Across Europe, HR professionals are getting on with the day-to-day business of managing the people side of their organisations.
But despite the differences in local culture and economy, a study of more than 1,000 executives found clear, common concerns among HR practitioners. The report, from business consultancy the Boston Consulting Group (BCG), highlighted five critical HR challenges that must be dealt with over the next decade. They were:
- managing talent
- managing demographics
- becoming a learning organisation
- managing work-life balance
- managing change and cultural transformation.
Talent emerged as by far the most pressing issue. So pronounced is the problem that the number of firms planning to move to new locales, such as India, in search of skills is likely to triple in five to eight years.
Mike McDonnell, president of the European Association of Personnel Management, said this was not just HR’s biggest challenge, but the main headache for European boardrooms.
“Ten years ago, companies used to say ‘people are our greatest asset’ and not really mean it. But today it’s at the top of every board’s agenda,” he said. “It presents a great opportunity for HR to become strategic.”
McDonnell believes successful companies will be those looking globally for talent, even for local operations. Launching initiatives around specific communities, such as older workers or women, will also be important, he said.
He also predicted that companies will put more emphasis on how they manage employee exit strategies. Companies are far more likely to take people on for short periods – say five or seven years – rather than for life, he said. “There will have to be more dialogue between employers and these groups, along the lines of: ‘I will take you on for ‘X’ number of years and give you this in return’.”
Jane Burt, HR director at BP, agreed that companies needed to be more innovative when sourcing people. She pointed to organisations already using the social networking website MySpace to attract people as a good example of novel thinking.
Burt also made a connection between the need to manage work-life balance and the drive to attract recruits from a wide talent pool. Offering employees flexible choices can become a great selling point, she said.
Tackling the work-life balance conundrum seems to be of particular concern in Eastern Europe. Bulgaria, the Czech Republic and Estonia included it in their list of top three priorities.
According to Rainer Strack, a partner at the BCG practice in Dusseldorf and an author of the report, this may be because people in these countries have spent years working hard to boost their economies and bring them in line with the rest of Europe. “They are tired and now want a more meaningful workplace,” he said.
But a wider issue for the whole of Europe is the changing demographic picture that will see the percentage of the population aged over 50 drastically increase during the next 15 years.
Redirecting learning and development resources to help older workers retrain and upskill will become increasingly important. “At some companies, more than 20% of the workforce is over 50 and only 2% of the training budget is focused on them – this is unsustainable,” Strack said.
Companies that fail to realise how much of their intellectual property and skills reside with mature workers could risk going out of business. Strack said: “Who will be responsible for looking after the older IT systems, for example?”
To find out where skills shortfalls exist, he suggested organisations forecast, on a ‘job family’ basis, how their current workforce will develop over the next five, 10 and 15 years, taking into account recruitment, retirement and attrition rates.
Navigating organisations through these huge challenges requires leadership – a point not lost on Tom Randle, head of HR at insurance provider Europ Assistance.
Improving leadership development was listed as one of the three key HR topics for UK and Irish firms, but Randle was baffled that the issue didn’t make it into the overall top five challenges across Europe.
“[Improving leadership development] has such a direct impact on a company’s ability to deliver and achieve its objectives,” he said.
The main challenges facing leading European countries
- Leadership – strong economic growth and globalisation have raised the profile of leadership development in the UK.
- Talent – executives at multinationals expect to source talent in both local and global markets, as well as moving activities to locations with extensive labour pools.
- Demographics – the average retirement age is lower than most European countries, so finding a new approach for managing the careers of older workers poses a major challenge.
- Employee commitment – with the historical importance of the public sector in France, companies have had a late start in developing incentives and motivation systems.
- Demographics – in some sectors, such as engineering, older employees account for a high percentage of a small workforce.
- Talent – for the same reasons managing talent is now a priority in Germany.
- Work-life balance – in the wake of the economic boom, employees’ expectations have risen substantially.
- Learning organisation – in an economy driven by IT, telecommunications and engineering, it is critical that companies keep the skills of employees up to date.
- Diversity – in 2005 Spain saw its immigrant population increase by about 700,000 – a trend that has seen diversity management put firmly on the agenda.
- Employee commitment – in a growth economy, employees have the opportunity to change jobs easily, and companies are struggling to find replacements to fill vacancies.
Source: The Boston Consulting Group