Lack of Necessary Workforce Skills Hinders Corporate Ability to Succeed, Accenture Research Finds; Even Critical Functions not Performing at Optimal Levels

The research, the Accenture High Performance Workforce Study, isconducted approximately every 18 months to measure workforcemanagement trends among executives in large corporations in the UnitedStates, Europe and Australia. This year's research, of more than 250senior executives, found that only 14 percent of respondents describedthe overall skill level of their organizations' entire workforce asindustry leading. Furthermore, just 20 percent of respondents said thevast majority of their employees understand their companies' strategyand what's needed to be successful in their industry.

Respondents also reported that even functions they considercritical - sales, customer service, finance and strategic planning(cited as critical by 62 percent, 43 percent, 23 percent and 23percent, respectively) - were not performing as strongly as theyshould. In fact, among those who rated these functions among the topthree, just one-quarter (25 percent) assigned the highest rating tothe performance of their sales function, and under a third providedthe same rating to their customer service, finance and strategicplanning functions (25 percent, 19 percent and 33 percent,respectively).

"The lack of essential skills is a vital issue for seniormanagers," said Peter Cheese, global managing partner in Accenture'sHuman Performance practice. "As the competitive environment grows moredemanding and as markets become increasingly commoditized, the need tocultivate these skills - particularly in the critical functions -should be at the top of every corporate to-do list. Those companiesthat fail to develop their workforces risk losing their competitiveedge."

According to the research findings, these shortcomings can beattributed, in part, to several key human resources- andtraining-related findings. For example, just one in ten respondentsreported being very satisfied with the performance of his or her humanresources (HR) and training functions (11 percent and 10 percent,respectively). The research uncovered a number of possible reasons forthis, including:

-- A lack of connection to business drivers - Only 36 percent of respondents said their companies tailor their HR and training support to each function's needs and contributions to the organization.

-- Failure to measure the business impact of HR and training efforts - More than 40 percent do not evaluate the impact of their HR and training efforts against profitability, and half (50 percent) do not evaluate those efforts against revenues and sales.

-- Ineffective or non-existent knowledge capture and sharing capabilities - Four in 10 (42 percent) respondents described capturing and sharing knowledge as a challenge or a severe challenge for their companies. The most commonly cited impediments to better knowledge capture and sharing were: a lack of a common business culture across different locations (cited by 38 percent); no knowledge support infrastructure with dedicated people (37 percent); and the fact that knowledge sharing is typically not rewarded in the organization (32 percent).

-- The talent time bomb - Nearly two-thirds (60 percent) of respondents reported that, over the next five years, they expect to begin feeling the impact of the aging workforce and the impending retirement of baby boomers. Of those, 28 percent said they are feeling the impact now. Almost one-half (43 percent) of participants described talent sourcing as a challenge or a severe challenge, primarily because of a smaller or shrinking talent pool from which to choose.

-- Lack of functional leaders' involvement in people issues - Only a small percentage of respondents said the heads of customer service, finance, sales and strategic planning at their companies are highly involved in human capital management initiatives (reported by 29 percent, 31 percent, 34 percent and 37 percent, respectively).

"A company's ability to manage its workforce strategically anddevelop its capabilities will set it apart from its competitors," saidCheese. "Some companies focus well on one or two aspects of humancapital management, such as learning or internal communications, butthe best take a broad view of managing their workforce. These are thecompanies that vastly increase their chances of being industryleaders."

The research did identify a group of companies that Accenturerefers to as "human performance leaders" - companies in which thethree functions their executives deem to be the most important performat the highest levels. These leaders, as opposed to the "laggards" -who said that none of their top three functions performs at thehighest level - are more likely to be successful in addressing theorganizational issues that contribute to strong financial performance.For example, respondents stated that their companies perform "verywell" in the following areas:

-- Acquiring new customers and increasing market share (reported by 43 percent of "human performance leaders" vs. 14 percent of "laggards")

-- Encouraging strong customer loyalty and retention (52 percent vs. 17 percent)

-- Responding to changing market conditions (52 percent vs. 14 percent)

-- Finding and developing talented leaders (39 percent vs. 7 percent)

-- Attracting and retaining skilled staff (30 percent vs. 12 percent)

-- Generating superior business value from technology investments (35 percent vs. 15 percent)

According to the findings, "human performance leaders" have moreeffective HR and training support. Among the practices helping themexcel are: formal measures that gauge the impact of all HR andtraining support activities on their top functions; tailoring HR andtraining support according to the contribution of specific functions;and taking a more strategic approach to human resources and training,including viewing the HR function leader as a strategic businesspartner to the executive suite.

Methodology

The Accenture High Performance Workforce Study, conductedapproximately every 18 months, is a research project that explorestrends, issues and developments in human capital management atorganizations around the world. This year's study was conducted by GfKNOP Limited on behalf of Accenture between February and April 2006,and it includes completed telephone surveys with 251 senior executives- chief executive officers, chief operating officers, chief financialofficers and chief information officers, human resource leaders, chieflearning officers - in the United States, United Kingdom, France,Germany, Spain and Australia. Respondents' companies represent sevenbroad industry segments (retail, travel & transportation, financialservices, electronics & high tech, communications, energy andutilities).

About Accenture

Accenture is a global management consulting, technology servicesand outsourcing company. Committed to delivering innovation, Accenturecollaborates with its clients to help them become high-performancebusinesses and governments. With deep industry and business processexpertise, broad global resources and a proven track record, Accenturecan mobilize the right people, skills and technologies to help clientsimprove their performance. With more than 129,000 people in 48countries, the company generated net revenues of USD 15.55 billion forthe fiscal year ended Aug. 31, 2005. Its home page iswww.accenture.com.