Research and results

Citation

Nolan, S. (2012), "Research and results", Strategic HR Review, Vol. 11 No. 4. https://doi.org/10.1108/shr.2012.37211daa.010

Research and results

Article Type: Research and results From: Strategic HR Review, Volume 11, Issue 4

A look at current trends and data

Sara Nolan

Story 1

HR issues among business leaders’ top concerns

A survey by KPMG reveals that the economic downturn has elevated “people matters” to the top five concerns for business leaders across Europe and the Middle East. KPMG’s Business Leaders Survey – based on the views of 3,000 business leaders across 31 countries – suggests that managing and retaining the right people within the organization is critical for one in four senior executives (24 percent). It is an issue only beaten to “top spot” in the list of priorities by concerns over cash flow, with business leaders focusing on how they can change operations to become cost efficient (43 percent), improve cash management (32 percent), exploit growth opportunities (30 percent) and prepare for major business model changes (25 percent) dominating thoughts in the boardroom.

Anna Marie Detert, director in KPMG’s People and Change consulting practice, says:

Last year, people issues didn’t even figure as a top ten priority for global business leaders; this year they rank in fifth place. The simple fact is that boardrooms have realized that they cannot afford to lose good people. Their major challenges, as our survey proves, are cost efficiencies, improving cash management and finding new avenues for growth – yet each of these hinges on identifying new people capabilities to deliver on revised business models.

Focus on motivating top talent

Asked what managing and retaining top talent actually means, respondents to the survey suggest that “motivating people is their highest priority” (43 percent). One-third (30 percent) also claim that offering development opportunities to their key people is critical. Given concerns over cash management, it is telling that just 12 percent still focus on pay and reward as a retention tool.

Anna Marie Detert comments:

Clearly, lessons have been learned from past recessions. Without high-potential future leaders and individuals with business critical skills, it is simply not possible to drive through important initiatives that can restore or improve an organization’s economic status. This fact is further validated by the 90 percent of business leaders who do not prioritize cutting the cost of the workforce.

For more information

Full findings from KPMG’s 2012 Business Leaders survey can be viewed at www.kpmg.com/EU/en/succeeding/business-leaders-agenda-survey-2012/Pages/default.aspx

Story 2

European companies struggling to deal with change

European companies are slow to adapt to the changes needed to stay competitive. This is according to a global study from professional services company, Towers Watson. The study identifies the best communication and change management practices at 604 top-performing companies and makes comparison between organizations in different regions. It shows that companies in Europe, the Middle East and Africa (EMEA) have had to deal with more change management challenges than their global counterparts and have struggled to deal with them as effectively

EMEA companies less effective at change management

The study, “Clear Direction in a Complex World,” shows that many companies around the world have been forced to implement significant change in order to adapt to economic challenges and remain competitive during the past two years. For organizations based in EMEA this has meant downsizing at nearly half (47 percent) and pay freezes at almost a third (31 percent). EMEA companies’ experience of change has been more extreme than in other areas of the world with figures showing lower instances of redundancies (37 percent) and pay freezes (24 percent) across the globe.

Crucially, when faced with change, only a third of organizations in EMEA create an integrated communication and change management strategy, compared to just under half globally. EMEA companies also fall behind when it comes to being clear to employees about what they need to do differently to be successful. Globally, two-thirds of companies that are highly effective in managing change provide clear direction to employees, compared to only half in EMEA.

In addition, European companies have been less clear at defining their “employment deal” or Employee Value Proposition (EVP), which lets employees know what the company expects from them and what they can expect in return. Only around one-third of highly change-effective companies in Europe believe they currently have a clearly defined EVP but promisingly, nearly half are developing targeted EVPs for different employee groups.

Impact on financial performance

The survey, the fifth biennial edition, shows that the way in which change is managed and communicated within an organization has a significant impact on financial performance. It concludes that companies that are highly effective at both communication and change management are found to be around 2.5 times as likely to outperform their peers as companies that are not highly effective in either area.

For more information

Visit www.towerswatson.com

Story 3

Senior team leadership development key to promoting growth

Leadership development for senior managers has, for the first time, become the top priority for learning and development in 2012 according to the “Corporate Learning Priorities Survey 2012” carried out by Henley Business School’s Corporate Development team. The survey report is based on responses from 136 HR and non-HR senior managers based around the world.

Of the respondents, 47 percent made this their first or second priority (compared with 35 percent last year), while 71 percent said their number one learning priority for 2012 was to use learning and development as a tool to aid growth (up from 64 percent in 2011).

A new approach to learning

Economic turmoil has not affected organizations recognition that learning and development is crucial to success, with 84 percent of respondents saying they would be doing more or the same learning and development activity in 2012. What has changed is the way organizations seek to learn.

A pragmatic, “back to basics” skills focus is revealed by such priorities as “purely tactical skills development”, “to improve sales capability” and “to equip talent with cross functionality skills to make them more versatile.” Equally, organizations will be seeking to leverage existing knowledge within the organization, with 55 percent saying they will be doing more informal knowledge sharing between peers and 59 percent saying they will increase their peer mentoring.

For the first time pragmatism has overtaken reputation as the key driver for organizations when selecting a business school partner. The top three requirements are:

1. 1.

   delivery by experienced practitioners (81 percent);

2. 2.

   reputation of school (64 percent); and

3. 3.

   use of up-to-date case studies (62 percent).

Delivery by well-known faculty was the least important criterion while the importance of the “inclusion of recent, original research” has dropped from 86 percent in 2010 and 72 percent in 2011 to 41 percent in 2012.

For more information

Visit www.henley.com

Story 4

Private companies offering short- and long-term incentives

A study on pay practices at private companies by WorldatWork and Vivient Consulting reports that a majority of private companies in the USA now offer long-term incentives (61 percent) in addition to short-term incentives (95 percent). Survey data was gathered in September 2011 from 232 private companies with revenues ranging from $100 million to more than $5 billion.

Long-term incentives prevalent

The “Private Company Incentive Pay Practices Survey (2012)” found that having a long-term incentive plan is now a prevalent practice across all private for-profit corporations (except partnerships). In spite of the challenges in terms of valuation and liquidity, long-term incentive (LTI) use has increased from 35 percent in 2007 to 61 percent in 2011.

“Private companies face unique incentive compensation challenges,” says Kerry Chou, a WorldatWork certified compensation professional and practice leader. “The jump from 35 percent to 61 percent in four years was significant and reflects the need for private companies to compete for senior/executive-level talent with both private as well as publicly traded companies.”

Types of long-term incentives widely used today include performance awards or long-term cash plans (52 percent), phantom stock and stock appreciations rights (SARs) (33 percent), stock (26 percent) and restricted stock (19 percent).

Increased use of short-term incentives

Respondents report increased use of short-term incentive (STI) programs since 2007 as well, growing from 79 percent to 95 percent. “On the short-term incentive side, we saw an increase in the use of individual incentives and team/unit/small group incentives,” says Bonnie Schindler, partner and co-founder at Vivient Consulting. “Spending on incentives as a percentage of operating income stayed constant overall from 2007 to 2011. This indicates that private companies are focusing their incentive dollars on specific key players with specific objectives in mind. Private companies are being smart and strategic about their compensation dollars.”

Types of short-term incentives widely used today include bonuses (88 percent), individual incentive plans (39 percent), profit sharing plans (19 percent) and team/unit/small group incentives (26 percent).

For more information

The report can be viewed at www.worldatwork.org/waw/adimLink?id=58146