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“Softer” issues of culture, engagement becoming harder for companies to master


By Neil Amato

Workers who are motivated on the job, inspired by a strong boss, and excited about an organisation’s purpose can be considered engaged employees. Employee engagement can be defined beyond those parameters, but HR and business leaders are generally in agreement: They know an engaged employee when they see one.

Yet, while many companies grasp the importance of employee engagement, some report inadequacy in trying to improve engagement, and others say they are deficient when it comes to leadership development or establishing a company culture.

In addition to the challenges of engagement and leadership, a new Deloitte report shows, companies struggle to decrease workplace stress and reduce complexity. Sixty-six per cent of respondents in a global survey believe employees are overwhelmed by today’s work environment, and 74% say workplace complexity is a significant problem.

All of these issues add up to one key problem: Companies fear workers will leave and that they will have to join an escalating competition for talent.

“Every program in HR must address issues of culture and engagement: how we lead, how we manage, how we develop, and how we inspire people,” the Deloitte report said. “Without strong engagement and a positive, meaningful work environment, people will disengage and look elsewhere for work.”

Lack of employee engagement is the top issue for 87% of respondents in the Deloitte survey, up from 79% last year. Very few organisations (12%) have a programme in place to define and build a strong culture, and just 7% rated themselves as excellent at measuring, driving, and improving engagement and retention.

These numbers are similar to data from a 2014 report by Development Dimensions International and The Conference Board. That report said that CEOs cited human capital as a top challenge but that a mere 9% were “very ready” to address the human capital challenge.

“As demand for talent picks up, the balance of power in business is rapidly shifting from the employer to the employee,” Josh Bersin, principal and founder of Bersin by Deloitte, Deloitte Consulting LLP, said in a news release. “Moreover, workers are becoming more mobile, contingent, and autonomous, and as a result, harder to manage and engage. In this new world of work, organisations need to re-imagine the way they manage people and come up with new, out-of-the-box ideas to make themselves relevant.”

Deloitte listed six key findings from its research, which came from more than 3,300 HR and business leaders in more than 100 countries.

“Softer” areas such as culture and engagement, leadership, and development have become urgent priorities: Leadership remains a concern, but culture and engagement replaced it as the most important challenge. The number of respondents calling culture and engagement very important went from 26% a year ago to 50% this year.

Leadership and learning have dramatically increased in importance, but companies seem less capable to address those challenges: While the importance of learning and development quadrupled compared with last year, companies have struggled to redesign the training environment, incorporate new technologies, or employ digital learning tools, Deloitte said.

HR organisations and HR skills are not keeping up with business needs: Using a rating scale of 1 to 5, with 1 being “underperforming” and 5 being “excellent,” HR leaders rated their organisations at 1.65, similar to last year’s ratings. Non-HR leaders rated the HR function at 1.32.

HR technology systems are a growing market, but their promise may be largely unfulfilled: While most companies plan to increase HR spending in the next 12 to 18 months, the report says, that increase “has not been accompanied by similar investments in process and people.” Meaning, a new technology doesn’t do much good without sufficient training or process redesign.

Talent and people analytics are a high priority and a tremendous opportunity, but progress is slow: Just 8.4% of respondents believe their organisations have a strong HR analytics capability, nearly the same number as last year.

Simplification is an emerging theme; HR is part of the problem: The “overwhelmed employee” was a theme of last year’s survey, and 71% of companies rated work simplification as important or very important. Also, Deloitte said that companies are phasing out “traditional performance management processes, notorious for their burdensome nature,” and switching to a streamlined process.

Related CGMA Magazine content:

Companies Aware of, but Not Acting On, Need to Alter Engagement Strategies”: Most companies are aware of the need to focus more on employee engagement, but few say they are doing enough to adapt to coming changes.

Mistakes CFOs Should Avoid to Keep Employees From Quitting”: Surveys with CFOs and office workers in the US suggest that inadequate compensation tops the list of mistakes CFOs make that prompt employees to quit their jobs.

Neil Amato (namato@aicpa.org) is a CGMA Magazine senior editor.

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