(First of two parts)
Organizations have been undergoing wave after wave of transformation since disruption is now a modern-day constant, and managing talent plays a key role to overcoming every obstacle that organizations encounter. The war for talent continues to heat up in today’s uncertain business landscape.
In order to support and counsel the CEO on their transformation and growth strategy, Chief Human Resources Officers (CHROs) and their equivalents have had to go well beyond traditional human resources territory. However, in order to recruit, keep, and utilize the best talent now and in the future, organizations must acknowledge that talented workers have a significant amount of negotiating power.
The CHRO is responsible for all things related to people in an organization, including the development and implementation of a people management strategy. This includes how to attract, onboard, engage, develop, reward, and retain the talent necessary for the organization to succeed. It also includes succession for C-Suites, change management, executive compensation, and diversity, equity and inclusion (DE&I) initiatives.
In the current talent landscape, the role expands further to include purpose, culture, and well-being, which are all increasingly important factors for employees. More recently, these factors include access to more flexibility in ways of working as well as development opportunities.
Boards must manage the talent agenda in a way that takes the current dynamic into account. This means ensuring that the CHRO role is elevated from business function to strategic collaborator, and that talent management continues to be a primary business focus. Additionally, it entails helping the CHRO listen to employees and influence the company to develop a human-centered culture and a more tailored employee experience.
In order to better understand why the connection between the board and the CHRO is becoming more crucial, insights from EY thought leaders and clients were gathered to further uncover the strategic value of the CHRO role. These insights fueled strategies to improve the board and CHRO dynamic along with the ways of working. Instead of merely reducing potential risk, organizations can find opportunities in current, unheard-of labor trends to gain a competitive advantage.
CHALLENGES IN TALENTThe responsibility of the board is to ensure that management provides the organization with the key talent it needs to execute its strategy. However, in recent years, a depleting talent pool and rising employee demands have made this difficult. The pandemic and its economic repercussions compounded the issue by creating a shift in what employees value in both their professional and personal lives — and the situation is still evolving.
Talent challenges are being exacerbated by a constantly evolving environment. Just three years ago, flexible working was a differentiator or a means of achieving a competitive edge. Now, according to the EY 2022 Work Reimagined Survey, as much as 90% of the respondents said they would think about quitting their current position if flexible working was not an option. Flexibility also has different meanings, as younger individuals might prefer to work from the office more as a result of rising heating and cooling expenditures. However, those who drive or commute to work are more inclined to prefer the reverse to save money on fuel and time.
A recent EY survey of graduates and interns looked into what will keep younger generations engaged and motivated due to their tendency to shift employment more frequently. Since flexibility is becoming more and more synonymous with mobility for these groups, governments all around the world need to develop policies that can compete with the attractiveness of traveling abroad for work. This reality is particularly true for the Philippines with our sizable overseas worker population.
Meanwhile, since the COVID-19 pandemic started, a sizable number of the population over the age of 50 have quit working in some advanced economies. Organizations have to assess the effects of this shift while monitoring market conditions and, where necessary, think about strategies to entice this group back.
Organizations are being forced to react quickly in the short term as a result of this ongoing disruption. One way is by assessing how the cost-of-living crisis is affecting employees and developing assistance strategies. However, focusing on the short term may also keep CHROs and their boards from thinking strategically. The organization must be able to assess the talent it currently has, the talent it will require in the future, and the best way to bridge the talent gap.
PERCEPTION GAPS WITH EMPLOYEESBoards and their CHROs must make decisions about how to carry out commitments related to the talent agenda while navigating a rapidly shifting, occasionally contradictory reality. While they are better positioned to do so now than before the pandemic, the EY 2022 Work Reimagined Survey found that employers and employees are not always on the same page when it comes to employee engagement.
For instance, when asked why they would change professions, employees most frequently cited career advancement and an increase in overall salary. On the other hand, employers say that learning, skills development, and well-being are some of the key elements to ensuring their employees can thrive. Additionally, there is a “loyalty disconnect” where employers think younger generations are less dependable. However, younger workers claim that they merely have different loyalties and values. Younger workers, for instance, place a higher priority on mental health, the mission of an organization, and its ethical standards than they do on management structures or the actual work.
Organizations must act fast to close these perception gaps while maximizing the abilities of each and every worker. Putting humans at the center needs to be a strategic focus for the board and the CHRO to better understand what employees across all demographics want.
CONSIDERATIONS FOR BOARDSBoards will need to ask themselves how they enhance both formal and informal talent governance to support and reflect the strategic relevance of the CHRO role. By collaborating with the CHRO, they can make sure the company stays on top of talent issues and can deal with the constantly shifting attitudes of its employees.
The management group and the larger employee organization will have to determine how they uphold the culture and values of the company, as well as the systems in place to quantify this. Boards will also have to determine if the company has the necessary expertise and abilities, particularly those for future leadership, to execute its business plan.
Lastly, board members must ask themselves what role they see themselves playing in developing a sustainable workforce and advancing the talent agenda. This can range from retraining the workforce and gauging the employee experience to boosting staff retention and integrating hybrid working styles into organizational culture.
The second part of this article will discuss three strategies for boards and CHROs to help each other succeed: strengthening and enabling the CHRO role, re-examining the risk framework to support the talent agenda, and supporting CHROs in developing a human-centric strategy and employee value proposition.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.
Lisa Marie T. Escaler is the People Advisory Services Workforce Advisory (PAS WFA) leader of SGV & Co.