A better-prepared workforce delivers better results. And companies with above-average revenue growth are more likely to provide employees with advanced training and development programs, as well as give their workers access to the information they need to not just get by but to thrive.
The inverse holds true as well. Problems with talent and skills affect business performance. How significantly? High-revenue-growth companies are significantly more likely to be redefining or adapting business models in response to market opportunities and pressures, while underperformers are more likely to be downsizing and restructuring operations just hoping to survive. But by not re-thinking how to make HR a strategic priority, they will not catch up. Ask any of the 50% of the Fortune 500 in 2000 that are no longer in that category; likely not even around today at all, unless they were gobbled up by someone looking for spare parts.
I don’t think many successful companies are surprised that a big piece of the answer today is what I just said – making HR a strategic priority. I’m guessing the ones who don’t think HR can make a difference are generally the ones not in the growth category – defined here as those that reported either above-average revenue or profit margin growth over the past three years.
Executives at higher-growth companies tend to be more forward looking and better prepared to react to workforce trends. Trends like the growing number of millenials who are already in our workforce and who by 2025 are predicted to make up 75% of it. That number is a reflection that we’re at a point where we’re losing more of our company knowledge and leadership experience to retirement globally. In the US alone, 10,000 Baby Boomers a day turn 65 until 2030. More than at any time in the past. That’s a significant knowledge and leadership drain.
And with CEOs being kept awake at night wondering how they are going to find enough people with the right skills to meet the demands of our increasingly complex technical environments, both people with IT skills and people with the experience to lead the next generation, we’re seeing a rise in the use of contingent labor – a trend that looks to be sticking around. And those “outside the walls” contributors need to be connecting in new and innovative ways to gain long-term value and feed the pipeline of high value workers.
Preparation for the future workforce means more than just reacting to changing trends—it requires that workforce issues be visible and actionable priorities in the C-suite.
To catch up to high performers, underperforming companies must focus on making HR a strategic priority, recruitment efforts, and reacting to changing workforce trends. And growth companies may have something learn from underperformers – at least those acting to reverse course – when it comes to embracing and using existing talent in leadership positions and leveraging data.
While much of this is my experience, it’s not just my perspective. While much of this is my experience, it’s not just my perspective. You can learn more about how HR can help differentiate growth companies from those lagging behind in the recently released findings from Workforce2020, an independent, global study of over 2700 executives from Oxford Economics with support from SAP.