In this high-growth phase, the role of the CEO is to become the ‘bridge' between the external world and the people inside the organization
CEOs across industries agree that people are core to their business success as derived from our interactions with various CEOs
73% CEOs in India spend more than one-fourth of their time directly on talent-related activities. While 68% acknowledge that this time has increased in recent years, 79% also affirm that this focus will only increase further next year. This indicates a relevant change in the way organizations are functioning today. The People Matters - Monster.com CEO as the Chief Talent Officer Study 2011 reveals what CEOs are doing in their individual capacity to leverage the people advantage to build successful and sustainable organizations.
Eighty percent of the CEOs surveyed in this year’s study agree that HR issues are undoubtedly core to the success of their companies. The increasing fear of unavailability of the right talent to execute their companies’ strategies is leading CEOs to discuss people challenges more and more at the boardrooms.
Many CEOs and their leadership teams are re-thinking their complete people strategies, not only to align to the new business opportunities, but also to prepare the organization to compete and win in the new business reality. The 14th Annual Global CEO Survey by PwC this year also identifies ‘talent’ as one of the three main drivers for strategic change that CEOs are looking at in 2012, along with innovation and shared agenda with the government.
For Indian CEOs talent has always been on the top of their agenda, either to foster growth or as a consequence of the downturn. But what is changing is the pace and pressure that organizations face to focus on talent issues. Today, these talent challenges are seen as a sign of a growing economy which brings with it the excitement of umpteen opportunities that this new reality unfolds. Most CEOs who participated in this survey affirmed that they see these challenges in positive light as these are typical of a growing economy.
In this high-growth phase, the role of the CEO is to become the ‘bridge’ between the external world and the people inside the organization. As the external environment becomes more and more complex, the importance of this bridge increases, hence impacting the CEO’s role to extend towards more talent-related areas.
An optimistic business landscape
India’s GDP growth of 8.9% during Q2 FY11 reveals that the Indian economy continues to march towards the high growth trajectory of the pre-crisis period, despite fears of soaring inflation. At present, the growth momentum is based on the increased impetus seen from the three sectors viz. services, industry and agriculture.
Results of the Grant Thornton International Business Report (IBR) over Q4 2010 and Q1 2011 further reiterates that 92% of the Indian senior executives surveyed confirmed that they are optimistic about the performance of the Indian economy over the next 12 months.
The People Matters CEO Survey 2011 reflects a similar optimism. As organizations prepare for growth; Indian companies continue to focus on the domestic market while expanding globally, and MNCs are investing in India as a strategic market.
Indian companies going global: “We have a very ambitious plan for this year. Our expansion also includes global locations where we want to strengthen our presence,” - Bank of Baroda, M.D. Mallya.
MNCs favoring India as a strategic market: “India is a strategic market for DuPont and we have high growth aspirations. During the last three years, we were focused on building our capability to serve our customers. Having established a strong business presence, we are now looking at optimizing our presence by hiring and retaining the best talent,” - Balvinder S. Kalsi, President, DuPont (South Asia).
Indian companies and MNCs eyeing to capitalize on the domestic opportunity: “The pace at which we are growing, adding people on a daily basis and opening a new store every 5 days, we have already crossed 12,000 employees and will continue to add. As a result, we are facing the challenge to maintain standardization of all talent management processes and seamless execution at all the locations and regions” - Ajay Kaul, Chief Executive Officer, Jubilant FoodWorks.
In fact, many businesses are looking at doubling or tripling their revenues in the next 3 to 5 years, and expecting to grow their workforce at the same rate. As a result, most CEOs see India as a hypercompetitive talent market where finding the right people is one of the biggest constraints that can hinder achievement of targeted growth. This in turn makes the talent factor a more strategic concern that demands the CEO’s undivided attention.
CEOs across industries agree that people are core to their business success as derived from our interactions with various CEOs. Deep Kalra, CEO, MakeMyTrip says “Human capital is the currency of the new economy, and while it is impossible to measure its impact, it is inarguably the most critical piece to maximizing company’s value”, while Tiger Tyagarajan, Chief Operating Officer, Genpact adds “People are core to what we do, core to our business. People are the way we win.” And Capgemini CEO Aruna Jayanthi agrees, “Talent is not just a HR agenda but a business agenda”.
Today HR considerations are an important element in most organizational decisions even in transactions like M&As that traditionally only considered the financial, strategic and marketing aspects of a deal. CEOs are now equally interested on the people aspect to assess the value of such transactions and the risks associated with it.
Challenges facing organizations
There is a common thread that ran across all CEOs surveyed who categorized the key HR challenges as talent shortage, speeding up capability building and effectively engage and retain people. Talent shortage can be a clear threat to organizational growth plans. Attracting, growing and retaining best talent can be the biggest challenge facing organizations in a scenario of heightened competition where everyone is striving to optimize on their position and presence. This is a problem across levels and if not addressed promptly, can easily cripple the whole foundation of the organization.
