1. The talent paradox Before HR can help an organization address the talent gap, it needs to address its own

2. The role of HR continues to challenges such as leadership development andpipeline, creating a high performance culture, talentevolve, gradually shifting from management and acquisition, and anticipating andresponding to mission-critical events. According toadministrator to strategicthe survey, these are the types of challenges thatdrive an organizations overall performance. To meetbusiness partner. Traditional HRthe challenges, respondents expect HR will need tosignificantly upgrade its talent and capabilities.focus areas such as improvingStrategicHRrequiresnewskillsandHR operational efficiency,competencies. Competencies expected to rise themost in importance over the next three years are allreducing staff costs, and training/ fundamental to HRs new role as a strategic partner things like innovation, strategic thinking anddevelopment are now tablestakes.analytical ability, relationship building/strategicpartnership, and business acumen. Unfortunately,They must be done well, but the survey data shows that many of these criticalfuture competencies are currently viewed as HRsdont provide a sustainable weakest areas. 38% of respondents say that HR isweak or very weak in innovation, while anotherperformance advantage.39% rate HRs innovation capabilities as simplymoderate. Other key competency areas receiveTo succeed in its new role and deliver what the similarly low marks.broader organization needs HR must attract anddevelop staff with new skills and capabilities. The Build?Buy?Orboth?To close the gap, HR shouldEconomist Intelligence Unit conducted a globalincrease its investment in business-related training,leadership survey on behalf of Deloitte member firmsand ramp up programs such as job rotations that(Deloitte) to understand the challenges that todayshelp HR staff improve their business knowledge andHR organizations face in developing and acquiring HR experience. It should also recruit leaders and stafftalent. Key findings: with broad knowledge and experience thattranscends traditional HR competencies. In the faceHRmustimproveitscapabilities. Most of the of a chronic talent shortage, HR will need to recruitsurveyed organizations believe the HR function hasmore aggressively, actively positioning itself as asignificant room for improvement. Althoughgreat place for top talent to launch a career.respondents say HR is generally performing well inits traditional administrative role, only 29% believe Before HR can help the broader organization addresstheir HR function has the talent necessaryits strategic talent challenges, HR must first address itsto succeed in the next three to five years. own talent challenges. This survey report highlights thelatest issues and trends in HR talent, and offersHRmustfocusonstrategicpeopleissues,notpractical, real-world insights to help HR attract,justadministrationandoperatingefficiency. develop, and retain the talent it needs to help theTo fully support the broader organization, HR mustorganization succeed.focus more time and effort on strategic people 2 The talent paradox 3. What organizations need from HRThe survey results show that in order to help an Organizations today face unprecedented peopleorganization thrive, HR must focus more time and effort challenges, and they need HRs help. The HR function on strategic people challenges: can no longer limit its focus to traditional improvement areas such as HR operational efficiency, reduced staff Leadershipdevelopmentandpipelinebuildingthe costs, and training/development. These kinds of next generation of leaders activities have become tablestakes. They should be Highperformanceculturecreatingaworkforcethat done well, but dont provide a sustainable advantage in is pre-wired for high performance the marketplace. And they are not enough to address Talentmanagementattracting,developing,and the myriad of short- and long-term people issues that retaining the talent an organization needs to thrive todays organizations are wrestling with. Talentacquisitionrecruitingandhiringpeoplewith the right skills and capabilities Anticipatingandrespondingtomission-criticalevents proactively addressing strategic challenges, instead of reacting after the fact These challenges have a tremendous impact on anorganizations overall performance. Figure1:StrategicchallengesWhich of the following issues present the most important challenges to the performance of your organization? Leadership development and pipeline 50% Creating a high performance culture49% Talent management39%Talent acquisition29% Anticipating and responding to business-critical events26% Improving operational efciency of HR through process and technology 23% Reducing staff costs 22%Training/development19% Compensation, benets, and pension planning and management 15%Complying with regulatory questions 8%0% 10% 20% 30%40% 50%The talent paradox 3 4. Room for improvement According to the survey, most organizations believe HR has significant room to improve its capabilities and performance. 46% of respondents say their HR function is adequate but needs to improve, while Figure2:RatingHRsoverallperformance 20% say HR is world-class in some aspects, but needs to improve in several areas. 