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What's Keeping HR Up at Night?

Employee engagement, top-talent retention and leadership development continue to lead the list of concerns keeping HR executives up at night.

Thursday, September 19, 2013
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What problems of the day linger in your mind long after you've left the office?

As it has been for the last four years, answering this question was the goal of Human Resource Executive ®'s 2013 "What's Keeping HR Up at Night?" survey.

This year, 613 readers participated in the poll, telling us what has them tossing and turning these nights. And it seems 2013 has brought HR professionals many of the same worries that kept them awake in 2012.

"Ensuring employees remain engaged and productive," for instance, topped the list of biggest HR challenges facing organizations for the second consecutive year, with 35 percent of respondents citing it as their biggest challenge. The second- and third-most-common responses were "developing leaders" and "retaining key talent as the economy recovers," at 28 percent and 25 percent, respectively.

These issues have hovered near the top of the list each year we've conducted the survey. In 2012, for example, 34 percent of respondents cited employee engagement and productivity as their biggest challenge. Thirty-three percent said the same about retaining talent as the economic recovery takes hold, followed by "developing leaders," at 32 percent.

Getting Engaged

It's fair to say that engaged employees are typically happier and better workers, but getting a true picture of employee engagement can be tricky.

It's not that HR isn't trying. In fact, recent Bersin by Deloitte research finds American companies spending $720 million annually on improving employee engagement. According to the research, much of that money is spent on creating and administering employee-engagement surveys.

Engagement surveys are certainly popular with employers, but are not without potential problems. Proponents will tell you engagement surveys are invaluable in identifying what makes workers happy and productive -- and what doesn't -- within your organization.

Detractors claim employees can game the system by answering questions in a way that furthers their own interests -- angling for a raise by indicating they don't feel fairly compensated, for example. Or, some employees may be reticent about providing honest feedback, even anonymously, if they have grievances or negative comments to share.

No wonder employee engagement remains the No. 1 HR challenge facing organizations today.

Engagement and retention -- another top-of-mind matter for HR at the moment -- are intrinsically linked, of course. In fact, "intention to stay is one of the defining characteristics of engagement," says Kim Ruyle, president of Coral Gables, Fla.-based talent management and organization-development firm Inventive Talent Consulting. 

"Short of bribery," says Ruyle, "I don't know how to retain talent in a world of opportunities, other than to engage the talent."

For Robin Van Lant, senior program manager at Denver-based Key Equipment Finance, maintaining high levels of employee engagement has sometimes been daunting as the company -- a division of Fortune 500 financial-services company KeyCorp. -- has undergone significant changes. "About two years ago, we just came out of a couple rounds of layoffs," says Van Lant. "We had undergone some changes in leadership. So things were edgy."

Despite such uncertainty, Van Lant has actually seen employee-engagement scores go up in the two years since, noting that she and the HR team carefully tailor engagement surveys -- which the organization conducts every 12 to 18 months -- to get at how HR can help improve employee efficiency and satisfaction.

For example, a recent engagement survey focused on technology improvements, says Van Lant.

"We're a company with a lot of different [computer] systems, and we've been part of some acquisitions," she says. "Over the course of acquisitions, you acquire systems. So, in our last survey we asked employees to be very focused on technology. We even did a follow-up survey on technology, so we could understand how we could improve and act on it. ... From the technology side, we felt this was something HR could drive."

Sales-team members revealed in their responses that shared servers were significantly slowing their customer-relationship-management software and affecting their productivity, says Van Lant.

Upon analyzing the survey results, "all we had to do was get approval to provide a dedicated server for the sales CRM software," she says. "Problem solved."

Overall, the organization has seen employee-engagement scores increase from 50 percent to 68 percent overall during the past 18 months, with some individual teams seeing even larger spikes.

Holding On

Economic conditions have only complicated the engagement issue in recent years. It's tough to overstate the effect the Great Recession has had on the corporate climate. Slight salary increases -- or outright salary freezes, slashed budgets, smaller staffs and the looming threat of layoffs can conspire to leave employees disenfranchised and demotivated.

This isn't to say all employees are mentally checked out, of course, but our survey results indicate there's room for employee spirits to be lifted at many organizations. In assessing the current state of employee morale and engagement in their organizations on a scale of 1 to 5 -- with 5 being "extremely strong" and 1 being "extremely weak" -- the average score was 3.1. 

The economy has begun to show signs of life and, while progress has been slow, employee retention is a growing concern, with companies fearful of seeing waves of top talent leave as the job market continues to loosen up.

