During 2014, our consultants interviewed 16 seasoned HR leaders from diverse organizations about their unique business challenges and their expectations for leaders. While they were a diverse group drawn from healthcare, high-tech manufacturing, banking, education and public utilities, we were surprised by their very consistent views of what the future holds. We invite you to review what we learned and to judge how well it fits your organization.
Business Models Are Under Attack
Most interviewees told us that their old ways of doing business were under serious threat. Most often, this boiled down to how technology, and the competition enabled by it, is transforming their customer relationships.
Many consumers have come to expect faster, better and personally tailored responses to their individual needs. They have grown accustomed to highly flexible, quick service providers like Amazon and Google. They can report problems, check accounts, order products and make payments easily. Today, a consumer or a business customer also can find providers of many products and services on the web, and compare their options. And they can do it almost anywhere with smart mobile devices. Those expectations are driving our client organizations to completely rethink how they relate to the outside world, as well as to each other as business-to-business vendors and buyers.
Leaders Must Be Increasingly Flexible and Innovative
Evolving business models will place a premium on organizational leaders who are adaptable, strategic and even ingenious in how they recognize and respond to a changing world. New technology can yield better, real time customer information, drive growth, reach new markets and create efficiencies and cost savings. Much more than simply having a web page or a customer portal, organizations must look critically at all of their capabilities and limitations, especially in light of customers’ convenience and their greater access to information and to competitors. Leaders must recognize a genuine opportunity or threat and be ready to act on it. And, they will need to bring along their employees through both informing them of the urgency and motivating real change.
A leader who relies blindly on what has worked before, however successfully, runs the risk of being passed by competitors and left behind. But there are risks for both fast followers and for trailblazers. What will happen if an innovation bet fails? Our interviewees cited the need for leadership courage, but courage balanced with clear strategic thinking.
Driving Appropriate Culture Change
These challenges and leadership needs naturally highlight the importance of skillful culture change. An organization that fails to respond to a changing business model will see its market share, its profits and its reputation dwindle. It will suffer demoralizing losses, both financially and in its human capital. Employees will be required to shoulder the burden of new and different work demands, possibly with fewer co-workers, and a less certain future. Some will mentally check out. Others will vote with their feet and leave entirely, particularly in an improving job market.
Successful leaders must get ahead of the changes. They must become masters of identifying the critical performance enablers of the existing culture, be it outstanding service, leading edge products or operational excellence, as well as the major change inhibitors. Even more, they must be able to translate that understanding into a compelling view of the future and identify the right activities, policies and decision rules which will drive their organizations forward.
Too much reliance on the past will paralyze an organization that should be in motion. Too much emphasis on new and different thinking and behavior could take it in entirely the wrong direction. Leaders for the future must strike the right balance between the old and the new, and demonstrate the will to take action and drive change. Leading towards the future will not favor the timid.
Of course, culture change alone will not guarantee achieving success. Part of instituting a new business model necessarily requires blowing up the old organizational structure. It means reshuffling teams, roles and responsibilities, upgrading talent and placing new expectations and rewards in front of many employees. Future leaders must be ready to face the inevitable HR consequences of change: people feeling passed over or pulled in unpleasant new directions, hiring new and essential talent in spite of opposition, and moving employees out of their comfort zones.
Our interviewees told us that the talent implications won’t stop with just these leadership demands. They also include identifying the people who can be a foundation for the future and grooming them to be ready for it. Several respondents told us how important it is to reach deeper into the organization to identify the leaders of the future, even if they weren’t from the traditional places. They described the critical value of fully developing and utilizing female employees and minorities. And they implied that some of the best talent may reside in younger people, too.
All of these considerations shine a different light on talent management. Rather than having an exclusive focus on the rare, high-level “franchise players,” what emerges is an evident priority to look more broadly and deeply for essential future talents. It means being talent scouts in the truest sense of that phrase. And it means that senior leadership must think differently about talent and how to invest in it. Saving money in the short-term on salaries and administration inevitably will result in higher costs later as the organization under performs. It will simply delay the consequences and boost current profitability. Our interviewees told us that their leaders need to think differently, and more often, about genuine, full-fledged talent management.
Putting It Together
We got terrific benefits as our clients shared their thoughts and concerns about the future with us. Now you, too, have the opportunity to ponder what they told us.
How does this picture fit your organization? Do you expect to face similar challenges? Will the future place new demands on your leadership and your employees? Are you ready to confront tomorrow and to make the necessary changes? Or, will you be left behind?
It’s not too soon to seriously think about it.