People Issues Move Forefront of Leadership Agenda

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<p><strong>New York &mdash; May 30</strong><br />Senior business and human resources executives agree on the key people issues that are critical to business success, but business leaders think HR might be struggling to serve both the enormous strategic and operational implications, according to a global study conducted by Deloitte Touche Tohmatsu and the Economist Intelligence Unit. &nbsp;<br /><br />&ldquo;Aligned at the Top,&rdquo; a global and cross-industry survey of 531 HR and non-HR executives, revealed 85 percent of participants think people are vital to all aspects of their organization&rsquo;s performance, and that number rises to nearly 90 percent when looking three to five years ahead.&nbsp; </p><p>Yet, only 3 percent of participants describe their organization as &ldquo;world-class&rdquo; in people management and HR functions, and only 23 percent think HR plays a crucial role in strategy formulation and operational results.<br /><br />The study indicates senior business leaders perceive HR to be more focused on transactional activities, such as benefits and performance evaluations, and HR operating efficiencies, rather than high-level strategic people issues, including leadership development. </p><p>In fact, when senior executives discuss people issues, HR often isn&rsquo;t even mentioned. Case in point: More than half (52 percent) of the respondents still don&rsquo;t have a chief human resources officer or comparable C-level executive dedicated to people issues.<br /><br />&ldquo;It&rsquo;s a stunning paradox that HR is not being looked to for leadership on the people agenda,&rdquo; said Jeff Schwartz, principal with Deloitte Consulting LLP in Washington, D.C., and co-director of the study. &ldquo;Many top company executives believe the HR department lacks the business insight to drive strategic initiatives around top priority issues, such as leadership, talent management, creating a high-performance culture, and training and development.&nbsp; </p><p>&quot;While HR executives agree with these priorities, they continue to focus on their core role of improving HR operating efficiency, building scalable HR structures that can support the company&rsquo;s growth &mdash; a &lsquo;dial-tone&rsquo; level function that top executives already take for granted.&rdquo;<br /><br />Regionally, respondents perceived the effectiveness of the HR function differently, with North American companies giving HR the highest average marks, followed by Asia Pacific and Western Europe, respectively. </p><p>Similarly, 60 percent of North American respondents view people issues as &ldquo;significant&rdquo; or &rdquo;highly significant&rdquo; to strategic decision making compared with 49 percent in Asia Pacific and 48 percent in Western Europe.<br /><br />The study also shows many HR organizations already recognize the challenge to be more strategic and are shifting their administrative transactions and other nonstrategic activities to shared service centers or an outsourcing vendor.&nbsp; </p><p>About 25 percent already outsource recruitment, training and payroll, and another 15 percent expect to outsource these and other HR activities in the next three to five years.<br /><br />&ldquo;HR organizations globally recognize they have an opportunity to play a more strategic role, yet the question remains: Has HR been taken by surprise by global demographic changes, a need for accurate employee data and strategic capability to tackle business leaders priorities?&rdquo; said Brett Walsh, a Deloitte Consulting partner in London and co-director of the study. &ldquo;While the C&#8209;suite&rsquo;s people agenda is clear, the roles that business and HR leaders will play in addressing the company&rsquo;s strategic people issues are not. How business leaders approach the challenge &mdash; and how HR responds &mdash; will determine who takes the lead on managing people strategy and HR operations to address tomorrow&rsquo;s most significant people priorities.&rdquo;<br /><br />Survey respondents agree the role of HR will change &mdash; within the next three to five years, the majority (95 percent) expect HR to be perceived as a strategic, value-adding function, not just a cost center.</p>

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