The Three Human Capital Management Concerns Keeping U.S. CEOs Up At Night

Guest post from Bhushan Sethi:

Most US CEOs say technological advances will transform their businesses within the next five years. But almost three quarters say they’re worried about the skills gap in their organizations.

After surveying 1,344 CEOs in 68 countries, we found that 70% of US CEOs are concerned about the skills gap. And 86% say technology advances are going to transform their businesses within the next five years. So the relationship between talent quality and financial success isn’t just causal. It’s completely consequential.

 

Three concerns crucial to human capital management leadership over the next few years are:

 
1.     Transformation requires trust – Departmental changes are nothing new, and most employees will go along to get along when the degree of change is small and the rate is slow. Bigger changes require more. Employees need to trust their leaders when the leaders ask them to take a leap of faith. This is going to be harder to do than it used to be. Five years after the financial crisis, just 32% of US CEOs say the level of trust with employees has improved. Being transparent about where the company is going and what it takes to be successful is an approach managers will have to embrace to regain that trust.

 2.     The people you have now are the people you’ll have later – In the past, large-scale change could be achieved by replacing people. But consider the data…this is beyond “large-scale” when:

 

·       62% of US CEOs are considering or planning change in customer growth and retention strategy

·       62% are doing the same in how they use and manage data and data analytics

·       54% are focused on their R&D and innovation capacity

This skills gap is just too big for managers to fire and rehire their way out of the problem. To cope with this degree of change, training for tomorrow must become as important as revenue today. This is especially true when it comes to digital skills because they’re inherently cross-function. Consider the integration of big data and customer service. IT people can’t bring data sources together in a useful way without understanding what each data point means. Customer service professionals, who are wonderful at understanding the ebb and flow of customer moods, must learn to be scientific in their measurement and approaches. To boot, each must learn the other department’s skills while not fighting over turf. The leader’s role here is to point towards a common goal, motivating people to learn from each other so that they can achieve this new opportunity. The skills gap, in other words, is very much a leadership gap.

3.     The meaning of a diploma – As much as we bemoan the paucity of skills training in higher education, it’s not possible for schools to be close enough to industry to have a perfect match between training and needs. The good news is that industry can do more. A number of companies are offering MBA programs at night inside their own buildings. Others are working hand-in-glove with community colleges to train operators for their plants. There are even instances where companies have approached high schools to encourage shop classes so that people will develop welding and pipefitting skills. There are no limits to the practical, if inventive, ways companies can develop the talent they need.

Looking at these problems and their solutions, it becomes clear that the secret to closing the skills gap isn’t closing the skills gap -- it’s seizing the leader’s mantle.  That’s not a title or a position, but a role of pointing to the valley, telling the people about the danger ahead and then inspiring the changes necessary to survive and prosper.

How prepared are you for this challenge? To answer that question, simply ask yourself another: How invested are you in your people’s skills?

By Bhushan Sethi, PwC managing director in the firm’s Advisory practice, focused on human capital issues.