A look at current trends and data

Citation

Nolan, S. (2013), "A look at current trends and data", Strategic HR Review, Vol. 12 No. 1. https://doi.org/10.1108/shr.2013.37212aaa.009

A look at current trends and data

Article Type: Research and results From: Strategic HR Review, Volume 12, Issue 1

Sara Nolan

European productivity levels reach a low

European companies’ employee productivity levels are at a five year low, according to new research by PwC. The company’s Key Trends in Human Capital 2012 report reveals that productivity levels saw a sharp drop in 2011 following a period of relative stability between 2006 and 2010. The report suggests this drop is driven by an increase in employee costs, which have jumped 16 percent from 2009 to around $55,000 in 2011.

The report, which is based on data from over 2,400 organizations in over 50 countries, suggests that this increase in employee costs is largely down to companies cutting back on their recruitment of lower grade employees during the downturn. This has left companies with a higher proportion of experienced workers who command greater pay, compared to younger, less experienced workers, whose pay bills will be lower. This comes at a time when companies are seeing little, or no, revenue growth.

Lower return on remuneration investment

This means Western European companies are getting a much lower return from their investment in their workforce. The report reveals that human capital return on investment (HC ROI), an analysis of the pre-tax profit produced for every pound, euro or dollar paid out in remuneration, has fallen to 1.11 in Western Europe. This means that employers are now only getting the equivalent of $1.11 back for every $1 they invest in someone.

Richard Phelps, human resource services partner at PwC, comments: “Our analysis reveals that the percentage of employees with less than two years’ service has fallen sharply to 22 percent. Many organizations across Europe have chosen experience over youth to see them through the recession, but cutting the recruitment of younger workers means they are paying out much more for their workforce for less return. The difficult job market means many experienced workers are staying longer in jobs, leaving companies struggling with top heavy structures, little staff turnover and rising wage bills.”

PwC suggests that many companies need to go back to basics and improve their performance management processes to ensure that people of all levels are delivering value. For many companies, this will mean implementing more vigorous performance management that really differentiates between higher and weaker performers and rewards them accordingly. Companies need to really understand what their employees want, what matters to them and what motivates them.

Geographical variances

The report highlights that UK and European companies still lag behind their US and Asian counterparts when it comes to maximizing profit from their investment in people. It also shows that despite the US seeing a drop in its return on investment, for every dollar paid out in remuneration, US employers typically get 20 percent more pre-tax profit in return compared to UK companies.

For more information

Visit: www.pwc.com

Employees value development opportunities

Employees highly value the development opportunities they are offered by their employer, according to research conducted by assessment and development consultancy Cubiks. Over 500 people from 33 countries answered the survey, which asked respondents about their opinions on development and talent management.

The results from the survey illustrate that development opportunities play a crucial role in staff retention, as 93 percent of employees said that they would stay longer with an organization that invests in their development. In fact, over 70 percent of people prioritize their development to the extent that they would prefer to be offered training courses than additional holiday, and more than half of respondents said that they would choose development opportunities over a pay rise.

Although this demonstrates how important people feel their opportunities for development are, the survey showed that employees value some development activities much more than others. Coaching was identified as the most preferred activity, while training on the job is perceived as the most effective. People showed a distinct preference for development activities that involved interaction with colleagues or trainers; it is therefore unsurprising that newsletters and e-learning are seen as the least effective training methods.

Other key findings include the following:

• •

  Only 50 percent of people see themselves as responsible for their own development.

• •

  People recognize the fact that development is as important to the organization as it is to the individual.

• •

  Many organizations seem to lack a structure for talent identification.

• •

  Employees lack confidence in unstructured talent identification processes.

For more information

Visit: www.cubiks.com/survey

Organizations benefit from appointment of “expert leaders”

Organizations perform better when leaders have done the same job as followers, a 60-year Formula One study suggests. It shows that Formula One teams led by bosses who started out as drivers or mechanics win twice as many races as their rivals. Researchers say the key to success is hiring so-called “expert leaders” – individuals who have built up years of experience on the floor – instead of general managers. The pattern applies not just in Formula One but across other public and private sector organizations too.

The findings come from London’s Cass Business School and the University of Sheffield where academics analyzed every Formula One race – almost 18,000 – staged in the last 60-years. They found that the most successful team leaders are more likely to have started their careers as drivers or mechanics compared with Formula One leaders who are professional managers or engineers with degrees.

Implications for business

The authors argue their findings show that organizations headed by individuals with deep technical knowledge and experience in the firm’s core business, coupled with strong leadership ability perform better than firms where general managers are at the helm. “Is it important that the CEO of McKinsey was an outstanding consultant first? Should the BMW boss be an engineer? Are doctors better at running NHS hospitals? We would argue, ‘yes’,” says co-author of the study, Dr Amanda Goodall of Cass Business School.

Dr Goodall continues: “Over the last three decades, managerialism has become pervasive. Major blue chip firms have shifted away from hiring CEOs with technical expertise, towards the selection of professional managers and generalists. The swing of the pendulum has gone too far – leaders should first be experts in the core business of their organizations, whether they are bankers, hospital administrators, restaurateurs or technology innovators. Being a capable general manager alone is not sufficient.”

Dr Goodall conducted a previous study of 300 hospitals in the US which found that hospitals run by doctors outperform those run by managers.

For more information

Visit: www.cass.city.ac.uk

Multinationals supporting global employees

Some 51 percent of workplaces globally experienced a crisis (natural disaster, civil unrest, employee death, etc) in the past year, according to a global benefits report released by ComPsych Corporation, provider of employee assistance programs (EAPs). In addition, 37 percent of organizations surveyed report they plan to expand EAP services to their multinational employee population.

Dr Richard A. Chaifetz, chairman and CEO of ComPsych, comments: “Multinational organizations are realizing the importance of support services to help employees – wherever they work or live – recover from critical incidents that can cripple business operations as well as productivity.”

Global workforce challenges

In the report, ComPsych also polled HR and benefits professionals of multinational organizations on global employee issues. The top five global workforce challenges were reported as the following:

1. 1.

   Work-related stress and anxiety.

2. 2.

   Balancing family responsibilities.

3. 3.

   Financial pressures.

4. 4.

   Weight management.

5. 5.

   Depression.

For more information

Visit: www.compsych.com