In 2010, 41% employers in Asia-Pacific expressed difficulty in filling positions, according to a Manpower Survey of 35,000 employers worldwide. Promising organizational growth and the optimistic business scenario brings forward numerous opportunities for employees in the job market. This in turn results in a fierce competition for talent making talent attraction and retention even more difficult. “The challenges will be compounded by the fact that it is the same experienced and trained professionals that all companies will be looking for, both MNCs as well as the fast emerging Indian companies. Hence there will be a war for talent,” adds Kalsi from DuPont.
In addition to the focus on talent acquisition, as business grows and matures, the challenge will be not only to bring people onboard but also ensuring that talent is integrated, trained and ready in the system to contribute to the common vision. As K. R. Kamath, CMD, Punjab National Bank shares “This year, we plan to recruit very heavily, around 12,000 people. So while this is a priority, recruitment does not stop just at the numbers, we need ensure that new joinees get the right welcome into our team through a strong induction program.”
Finally, the changing workforce demographics also challenge some of the traditional rules of talent management. For example, using compensation as a retention tool does not meet the present talent requirement and aspirations anymore. The ‘Gen Y’ category of employees have different motivators from their job like being mobile, working with new technologies and collaboration tools, etc. Organization must adapt to meet the new aspirations of the upcoming generations if they seek to effectively retain their key talent.
A CEO’s Top 3 HR priorities for FY 2011-2012
This year’s CEO survey unfolded the undisputed top three HR priorities that have made it to the CEOs “to do list”. 65% respondents have chosen “building teams to meet expected growth” as one of their top three priorities, while the other two key priorities for the year include “building motivation and engagement” (56% respondents) and “retention of key talent” (52% respondents).
1. Building teams to meet expected growth
CEOs’ primary agenda is to help the organization build capable teams to execute new business strategies and opportunities. Therefore the CEO is not only interested in hiring the right talent but CEOs are actively trying to create a consistent pipeline of leadership at the three levels - the top level to ensure leadership succession planning; the middle level to ensure ready talent pipeline for the top level, and the entry level to identify top performing employees who can be moved into fast track career development plans for middle level roles. At the entry and junior levels, companies focus on strengthening their HR processes to hire and train people by the use of technology. At the middle level, the focus is on strengthening the quality of middle managers both in terms of competency building across areas (sales, marketing, technology, etc.) and in terms of providing the required managerial exposure to enable them to inspire and motivate their teams. At the leadership level, the focus is on building and retaining leaders to create a robust leadership pipeline for current and future requirements.
2. Building employee motivation and engagement
Internal teams need to feel engaged and motivated to work together towards the common goal. Creating a great workplace, maintaining employee engagement, keeping people excited and motivated, to innovate at their work have become key areas of consideration for CEOs. The CEO’s emphasis is on creating and maintaining a differentiated culture for the organization.
3. Retention of key talent
The increasing scarcity of quality talent along with growing impetus on people in attaining business excellence has made talent retention vital. Most CEOs believe that while this is a primary action point for them, its effective implementation is an automatic result of how well the organization meets the first two talent criteria of acquisition and development. Once the first two are in place, the third is automatically managed.
Have these priorities changed?
Most CEOs commented that these priorities have changed in the last three years. Pre-recession, the focus was on hiring, training and compensating people, along with building processes and systems. During the downturn, attrition risk was not so high hence it was less of a focus area while the priority was on resource allocation and re-allocation. Today’s business dynamics have led CEOs to shift their priorities towards culture building, engagement, fostering brand ownership and building an environment where employees can grow.
CEOs time & effort on talent agenda
This year’s survey shows that 73% CEOs spend more than 25% of their time on talent and talent-related activities, and of those 50% spend between 25% and 50% of their time in this area.
Many found it difficult to put an exact number to the amount of time they spend on people-related activities as they feel that today “talent mindshare” is ingrained in the overall “business mindshare”. “It is difficult to quantify. Even when we are discussing business-related matters or when solving an operational issue, I always use those opportunities to further develop our people and tap their talent,” says GV Prasad, Vice Chairman & CEO, Dr. Reddy’s Laboratories.
The rest of the CEO’s time is spent on customers, operations, investors and networking. But talent discussion is also present during the time allocated to the other activities. “Even the time I spend with customers and operating teams, at least one-fourth of that actually goes into discussions around talent, from requirements to challenges to innovation and expertise building,” says Tiger of Genpact.
So, where does today’s CEOs’ time go?
Today, CEOs pay equal attention to the bird’s eye view to ensure the vision and culture of the organization is appropriately articulated as well as keeps an eye on the ground level by involving themselves actively in the hiring process or training and development plans. According to the survey, engaging and motivating employees to be part of the company’s vision, investing in leadership identification and development, and keeping a close eye on retention, take majority of the CEO’s time. While speaking to CEOs, many pointed out strategic hiring as an activity they are mostly involved in including meeting candidates, identifying talent and having a final say on strategic roles.
The survey and the discussions brought out the top 5 activities that CEOs invest their time on:
1. Painting the larger picture. One crucial organizational activity the CEO specifically focus on is communicating the vision and mission of the company, and interpreting the same for people at different levels, explaining the meaning and relevance of the larger organizational goal to the employees, getting them excited, as well as communicating on the company’s progress and where it is headed.
