IBM Global Human Capital Study: Looming Leadership Crisis, Organizations Placing Their Companies' Growth Strategies at Risk


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ARMONK, NY - 18 Oct 2007: According to a major new IBM (NYSE: IBM) study of over 400 human resource executives from 40 countries released today, more than 75 percent of HR executives say that they are concerned with their ability to develop future leaders. Given the explosive growth in emerging markets, and the retirement of experienced personnel in more mature economies, the study suggests that companies are placing their growth strategies at risk if they cannot identify and develop the next generation of leaders.

The study shows that leadership issues are surfacing worldwide, with organizations in every corner of the globe being impacted. Companies in the Asia Pacific region are most concerned with their ability to develop future leaders (88 percent); followed by Latin America (74 percent); Europe, Middle East and Africa, (74 percent); Japan (73 percent) and North America (69 percent).

The Global Human Capital Study titled "Unlocking the DNA of the Adaptable Workforce" was developed by IBM Global Business Services' Human Capital Management practice and the IBM Institute for Business Value (IBV), with assistance from the Economist Intelligence Unit (EIU). Human Resources executives participated in a structured interview, with many of them face-to-face, designed to capture insights on the subject of workforce transformation.

"In today's business environment, organizations worldwide need to have a pipeline of future leaders who can deliver on today's commitments, drive workforce and enterprise transformation, and lay the groundwork for future growth," said Tim Ringo, Global Leader, Human Capital Management, IBM Global Business Services. "Effective leadership not only guides individuals through turbulent business conditions, but creates a climate that attracts and retains high performers, who will be in increasingly short supply in the future."

Key Roadblocks
Rotating employees across divisions and geographies is also an important way to hone future leadership talent. Yet, according to the study, 36 percent of HR executives state rotating leadership talent is a significant challenge in developing future leaders. Another key challenge is the generation gap -- passing on knowledge from older to younger employees (28 percent).

Help Wanted: Skills
In addition to being unable to develop effective leaders, the study finds that 52 percent of HR executives say a significant workforce-related challenge facing their organizations is the inability to rapidly develop skills to address current and/or future business needs. Furthermore, the study shows that more than one-third of study participants state their employee skills are not aligned with current organizational priorities (36 percent).

"The ability of an organization to look ahead and identify the skills it will need in the future, and then rapidly develop a critical mass of individuals with those skills in a cost-effective manner, will be a core competency for those companies looking to compete in the globally integrated world," said Randy MacDonald, Senior Vice President of Human Resources for the IBM Corporation.

Talent Wars
For many companies participating in the study, turnover continues to increase. Forty-seven percent of the organizations surveyed said that employee turnover has increased over the past two years, while only 16 percent said it has decreased.

The study finds that HR executives and line of business executives appear to be more concerned about developing existing employee skills than attracting new talent. Many believe their corporate reputations will allow them to attract and retain the people they need. While 52 percent indicate an inability to rapidly develop skills is a primary workforce challenge, only 27 percent state the inability to attract qualified candidates is a problem.

Retention also seems to be less of a concern; only 18 percent state this is a high priority workforce issue. However, changing trends in workforce demographics and mobility patterns suggest they may need to invest more resources in recruiting, selection and retention.

An underlying cause according to the study is that HR executives believe that despite the ongoing war for talent, they are more capable of attracting and retaining talent than their competitors. Almost 60 percent of HR executives surveyed feel they attract and retain talent better than their peers, while only 10 percent state they are less effective.

Developing an Adaptive Workforce
Due to various internal and external pressures, companies today are forced to be more responsive to shifting market needs; more flexible in how they operate; more focused on their core competencies; and more resilient to external threats. Developing a workforce that is adaptable to change has become essential. According to the study, however, only 14 percent of HR executives state their workforce is very capable of adapting to change.

The Global Human Capital Study identifies three critical success factors to developing an adaptable workforce:

About the Global Human Capital Study
The findings of this report are based upon a survey conducted by IBM Global Business Services' Human Capital Management practice and the IBM Institute for Business Value (IBV) from February to July 2007. Over 400 human resource executives from 40 countries participated in a structured interview designed to capture insights on the subject of workforce transformation. The majority of these interviews were conducted in person by IBM practitioners, with the remainder interviewed via telephone through a partnership with The Economist Intelligence Unit (EIU). Participants represent private, public and not-for-profit organizations across a variety of industries and geographic locations. They ranged in size from less than 1,000 employees to more than 50,000. Corresponding revenues for these organizations ran from less than US$500 million to over US$25 billion.

About IBM Human Capital Management Practice
IBM Global Business Services' Human Capital Management (HCM) practice focuses on enabling enterprise innovation and performance through improved workforce effectiveness. With two thousand practitioners worldwide, the Human Capital Management practice has a full suite of end-to-end capabilities to address clients' challenges. IBM's Human Capital Management practice capabilities include workforce transformation, learning solutions, knowledge and collaboration, HR Strategy and transformation and outsourcing. Visit www.ibm.com/gbs/humancapital for more information.

About the IBM Institute for Business Value
The IBM Institute for Business Value provides strategic insights and recommendations that address critical business challenges to help clients capitalize on new opportunities. The Institute is comprised of consultants around the world who conduct research and analysis in 17 industries and across five functional disciplines, including human capital management, financial management, corporate strategy, supply chain management and customer relationship management. Visit www.ibm.com/iibv.

About IBM
For more information about IBM, visit www.ibm.com.

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