before HR can help an organization to address the talent gap, it needs to address its own

1. The talent
paradox
Before HR can help
an organization address
the talent gap, it needs
to address its own

2. The role of HR continues to challenges such as leadership development and
pipeline, creating a high performance culture, talent
evolve, gradually shifting from management and acquisition, and anticipating and
responding to mission-critical events. According to
administrator to strategic the survey, these are the types of challenges that
drive an organization’s overall performance. To meet
business partner. Traditional HR the challenges, respondents expect HR will need to
significantly upgrade its talent and capabilities.
focus areas such as improving
• Strategic HR requires new skills and
HR operational efficiency, competencies. Competencies expected to rise the
most in importance over the next three years are all
reducing staff costs, and training/ fundamental to HR’s new role as a strategic partner
– things like innovation, strategic thinking and
development are now tablestakes. analytical ability, relationship building/strategic
partnership, and business acumen. Unfortunately,
They must be done well, but the survey data shows that many of these critical
future competencies are currently viewed as HR’s
don’t provide a sustainable weakest areas. 38% of respondents say that HR is
“weak” or “very weak” in innovation, while another
performance advantage. 39% rate HR’s innovation capabilities as simply
“moderate.” Other key competency areas receive
To succeed in its new role – and deliver what the similarly low marks.
broader organization needs – HR must attract and
develop staff with new skills and capabilities. The • Build? Buy? Or both? To close the gap, HR should
Economist Intelligence Unit conducted a global increase its investment in business-related training,
leadership survey on behalf of Deloitte member firms and ramp up programs such as job rotations that
(“Deloitte”) to understand the challenges that today’s help HR staff improve their business knowledge and
HR organizations’ face in developing and acquiring HR experience. It should also recruit leaders and staff
talent. Key findings: with broad knowledge and experience that
transcends traditional HR competencies. In the face
• HR must improve its capabilities. Most of the of a chronic talent shortage, HR will need to recruit
surveyed organizations believe the HR function has more aggressively, actively positioning itself as a
significant room for improvement. Although great place for top talent to launch a career.
respondents say HR is generally performing well in
its traditional administrative role, only 29% believe Before HR can help the broader organization address
their HR function has the talent necessary its strategic talent challenges, HR must first address its
to succeed in the next three to five years. own talent challenges. This survey report highlights the
latest issues and trends in HR talent, and offers
• HR must focus on strategic people issues, not practical, real-world insights to help HR attract,
just administration and operating efficiency. develop, and retain the talent it needs to help the
To fully support the broader organization, HR must organization succeed.
focus more time and effort on strategic people
2 The talent paradox

3. What organizations need from HR The survey results show that in order to help an
Organizations today face unprecedented people organization thrive, HR must focus more time and effort
challenges, and they need HR’s help. The HR function on strategic people challenges:
can no longer limit its focus to traditional improvement
areas such as HR operational efficiency, reduced staff • Leadership development and pipeline – building the
costs, and training/development. These kinds of next generation of leaders
activities have become tablestakes. They should be • High performance culture – creating a workforce that
done well, but don’t provide a sustainable advantage in is pre-wired for high performance
the marketplace. And they are not enough to address • Talent management – attracting, developing, and
the myriad of short- and long-term people issues that retaining the talent an organization needs to thrive
today’s organizations are wrestling with. • Talent acquisition – recruiting and hiring people with
the right skills and capabilities
• Anticipating and responding to mission-critical events
– proactively addressing strategic challenges, instead
of reacting after the fact
These challenges have a tremendous impact on an
organization’s overall performance.
Figure 1: Strategic challenges
Which of the following issues present the most important challenges
to the performance of your organization?
Leadership development and pipeline 50%
Creating a high performance culture 49%
Talent management 39%
Talent acquisition 29%
Anticipating and responding to business-critical events 26%
Improving operational efficiency of HR through process and technology 23%
Reducing staff costs 22%
Training/development 19%
Compensation, benefits, and pension planning and management 15%
Complying with regulatory questions 8%
0% 10% 20% 30% 40% 50%
The talent paradox 3

