For years, there’s been warnings that the decline in birth rates and workforce as well as the increase in the elderly population, will be one of the biggest challenges we face – not only for societies, but also for organisations. That time has come. A new international survey shows that over 70 percent of HR professionals now cite people challenges and talent gaps as the biggest business obstacles.
The international survey from consultancy firm BCG, WFPMA, the community of global HR Associations and supported by Armenian HR Association shows that 72 percent of HR Professionals address people challenges and talent gaps as the biggest challenge they currently face. Other disruptions are likely to increase in frequency and severity, in addition to increasing talent gaps, less fluid talent markets, and the growing need for digital transformation and innovation—especially around AI.
– For us, it is interesting to see that so many concerns are shared across countries and regions, says Even Bolstad (president of the European HR association and board member WFPMA), partner under the WFPMA umbrella.
– The talent crunch is affecting us all and is in many ways “the next priorly announced crisis”, after Covid 19. The lack of available people also means that we cannot expect to fill our talent gap with people surplus from other countries or companies. We need fresh thoughts on everything from organisational design to use of digital tools and put effort into developing talent ourselves. Although we have had the knowledge of what was around the corner for decades, we have to a large extent ignored what was coming and waited until the crisis is here. These findings demonstrates clearly that it is important for us to act. Now.
The Covid-19 pandemic emphasised the importance of people management and forced organisations to clearly define priorities. Organisations all around the world quickly strengthened more flexible working models, and also developed specific capabilities in employee health and safety.
The impact of the pandemic proved that people management functions are good at responding to acute stimuli and can boost their capabilities when they focus on a set of very focused topics. For example, health and safety is the number one topic in our survey in terms of current capabilities, and flexible work schemes jump by 15 places in the capabilities ranking, said Philipp Kolo, a BCG partner and associate director, and a coauthor of the report.
– The bigger challenge involves looking ahead and planning for the mid- to long-term future. By shifting their focus to topics that yield results in the medium to long term, people management functions can build up the right capabilities to shape their company’s overall people agenda in a truly differentiating way.
Still, even with a major digital shift during the pandemic digital technology is still a challenge for organisations worldwide. The need for digital technology is necessary to anticipate and solve the most prominent business challenges. However, just 35 percent of HR professionals currently believe that their people management functions are using relevant digital technologies. Further, only 30 percent agree that HR is using data and analytics to anticipate people challenges.
– The respondents clearly recognise that improvement on priority topics, such as strategic workforce planning, upskilling, and AI adoption, is important to the continued success of their companies–but also that their current capabilities in those areas are very weak,” said Jens Baier, a BCG managing director and senior partner, and a coauthor of the report.
– Prioritising proactive investment in digital and data capabilities is key to solving many of the challenges that limit the organisational impact that people functions can deliver, he continues.
The challenge with lack of people and talent gaps will emphasise the new ways of doing the work we do today.
– Companies need to continuously prioritise developing the talent they already have, and upskilling and reskilling, in conjunction with effective talent acquisition, is critical to making this happen, said Anthony Ariganello, president of WFPMA.
– It is important for companies to see digital transformation not as a goal, per se, but rather as an enabler for other goals such as greater efficiency, improved service levels, or a better employee experience. It is a foundational element of multiple people engagement topics.
These are among the findings of a new report released on November 16th by Boston Consulting Group (BCG) and the World Federation of People Management Associations (WFPMA), titled Creating People Advantage 2023: Set the Right People Priorities for Challenging Times
- Only 35% Agree That Their Company’s People Management Function is Using Relevant Digital Technologies
- Just 30% Say That HR is Using Data and Analytics to Anticipate People Challenges
- New Report from BCG and WFPMA Finds That People Management Functions Must Shift Their Focus to Prioritising Topics That Are Most Important to Future and Long-Term Performance
About Boston Consulting Group
Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholders—empowering organisations to grow, build sustainable competitive advantage, and drive positive societal impact.
About The World Federation of People Management Associations (WFPMA)
The WFPMA is a global network of professionals in people management. It’s members are predominantly the continental federations which are made up of more than 90 national human resource associations representing over 660,000 people management professionals. The biggest of these continental associations is the European Association for People Management (EAPM) which consists of Armenian HR Association and 34 other European HR associations.