The oil industry knows better than most the importance of operational efficiency as it struggles to manage the impact of a ten-year low in crude oil prices.
It is a sector with executive boards that know the importance of investing in new blood to help grow the talent pools required to plug skills gaps being created by increasing numbers of employees approaching retirement.
But not all sectors face such desperate measures. In fact, the drive for operational efficiency, or future survival as in the case of many oil companies, need not be at the price of talent. However, many executive directors fail to engage in the talent management debate, let alone agree with this conjecture.
Christopher Johnson, European and Pacific region business leader for talent at Mercer, believes that part of the cause of many executive directors’ disengagement in the talent debate is because of a failure by their management to explain the skills required to help grow the business.
This, he suggests, is due to the difficulty involved in presenting a clear story about the underlying employee issues at play around, for example, career development, gender and age diversity, and succession planning.
“Where boards are failing is in recognising in the broader workforce those huge talent issues they should be facing up to,” he says. “For example, the ageing workforce is a big issue, and some organisations aren’t thinking beyond this to the fact that they’re getting a more complex workforce with a broader age range and employees staying on in work.”
But how does management present to a board member a simple dashboard of data?
Human resource functions can prove instrumental in engaging executive board members in the talent management debate, persuading them of the importance of prioritising talent and, crucially, helping them to view it as a long-term investment rather than a short-term cost.
But this requires good-quality analysis of workforce demographics by human resource staff equipped with the appropriate analytical skill sets.
“It’s about them providing good-quality and clean data, presented quickly in a way that allows boards to have confidence that things in the business are fine or to recognise that things need to change,” says Mr Johnson.
Uninterested and unengaged executives can equate to uninterested and unengaged employees. Employers may suffer employee presenteeism, whereby staff attend work but are unproductive while there.
Worse still, errors may be made, which could result in dissatisfied customers and even workplace accidents, with unfortunate injuries to employees, creating unnecessary costs for employers through lost business, sickness absence, medical bills and, potentially, litigation.
Peter Reilly, principal associate at the Institute for Employment Studies, says: “Errors will vary from industry to industry, but truly disengaged and disaffected staff can do enormous damage to organisations.”
This is particularly the case when talented employees leave their organisation to join a competitor.
Professor Maury Peiperl, director of Cranfield School of Management, believes the latter could prove a key catalyst for change in executives’ interest and engagement in the talent management debate.
“The biggest catalyst for change would be organisations’ competition coming from small startups, from outside their usual frame of competitors, and executives starting to recognise there is no permanence in size,” he says
But Professor Peiperl also acknowledges the challenges present for executive boards across all industry sectors. “We’re increasingly looking at a workforce where people expect to be paid attention, rewarded and developed or they just aren’t interested,” he says.
“At the same time, organisations have to stay in business and spend what little money they have staying afloat, so there’s a perennial tug of war between short-term and long-term issues.”
The credibility of the human resource function is the first major barrier businesses must overcome to enable talent management to become a future boardroom agenda item of importance
This is why many human resource teams face an uphill battle in getting talent management on to their board agenda, particularly when it appears they deem the issue more important than most.
The Chartered Institute of Personnel and Development’s latest HR Outlook Report, which polls organisations about their current and future business priorities, reveals that human resource staff are more concerned with talent management than non-human resource leaders, who are more preoccupied with increasing customer focus.
The report also reveals that 76 per cent of human resource leaders agree that their current people strategy will help their organisation achieve its future priorities, compared with just 26 per cent of other business leaders.
So, perhaps the credibility of the human resource function is the first major barrier businesses must overcome to enable talent management to become a future boardroom agenda item of importance.
This is likely to happen with the ever-changing nature of the human resource function, which is slowly evolving to become more commercial and strategic in its outlook.
But executives also need to wake up to the fact that growth in market share will remain out of reach as long as they fail to implement and invest in a robust talent management programme, which engages and develops staff, enabling them to move the organisation forward.