Canadian HR Reporter

CANADIAN HR REPORTER March 20, 2017 6 NEWS Leadership, engagement, change top 3 human capital challenges: Report BY SARAH DOBSON THREE human capital chal- lenges are expected to dominate the human resources agenda over the next five years — leadership development, employee engage- ment and the capacity to respond to change, according to the Con- ference Board of Canada. And the three are interrelated. Without them, organizations will struggle to make the most of a slow economic and business in- vestment climate, said its report HR Trends and Metrics, based on a survey of 150 Canadian organi- zations in 2016. "Overall, the top HR priorities are aligned with these human capital challenges. But if HR is to respond effectively to change, it needs a sound evidence base, grounded in meaningful data and analysis, to inform all of its program design and delivery practices." Leadership capacity Leadership capacity is the pre- dominant human capital chal- lenge for both the short- and long- term. Likewise, management and leadership development contin- ues to be a top HR priority. It's been a trend over the years, but the context has changed, with transitions to a digital economy and retirement waves hitting their peak, said Shannon Jackson, asso- ciate director of HR transforma- tion and effectiveness research at the Conference Board of Canada. "ey're hitting that peak for re- tirement just as future disruptions are erupting everywhere. And for a lot of businesses, they're unclear of what's coming next, so from the HR leader's perspective… and or- ganizational leaders, knowing how many leaders they need, what are going to be the skills and behav- iours and capabilities they need to develop or recruit becomes a bit of a moving target," she said. "And that affects how they're building their capacity... it also means that there's pressure on the existing leadership, so their capac- ity continues to be stretched as we see different approaches to busi- ness models and the size of teams they may have." What it takes to be a good leader has changed as the role becomes more complex, said Sandra Reder, president and founder of Vertical Bridge Corporate Consulting in Vancouver. "It's a way different world out there. To be a leader in today's business climate, the old com- mand-and-control style is long gone, and back in the day, you were the boss and you got to say what happened and if people didn't like it, they sucked it up and left — you can't lead that way anymore. You've got so many dif- ferent factors impacting — you've got technology, generational is- sues in the workplace, you've got your leaders now coming out of that younger generation and they're a different breed, they're hard-wired differently, so to iden- tify them and nurture them and grow them, it requires a whole dif- ferent set of rules and skills." Historically, there really hasn't been an adequate focus on leader- ship development and succession, and that's lead to leadership ca- pacity issues, said Laura Williams, principal of Williams HR Law Pro- fessional in Markham, Ont., along with "a dearth of individuals that are available to hire externally, that right out of the gate have adequate leadership capabilities." There are many factors that have led to a rise in complexity of the role, she said. "You've got increasing diver- sity across workforces, which has made employee motivation, engagement, retention, a greater challenge; not to mention global- ization has opened up new mar- kets to Canadian businesses, but it's also exposed our organizations to increased competition for tal- ent, product and service and in- novation… and then you've got a changing legal landscape and heightened legal requirements and responsibilities on employ- ers and on managers specifically, certainly requirements that relate to accommodation, medical dis- ability, gender identity, religious accommodation." Plus, there are top performers who prefer career mobility, mil- lennials who like to job hop, and a greater focus on employee en- gagement, said Williams. "You've got to balance that with meeting operational demands, which often requires leaders to do more with less. So you have to be strategic and you have to be results-driven." Engagement big concern Leadership is linked to employee engagement, which is the second most important human capital challenge, according to 43 per cent of the survey respondents for the short term, and 34 per cent for the long term. It's also ranked third on the HR priorities list. "If you have sophisticated lead- ership in an optimally engaged and productive workforce then, for the organization, that's gold," said Jackson. "People are looking to their senior leadership to have a clear vision to know how to navigate through this uncertainty, make it clear how the employee fits in today and what that could look like in the future." Overall, there's a shift in orga- nizations, and employee engage- ment is contributing to that, she said, citing the fact that a less-than- two-per-cent voluntary turnover rate among mission-critical skills indicates people are engaged. "If people have the skills, capa- bility and understanding of how they're contributing to the overall organization, and have autonomy to do the job, then they're engaged in their work. So personal and pro- fessional growth becomes a very important element of that. People want to be good at what they do." People move around when they're not happy, they're blocked in their career growth, they don't feel valued, they feel they're not paid properly or they don't feel there's a