As a leader, the CEO’s main role is to communicate on the market opportunities, its possibilities and how the company can take a strategic decision to benefit from those opportunities. As rightly put forward by Santhanam B, MD, Saint-Gobain Glass India “The CEO should be able to zoom in and zoom out constantly and be able to provide answers to internal questions at all levels.”
2. Fueling the leadership pipeline. As CEOs take ownership of the complete talent management process, they are keenly involved in identifying leaders, helping them tap their potential, and working with middle level managers to create a collaborative partnership with employees. This focus has a short-term objective of meeting present requirements of the organization, and also has a long-term goal of building future leadership pipeline for business growth. “Majority of my time goes in being a catalyst to help others become better leaders and includes my time spent on coaching and mentoring, managing performance and giving feedback. Even when I visit a branch, my aim is to create an opportunity to coach people for the next level rather than assessing their business performance, which I can do without visiting them,” says Niren Chaudhary, MD Indian Subcontinent, Yum Restaurants India.
3. Building employee motivation. Motivation and engagement comes from a combination of elements that are inter-related. CEOs today spend their share of time in connecting with employees and engaging with them so they feel a part of the company’s overall journey. “Besides my time spent on developing and nurturing the next level in the organization, rest of my time is invested in creating an appreciative culture where we celebrate together and share every stage of the journey. I believe that focus on people is the priority for the organization as if you focus on people, the rest will follow,” shares Sandeep Banerjee, CEO, Edenred India.
4. Emphasize on hiring the right people. When looking at the CEOs’ calendars and the number of days that are blocked for interviews or interactions with candidates, there is a clear trend across industries where CEOs are seeing talent acquisition as a key element of their talent management activity. Its importance is reflected in what CEO MakeMyTrip, Kalra says, “Each right hire saves you the effort of developing and aligning people in the future.”
Sanjay Modi , MD, Monster adds, “I am very particular about hiring the ‘right talent’. For key and senior positions, I get involved right from the first meeting, to follow up meetings till the final offer is made. When it comes to hiring, I do not think about time. If I am not getting a clear ‘yes’ from within, I will not hire. I never push myself to bring a person on board.”
5. Retention of key talent. Retention of talent is a lag indicator. CEOs invest their time in connecting with employees, aligning their aspirations with the common goal, creating an appreciating culture and hiring and developing the right people. CEOs believe that if the above are taken care of, retention of key talent is an automatic consequence.
CEO’s talent accountability
According to survey results, talent measures and targets find a place in CEOs’ scorecards. In fact, CEO’s performance on these measures account between 20 to 30% of the CEO’s overall performance. The way talent-related targets are captured on the CEO scorecard differs from organization to organization. While some organizations only factor in lag indicators (like attrition/retention targets or employee satisfaction indexes), leaving all lead indicators under the HR function scorecard, there are others that include key HR targets (like succession planning, leadership development or hiring targets) on the CEO’s scorecard.
The common goals that feature on the CEO’s scorecard today are:
Goal Number 1: Retention
74 percent CEOs have retention as part of their goal sheet. Some have a separate target for high performers and key talent, while others have an overall retention target for the organization.
Goal Number 2: Employee satisfaction and engagement
61 percent CEOs have employee satisfaction scores as part of their goal sheet along with other measures of engagement like company ranking in external best employer surveys.
Goal Number 3: Capability Building
52 percent CEOs have measures that indicate capability building, for example, number of critical positions filled from within, bench-strength for critical positions and number of people trained.
CEO’s talent focus – on the rise
Survey data shows that close to 80% of the surveyed CEOs feel they are spending optimal time in talent management activities. And almost 70% agree that the time they spend on people have significantly increased in the last three years and 77% predict that this time-spend will further increase in the coming year. The trend of CEO as the Chief Talent Officer is set to consolidate as organizations center the success of their business strategies on identifying, grooming and retaining talent.
PEOPLE MATTERS CEO SURVEY 2011
The survey reflects contributions of more than 114 leading Indian business heads across industries.
Respondents represent a spectrum of industries and sectors: IT/ITES (22%), Banking, Financial Services and Insurance (19%), Manufacturing (17%), Consumer Business (15%), Services (Profit) (12%) and Life Sciences and Healthcare (7%), among others. Respondents represented a diverse group of business leaders from different organization structures in India: Professional CEOs hired by the board (41%), 2nd or 3rd generation CEOs from family owned organization (33%), entrepreneur/promoter CEOs (25%).
The online questionnaire was primarily structured around closed, single and multiple-choice questions. Respondents also had an opportunity to add their views and comments where the option provided did not give the relevant description of their reality. The figures for multiple-choice questions reflect the percentage of respondents that chose that specific option. The figures for answers that had limited choices reflect the percentage of respondents that chose that answers within their limited choices.
Additionally, thirty percent of the overall responses were collected through face-to-face and telephonic interviews conducted by People Matters research team. These interviews were more open ended and allowed the business heads to elaborate with qualitative information on their people strategies and best practices. These qualitative responses have been incorporated in the results of the survey.
To access the complete People Matters CEO Survey Report visit www.peoplematters.in