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.