects in areas such as recruiting and leadership development. Even when they have a strong capability in an important HR area, these organizations keep refining and experimenting to grow even stronger.

Pieter HaenPieter Haen is Secretary General of the World Federation of People Management Associations.

About the author

Pieter Haen studied labor law and international law (Tilburg University) in The Netherlands, following which he fulfilled his military service as secretary of the Court-Martial. He has worked in banking, fast moving consumer goods industries and retail in HR and general management jobs. Since 1990 he is founder and president of Duurstede Groep Strategic Executive HR Consultancy & Search. He is also president of the European Association for People Management and secretary general of the WFPMA. He is a co-author of Creating People Advantage 2010: How Companies Can Adapt Their HR Practices for Volatile Times. The full report can be downloaded at: www.wfpma.org Pieter Haen can be contacted at: pieterhaen@duurstedegroep.com