4. Room for improvement
According to the survey, most organizations believe HR
has significant room to improve its capabilities and
performance. 46% of respondents say their HR
function is “adequate but needs to improve,” while
Figure 2: Rating HR’s overall performance 20% say HR is “world-class in some aspects, but needs
to improve in several areas.” 20% believe “significant
Which of the following statements best describes the overall state improvement” is needed, while another 10% say that
of your organization’s management of HR issues? “radical improvements” are needed. Only 5% consider
We have an adequate HR function for our their HR function “world-class” in every aspect of
46%
industry but we need to improve performance.
We are world-class in some aspects of our HR function,
20%
but we need to improve several areas
In Deloitte’s experience, most HR organizations perform
We are getting by in our HR function, 20% well on traditional activities such as benefits
but significant improvement is needed
administration and regulatory compliance. Also, they
We are underperforming in our HR function;
radical improvements are needed
10% have made great strides at improving HR operating
efficiency. Yet there is clearly a gap between HR
We are world-class in all aspects of our HR function 5%
capabilities and the changing needs of the overall
0% 10% 20% 30% 40% 50% organization.
Figure 3: Specific HR competencies
Rate the specific competencies that your organization’s
HR function collectively demonstrates
Providing technical HR expertise to address people management challenges 43% 36% 21%
Helping to execute on corporate or business unit strategies or plans 42% 35% 23%
Contributing to the development of corporate or business unit strategies or plans 42% 34% 24%
Retaining talent to meet the organization’s needs 40% 34% 26%
Attracting talent to meet the organization’s needs 39% 36% 25%
Leading, managing or supporting organizational change 36% 39% 25%
Improving HR operational efficiency 34% 40% 26%
Developing and attracting leaders 32% 38% 30%
Creating a high performance culture 29% 34% 37%
0% 20% 40% 60% 80% 100%
Highly effective/moderately effective Adequate Highly ineffective/moderately ineffective
4 The talent paradox

5. Looking at specific competencies, HR received its About the survey
highest rating for technical HR expertise (see figure 3). A total of 359 people from 78 countries participated in the
Yet even in this traditional area of strength, 21% of survey. 80% of respondents were senior leaders, including
respondents consider HR “highly or moderately CXOs, board members, department heads, vice presidents, and
ineffective,” while another 36% rate HR as merely directors. 40% were from human resources, with the rest
“adequate.” representing a broad cross-section of business functions, from
operations and corporate management to finance and sales
Even more alarming, HR’s lowest ratings were in the & marketing.
two areas rated most important for the broader
organization: (1) creating a high performance culture 5% 3%
CIO/Technology director
and (2) developing and attracting leaders. 5% 21% CEO/President/Managing director
6% SVP/VP/Director
The majority of respondents expect HR to improve its Manager
7% Head of department
expertise and capabilities over the next three years, but
CFO/Treasurer/Comptroller
to fall somewhat short of its loftiest aspirations. Less
7% Other C-level executive
than a third expect HR to evolve into an effective 16%
Other
business partner, or to attain world-class status with
8% CHRO
extensive involvement in workforce analytics, culture
Head of business unit
building, change management, and strategic planning 8% 15%
Board member
(see figure 4).
10% 6%
Sales and marketing
Figure 4: Expectations for HR improvement 10%
Human resources
Which of the following statements best describes your Business operations
expectations for the development of your organization’s Other corporate management
HR function over the next three years? 14% Other
40%
Finance
11%
18%
20%
20%
29%
15% Participating organizations ranged in size from small (less than
6% 5,000 employees and $500 million in revenue) to large (more
than 100,000 employees and $5 billion in revenue), with strong
0% 10% 20% 30%
representation from every major industry and global region.
Will attain world-class status with extensive involvement in workforce 6%
analytics, culture-building, change management and strategic planning
Will evolve into an effective business partner 26%
Middle East and Africa
Will learn more about the business and will aspire to become a strategic Europe
partner but will not be fully accepted in that role
35% Americas
Will develop increased HR expertise and will proactively promote
best practices Asia-Pacific
Will remain primarily focused on managing HR transactions
Don’t know
33%
The talent paradox 5

