Is Your Workforce Heading for a Performance Cliff?

With just a couple of weeks to go before deep spending cuts and steep tax hikes go into effect barring a deal between the White House and Congress, many bosses are citing another looming crisis.

According to a recent analysis by executive membership advisory firm CEB, corporate bosses say only 5 percent of their employees have the mix of skills and competencies required to deliver on the results their organizations expect in 2013.

“With 67 percent of executives reporting continued pressure to lower costs despite increasing revenue expectations, the corporate bottom line is increasingly dependent on achieving greater labor efficiencies,” said Conrad Schmidt, CEB global research officer. “In order to overcome new workplace challenges and facilitate increased employee productivity, executives will need to organize and manage their workforce differently.”

The analysis, based on a study of 20,000 employees and released as part of CEB’s annual “Executive Guidance” report, indicated that a majority of executives are looking for performance gains of 20 percent from employees next year. Yet only 32 percent plan to hire to meet those goals. That leaves companies facing their own version of the fiscal cliff unless something changes.

“It’s really about who you’ve got now,” Schmidt said. “It’s about developing and deploying better because so much of what is going to make people successful is their knowledge of the organization, the business, the stakeholders [and] the networks they build.”

Complicating the problem is a rapidly evolving work environment. Schmidt said there are three core characteristics of the work environment – frequent and persistent change, the requirement for more interdependent work, and the primacy of knowledge work – and offered four recommendations for talent managers based on the findings:

  • Use stretch roles to accelerate skill development: For example, managers could define a set of projects where analytical and collaborative skills are essential and designate them as on-the job learning opportunities. They could also identify the best internal collaborators and use them as “connectors” to teach others how to network and build relationships.
  • Adjust employee roles to emphasize organizational collaboration: Schmidt said companies should recognize the importance of an employee’s performance in the networked environment and redefine roles based on individual’s contribution to the organization beyond the individual and team level.
  • Reorient managers to guide knowledge workers: Instead of responding to change with more structure and hierarchy, managers should focus on removing complications that arise in a less routine, more ambiguous work environment. That might mean focusing on big-picture objectives over process and connecting employees to information sources rather than being the provider of information.
  • Target technology investment to the needs of knowledge work and collaborative teams: Schmidt said CEB studies show that only 40 percent of employees feel that they have the technology to be productive, despite the fact that 99 percent are using some form of technology on the job. He said talent managers should focus on technology from the employee perspective and not just the business needs. For example, instead of using standard technology assessment methods to determine what’s needed, corporate IT could work with talent managers to identify how workers use technology as part of their workflow.

The bottom line is employees must work differently to survive, Schmidt said, and collaboration and the ability to change are critical to success. That applies to organizations too.

“What we’re really looking for is people with a new bundle of skills,” Schmidt said. “Being good at adapting, working collaboratively and applying judgment – that kind of perfect cocktail doesn’t really exist at a high level out there.”

For talent managers, the shifts in the work environment mean focusing on developing the skills and competencies that will help existing staff be successful rather than looking outside for answers.

“It’s a change in the development culture towards more experience-based on-the-job development but trying to accelerate it through stretch roles and making managers responsible for that development,” Schmidt said.

Mike Prokopeak is the editorial director of Talent Management magazine. He can be reached at