20% believe significant Which of the following statements best describes the overall stateimprovement is needed, while another 10% say that of your organizations management of HR issues? radical improvements are needed. Only 5% considerWe have an adequate HR function for ourtheir HR function world-class in every aspect of 46%industry but we need to improveperformance. We are world-class in some aspects of our HR function,20%but we need to improve several areas In Deloittes experience, most HR organizations perform We are getting by in our HR function,20%well on traditional activities such as benefits but signicant improvement is needed administration and regulatory compliance. Also, they We are underperforming in our HR function; radical improvements are needed 10% have made great strides at improving HR operating efficiency. Yet there is clearly a gap between HRWe are world-class in all aspects of our HR function5% capabilities and the changing needs of the overall 0%10% 20%30% 40% 50%organization.Figure3:SpecificHRcompetencies Rate the specic competencies that your organizationsHR function collectively demonstrates Providing technical HR expertise to address people management challenges 43% 36%21%Helping to execute on corporate or business unit strategies or plans42% 35% 23% Contributing to the development of corporate or business unit strategies or plans42% 34%24%Retaining talent to meet the organizations needs 40%34%26%Attracting talent to meet the organizations needs 39%36%25%Leading, managing or supporting organizational change 36%39% 25% Improving HR operational efciency34% 40%26%Developing and attracting leaders32% 38% 30%Creating a high performance culture 29%34% 37% 0% 20% 40% 60%80%100% Highly effective/moderately effective Adequate Highly ineffective/moderately ineffective 4 The talent paradox 5. Lookingatspecificcompetencies,HRreceivedits About the survey highest rating for technical HR expertise (see figure 3).A total of 359 people from 78 countries participated in the Yet even in this traditional area of strength, 21% ofsurvey. 80% of respondents were senior leaders, including respondents consider HR highly or moderatelyCXOs, board members, department heads, vice presidents, and ineffective, while another 36% rate HR as merelydirectors. 40% were from human resources, with the rest adequate.representing a broad cross-section of business functions, fromoperations and corporate management to finance and sales Even more alarming, HRs lowest ratings were in the& marketing. two areas rated most important for the broader organization: (1) creating a high performance culture 5% 3%CIO/Technology directorand (2) developing and attracting leaders. 5%21% CEO/President/Managing director6% SVP/VP/DirectorThe majority of respondents expect HR to improve its Manager7%Head of department expertise and capabilities over the next three years, butCFO/Treasurer/Comptroller tofallsomewhatshortofitsloftiestaspirations.Less7%Other C-level executive than a third expect HR to evolve into an effective 16%Other business partner, or to attain world-class status with 8% CHRO extensive involvement in workforce analytics, cultureHead of business unit building, change management, and strategic planning 8% 15%Board member (see figure 4). 10% 6% Sales and marketing Figure4:ExpectationsforHRimprovement 10%Human resources Which of the following statements best describes yourBusiness operations expectations for the development of your organizationsOther corporate management HR function over the next three years?14%Other40%Finance 11% 18% 20% 20% 29% 15%Participating organizations ranged in size from small (less than 6% 5,000 employees and $500 million in revenue) to large (morethan 100,000 employees and $5 billion in revenue), with strong 0%10%20% 30%representation from every major industry and global region. Will attain world-class status with extensive involvement in workforce 6%analytics, culture-building, change management and strategic planning Will evolve into an effective business partner 26%Middle East and AfricaWill learn more about the business and will aspire to become a strategicEuropepartner but will not be fully accepted in that role35% AmericasWill develop increased HR expertise and will proactively promotebest practicesAsia-Pacic Will remain primarily focused on managing HR transactions Dont know 33%The talent paradox 5 6. Time for an HR talent upgradeTo fulfill its new role and deliver what the organizationneeds HR must attract and develop staff with newskills and capabilities. According to the survey, only29% of respondents believe their organizationscurrently have the HR talent necessary to succeed overthe next three to five years (see figure 4). Lookingdeeper,thesurveydatashowsthatthevastmajority of HR organizations (80%) already have the Figure5:HRtalentneedsarechanging talent they need to meet demand in traditionaltransaction areas such as payroll and benefits. Where Ability of talent to fulll organizations HR needs now vs. inthey come up short are areas that are critical to HRs three years (more than able to meet demand/able to meet demand)new role as a strategic partner, such as business Traditional HR capabilities80% strategy, workforce