6. Time for an HR talent upgrade
To fulfill its new role – and deliver what the organization
needs – HR must attract and develop staff with new
skills and capabilities. According to the survey, only
29% of respondents believe their organizations
currently have the HR talent necessary to succeed over
the next three to five years (see figure 4).
Looking deeper, the survey data shows that the vast
majority of HR organizations (80%) already have the
Figure 5: HR talent needs are changing talent they need to meet demand in traditional
transaction areas such as payroll and benefits. Where
Ability of talent to fulfill organization’s HR needs now vs. in
they come up short are areas that are critical to HR’s
three years (more than able to meet demand/able to meet demand)
new role as a strategic partner, such as business
Traditional HR capabilities 80% strategy, workforce planning & development, global
(payroll, benefits, other transactional) 82%
mobility, change management, and innovation. At the
Competencies for transformed HR role
34% moment, only 34% of organizations believe HR has the
(business strategy, workforce planning & development,
58%
global mobility, change management, innovation) talent required to meet their needs in these areas.
However, survey respondents expect HR to dramatically
0% 30% 60% 90%
improve its capabilities in these key areas over the next
Now In 3 years three years.
Figure 6: Key HR competencies in the future
Importance of the following specific HR competencies now vs. three years
from now (respondents selected “essential”)
62%
Teamwork and communications 68%
56%
Customer focus
64%
Leadership 56%
66%
49%
Strategic thinking/analytical ability
69%
Relationship building/strategic partnership 46%
58%
Consulting/advisory skills 42%
51%
Negotiation/conflict resolution 41%
48%
Business acumen 38%
49%
Innovation 36%
57%
0% 10% 20% 30% 40% 50% 60% 70%
Now In 3 years
6 The talent paradox

7. Key HR competencies Business acumen and relationship building are also
Survey respondents expect HR to improve its critical. In order to serve the broader organization as
competencies areas across the board over the next credible and trusted partners, HR staff must develop
three years. However, the competencies expected to strong relationships with the organization’s leaders, and
rise the most in importance during that time are all demonstrate a solid understanding of strategic issues.
fundamental to HR’s new role as a strategic partner:
innovation, strategic thinking and analytical ability, Unfortunately, the survey data shows that many HR
relationship building/strategic partnership, and business departments have yet to develop these critical
acumen. competencies. 38% of respondents rate HR as “weak”
or “very weak” in innovation, while another 39%
Innovation is important because even the best ideas believe HR’s innovation capabilities are just “moderate.”
eventually become commodities. To keep pace with Other key competencies such as business acumen and
changing needs – and maintain a sustainable advantage strategic thinking/analytical ability receive similarly low
in the talent marketplace – HR must constantly strive for marks.
new and better ways of doing things.
To support the future strategic needs of the
Strategic thinking and analytical ability are essential HR organization, HR must find ways to expand and
competencies because today’s talent challenges are improve its performance in all of these key areas.
driven by complex trends such as workforce aging and
global sourcing. It is HR’s job to help the organization
understand and solve these complex puzzles. To keep pace with changing needs – and maintain
a sustainable advantage in the talent marketplace –
HR must constantly strive for new and better ways
of doing things.
Figure 7: Rating HR’s current competencies
Rate the specific competencies that your organization’s
HR function collectively demonstrates
Customer focus 49% 34% 17%
Teamwork and communications 46% 39% 15%
Negotiation/conflict resolution 41% 39% 21%
Communications 37% 42% 21%
Relationship building/strategic partnership 37% 39% 25%
Consulting/advisory skills 36% 40% 24%
Leadership 36% 39% 25%
Strategic thinking/analytical ability 30% 39% 30%
Business acumen 27% 43% 30%
Innovation 23% 39% 38%
0% 20% 40% 60% 80% 100%
Very strong/strong Moderate Very weak/weak
The talent paradox 7

8. Current efforts to fill the HR talent gap HR departments are also making a deliberate effort to
In light of these new requirements, many of the hire HR staff with diverse backgrounds and business
surveyed organizations are investing in business experience. Although a master’s degree in HR remains
management training to help the HR staff improve its the most popular credential for success in HR, more
business savvy and capabilities (see figure 8). than a third of respondents (37 %) are interested in
candidates with an MBA.
That’s a good start, but Deloitte believes HR needs to
do more. Other key areas for learning and development HR organizations are looking for leaders with HR
include: consulting skills, strategic/analytical thinking, experience in other industries (59%), business operations
and conflict resolution. These kinds of skills can help HR experience (58%) and corporate management
staff partner with the organization more effectively. experience (45%). In addition, a significant number are
looking for leaders with experience in non-traditional HR
areas, as well as in finance and IT (see figure 10). This
broad experience improves an HR leader’s effectiveness
and credibility when interacting with leaders from other
parts of the organization.
Figure 8: Current training investments for HR staff
Which of the following types of training is your company investing in to
develop the HR competencies needed for future success? Select all that apply
Business management skills 52%
HR functional skills 50%
Organizational design 34%
Professional certification 31%
Psychology or other social sciences 20%
Don’t know/not applicable 14%
Other, please specify 7%
0% 10% 20% 30% 40% 50% 60%
Figure 9: Desired education for HR staff
How important are the following credentials to the success of professionals
in your HR organization? Select up to three
Master’s degree in Human Resources 46%
Undergraduate degree 39%
MBA or similar degree 37%
Certification from an HR professional organization (CHRP, SPHR, etc) 34%
Don’t know/not applicable 14%
Law degree 13%
Public Administration/Public Affairs degree 11%
PhD 4%
0% 10% 20% 30% 40% 50%
8 The talent paradox

