The 5 trends that redefine Human Capital Management
“What’s new?” and “what’s next?” are two questions that business owners and executives often ask. Trend research is one of the ways to gain good insight into what is likely to be coming down the road, as you manage your business and its most important assets: your employees.
Over two-thirds (65%) of companies around the globe, according to Towers Watson, are concerned about retaining critical skills and top performing employees. In addition, more than half of employers are concerned or very concerned about the shortage in skilled talent. At stake are business productivity, the capacity to grow and much more, which makes developing and engaging employees and managing their performance key priorities.
The quality of a company’s Human Capital Management (HCM) strategies can speak volumes about a business and its future. An organisation’s approach to staffing that focuses on managing employees and supporting their continuous improvement reveals itself in strategic metrics like employee satisfaction and retention rates, not to mention customer or client satisfaction and retention rates. The best HCM programmes are strategy-driven, align an organisation’s people strategy with their company’s overall values and goals, and give decision makers the flexibility to respond to business changes.
Sadly, research shows that 93% of companies have no concrete talent management strategy in place. In addition, emerging trends are likely to test the mettle of even the best talent management programs.
Here are five such trends (and accompanying challenges) that are expected to have an impact on Human Capital Management.
TREND #1: Increased Globalization
Today’s workforce is increasingly global. ADP reports that 40% of employees now work outside of their organisation’s home country. From compensation planning to performance reviews and learning tools, a widespread workforce demands the efficiency of standardized global HCM processes. Standardization (including integration) can also help drive profitability. According to Cedar Crestone research, standardizing HCM processes to improve productivity can translate into 38% more profit per employee.
TREND #2: Shifting demographics
“Gen Y” employees bring new tools and technological skills to the workplace, which need to be embraced by employers if they want to retain top talent. Frost & Sullivan research found that this year, 70% of all employees will rely on mobile devices to manage their daily workload. Additionally, social media is expanding. In this new environment, HCM mobile tools, social integrations and clear communication of social media policies are non-negotiable.
TREND #3: Solution integration
Simple is smarter. According to ADP Research Institute®, on average, companies are currently managing more than eight separate HR and payroll systems or vendors. The result? Another burden on the HR team. In fact, over half (58%) of HR staff time is spent on administrative tasks, and 19% of time is wasted on feeding data into multiple systems. New solutions that integrate systems and functions are fast becoming the norm, helping to reduce errors, avoid duplicated efforts, minimize manual labour and free up HR for more strategic necessities.
TREND #4: More compliance
The business regulatory environment is expanding. According to ADP internal data, nearly 19,000 changes were proposed to the tax rules in 2013. This reflects an upward trend. Compliance requirements – employment laws, labour practices, taxation, data privacy and equal opportunity regulations – are costly, time-consuming and increasingly a moving target, as deadlines on employment tax regulations continue to shrink.
TREND #5: Increased cost containment
As more businesses adopt a global view of what can impact their bottom line, human capital planning is of particular interest. This is an area where a poor effort can result in a major drain on costs due to process inefficiencies or the inability to acquire and retain key talent. Studies show that firms that have instituted a Human Capital Management strategy are able to reduce their total cost of ownership – the total amount spent per employee on all HR-related services – by an average of 26%.
Successful businesses confront HCM challenges
For businesses with an eye on the future, destiny is a matter of choice not chance. Hiring, managing and retaining top talent demands a talent management programme that will serve a business well, whether the marketplace is tightening or expanding. Research confirms this. According to findings from Bersin by Deloitte, the effective use of HCM strategies increases a company’s ability to respond to economic conditions and reduce the chances of having to execute a major redundancy programme.
A business that knows the capabilities of its employees, the needs of its customers, and has the products and services in place to succeed should be well prepared for the challenges that may arrive on the wings of strategic HCM trends. Does this describe your business?
Talent Management: Benchmarks, Trends, & Best Practices, Bersin & Associates, 2010.
ADP: Strategic Global Mobility Issues: A Review of Global Organizational Challenges and Alignment,
Worldwide ERC® and ADP, 2013.
ADP: After the Transformation: Achieving Strategic HR, ADP, 2008. 4 NelsonHall, 2011.