Can HR meet the talent challenge?

Human resources (HR) professionals are in the trenches of change. But are they rising to the challenges of talent-specific macro trends? 

As the knowledge economy took deeper root 25 years ago, it dawned on corporate leaders that winning companies would be those with the smartest talent. It followed that acquiring, developing and retaining talent should be a priority. 

But the rate of all-round change has thrown multiple curveballs at this mission. What are the trending challenges involving talent today, are HR professionals fulfilling their mandates, and does the C-suite pay enough attention to these issues?

HR’s strategic relevance would seem indisputable. “It is uniquely positioned to see, and discover, things about the business through the lens of its people,” says John Boudreau, management professor at the University of Southern California’s Marshall School of Business.

But two factors cut into the value HR leaders bring to their organisations. One is that many talent professionals remain operationally focused. The other is that even those who do apply business thinking to talent, and align HR with the company’s strategies, do not always have a seat at the top leadership table. 

Understandably, the C-suite wants to know how HR is helping the bottom line. But paradoxically, in prioritising the hard reality of results, CEOs may not be capitalising on the potential of strategic talent in gearing internal capabilities and competitive advantages. Until talent professionals can demonstrate how their work in soft measures feeds into performance and productivity metrics, this disconnect will continue. 

But the definition of productivity itself is under scrutiny. “Bubbling under many of the trends we see at the moment is the fact that most companies have realised that they cannot, in fact, really define or measure productivity,” says Sally Acton, CEO of Torque Solutions, a company specialising in the employee experience.

“This is showing up in how policy is being executed, how technology is both the enabler and constraint, and how skills are being sought. As a community, we are struggling with 4IR/5IR problems with 1IR mindsets,” she says. 

A related trend is the rapidly changing nature of work and the difficulties this presents in planning for skills needed now, let alone those of the future. 

Digital transformation is fast reshaping jobs — and shortening their shelf life. In its “The Future of Jobs Report 2023”, the World Economic Forum projects that 23% of all jobs will have changed by 2030, and this evolution will accelerate as AI takes deeper root. Gloomily, though the report forecasts the next wave of digital transformation will create 69-million jobs globally, it says 83-million jobs will become redundant. 

It’s certain that AI will further transform jobs and work, but it’s unclear how. In its report “Is HR Already Behind in the AI Revolution?” the Institute for Corporate Productivity found that HR leaders were not included in discussions regarding the role of AI — a marker of ongoing scepticism of HR’s strategic value. 

This is the context for companies’ increasingly flexible approach to roles and responsibilities, a shift aimed at creating what is termed “talent agility”. Partly, this is necessitated by changes in organisational structures as departmental silos are broken down: flatter structures, or networks with multiple reporting lines, are designed to foster collaboration. Partly, too, companies see the need for role interchangeability to ensure deeper bench strength in management and specialist skill set layers. 

But agility is also being pushed by employees. Newer workforce generations aim for more than a rewarding job, or even a rewarding career. Instead, they expect enriching employment experiences. Leading enterprises now have internal talent marketplaces which connect projects with employees keen to expand their knowledge and skills. There is also a digital platform “opportunity marketplace” which is both internal and external, intended to access skills instantly; it is automated and more dynamic than conventional recruitment and hiring. 

Skills shortages are a reality in almost all industries throughout the world. This is less a trend than a long-standing issue as education and training systems have not kept pace with the requirements of the 21st-century workplace, especially in — but not limited to — the digital skills area. 

In fact, soft skills — the ability to motivate, communicate and bring self-awareness and empathy to problem-solving — are increasingly referred to as power skills. “These are the ‘human’ skills in human resources, the skills that mobilise people, which is one of the hardest things to do in business,” says Rob Dennison, founder of Joburg-based leadership and learning consultancy Trainiac.

The C-suite is now waking up to the talent issue, because remote work gives employees global options

—  Lorinda Ellis

Other factors feed into the skills deficit. Long before the pandemic, occupational sociologists and academic studies had highlighted employee engagement as a contributor to an organisation’s results.