9. Another way for HR staff to build broader business At the moment, respondents have mixed feelings about
experience and acumen is through exchanges with other such exchanges (see figure 11). People outside of HR
parts of the organization. Through these direct, often shy away from HR assignments because they view
hands-on experiences, HR staff learn what really matters them as dead ends. Conversely, traditional HR staff
to the organization, and how to think like business sometimes lack the broad capabilities necessary to
people. Just as important, they develop personal succeed on assignments within the broader
relationships across the organization that help them organization. Deloitte believes this dilemma will
partner more effectively in the future. gradually resolve itself as HR adjusts to its new role as a
strategic partner, and as the need increases for HR staff
with business experience. However, organizations can
prime the pump by taking a more active role in job
rotation programs and providing extra management
support to help ensure participants are successful.
Figure 10: Desired backgrounds for new HR leaders
Which of the following backgrounds do you look for when seeking new
HR leaders from inside or outside the company? Select up to three
HR experience in other industries 59%
Business operations experience 58%
Corporate management experience 45%
Communications experience 44%
Non-tradional HR experience 27%
Finance experience 10%
IT experience 9%
0% 10% 20% 30% 40% 50% 60%
Figure 11: Staff exchanges
How open is your organization to facilitating interchanges
of key staff between HR and other business functions?
Incoming exchanges – Temporary developmental
assignments of professionals from operations or other 33% 46% 21%
enabling functions within the organization in HR
Outgoing exchanges – Temporary developmental
assignments of HR professionals in operations of other 32% 47% 21%
enabling functions within the organization
0% 20% 40% 60% 80% 100%
Highly enthusiastic/enthusiastic Neutral Highly averse/averse
The talent paradox 9

10. Challenges for recruiting HR talent important to provide clear career paths that offer plenty
Most of the surveyed organizations believe there is a of room for advancement and growth. In order for
global shortage of qualified HR talent. They also worry people to view HR as a good place to start a career,
that their HR staff don’t have enough opportunities for they need to see HR staff being promoted to senior
professional and career development, and that recent leadership positions within and beyond the HR function.
graduates do not see the HR organization as a career
launch pad. Of course, HR’s image as a career launch pad starts at
the top. The good news is that a significant number of
To address these deep-rooted challenges, HR must be respondents believe CHROs have a real opportunity to
more aggressive about recruiting top talent and win another C-level position (38%), or even to become
improving its brand image in the talent marketplace. CEO (19%) (see figure 13). This is another sign of the
Many of the actions HR organizations are taking to progress HR is making as a strategic function.
improve their strategic role and capabilities will naturally
make HR more attractive to talent. That said, it is
Figure 12: Thoughts on recruiting HR talent
To what extent do you agree with the following statements about recruiting HR talent?
There is a global shortage of qualified HR talent 56% 30% 14%
We don’t offer HR staff enough opportunities for professional and career development 46% 32% 21%
Recent graduates do not see our company’s HR organization as a career launcher 44% 35% 20%
HR talent is often lured away by managerial or other non-HR positions 43% 28% 29%
The HR profession is perceived by many new graduates as an attractive career 32% 33% 35%
Our HR function does not offer competitive compensation and benefits 31% 32% 37%
We have the HR talent we need to succeed in the next three to five years 29% 31% 40%
Our company is generally regarded as an employer of choice for HR staff 28% 40% 31%
0% 20% 40% 60% 80% 100%
Strongly agree/agree Neutral Strongly disagree/disagree
Figure 13: Career paths for CHROs
What are the future career moves for the CHRO? Select all that apply
CHRO of another, larger company 57%
Consulting industry 55%
Other C-level position 38%
Academia 24%
CEO 19%
Don’t know/not applicable 9%
Other, please specify 2%
0% 10% 20% 30% 40% 50% 60%
10 The talent paradox

11. To fulfill its expanding role, the HR function
must develop new capabilities that are less
administrative and more strategic. This
will require HR talent with new skills and
capabilities. If HR can successfully address
its own talent challenges, it will be in a much
stronger position to help an organization tackle
talent challenges outside of the HR function.