planning & development, global (payroll, benets, other transactional)82%mobility, change management, and innovation. At theCompetencies for transformed HR role 34%moment, only 34% of organizations believe HR has the (business strategy, workforce planning & development, 58% global mobility, change management, innovation)talent required to meet their needs in these areas.However, survey respondents expect HR to dramatically 0%30%60%90%improve its capabilities in these key areas over the nextNowIn 3 years three years.Figure6:KeyHRcompetenciesinthefuture Importance of the following specic HR competencies now vs. three yearsfrom now (respondents selected essential) 62%Teamwork and communications 68% 56% Customer focus 64%Leadership56%66% 49% Strategic thinking/analytical ability 69%Relationship building/strategic partnership 46%58% Consulting/advisory skills 42% 51% Negotiation/conict resolution41%48% Business acumen38% 49%Innovation 36% 57%0%10% 20%30%40%50% 60% 70% Now In 3 years6The talent paradox 7. Key HR competencies Business acumen and relationship building are also Survey respondents expect HR to improve its critical. In order to serve the broader organization as competencies areas across the board over the next credible and trusted partners, HR staff must develop three years. However, the competencies expected tostrong relationships with the organizations leaders, and rise the most in importance during that time are alldemonstrate a solid understanding of strategic issues. fundamental to HRs new role as a strategic partner: innovation, strategic thinking and analytical ability,Unfortunately, the survey data shows that many HR relationship building/strategic partnership, and business departments have yet to develop these critical acumen. competencies. 38% of respondents rate HR as weak or very weak in innovation, while another 39% Innovation is important because even the best ideas believe HRs innovation capabilities are just moderate. eventually become commodities. To keep pace withOther key competencies such as business acumen and changing needs and maintain a sustainable advantage strategic thinking/analytical ability receive similarly low in the talent marketplace HR must constantly strive for marks. new and better ways of doing things. To support the future strategic needs of the Strategic thinking and analytical ability are essential HRorganization, HR must find ways to expand and competencies because todays talent challenges areimprove its performance in all of these key areas. driven by complex trends such as workforce aging and global sourcing. It is HRs job to help the organization understand and solve these complex puzzles. To keep pace with changing needs and maintain a sustainable advantage in the talent marketplace HR must constantly strive for new and better ways of doing things. Figure7:RatingHRscurrentcompetenciesRate the specic competencies that your organizations HR function collectively demonstratesCustomer focus49% 34% 17%Teamwork and communications 46%39% 15% Negotiation/conict resolution41% 39%21%Communications37%42%21%Relationship building/strategic partnership37% 39% 25%Consulting/advisory skills 36% 40% 24% Leadership36% 39% 25%Strategic thinking/analytical ability30% 39%30%Business acumen27%43%30% Innovation23% 39% 38%0%20%40% 60% 80% 100% Very strong/strong ModerateVery weak/weak The talent paradox 7 8. Current efforts to fill the HR talent gapHR departments are also making a deliberate effort toIn light of these new requirements, many of thehire HR staff with diverse backgrounds and businesssurveyed organizations are investing in business experience. Although a masters degree in HR remainsmanagement training to help the HR staff improve its the most popular credential for success in HR, morebusiness savvy and capabilities (see figure 8).than a third of respondents (37 %) are interested in candidates with an MBA.Thats a good start, but Deloitte believes HR needs todo more. Other key areas for learning and developmentHR organizations are looking for leaders with HRinclude: consulting skills, strategic/analytical thinking, experience in other industries (59%), business operationsand conflict resolution. These kinds of skills can help HR experience (58%) and corporate managementstaff partner with the organization more effectively.experience (45%). In addition, a significant number are looking for leaders with experience in non-traditional HR areas, as well as in finance and IT (see figure 10). This broad experience improves an HR leaders effectiveness and credibility when interacting with leaders from other parts of the organization.Figure8:CurrenttraininginvestmentsforHRstaff Which of the following types of training is your company investing in todevelop the HR competencies needed for future success? Select all that applyBusiness management skills52% HR functional skills 50%Organizational design 34% Professional certication31% Psychology or other social sciences20% Dont know/not applicable14% Other, please specify 7% 0%10%20%30% 40% 50% 60%Figure9:DesirededucationforHRstaff How important are the following credentials to the success of professionalsin your HR organization? Select up to three Masters degree in Human Resources46%Undergraduate