New Reports Offer View of Coming Global Workforce Challenges

Oct 18, 2010
This article is part of a series called News & Trends.

Three years from now can seem like geologic time for so many global companies still picking their way through today’s economic morass. Yet HR leaders of global companies are already beginning to look ahead for when their company begins to grow again.

IBM issued its biennial Chief Human Resource Officer Study last week. Its 70 pages detail the workforce challenges these leaders see ahead.

In the introduction, IBM’s senior VP for HR, J. Randall MacDonald, says, “HR leaders expect their businesses to remain focused on two equally important goals during the next three years — the need to drive growth yet, at the same time, maintain operational efficiency.”

The study is part survey, and part focus group. IBM’s researchers surveyed 707 HR leaders of companies of all sizes around the world; 600 of them were interviewed face-to-face.

Their immediate focus, as you might expect, is on present conditions. Wresting the maximum efficiency out of the operation is the overriding business challenge for 64 percent of the global HR leaders. But looking ahead three years, they expect — in almost equal measure — that their companies’ top issues will be the introduction of new products and services, expansion, and improving efficiency.

Much of that growth will be in India and China, as global businesses from mature countries like the U.S. and European nations broaden their market. Surprisingly, companies in China and India and other developing nations will look to expansion in the mature markets. The IBM report says:

“34 percent of CHROs in growth markets say they anticipate increasing headcount in North America over the next three years, while 37 percent plan additional investment in Western Europe. This includes companies from India, where 45 percent of respondents indicated they plan to increase headcount in North America and 44 percent in Western Europe. In China, 33 percent of CHROs we interviewed said they plan to increase headcount in North America and 14 percent in Western Europe.”

Obviously, these companies will be competing for talent at just the time most economists expect American companies to also be expanding and adding employees. Though confidence in a hiring uptick is at a nadir, as evidenced by the seesawing Consumer Confidence Index of The Conference Board, the economic signs all point to a stabilizing of the U.S. economy.

The rate of layoffs has dropped substantially since the beginning of the year. According to Challenger, Gray & Christmas, “The 12-month moving average (of announced layoffs) has now dropped to 46,866, the lowest since November 2000, when it stood at 43,744.”

Private sector job growth has been positive, if small, for several months now. That’s a huge change from 2009 when job losses, private industry job losses, were half a million a month.

None of that is to minimize the pain of the millions who are out of work or working part-time or working at jobs beneath their capability because they can’t find other work. Just last week, the number of first-time unemployment claims rose again, a sign that economic improvement is still very much touch and go.

Those who still have jobs may feel lucky, but they are also stressed. An Adecco survey found that 63 per cent of bosses say they are more stressed today than before the recession started. That may help explain why only 30 percent of the workers in the survey aspire to management.

Worker stress, fueled by the pressure to do more — or at least as much — with less, is not just a U.S. problem. A Kenexa Research Institute WorkTrends Report ($499) says only 53 percent of employees worldwide believe their company has enough people to get the job done. Some workers would probably say there aren’t enough no matter what. However, as the steady increase in temporary staffing suggests, employers are themselves seeing the need for more help — but not permanent help. Not just yet.

There’s evidence, in fact, that hiring in the near term is not going to grow much. Although productivity declined in the second quarter of the year (third quarter data is not yet out), the San Francisco Federal Reserve says productivity would need to slow to about 1 percent or less for there to be strong employment growth. That is unlikely, based on history, says the report’s author, senior economist Daniel Wilson.

In fact, all through the recession American businesses have wrested more productivity from their workers. The U.S. Bureau of Labor Statistics says that business output per hour, a key measure of productivity, is up. In 2009, in the depths of the depression, business output rose 3.5 percent, a greater percentage than in any year since 2003.

The Kenexa research suggests the recession has made companies more open to creativity; 52 percent of the respondents report working in an innovative climate. While India and China lead in workers reporting an innovative climate, the U.S. is 6th, well ahead of countries like Japan and Germany. It also ranks 6th in the world for employee engagement.

Kenexa’s research focused on leadership issues and how it correlates to worker engagement, effectiveness, and corporate success. On effectiveness, the managers of the world scored a cumulative index of 55 percent. On this measure, U.S. managers were somewhat above the global average, but several points behind leaders India and China. Among the 10 drivers of leadership effectiveness Kenexa measured, the U.S. was a standout in only one: motivating employees to work hard.

That is certainly borne out by the BLS productivity measures.

Third quarter productivity data won’t be released until next month. When the numbers are released, they may help make clearer the future job picture. Even if the data shows productivity growth standing still, surveys by SHRM and CareerBuilder and others say it will take a while for corporate executives to be convinced to start hiring in numbers enough to reduce the unemployment rate.

SHRM’s LINE report for October opens this way: “The pace of job growth is so slow that hardly anyone is noticing it.” While it predicts little change in hiring this month, the report does say that recruiters are experiencing more difficulty in hiring talent.

“At least for higher-level, higher-skilled job seekers, things look to be improving,” said Jennifer Schramm, SHRM manager of workplace trends and forecasting. “HR professionals reported that recruiting these kinds of workers in September 2010 was more difficult than at the same time (in 2009).”

Looking ahead, a CareerBuilder survey says 21 percent of the surveyed employers expect to add full-time, permanent workers this quarter. There’s still plenty of caution. The survey says 27 percent of employers predict they will hire contract or temporary workers. A quarter of the hiring managers expect to transition at least some of the contingent staff to permanent positions.

This brings us back to the IBM report. The report notes in its introduction that the “worldwide focus on growth will require companies to fundamentally rethink how they manage the workforce and overcome borders.”

The IBM researchers found three areas of greatest challenge for companies: leadership, workforce management, and collaboration. As the report puts it, “Based on insights from more than 700 senior HR leaders, we believe three essential capabilities will enable organizations to move beyond the remaining borders that constrain workforce effectiveness: cultivating creative leaders, mobilizing for speed and flexibility, and capitalizing on collective intelligence.”

While most of the U.S., for that matter, much of the world, sees job creation as the most important economic issue of the day, the world’s HR leaders see managing future growth and workforce management as the most important issues of tomorrow. Both the IBM and Kenexa reports intersect at the issue of leadership. Both reports offer a snapshot of what is and what needs to be done.

And in this future vision, both reports lend crucial weight to the importance of talent acquisition and the training and development of tomorrow’s corporate leaders.

This article is part of a series called News & Trends.