Human Resources: The Big Issues


July 8, 2008

by Marshall Goldsmith

Companies are facing daunting challenges in hiring, training, and retaining people. Globalization has increased the demand for talent everywhere, while the upcoming retirement of the Baby Boom generation is projected to shrink worker supply in the West. More than ever, employees are demanding a balance between their work and the rest of their lives – a trend long present in the West but now prevalent in Eastern Europe, South America, and India.

Companies have always struggled to measure and track their programs and activities aimed at improving people’s performance and level of engagement. To try to get a better handle on how companies manage their people, Boston Consulting Group (BCG) recently surveyed more than 4,700 executives in 83 countries and markets and published a report based on its findings, “Creating People Advantage: How to Address HR Challenges Worldwide Through 2015”. Executives told BCG they feel unprepared to face the massive challenges that confront them in managing talent.

The report is unique in its detailed and specific findings by country, region, and industry. I recently spoke with Anna Minto, a BCG partner and co-author of the report, and Chuck Scullion, also a BCG partner and leader of the firm’s organization practice in the Americas, about the study. Edited excerpts of our chat follow:

What are the key people issues that emerged in the U.S., and how should companies address them?

Of the 17 issues covered by the survey, the top three in the U.S. were managing talent, improving leadership development, and managing demographics. For each issue, we asked executives how important it was to their company’s future, and we asked them to assess their company’s capabilities in that area.

On managing talent, the key concerns center on sourcing talent globally and developing customized career tracks and compensation plans. Only 20% of respondents say their companies currently source talented people globally, yet nearly half said they would do so in the near future. If this does not sound startling, imagine a global search for half of the key positions at your company. While only 40% of respondents say their companies now have tailored career tracks and specific compensation schemes for talented people, roughly two-thirds of them believe they will in the near future.

To improve leadership development, U.S. executives expect their companies to start providing financial rewards for good leadership. Only one-quarter of executives said their companies provide financial rewards for leadership today, but 63% expect their companies to be doing so by 2015.

The third topic, managing demographics, is a double-whammy in the U.S. Executives need both to replace older employees and address the emerging needs of younger ones, commonly known as Generation Y or the Millennials. To fill the gap left by retirees, U.S. executives expect their companies will start offering employment options to attract or retain semi-retired or retired workers and look to train employees for new jobs. At the same time, companies are trying to keep younger employees, who have less loyalty to their company, engaged and committed.

How do these issues differ from the top issues in other countries and regions?

Managing talent and improving leadership development are universally important. Managing talent was one of the top three human resources issues in 14 of the 17 countries we analyzed in depth, while improving leadership development was a top-three concern in 10 of them.

Even so, companies vary in how aggressively they plan to address these issues. Measuring leadership skills through 360-degree feedback, which you have been advocating for a long time, is in use at less than one-half of the companies in developed economies. By 2015, less than two-thirds of all companies will be deploying it.

On the other hand, executives said their companies plan to rapidly ramp up their global sourcing of talent. It’s almost as if somebody has screamed “Fire!” in a crowded theater. Everyone will be heading toward the same exits – or, in this case, markets. This heightened thirst for global talent gives an advantage to companies with a strategic focus on people needs. They have spent the time to understand their needs and the local talent markets and build their reputation – their HR brand, if you will – among recruits in those markets.

What about demographics?

That is mostly a pressing concern in North America, Japan, and Europe. Elsewhere, the working-age population is still relatively young. Places like India and China will eventually have to cope with a wave of employees moving into retirement, but the day of reckoning is in the distant future.

Were there any big surprises in the report?

Two. First, one-third of U.S. companies anticipate installing a head of change-management, with authority and standing similar to that of a chief financial officer, by 2015. The position did not even exist a few years ago, and today only 11% of executives say their companies have such a position. That [anticipated] growth suggests the importance of managing change at corporations.

Second, managing work-life balance emerged as the third most important people issue globally. Companies are wrestling with the entry of Gen Y into the workforce, the erosion of corporate loyalty, and the gathering significance of the emotional wellbeing of employees – not just in the U.S. In places such as India and Latin America, where talented individuals have many employment options at home and abroad, work-life balance has also become a selling point.

How can readers reach you?

They should feel free to e-mail either of us at or