future in their role. So employee engagement is impor- tant, said Reder. "If you aren't paying attention to it, your employees are ripe for headhunting, they're ripe for somebody coming in and poach- ing them. And we all know it's way harder to find somebody new and train them up than it is to keep good people." While most employers under- stand engagement is important and they need to spend more time and focus on the issue, it doesn't mean they're all doing it — or they're doing it well, she said. "ey've got their hands full, there's just so much going on, the world is changing… Organi- zational change, it's going at the speed of sound right now, so to be a leader in this market, it's not just about leading your people, it's also staying on top of all the change going on in terms of globally, and locally and technologically, and then you've got the people, trying to stay one step ahead of what's going to happen next." Higher engagement levels also tend to result in fewer law chal- lenges and legal escalations with- in the workplace, such as costly wrongful dismissal challenges or human rights complaints, said Williams. "e challenge for many orga- nizations is leadership capacity — many managers and business owners are simply too over- whelmed from working in the business, and distracted by what they believe to be what drives the bottom line, than focusing on en- gagement. I think that there is a trend that suggests more employ- ers are making the necessary in- vestments to foster stronger em- ployee engagement, but there are many others that still lag behind. It's either due to a lack of will or sometimes it's revenue — they don't connect to the value enough to commit to these efforts." Organizational change e third top human capital chal- lenge deals with organizational change — more than one-third (39 per cent) of respondents ranked the capacity to respond to rapid change as a top short-term human capital challenge in 2016, up from just over one-quarter 10 years ago. However, they ranked the issue as less important (24 per cent) in the long term. "Organizational change has al- ways existed, the difference now is the pace," said Jackson. "With the digital changes, new technology, new regulations, new everything, it seems every day those things are changing, and organizations that don't know how to flex well are having difficulty responding. For the HR leaders… they have to re- vamp their methods of delivering talent management to the organi- zation, not only delivering it but developing the strategies. So we're seeing a revamping — in some cas- es, deconstruction and then recon- struction — of traditional HR prac- tices; so recruiting, for example, or performance management." With the gig economy and hir- ing of more individual contrac- tors, recruitment could be done through HR, the project manage- ment office or operations leaders, she said. "It depends on your organiza- tion and whether you have that centralized and whether your organization considers those in- dependent contractors or con- tingent workers part of your workforce, or part of your service providers." ere are all kinds of influenc- ers and drivers that are leading to changes that are well within an organization's contemplation, said Williams. "You've got international com- petition, demographic shifts, changing workplace norms, shifts in employment legisla- tion… there's also changes in the way that we work, greater em- ployee demands for flexibility, more part-time work, working remotely... A lot of these translate into trends that are accessible and organizations can be much more planful and less caught reacting," she said. "It sometimes is dumbfound- ing the fact that the organization is caught scrambling when it was well within their contemplation that changes are going to happen." A lot of employers don't take the time to analyze trends within their own industry, so they can an- ticipate and lead the change, rath- er than react to it, said Williams. "The organization has to be nimble and agile, so they're change-ready, and they don't feel that sense of uncertainty… because the lack of certainty can erode an organization's credibility if it looks like they're floundering or they're lagging in response to change, and that leads to attrition." Being able to track, anticipate and prepare for the people im- pacts of these changes will grow in importance, and competencies in navigating change will be a re- quirement for all leadership, said the Conference Board report. It comes down to intentional, customized leadership develop- ment that's relevant to a particular organization's workplace realities — and emphasizes influencers such as competition, changing workplace norms and new legis- lation, said Williams. "All of that should be embedded in the program so the leaders are equipped to deal with situations when they arise." And organizations should le- verage opportunities change pres- ents, she said. "It could be opportunities that relate to you culling a certain per- centage of the workforce that's ineffective; there might be some innovation that becomes more viable based on the changing landscape, for whatever reason. There's so many opportunities that change brings so it's making sure that the organization has that mindset, that they're not fearful of change, they don't feel paralyzed by uncertainty but they embrace the opportunity." "Every day, things are changing and organizations that don't know how to flex well are having difficulty responding. HR leaders have to revamp their methods."

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