In fact, when asked to grade their concern about losing talent over the next year on a scale of 1 to 5, the overall average score was 3.7, with 61 percent of respondents rating their level of concern as either a "4" or "5."

What are companies doing to boost retention and develop leaders? According to our survey, "increasing employee communication (61 percent)," "providing employees with additional training (55 percent)" and "assisting employees in their career development (40 percent)" are the most popular approaches organizations plan to take in the next 12 months.

"Managing ever-churning talent is a huge challenge," says Trisha Zulic, director of human resources at Efficient Edge HR, a San-Diego-based provider of HR administrative services.

"Teaching leaders how to deal with changing talent is just as, if not more, difficult [for HR]," she says. "They are blaming HR for not hiring right and not understanding that a high percentage of today's workforce is transient in nature."

Amparo Bared knows how difficult it can be to retain and develop the necessary talent in today's environment.

Bared is vice president of talent management at Ryder Systems Inc., a Miami-based provider of commercial transportation, logistics and supply chain-management services. Ryder recruits more than 6,000 new employees each year, and its HR team is under steady pressure to "keep the talent pipeline filled," says Bared.

As part of the company's overall talent-management strategy, "we talk not only about continually bringing in new talent, but what we're doing to retain and develop our people," she says.

Critical to Ryder's talent-management strategy are partnerships with outside institutions such as colleges, technical schools and the Women in Trucking Association, which help Ryder find and start to groom its next generation of leaders, Bared says.

The company also provides employees -- from skilled laborers to those in executive-level positions -- with career-development opportunities early and often in their Ryder careers, says Bared.

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"We focus on building the skill sets of [our] people and making sure they're equipped to do their jobs and do them well. That's why the development piece is so important."

Not all companies consider "the development piece" quite as critical, says Ruyle, pointing to the survey's 28 percent of respondents who cited "developing leaders" as a top challenge.

While some companies have neglected to make leadership development a top priority, says Ruyle, "even those that follow through on good intentions are prone to common errors." For example, he says, some organizations don't adequately differentiate talent, especially as it relates to identifying potential. They also, he adds, fail to take an aggressive approach to managing emerging leaders' careers and rely solely on HR to handle talent management rather than holding operational managers accountable as well.

"It follows that if it's difficult to develop leaders," he says, "retention is going to also be a significant concern, especially since the most capable leaders will have the most opportunities and likely represent the greatest retention risk."

Handling Stress

As these and other worries mount for HR leaders, so too does the level of anxiety they're experiencing.

Nearly half of those polled (44 percent) reported their level of stress had increased somewhat in the past 18 months, with another 32 percent saying their stress level had spiked dramatically in that time frame. In 2012, 46 percent of participants said their stress had gone up somewhat, and 27 percent said their stress levels had radically increased. 

"For years, HR professionals have pleaded to be 'strategic' and 'add value,' without appreciating that these activities come with an emotional toll," says Dave Ulrich, professor of business at the Ross School of Business at the University of Michigan.

"HR's increasingly strategic role requires more accountability, which leads to more stress," adds Ulrich, who is also a partner with Provo, Utah-based consulting firm the RBL Group.

"My stress has increased somewhat" in the past 18 months, says Erica Gamble, vice president of human resources at Bank of America Merchant Services, a Charlotte, N.C.-based electronic-payments processor.

Gamble cites leadership development and difficulty attracting top talent among the top stressors for her HR organization.

"Attracting new employees of the correct caliber can be a challenge for any company," she says. "Many organizations lack the dedicated resources to increase their profile among job seekers, which can lead to them losing out on top talent." Gamble also notes, however, that the Affordable Care Act is "not a concern" right now.

Our survey finds that other HR practitioners may also be feeling more prepared as the implementation of ACA provisions draws closer.

On average, responding organizations rate their ACA readiness as a 3.6 on a scale of 1 to 5, with 73 percent giving themselves either a "3" or "4."Additionally, 80 percent say their organization is not considering phasing out health benefits in light of ACA provisions.

ACA requirements aside, however, "demands on HR have gone up" overall, says Ulrich.

The majority of HR professionals feel they're not equipped to meet those demands, with 53 percent of respondents indicating their department is not adequately staffed to handle its workload. When asked which HR disciplines are most in need of additional staff, 42 percent said "general HR," with 41 percent saying they were in need of HR professionals to aid in training and development, and 36 percent saying the same with regard to recruiting.

Indeed, faced with doing more with less for the foreseeable future, stress levels throughout HR organizations may continue to tick upward, says Ulrich.  "The challenge for HR," he says, "is to not only manage it for themselves, but to help others do the same."

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