5 Trends That Will Redefine Human Capital Management
Posted by: on 13 April 2016 in Human Capital Management
Did you know that according to a recent study (1), one third of global employers reported that their workforce turnover increased? In addition, a high percentage of organisations admitted they were having problems keeping key groups of staff – those with critical skills, those with high potential and the top performers. Furthermore, an even greater number of employers are having issues recruiting these types of employees.
These are pretty alarming statistics that bring the business challenges the war for talent creates. At stake are business productivity, the capacity to grow, developing and engaging employees, as well as effectively managing employees’ performance.
Interestingly, 87% of organisations (2) are revamping, restructuring or considering a redesign of their talent acquisition function. Additionally, change – which is always at work – can be seen in emerging trends that are likely to test the mettle of even the best talent management programs.
The statistics also illustrate – more broadly – that the quality of a company’s Human Capital Management (HCM) strategy can significantly impact 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, as well as in client satisfaction and retention rates. The best HCM programs are strategy-driven and align an organisation’s people strategy with the company’s overall values and goals. Strategic HCM gives decision makers the flexibility to respond to business changes.
Meanwhile, human resource leaders continue to pivot to accommodate these top five trends, which are impacting their organisation’s HCM strategy:
TREND #1: Increased Globalisation
Today’s workforce is increasingly global. In fact, according to recent research (3), 40% of employees work outside of their organisation’s home country. From compensation planning to performance reviews and learning tools, a widespread workforce demands the efficiency of standardised global HCM processes.
TREND #2: Shifting Demographics
Pew Research Center® (4) says that Millennials comprise the largest share of the workforce in 2015. This burgeoning segment of the workforce demands leading-edge tools and resources, which are mobile-enabled. Frost & Sullivan® (5) research supports this trend and found that more than 70% of North American businesses deployed a wide array of mobile worker software to increase worker productivity, expedite the overall sales process and reduce paperwork. Additionally, social media tools continue to expand. 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. For instance, 2015 research shows that global employers currently manage an average of 33 payroll systems and 31 HR systems (6) – a 40 per cent increase from last year. The situation is even direr for multinational organisations with headquarters in emerging markets, such as Asia-Pacific and Latin America, which manage an average of 40 to 50 different systems for payroll and HR.
One result? An increased burden on the HR team. New HCM solutions that integrate systems and functions are fast becoming the norm, helping to reduce errors, avoid duplicated efforts, minimise manual labour and free up HR for more strategic necessities.
TREND #4: More Compliance
The business regulatory environment is expanding. 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. In addition, many employers are unprepared to document and report data with sufficient accuracy to avoid or minimise the penalties that can readily be incurred.
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. A 2014 study by NelsonHall revealed that North American 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%.
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 program that will serve a business well, whether the marketplace is tightening or expanding. 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 amply prepared for the challenges that may arrive on the wings of shifting HCM trends.
Written by: The Connect@ADP team