“Preparing for Tomorrow”
Making change work to your advantage
Mercuri Urval Global Client Services
June 2010/ GCS Research Team
Research
• This paper is based on extensive research by Mercuri
Urval and our research partner S4K in over 500
organisations around the world
• Conducted from 2006-2010 in leading European
organisations
• Participants were selected from among high-performing
senior HR executives and business leaders
First, the context
The mid-term challenges
Public sector debt
Slow economic recovery
Euro-zone instability
Uncertainty rules
The “new normal”
–
–
–
Recovery is evident, but at low levels
Growth in Asia, South America
Will weak Euro-zone countries lead to a “double dip”?
United States
–
–
Surprisingly strong consumption, but high unemployment and still low levels of personal savings
The housing market remains volatile, commercial real estate also a concern
Asia Pacific
–
–
China, India and others continue to experience strong growth
Japan shows unexpected export strength
Europe
–
–
Europe is growing again, but the recovery is slow and at some risk
Large differences between countries and great uncertainty in the Euro-zone
Nordics
–
–
Signs of recovery, but still no significant growth in production
Stable state finances, less-than-expected unemployment and strong consumption (so far)
Source: Blue Institute Growth Barometer May 2010
And three macro trends
Demographics
Technology
Globalisation
Demographics
Lack of labour threatens future growth, issue is ‘hidden’ by recession
No of
Employees
Retirements
Capability
Break-even
Capability Gap
Entrants
2000
Source: AMS EUROPEAN UNION (EU-15)
2010
2020
2030
Technology
Speed of innovation and reduced ‘time to market’ demands accelerated responses
Globalisation
New opportunities, innovation drivers and competitors emerge continuously
•Customers without borders
•The global knowledge share
•Economies connected like never before
•Best practice and innovation travels at speed
•Emerging markets
The Tension
•
Increased cost and importance of talent in the long-term
Vs
•
Need to control costs and uncertainty around investment in the mid-term
The Risk:
•
By the time increased certainty, confidence and growth is well established,
the talent needed to capitalise on opportunities will not be available
How do our leading companies plan to respond?
- Strategic challenges
- Organisational challenges
- Leadership Challenges
Executive Summary: Top Challenges
2006
2015: A prediction for tomorrow
2007
2008
2009
2010
0
2
The concepts of Talent, Performance, Change
Management and ‘one company’ are merged, with
successful organisations placing the future
customer at the heart of the ‘whole company’
4
6
8
10
What was famously described as ‘The War for
Talent’ in the 1990s now looks like an opening
skirmish - ‘talent’ with business skills is almost
impossible to find
12
14
16
18
A new challenge emerges - Knowledge Transfer,
utilising experienced employees after they would
have retired in previous eras.
20
Customer focus and understanding
Performance Management
Leading change
22
Communication
24
Talent Management
26
Becoming one company
Operational excellence
28
Product & service innovation
30
Coaching
32
Execution
34
Responses indicate executive key focus for the coming year(s)
Source: S4K and Mercuri Urval GCS research unit
Top 10 Focus areas ranked from top to bottom
Strategic Challenges
2015: A prediction for tomorrow
2006
2007
2008
2009
2010
0
Customer focus and understanding becomes
dominant and is the overriding driver for business
1
2
3
Increasingly, companies can only win if they are
totally aligned around their customer – meaning
operations are organised and products are
developed in a truly ‘customer connected’ way that
typically has not been seen before
4
5
6
7
Whilst costs will be important, it is top-line growth
from a fast-changing set of customers that gives
CEOs sleepless nights and profit drivers
8
Customer focus and understanding
Operational excellence
9
Product/Service innovation
10
Profitable growth
11
Cost focus
12
Responses indicate executive key focus for the coming year(s)
Top 5 Focus areas ranked from top to bottom
Source: S4K and Mercuri Urval GCS research unit
Organisational Challenges
2015: A prediction for tomorrow
2006
2007
2008
2009
2010
0
Customer insight becomes the driver behind
Talent, Performance, Change Management and
‘one company’ thinking, with successful
organisations placing the voice of the customer at
the heart of their ‘whole company’
1
2
3
4
5
New talent is very hard to attract, so employee
branding and retention strategies come to the fore,
as companies fight to keep hold of the expertise
and knowledge they have – those with knowledge
are a scarce resource
Talent management with customers at its heart is
seen as the top value-creating process within
successful companies. As technology costs crash,
people become the source of differentiation and
competitive advantage in most industries
6
7
8
Talent Management
Corporate culture
9
Becoming One Company
10
Creating a learning organisation
11
Knowledge management
12
Responses indicate executive key focus for the coming year(s)
Top 5 Focus areas ranked from top to bottom
Source: S4K and Mercuri Urval GCS research unit
Leadership Challenges
2015: A prediction for tomorrow
2006
2007
2008
2009
2010
0
Leadership is changing fast: old-fashioned notions
of task management and control have been left
behind - much greater systemic and
entrepreneurial competence is required
1
2
3
4
As organisations develop closer partnerships with
customers and suppliers, tomorrow's leader
manages organisational performance in a new way
- shared innovation, resources and costs. The endcustomer becomes the number 1 stakeholder for all
executives
5
6
Performance management
7
Leading change
8
Communication
9
Execution
Coaching
Management and functional competence is pushed
down the hierarchy, as top leaders are customerconnected and ‘one company’ people – their
reward relates only to the company, no longer to
their own silo
10
11
12
Responses indicate executive key focus for the coming year(s)
Change is the new norm; it remains critical, but is
seen in a different way – as accelerated evolution,
and not a discrete activity or project
Source: S4K and Mercuri Urval GCS research unit
Top 5 Focus areas ranked from top to bottom
Customers and Talent
Further research conducted by Mercuri Urval between 2009-2010 in over 500 leading
European companies showed the same picture:
•
Short- and mid-term: improved customer retention, more customer loyalty
and a high quality of service were seen as key tasks for the future
–
–
–
–
–
•
acquiring new customers
increasing profitability
improving the quality of service
strengthening customer retention/loyalty
increasing innovation frequency
85%
79%
79%
73%
71%
Longer-term: sustainable growth also showed a clear trend, focusing on
talent:
– strengthening human capital
– development of service quality
– improving ability to listen to the client
79%
73%
72%
The research suggests
•
Get closer to your customers and their customers as a whole organisation,
or you will fail
•
Your people are your primary source of sustainable, competitive advantage
•
Talent, especially with experience, is going to get extremely hard to find
 Leaders must make sure they build people capability now that will create
value from their customers tomorrow