By Kazim Alam, The Express Tribune
KARACHI: The failure of businesses to make the most of their human capital is leading to their blighted growth prospects and lower financial performance, according to a recently released report by the Chartered Global Management Accountant (CGMA).
Titled “Talent pipeline draining growth: connecting human capital to the growth agenda,” the survey was conducted by the Economist Intelligence Unit (EIU) on behalf of the Chartered Institute of Management Accountants (CIMA) and the American Institute of Certified Public Accountants (AICPA).
Based on the responses of 313 chief executive officers (CEOs), chief financial officers (CFOs) and human resource (HR) directors throughout the world, the survey revealed that over two-fifths (43%) of respondents partially attributed the failure of their firms to achieve key financial targets to ineffective people management while almost the same number of respondents (40%) said it had reduced their company’s ability to innovate.
CIMA is a global accounting body, which maintains its presence in 20 countries, including Pakistan. The 313 executives who took part in the survey belonged to Europe (27%), United States (24%), Asia-Pacific (25%), and the rest of the world (24%). Therefore, it is possible that some of the CEOs, CFOs and HR directors that the EIU spoke to for this survey belonged to Pakistan. However, when contacted by The Express Tribune, CIMA Pakistan representative Javaria Hassan was not available for comment on Monday evening.
According to the survey, an overwhelming proportion of HR directors (83%) believed that talent development is their remit. In contrast, less than 30% of CEOs and CFOs held this view, signifying disconnection about responsibilities at the top management level. No wonder that confusion about respective responsibilities hinders effective decision making in key areas: 77% of CEOs advocated cutting investment in workforce skills, training and qualifications in the next 18 months while only 18% of HR directors agreed.
Conducted to understand the importance of talent management in business strategy, respondents belonged to a vast range of sectors, such as manufacturing, retail, energy and utilities, financial services, telecommunications, health care, pharmaceuticals, media and consumer goods.
About 43% of respondents said their companies were unable to achieve key financial targets in the past 18 months as a result of “inadequacies in human capital management”. Similarly, 40% reported a reduction in the ability of their companies to innovate over the last one and a half years because of the same reason.
Over half (51%) of executives said their firms did not have a formal succession planning process for C-level roles, such as CEO, CFO and chief operating officer. While nearly 36% of HR directors were confident that their firms will not need to go externally to recruit for senior roles, less than 10% of CEOs and CFOs agreed, which reinforced the earlier finding about a disconnection at the top management level.
Over one-third of CEOs and 40% of CFOs believed that while their firm had a lot of data regarding human capital, its usefulness was questionable and that they did not receive enough data-based insights or analysis to help their firm with human resource planning. Similarly, only 12% of CEOs were confident about the quality of metrics that senior management receives on human capital. Also, they were ‘highly sceptical’ of data on retention of talent and workforce analytics.
Nearly half of respondents (45%) were from firms with $1 billion or more in global annual revenues.
Published in The Express Tribune, September 25, 2012.