HR SURVEY 2018 - Harvey Nash · Human resources professionals are used to change – they see it...

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G R O W T H . C H A N G E . U N C E R TA I N T Y.

Human resources professionals are used to change – they see it all around them. Whether it’s working with the board on a new growth strategy, or helping shape the organisation’s structure to compete in an increasingly competitive world, HR is a key part of getting businesses from A to B.

But the world is also changing. Digital innovation, shifting consumer patterns in the global economy, the increasing need for organisations to have a purpose in society, and even political uncertainty, are affecting organisations in ways they never have before.

In one of our other globally recognised studies – the Harvey Nash CIO Survey – we report that almost half of organisations are investing in digital transformation strategies. And no function is more affected by, or so intrinsically involved in this, than Human Resources.

This year’s Harvey Nash HR Survey shines a light on all this. Now in its seventh year, and

reflecting the views of over 800 HR leaders across the world, this report shows how HR is leading the way in helping organisations adapt and change for the future. It also shows that there is more work to do, as HR looks to gain more support and influence on the board, as well as capitalise on the ever-expanding opportunities, and challenges, of digital.

But one thing is for sure: there has never been a more exciting time to be in HR.

Welcome to the 2018 HR Survey. I hope you find it valuable in your business and career planning.

Contents

The board wants HR to deal with growth

HR is valued, but not going places?

It’s all about taking control

AI –right here, right now

Time to perform

Into a flexible world

Recruitment is all about the brand

Direct is best?

Diversity – progress is slow

Gender diversity is the priority

What drives HR People?

4 5 6 7 8 9 10 11 12 13 14

About the survey

820

respondentsA comprehensive study

of the HR community

127different job titles

From HR Consultant to Learning & Development Manager to Head of HR

38

countriesFrom Saudi Arabia

to Sweden

Albert EllisCEO, Harvey Nash Group @harveynashceo

Growth. Change. Uncertainty.

H A R V E Y N A S H H R S U R V E Y 2 0 1 82

You’re hired!

Recruitment is the most important issue the board wants HR to address (29% feel this is a top three issue). Developing leadership capability and employee engagement are the next most important.

What you need to know

3

Time to perform

There has been a big jump in organisations implementing performance management programmes (a jump from 25% to 36%).

Taking control

Over half of HR departments (56%) say it is more important for HR to do more for the

business, rather than empower the business to do more HR: a swing of 9% since 2016.

The direct line

39% of organisations are hiring their staff directly,

the highest figure for five years. Recruitment agencies are focusing on adding value, and dealing

with complexity.

It’s all about the brand

70% of HR respondents listed ‘building an employer brand’ as very important when it

comes to recruitment, making it the single most important thing to do when hiring.

Non-human resources

Over a quarter (26%) of HR professionals already have their workforce planning

impacted by AI and automation.

Is image everything?

On the whole, HR is satisfied with how it’s seen by the business (62%), but this figure has stagnated over the past three years.

Your flexible friends

Organisations are increasing their use of non-employee labour. Currently the proportion of organisations with 20% or more of their

workforce as non-employee labour is 31%; this is expected to rise to over 40% within five years.

Does the board value HR?

52% believe HR is very important to the board: good news for half of HR people, but this figure hasn’t changed much since last year, and it still leaves

almost half who feel there is more to do.

H A R V E Y N A S H H R S U R V E Y 2 0 1 8 3

The board wants HR to deal with growth

We asked what the top three priorities of the board were for HR, and the results were clear. Recruitment, developing leadership capability and employee engagement were all top priorities, suggesting that growth – both in terms of headcount and development of people – is high on the agenda. Downsizing, a priority that has featured in previous years, is of concern to only 4% of the 800 organisations featured in this survey.

This positive outlook by organisations’ boards reflects a similarly positive outlook for the world economy by commentators such as Goldman Sachs.

Some of the more ‘mechanical’ aspects of HR appear lower down the priority list: performance metrics, automation and industrial relations are of interest to less than 5% of organisations’ boards. Even training and education is of interest to only 11% of boards.

It’s not to say these aren’t important, but when HR is in conversations with the board, it is recruitment, developing leadership capability and employee engagement that are the topics most likely to grab their attention.

What three key issues that your board is looking for HR to address?

