Over the last 30 years, business strategists have taught us that customers come first. If you treat your customers well, they will amplify your brand, refer your product, and of course buy more. But today, as our newest research finds (Deloitte Human Capital Trends 2017), the formula has changed:
Consider your employees your #1 stakeholder. They, in turn will take care of your customers, who in turn will take care of your shareholders.
Consider a few simple facts. Despite the huge focus on employee engagement and culture in business (The word “culture” was the most frequently searched word in the Merriam Webster’s dictionary last year), US business productivity is barely increasing. Employee engagement is flat (I’ve been studying it since 2003 and it has not gone up at all, and employees are more overwhelmed than ever. In fact we are taking 4 less days of vacation in 2016 than we did in 1998).
This year we surveyed more than 10,000 business and HR leaders in 140 countries—our largest survey to date— and found that “employee experience” is more important than ever. From recruitment to retirement, leading organizations are rewriting the rules and innovating all aspects of the employee experience to attract and retain the right talent, enhance engagement to boost productivity, and gain a competitive edge.
Attracting the Right People Is Everyones Job
As companies across industries continually report skills shortages, finding the right talent is a top concern. Respondents to this year’s Trends survey cited talent acquisition as the third most important issue, with 82 percent calling it important or very important. Notably, talent acquisition is no longer just an HR responsibility. In addition to identifying competitive talent, recruitment efforts are now considered an opportunity to share an employer’s brand and value proposition. Yet only 15 percent of global business leaders surveyed this year believe their companies do an excellent job cultivating and monitoring long-term relationships with potential future talent.
So how can companies gain a competitive edge in acquiring in-demand employees? As recruitment faces tremendous pressure to expand talent sourcing channels, a new breed of cognitive technologies is emerging. Artificial intelligence, predictive analytics, video interviewing, tools that match candidates to jobs based on previous experience, job simulation software, and even video-games are all being used to identify valuable skills in overlooked talent pools. These tools save money and shorten the hiring timeframe, while creating a differentiated and compelling candidate experience.
Employee Engagement Is A Complex Problem
In this new world of work, employees expect an engaging experience. And each employee, based on their age, tenure, and role, expects something a little different. The old fashioned concept of an annual engagement survey has gone the way of the dinosaur: today more than 20% of companies survey their employees quarterly and many now have “always-on” listening tools to let employees speak up.
I know this is hard because I talk with companies about this every day. Nearly 80 percent of executives rated employee experience important or very important, but only 22 percent reported that their companies really know how to make employees’ work lives better.
Our research shows there are quite a set of things to consider. Our research shows that there are 20 different elements (shown below), and the only way to really understand them is to listen to people, create a culture of people first, and focus management on people first, numbers second.
Part of this problem is the enormous trend toward fixing the annual performance process. Today 79 percent of executives rate the redesign of performance management a high priority, up from 71 percent three years ago, and our research shows that almost every company that makes their annual process more developmental and open sees tremendous positive change. Deloitte, GE, IBM, Patagonia, and hundreds of other companies have made this change and all see tremendous positive effects.
Let People Be Themselves
One of the most important strategies at work today is to let people be themselves. Our research shows that executive priority on inclusion and diversity jumped up 53% over the last two years, pointing out how important it is to let people come to work as their authentic selves. Not only does this give people a feeling of empowerment, it lets them express their citizenship and local identity in a powerful way.
Leading companies today focus on inclusive people practices in a deliberate, CEO-driven way. Patagonia, for example, encourages employees to take action in local and national environmental causes, even to the degree the company will pay for employees bail if they are arrested while protesting. Salesforce.com gives employees 7 days a year for paid “VTO” (volunteer paid time off). Deloitte and other companies focus heavily on Diversity metrics and hold leaders accountable for open diverse hiring and promotion practices. More than 20% of respondents told us that management pay is now tied to levels of inclusion and diversity on teams.
Automation Comes To Work: How Do We Keep People Happy?
We are all talking about the increasing role of AI, robotics, and cognitive software systems. People are worried about whether automation will take their jobs. This year only 15 percent of global executives in this year’s survey report they are ready to manage a workforce with people, robots, and AI working side by side—the lowest readiness level for a trend in the five years of the Deloitte Global Human Capital Report.
It turns out automation does not typically eliminate jobs. Innovative organizations are leveraging cognitive technology and connectivity to augment—rather than shrink—the workforce, freeing up employees for deeper, more strategic work. Forty-one percent of companies reported they have fully implemented or have made significant progress in adopting cognitive and AI technologies within their workforce; and ten percent consider themselves fully automated. Notably, most companies (77 percent) say they will either retrain people to use technology or will redesign jobs to better take advantage of human skills. In some respects, AI is eliminating tasks and actually creating jobs.
Careers & Learning Take Center Stage
An augmented workforce is enabled by learning. With technology advancing at unprecedented speeds, companies must overhaul their approach to career models and teach employees the skills they need. It’s no wonder that careers and learning rose to the second most important challenge in Deloitte’s Trends survey, with forty-five percent citing it as urgent or important. In fact, we found that the fastest-growing HR tech spending segment is the adoption of employee learning systems. Yet companies’ ability to keep up with employees’ demands for learning and career growth has dropped by five percent since last year’s survey.
So how can companies tackle this challenge? As employees push for career development and learning opportunities, around 70 percent of companies are redesigning or recently redesigned their entire career management strategy. New tools for continuous, curated, and digital learning are breaking through, and CLOs are taking a cross-functional and interdisciplinary approach that mirrors the dismantling of siloed hierarchies and deployment of project-oriented teams. Furthermore, as today’s employees expect a dynamic career trajectory, the percentage of companies with strong experiential programs for leaders rose by nearly 37 percent from 47 percent in 2015 to 64 percent this year. However, 65 percent have no significant program to drive digital leadership skills.
To stay competitive amidst such rapid change, companies must capitalize on the very technologies that are disrupting the world of work. From finding and retaining the right employees to reskilling an augmented workforce, organizations across the globe are finding that reinventing the entire employee experience has become essential to business success.