The war for talent
When McKinsey & Company first coined the term ‘war for talent’ in 1997, it was referring to recruiting and accessing ‘high talent’ skills seen as critical to an organisation’s success. Today, Peter Cheese, CEO of the CIPD, believes ‘talent’ is more encompassing – referring to all the skills and capabilities needed by the organisation – from transactional to more developed skills.
Paradoxically, employers are also experiencing critical skills shortages, which for Cheese is “extraordinary” given the recent high rates of unemployment. And although the jobs market is steadily showing signs of improvement, many skilled vacancies remain.
For Cheese, this means organisations’ ability to create clear EVP, recruit people effectively, engage and retain them – has never been more critical. “Good people-management practices, recruiting for diversity and hiring for attitude are becoming much more central to businesses’ short- and long-term success,” he says.
A holistic view of leadership capability
In light of this, Cheese believes a more holistic view of leadership is necessary. “Most business leaders have come up through the finance function, having been trained in a very pragmatic way dealing with strategy and numbers,” he says. “There has not been enough teaching or consideration of people and organisational parts of the business.”
He argues that we are now experiencing a new paradigm of leadership. To be effective, business leaders must put more emphasis on understanding people, corporate culture and capability.
“People are material in the financial, social and business sense – yet we haven’t been measuring as if they were,” he says. “When you hear heads of corporations, heads of banks, heads of the health service etc saying, ‘our biggest failure was corporate culture’, you know the agenda is starting to move. We’ve known that culture is an essential ingredient for business success for a long time but only now is it coming into the frame when you think about leadership.”
Cheese also highlights the importance of individual leadership capability, which translates to authenticity, integrity and role-modelling the behaviours and values of the enterprise. For Cheese, developing these capabilities must be applied at all levels of the organisation. “You can’t have a sustainable business if your people on the front line are not doing that stuff,” he says. “I don’t think we have devoted enough time to training and understanding basic people management capabilities at first line supervisory level and upwards.”
The new workforce characterised by diversity
With the workforce now being so diverse (and Cheese is keen to point out this goes way beyond ethnicity or gender equality) there is an opportunity for performance and innovation. However, it is up to leaders and managers to respect variations in working and consider how to motivate people who operate in very different circumstances.
He also warns against developing unconscious bias amid this new workforce. “If you have two team members, one who works from home and one who works from the office, it’s easy to develop an unconscious – or even conscious – bias to the person who is there all the time. This is based on a paradigm of presenteeism, instead of assessing and understanding them on an outcome basis,” he says.
He argues that unless we can teach our managers to understand and work with these differences, and train and coach their team members accordingly, we will not get the best out of people.
The changing role of HR
“In HR, we’re operating in a changing context, where the emergence of ‘megatrends’ is defining a new workplace, workforce and work,” says Cheese. “There’s much debate among business leaders, government, regulators and politicians about the nature of organisations: ‘Do they reflect society? Are they agile? Do they promote social and sustainable business?’ It’s not just about recruiting the right people but asking if we are building the right organisations.”
These questions are all on HR’s agenda, says Cheese, so collectively HR needs to step up. “Although we’ve done many good things, we haven’t fully landed the space about HR’s role in organisations and the value it can bring,” he says.
To achieve this, Cheese is clear in his conclusion that HR must look more at metrics – something he acknowledges has been a “long-standing challenge of the profession” – to provide robust data and insights.
Shifting the directional thinking of HR
The CIPD is working towards framing a model that brings together different domains in thinking, which it believes will shift the directional thinking in HR. This comprises three elements, explains Cheese. The first one is contextual – developing an understanding of the emergence of ‘megatrends’ and shifts in the nature of work, workplace and workforce. “Every profession has a context and this is ours,” says Cheese.
“There’s no question that these trends in how the new generation of worker thinks, learns and collaborates in the modern workplace will affect every enterprise. So we need to identify ways in which the CIPD can bring together research and insight to help HR professionals understand how to relate this to their own organisation.”
Next, the agenda on measurements and metrics must progress, asserts Cheese. “We don’t have any consistency, understanding or reporting – not even a common definition on basic stuff like headcount,” he says.
This is not just important for HR but also for finance and the wider business profession. “Most of what finance measures on balance sheets accounts for the minority of corporate value. The majority is ‘intangible’ and a large part of that is human capital. The finance profession knows it cannot go on calling this stuff intangible, so we have to put better definition and understanding on it,” explains Cheese.
The CIPD is actively working on an initiative called Valuing Your Talent, which aims to share best practices and build a common framework and exemplars of good people and organisational metrics.
Finally, there is the science of human and organisational behaviour. Cheese believes that there has been so much focus on efficiency and process that we have lost the science of what is at the heart of HR – understanding people.
These three elements provide a solid base to think about a future for HR that is more value-adding, less process-driven, more connected and integrated to business and adding greater value. But is HR ready for this? “There are many examples of HR practitioners fundamentally rethinking what they are about, measuring stuff and doing great things, but we need to learn from these examples,” says Cheese.
“Having been criticised heavily for our effectiveness, HR has lost confidence. We have to regain this and build more solid platforms for the future.”