2%3%3%

4%4%4%

7%9%

11%12%

15%16%

17%18%

19%19%

21%21%

25%27%

29%

Industrial relations (trade unions)Flexible employment

AutomationDownsizing

DiversityPerformance metrics

SuccessionManagement development

Training & education programmeCapability & competence management

HR systems & processesOrganisational growth

Business efficiencyChange management

Performance managementCulture development

Employee retention & motivationTalent management

Employee engagementLeadership capability

Recruitment


On the face of it, HR occupies an enviable position in organisations: almost two-thirds of respondents believe the business truly values HR, and half believe the board feels HR is ‘Very important’.

But, like many things in life, the direction of travel is just as important as the location, and it’s worth noting that in both instances the graph is levelling out; in fact in the case of the business view of HR, it’s declining slightly.

Compare that, for instance, with our sister report, the CIO Survey, where the CIO reached its most influential position in the ten years we have been tracking it, built on the surging importance of digital.

HR has a difficult challenge. The board and CEO know that people matter – in many cases people are the most important asset a company has. But that is a separate question from how much HR matters as a function.

On the one side is the long tail of necessary, but sometimes thankless, ‘mechanical’ basics listed previously. On the other side are activities that make a strategic difference. Getting the balance right is so important: no board will listen to a strategic visionary who can’t get the basics right, but basics alone will not get you in front of the board.

Are you satisfied by the image of HR as seen by the business?

How important is HR to the board? (Filtered by ‘Very important’)

65+35+A201665%

35% 63+37+A201763%

37% 62+38+A201862%

38%

62+38+A201752% 62+38+A2018

52%

yes no

HR is valued, but not going places?


It’s all about taking control

In an age increasingly defined by software products that empower line managers to do more for themselves, it is tempting to think that the ultimate destination of operational HR is in the hands of the business. In fact, two years ago that is exactly what you were saying – over half of you said that the business should be taking more responsibility for HR.

Since then, though, a line has been crossed and the opposite is now true – over half of you are saying that HR should be doing more.

There are differences between sectors. Pharmaceuticals and Utilities are most enthusiastic about HR taking control. Not-for-profit sectors like Charity, Public Sector and Education are more inclined to encourage the business to take responsibility for HR.

There is, of course, no right or wrong approach here and the structure of an organisation – such as whether it is centralised or federated – will be an important factor in defining the role HR plays.

What’s more important: HR doing more for the business or getting the business to take more responsibility for HR?

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

57%36%

44%45%

49%52%

56%56%56%56%57%57%

64%64%

67%71%73%

43%64%

56%55%

51%48%

44%44%44%44%43%43%

36%36%

33%29%27%

AllCharity / Non-profit

Broadcast / MediaGovernment / Public Sector

Transport & LogisticsEducation

HealthcareRetail / LeisureManufacturing

Technology / TelecomsEnergy

Business / Professional ServicesFinancial Services

Construction / EngineeringAdvertising / PR

UtilitiesPharmaceuticals

Chart Title

Getting HR to do more for the business Getting the business to take more responsibility for HR

47+53+A2016 47%53% 50+50+A2017 50%

50% 56+44+A2018 56%44%

HR do more Business do more


AI – right here, right now

There has been a lot of talk about automation and AI in recent years: in the UK, for instance, a recent report by the Bank of England cited that up to 15 million jobs could be at risk of automation. While the report shone a welcome light on a trend that will affect us all, like many studies on automation it was scant on the specifics and didn’t assess what is happening right now.

So turning to the data from the HR Survey, what is striking, and surprising to us, is just how many organisations are being affected by automation and AI right now – 26% are accommodating it in their workforce plans, a big jump up from 17% last year. Within five years that proportion is likely to rise to seven in ten. In other words, for the vast majority of organisations, AI / automation will become commonplace.

In our sister report, the CIO Survey, we are finding that AI / automation is currently mostly targeted at IT departments (e.g. automated testing) and customer services (e.g. automated call handling), but its expansion into other areas is growing – in some cases quite rapidly.

At what point do you think technologies such as artificial intelligence and automation will be sufficiently advanced that they will impact workforce planning in your organisation?

Which role do you believe is the most important in helping your organisation realise its future potential through digital / technology?

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17 %

45%

25%

9 %

4%

26%

46%

20%

6%

2%

Now

2–5 years

6–10 years

11+ years

Never

2018 2017


Time to perform

Performance management can, of course, mean different things to different people, but one thing is for sure – it is a key tool for most organisations. Over one-third of organisations have it fully in place, and another 28% have it in most areas.

