The 5Cs that will disrupt business

With the proliferation of multi-generational workforces and increasing competitive pressures across sectors and geographies, talent challenges have subsequently multiplied to the level and scale where business leaders have finally stood up and taken notice. KPMG’s 2012 Business Leaders Survey reveals that one in four leaders globally consider managing and retaining the right people as a critical challenge. If leaders and organizations fail to act on the early warning signals that the current talent landscape is indicating, there may come a time when business corporations may be staring at the face of a severe crisis. It was with this premise that KPMG recently collaborated with a research firm, Brandon Hall Group, to conduct a study among 1,200 human resources (HR), talent and business leaders across 54 countries. KPMG’s Global Talent Risk Survey 2013 attempts to identify the key talent risks, which organizations are facing at the moment and how they might cause business disruptions in the future. These risks are classified under five key categories – capability, capacity, cost, connection, and compliance. These 5Cs of risks constitute the considerations without which organizations will fail to create fool-proof plans for the future.

The KPMG Global Talent Risk Survey 2013 reveals that among the risk categories, business leaders are most concerned about the capacity and capability of the organization to forward business strategy. Among them, the insufficient pipeline of future leaders and the lack of depth of internal candidates for critical roles come across as the most concerning. Besides that, capability risks also emerge as the most concerning for business corporations, including the issues that organizations face in recruiting and retaining key talent, and developing skills and capabilities for the future.

The new generation of people coming into the organization have a different view of what their careers should look like. When the present generation started, their idea was to get into the job, build a career within the organization, and–if done right–look forward to a comfortable pension at the end of it. The new generation, especially in the emerging markets, have a different view and that is the sense of wanting most things at the moment. They expect the organization and the employer to give them challenges, keep up a steep learning path, and promotions regularly. Such a generation is also not prepared to stay within an organization for a long time. If a firm is not responding to their needs, they will lose their talent very quickly. The younger generation also need the vision about their level of contribution and the ability to shape the organization, which fulfils their need for challenge, learning and leadership.

Mark Spears, Global Head of People and Change at KPMG, says, “If organizations are only concerned about how to recruit, train, and pay people, then they are missing out on the larger piece of engaging them. Engaging people to feel for the goals and objectives of the organization comes with greater levels of interaction with the management of the company. Therein, however, lies a paradox. The very people at the leadership layers who are expected to inflect positive outcomes with these interactions are not equipped with the skills to make them happen. Most middle and senior managers come from a generation where these skills did not exist and in many ways they act as blockers for these individuals.” Most companies in the Asia-Pacific resonate a similar sentiment that their biggest challenge is managing their talent and making the middle and senior management adaptable to the idea of providing young talent opportunities, space and early responsibilities to drive their engagement.

The second area involves the identification of the capabilities or core competencies within the organization so that they can focus their talent spending on the areas, which require more attention. One of the questions that organizations really struggle with is how much they are spending on talent. Sometimes organizations get too reliant on best practices for talent management and consequently roll out initiatives, such as a graduate program, or a high potential or a supervisory program. If these initiatives are not linked to the roles that are impacting business the most, then an organization is unable to ascertain whether the spending is yielding any outcome.

A key towards gaining the right business outcomes comes with making the younger generations attached to the organization and making them gain a sense of loyalty. Nishchae Suri, Partner & Country Head, People and Change Practice at KPMG India, says, “An Eastern philosophy is driving Western thinking globally across organizations. Organizations are looking very closely at the aspect of emotional attachment. Emotional attachment is different from loyalty and a more important factor of driving employee contribution.” Emotional attachment is the dedicated commitment by an individual to provide positive outcomes to the organization or the brand for the duration of service, and in no way is related to the commitment of long-term service. The paradigm shift for an organization is to adapt to the principle of aiding an employee give 100 per cent of dedicated service to the current assignment, rather than worry about long-term commitment.

In addition to capacity and capability, a very important talent risk is the risk of connections. An organization may have the best workforce with all the right talent with the right capabilities working at the right place. Soon, however, the organization may realize that those capabilities are working for rival companies.

While retaining key talent may be cost and effort intensive, a few simple things can enable the organization to shape and build connections and commitment within the organization. Connections can create stickiness but not loyalty as understood in the traditional sense of the term. Nobody asks for loyalty anymore, but conversations are around creating a system of “win-win” between an individual and an organization. Young employees have to be loyal to their jobs, but it is wrong to expect them to hang on to their jobs to prove their loyalty.

Insufficiency of talent budget features as a high risk in the US, but does not feature as high up in India. In India, the cost challenge that is more remarkable is the cost of critical skills becoming more and more expensive. There are people that occupy critical roles and those skills have become expensive. Good talent is always in demand and they are driving the cost point up. These worries are forcing Indian organizations to put together some mitigation measures in place so that this cost risk does not proliferate to uncontrollable proportions.

The findings of the Global Talent Risk Survey 2013 have revealed that there is a fundamental conflict between the concerns of the business management and the HR departments. Business managers are most concerned about capacity, while HR managers are more concerned about capability. The key reason why HR is worried about capability is because the organization lacks the skills for the future. It is therefore not surprising to see HR dedicate most of their efforts to learning and development. At the same time, frontline managers are most concerned about connections. While frontline managers in India do not have the capabilities to build connections which promote stickiness, they realize that they can achieve their objectives by building an environment of trust, openness, mutual respect, and care.

An important thing to note is that performance management has transformed into a tool of compliance rather than actually serving any real talent objective. Suri says, “It almost feels like organizations are merely paying lip service to all of these management tools. It is, therefore, more important to look across the whole spectrum of the 5Cs rather than focusing on only one aspect of talent. A progressive organization is one that has the foresight to view talent both as an opportunity and a risk and plan accordingly.”