12. To learn more how Deloitte member firms can help your business succeed, please contact:
Global Human Capital Human Capital – Asia Pacific Human Capital – EMEA Petr Kymlicka
Dr. Sabri Challah Richard Kleinert Brett C. Walsh National Practice Leader
Global Practice Leader, Human Capital Regional Practice Leader Regional Practice Leader Human Capital
+44 20 7303 6286 Human Capital Human Capital Deloitte Advisory s.r.o.
schallah@deloitte.co.uk Deloitte Consulting LLP, United States Deloitte MCS Limited Central Europe
+1 213 688 3368 United Kingdom + 420 2 246042260
Margot Thom rkleinert@deloitte.com + 44 20 7007 2985 pkymlicka@deloitte.com
Global Practice Leader bcwalsh@deloitte.co.uk
HR Transformation Lisa Barry Gilbert Renel
+1 416 874 3198 National Practice Leader Dr. Udo Bohdal National Practice Leader
mathom@deloitte.ca Human Capital National Practice Leader Human Capital
Deloitte Consulting, Australia Human Capital Deloitte S.A., Luxembourg
Jeff Schwartz +61 3 9208 7248 Deloitte Consulting GmbH, Germany +35 24 5145 2544
Global Practice Leader, lisabarry@deloitte.com.au +49 69 97137 350 grenel@deloitte.lu
Organization and Change ubohdal@deloitte.com
+1 703 251 1501 Kenji Hamada Ardie van Berkel
jeffschwartz@deloitte.com National Practice Leader Gert De Beer National Practice Leader
Human Capital National Practice Leader Human Capital
Tim Phoenix Tohmatsu Consulting Co., Ltd., Japan Human Capital Deloitte Consulting B.V.
Global Practice Leader, Total Rewards +81 3 4218 7504 Deloitte Consulting, South Africa The Netherlands
+1 512 226 4272 kehamada@tohmatsu.com.jp +27 11 806 5995 +31653733271
tphoenix@deloitte.com gedebeer@deloitte.co.za AvanBerkel@deloitte.nl
Byung Jeon Kim
Human Capital – Americas National Practice Leader Enrique de la Villa David Yana
Michael Fucci Human Capital National Practice Leader National Practice Leader
National Practice Leader Deloitte Consulting Korea, Korea Human Capital Human Capital
Human Capital +82 2 6676 3830 Deloitte S.L., Spain Deloitte Consulting, France
Deloitte Consulting LLP, bjkim@deloitte.com +34 9151 45000 +33 1 58 37 96 04
Americas and United States edelavilla@deloitte.es dyana@deloitte.fr
+1 212 618 4708 P. Thiruvengadam
mfucci@deloitte.com National Practice Leader Rolf Driesen Alexander Zabuzov
Human Capital National Practice Leader National Practice Leader
Margot Thom Deloitte Touche Tohmatsu Human Capital Human Capital
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Human Capital +91 80 6627 6108 +32 2 749 57 21 +7 495 787 0600
Deloitte Inc., Canada pthiruvengadam@deloitte.com rodriesen@deloitte.com azabuzov@deloitte.ru
+1 416 874 3198
mathom@deloitte.ca Hugo Walkinshaw Christian Havranek
Practice Leader, Human Capital National Practice Leader
Vicente Picarelli Deloitte Consulting Singapore Human Capital
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Human Capital Singapore and South East Asia +43 1 537 00 2600
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Latin America and Caribbean hwalkinshaw@deloitte.com
+55 11 5186 1043 Feargus Mitchell
vpicarelli@deloitte.com Jungle Wong National Practice Leader
National Practice Leader Human Capital
Human Capital Deloitte MCS Limited
Deloitte Touche Tohmatsu United Kingdom
CPA Ltd., China +44 20 7007 3698
+86 10 8520 7807 fmitchell@deloitte.co.uk
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