Organisations with ‘fully’ implemented performance management programmes

While in past years the use of performance management had appeared to level out (in fact, in our last HR Survey we reported a drop), this year we have seen a marked increase. This year, one in five boards feel it is one of their top three HR issues.

Performance management is most likely to be found in the Financial Services, Energy and Pharmaceuticals sectors – all strongly customer led. It is less common in Construction, Media / Broadcast and Advertising / PR.

As organisations plan ahead and get a firm grip on their customer and digital strategies, the importance of ‘plugging the employee in’ to those strategies becomes more important.

Fully – all / almost

all relevant people are part of a programme

Fullyall / almost all

relevant people are part of a programme

36% Ful-ly – all /

almost all relevant people are part of a

programme

Mostly most people

are part of the programme, but there

are some gaps

28%Ful-

ly – all / almost all relevant

people are part of a programme

Partially some people are part

of the programme, but there are major gaps

23% Fully – all / al-

most all relevant people are part of

a programme

No extent none / very few

people are part of a programme

13%

To what extent has a performance management programme been implemented at your company?


ChiefMarketingOfficer 3% 2017 2018ChiefDigitalOfficer 6% Now 16% 26%Other 8% Next2–5years 43% 46%ChiefInnovationOfficer 11% 6–10years 24% 20%Someonemuchmorejunior 11% 11+years 13% 6%ChiefInformationOfficer 13% Never 3% 2%ChiefExecutiveOfficer 19% 2017columnaddsupto99%ChiefTechnologyOfficer 29%

30% 30%25%

36%

2015 2016 2017 2018

Chart Title


Into a flexible world

Organisations are increasing their use of non-employee labour, whether it’s through using more contractors and management consultants, or packaging up teams or departments into outsourced or managed service partnerships. Currently the proportion of organisations with 20% or more of their workforce as non-employee labour is 31%; this is expected to rise to over 40% within five years.

What’s driving this? Flexibility is one key factor; in an increasingly unpredictable world many organisations are looking to focus on their core, and keep the rest of their business flexible as new challenges and opportunities come to them.

Another factor is access to skills. In some areas, especially in tech, hiring permanent people is very difficult and sometimes using contractors or consultancies is the only option.

But probably the biggest factor is that flexible working seems to be ‘coming of age’. Organisations, and people, are getting to grips with making it work; and while there are still clearly challenges in some areas of flexible working (such as the legal rights for gig economy workers), the market seems to be maturing.

In the next five years, what is your destination proportion of non-employee labour?

Over the next two years, what do you expect to happen to the following forms of non-employee resources within your organisation?


ChiefMarketingOfficer 3% 2017 2018ChiefDigitalOfficer 6% Now 16% 26%Other 8% Next2–5years 43% 46%ChiefInnovationOfficer 11% 6–10years 24% 20%Someonemuchmorejunior 11% 11+years 13% 6%ChiefInformationOfficer 13% Never 3% 2%ChiefExecutiveOfficer 19% 2017columnaddsupto99%ChiefTechnologyOfficer 29%

12%

41%

22%

12%

4% 5%1% 2% 1% 0% 0%

0 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Chart Title

15%

16%

9%

12%

45%

47%

45%

39%

31%

29%

28%

35%

9%

8%

18%

14%

Contracting

Consultancy

Managed service contracts

Outsourced employment

Decrease Stay the same Increase Don't know


Recruitment is all about the brandIt is clear that when it comes to recruitment, the top priority is brand-building.

But it’s a job that has got more complicated in the past decade. Social media – where views and opinions can be rapidly and widely shared online – presents both a challenge and an opportunity. One survey respondent commented about the problem they had dealing with an (in their view) unfair review on the employer rating website Glassdoor, while another mentioned the trouble they had getting an incorrect corporate fact updated on Wikipedia: ‘Good luck trying to find a customer support number for them,’ she remarked.

But social media can also be a positive force; organisations with strong cultures, and a clever HR / Marketing team that understand social media, have an opportunity to reach audiences they never have before.

Perhaps unsurprisingly, given that employee brand-building is the priority, talent pipeline and workforce planning are also important.

Please rate how important each factor is for your recruitment team.