Engagement is, however, elusive. Research firm Gallup, in its 2024 “State of the Global Workplace” report, speaks of a global employee engagement level of just 23%. The figure for Sub-Saharan Africa is lower, at 20%, and though no specific number for South Africa is reported, a pre-Covid survey indicated an appallingly low 9% engagement level, with 45% of the country’s workforce actively disengaged. 

This form of minimal commitment and non-involvement by employees is called quiet quitting, and it comes with a cost, estimated by Gallup at $9.8-trillion, or 9% of the world’s GDP.

And Covid has hastened a change in people’s attitude to work. Millions of jobs were lost. People understandably questioned whether their companies genuinely cared about them. In parallel with this, scaled-up digital connectivity and tools enabled remote work. Post-Covid there was a “great resignation” shift among skilled knowledge-economy employees, especially in the IT sector. They realised they no longer needed to be locked into inflexible work arrangements. 

Remote work for many was unavoidable during the pandemic, but afterwards, many CEOs, concerned about accountability and effective collaboration, pushed for a full and prompt return to the office. There was some justification for this. “The working-from-home illusion fades”, headlined an article in The Economist, pointing to productivity declines of up to 19% in certain sectors.

Chris Hitchings, director of South African-based media and marketing group Provantage, sums up why this would happen: “There’s nothing like getting in a room with someone, having a face-to-face conversation, that water cooler effect, the teamwork and engendering of trust that comes with it.”

Hitchings points out that many people want this kind of in-person interaction. Connection and a sense of belonging are important for professional and personal motivation. A 2023 Pew Research Centre survey indicated that 36% of workers worried that remote work limited their opportunities for mentorship and growth.

However, the work-from-home or work-from-office question has largely resolved itself. Millions of employees, except in some industrial or manufacturing sectors, now have hybrid arrangements. Organisations understand the possibility of work-from-anywhere (WFA) — even if this is not always accepted by management as optimal for productivity. 

But in South Africa, WFA is another reason leaders are watchful. “The C-suite is now waking up to the talent issue because remote work gives employees global options, and this is a risk given the small size of the country’s skilled and trained talent pool,” says Lorinda Ellis, chief marketing officer of LRMG, one of Africa’s leading talent development, technology and advisory companies.

So there is a figurative talent war on many fronts: a battle for skilled people; intergenerational conflict regarding right and wrong ways to approach work; and a silent, quiet-quitting cold war of disengagement. 

To win this battle, one of a company’s strongest possible assets is its culture. Workplaces nurture a sense of belonging among their employees when they emphasise fairness and trust, empower their people, and systemise career growth and personal development. 

“Companies need to be smart and healthy,” says Grant Ashfield, CEO of Joburg-based LeadershipWorks. “‘Smart’ involves stuff that companies are often good at, like strategy, structure and systems. But ‘healthy’ is often not paid attention to, and it is sometimes more difficult.”

This move to humanise work is linked to many other employment trends: diversity, equity and inclusion; employee wellbeing programmes; companies’ moves to create a strong employer brand to acquire and retain top talent. 

But at heart it is a culture issue. A study done in partnership with Oxford University concluded that listed companies with healthy cultures were significantly more likely to report consistent 15%-plus annual revenue growth, and to benefit from increases in market valuations.

A quote often attributed to legendary management consultant Peter Drucker is “Culture eats strategy for breakfast”. He wrote that “culture — no matter how defined — is singularly persistent”. He means that the way everybody in the organisation behaves translates into the way work gets done, and leaders set the tone. 

Indeed, an overarching talent trend resides within the C-suite, which now has a more focused lens on human resources. Despite ongoing scepticism regarding its measurable return on investment, talent is very much on the agenda of CEOs. They realise that they need to become de facto talent leaders too.

Says LRMG CEO Ricky Robinson: “Now, not just at the request of the HR director or manager, but also coming from CEOs or the C-suite generally, our clients are asking us to guide them in improving their employer brand, or in building leadership capabilities throughout their companies.”

This makes sense. If an organisation’s human capital determines the success of the business, CEOs can light the touchpaper on a culture of performance.