degree39% MBA or similar degree 37% Certication from an HR professional organization (CHRP, SPHR, etc)34%Dont know/not applicable14%Law degree 13% Public Administration/Public Affairs degree 11%PhD4% 0%10% 20% 30% 40% 50% 8 The talent paradox 9. Another way for HR staff to build broader business At the moment, respondents have mixed feelings about experience and acumen is through exchanges with othersuch exchanges (see figure 11). People outside of HR parts of the organization. Through these direct, often shy away from HR assignments because they view hands-on experiences, HR staff learn what really matters them as dead ends. Conversely, traditional HR staff to the organization, and how to think like businesssometimes lack the broad capabilities necessary to people. Just as important, they develop personal succeed on assignments within the broader relationships across the organization that help them organization. Deloitte believes this dilemma will partner more effectively in the future.gradually resolve itself as HR adjusts to its new role as astrategic partner, and as the need increases for HR staffwith business experience. However, organizations canprime the pump by taking a more active role in jobrotation programs and providing extra managementsupport to help ensure participants are successful.Figure10:DesiredbackgroundsfornewHRleadersWhich of the following backgrounds do you look for when seeking new HR leaders from inside or outside the company? Select up to three HR experience in other industries59%Business operations experience 58%Corporate management experience45% Communications experience44% Non-tradional HR experience 27%Finance experience 10%IT experience9%0%10% 20%30% 40%50% 60% Figure11:StaffexchangesHow open is your organization to facilitating interchanges of key staff between HR and other business functions? Incoming exchanges Temporary developmental assignments of professionals from operations or other33%46%21%enabling functions within the organization in HR Outgoing exchanges Temporary developmental assignments of HR professionals in operations of other32% 47%21%enabling functions within the organization 0% 20%40%60%80%100% Highly enthusiastic/enthusiastic Neutral Highly averse/averseThe talent paradox 9 10. Challenges for recruiting HR talent important to provide clear career paths that offer plenty Most of the surveyed organizations believe there is a of room for advancement and growth. In order for global shortage of qualified HR talent. They also worry people to view HR as a good place to start a career, that their HR staff dont have enough opportunities for they need to see HR staff being promoted to senior professional and career development, and that recentleadership positions within and beyond the HR function. graduates do not see the HR organization as a career launch pad. Of course, HRs image as a career launch pad starts at the top. The good news is that a significant number of To address these deep-rooted challenges, HR must be respondents believe CHROs have a real opportunity to more aggressive about recruiting top talent and win another C-level position (38%), or even to become improving its brand image in the talent marketplace.CEO (19%) (see figure 13). This is another sign of the Many of the actions HR organizations are taking toprogress HR is making as a strategic function. improve their strategic role and capabilities will naturally make HR more attractive to talent. That said, it isFigure12:ThoughtsonrecruitingHRtalentTo what extent do you agree with the following statements about recruiting HR talent? There is a global shortage of qualied HR talent56%30% 14% We dont offer HR staff enough opportunities for professional and career development 46%32%21%Recent graduates do not see our companys HR organization as a career launcher 44% 35%20% HR talent is often lured away by managerial or other non-HR positions 43%28%29% The HR profession is perceived by many new graduates as an attractive career32%33%35%Our HR function does not offer competitive compensation and benets31% 32%37%We have the HR talent we need to succeed in the next three to ve years29% 31%40%Our company is generally regarded as an employer of choice for HR staff28%40% 31% 0% 20%40% 60% 80% 100% Strongly agree/agree NeutralStrongly disagree/disagreeFigure13:CareerpathsforCHROsWhat are the future career moves for the CHRO? Select all that applyCHRO of another, larger company57% Consulting industry55%Other C-level position 38% Academia 24% CEO 19%Dont know/not applicable 9%Other, please specify2% 0%10%20% 30% 40% 50% 60% 10The talent paradox 11. To fulfill its expanding role, the HR function must develop new capabilities that are less administrative and more strategic. This will require HR talent with new skills and capabilities. If HR can successfully address its own talent challenges, it will be in a much stronger position to help an organization tackle talent challenges outside of the HR function. 12. To learn more how Deloitte member firms can help your business succeed, please contact:Global Human CapitalHuman Capital Asia PacificHuman Capital EMEAPetr Kymlicka Dr. Sabri Challah Richard KleinertBrett C. 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