3%

4%

5%

14%

30%

24%

27%

36%

42%

45%

39%

54%

70%

60%

53%

41%

31%

22%

Building an employer brand

Building a pipeline of talent

Workforce planning

Structuring the recruitment team to be more effective

Reducing agency spend

Improving recruitment reporting

Not important Quite important Very important


Recruitment agencies close your eyes: HR directors are increasingly hiring direct. The proportion of organisations hiring at least three-quarters of their staff directly has gone from 28% to 39% since 2016.

It’s not hard to see why. With the growth of tools like LinkedIn, as well as more efficient and automated means for engaging with potential candidates and managing the recruitment life cycle, HR teams have both more access to candidates and more efficient ways of dealing with them. And, of course, these are two key ‘value adds’ that recruitment agencies offered in the past.

But this is only part of the picture. From our experience, organisations are just as keen to work with talent and recruitment companies as before, but increasingly this is focused on roles where deep expertise and market knowledge are required, or where they need more sophisticated ‘solutions’ like managed services, large-scale recruitment, or outsourced contracts that require detailed planning, advice and, often, legal expertise.

The sector is changing – it’s becoming more sophisticated, more professional. Not all recruitment companies will be able to take this step up though.

Approximately, what percentage of your recruitment is directly hired (e.g. direct to the candidate, without using a recruitment organisation or other third party)?

Proportion of organisations hiring at least three-quarters of their staff directly

28+72+A201628% 34+66+A2017

34% 39+61+A2018 39%

Direct is best?

12%

12%

15%

22%

39%

Less than 10%

11-25%

26-50%

51-75%

76-100%


Diversity – progress is slow

Most boards and HR directors would say that diversity and inclusion are important to their organisation, but it is clear that almost half are not happy with their progress.

Having a formal strategy in place correlates significantly with progress: 80% of organisations that have a diversity programme implemented across their business are happy that diversity is heading in the right direction.

It is therefore surprising that almost a half of organisations have very little of a diversity programme in place (either ‘Partially’ or ‘None’).

Of course, improving diversity requires effort from many areas, but this data shows that having a formal programme is one way to make it happen.

Are you happy with the progress of diversity in your organisation?

To what extent do you have a formal strategy / policy for promoting diversity in your organisation?

45+55+A55%45%

yes no 19%

22%20% 21%

32% 33%

30%32%

29%28%

31% 32%

20%

17%19% 15%

2015 2016 2017 2018

Fully

Mostly

Partially

None


Gender diversity is the priority

Achieving a better balance of men and women is the diversity priority for most organisations, although culture and ethnicity are also considered priorities.

Which areas is your organisation actively pursuing to be more diverse?

Ful-ly – all /

almost all relevant people are part of a pro-

gramme

Gender

54% Fully – all / almost


Culture

39%Fully

– all / almost all relevant people are

part of a programmeEthnicity

38%Fully


part of a programmeAge

35%



Functional expertise

32%Fully


part of a programmeAcademic

background

27%


all relevant people are part of a programmeInternational

expertise

26%Ful-ly – all /

almost all relevant people are part of a programme

Socialbackground

13%

Ful-ly – all /

almost all relevant people are part of a programme

Lesbian, Gay, Bisexual

and Transgender

12%


What drives HR people?By a very long margin, HR people are driven by a need to make a difference to their organisation, followed by working on interesting and exciting projects.

A good salary is only of high importance to one in four HR leaders. Working for a big recognised company, or a brand you ‘align with’, is only important to a very small minority of you.

What is clear is that when it comes to their own jobs, HR people look beyond the obvious, external factors, and seek out the underlying value.

And in many ways this sums up Human Resources quite neatly!

Please identify the three factors that contribute most to your sense of fulfilment.

50%

40%

34%

32%

28%

28%

23%

23%

21%

19%

17%

16%

15%

10%

5%

A sense that HR / Talent has an important role to play in the organisation

Interesting and exciting work

Competent management and a vision for the future

An opportunity to shape the business strategy

A feeling that I am empowered

Access to management / contribute to strategy

Good salary

A culture of open communication

A reputation for fairness and respect

A creative / entrepreneurial environment

An opportunity to challenge the status quo

Working for a brand I align with

The opportunity to build a rewarding career

A large organisation – international career opportunities

A financially secure organisation


Please identify the three factors that contribute most to your sense of fulfilment.


?

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