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Five Trends that will Redefine Human Capital Management

Steve Hardy

Steve Hardy
Multinational Marketing

The state of global employment is puzzling. While approximately 7% of the U.S. workforce is unemployed, over two-thirds (65%) of companies around the globe are concerned about retaining critical skills and top performing employees, according to Towers Watson. Over half (52.3%) of employers are concerned or very concerned about the shortage in skilled talent. Multinational organizations seeking to strengthen their talent pool would be wise to focus on their most important asset – their current employees. Human Capital Management (HCM) is the approach to staffing that recognizes this need and supports continuous improvement of employees – not only to increase their level of skill for your business, but also to reward their loyalty by offering them new and exciting challenges.

HCM should be strategy-driven, and should align your organization’s people strategy with your company’s overall values and goals. Ensuring that the full employee lifecycle of each of employee (from hire to retire) is aligned with the strategic goals of your business is a critical challenge for leaders. Developing and engaging employees and managing their performance are key priorities that drive business productivity and growth. Sadly, 93% of U.S. companies have no concrete talent management strategy in place. Even for companies that practice HCM, there are key trends in today’s business environment that should be considered to avoid undermining your talent management program. Here are the top five challenges that will alter HCM needs among companies in the coming years:

Challenge #1: Globalization

Today’s workforce is increasingly global. In fact, according to the ADP Research Institute, 40% of employees work outside of their organizations’ home country. From compensation planning to performance reviews and learning tools, a widespread workforce demands integrated HCM. And, integration adds to financial success – companies can gain 38% more profit per employee by standardizing their global HCM processes, according to CedarCrestone.

Challenge #2: Demographics

According to the U.S. Census Bureau, nearly half (47%) of the current U.S. workforce was born after 1977. Gen X and Gen Y employees bring new tools to the workplace, which need to be embraced and cannot be avoided if companies want to retain top talent. Frost & Sullivan research found that 70% of all employees will rely on mobile devices to complete their daily workload by this year. Additionally, social media is expanding beyond community managers in usability. Over half (52%) of executives view social media as an efficient collaboration tool. HCM mobile tools, social integrations and clear communication of social media policies are non-negotiable in this environment.

Challenge #3: Integration

Simple is smarter. According to the ADP Research Institute, on average, companies need to manage more than 8 HR and payroll systems or vendors. Diverse systems result in added strain on their HR team. Over half (58%) of human resource staff time is spent on administrative tasks, and of their time is wasted on feeding data into multiple systems. Moving forward, the integration of these often disparate systems will become a necessity in order to help reduce errors, avoid duplicated efforts, minimize manual labor and free up HR staff to focus on more strategic activities.

Challenge #4: Compliance

Maintaining compliance with constantly changing employment laws, labor practices, taxation, data privacy, and equal opportunity is often costly and time consuming. In the past year alone, nearly 20,000 new pieces of legislation were enacted affecting employers worldwide. Compound that with shorter compliance deadlines on employment tax regulations, where implementation periods of months are now condensed to days and compliance may be keeping business leaders up at night. In fact, ADP research confirms that more than half of human resource leaders identify compliance as their number one challenge.

Challenge #5: Cost Containment

Nearly every business is focused on managing the bottom line. Controlling costs across diverse global markets is critical for success. Poor human capital planning can be a major drain on costs, whether due to process inefficiencies or the inability to retain key talent, creating the added stress of recruiting additional employees and reinvesting time, attention and capital. Studies have shown that North American firms that institute 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%.

Beyond hiring and retaining top talent, proper talent management has been shown to have measurable impact on business results. According to findings from Bersin by Deloitte, effective use of HCM strategies have been shown to increase a company’s ability to respond to economic conditions and reduce the chances of having to execute a major lay-off.

It will be interesting to see to see how global companies face these workforce challenges and meet their needs for skilled talent. Based on the increasingly complex environment, I’d be willing to bet that HCM will become a key strategic initiative, embraced by more employers in the U.S. and around the globe.


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