Five Key Challenges Facing Global Firms Over Next Five Years
Updated: Jun 3
Collaboration, agility, transparency, innovation, and productivity are the five key challenges facing global companies over the next five years, according to data based on more than five million employees worldwide by global management consultancy Hay Group. However, the Hay Group research found that engagement and enablement levels in many global businesses haven’t improved since 200
“The business environment is rapidly changing. Our research shows that many companies don’t currently have the right strategies in place to respond to the challenges this brings through arguably their most critical asset – their people,” says Mark Royal, senior principal at Hay Group. “Firms rated highest for engaging and enabling their staff to achieve four and a half times the revenue growth of their lowest scoring counterparts and see up to 54% improvement on staff retention. People are the lynchpin to sustaining performance in this rapidly changing world, and organizations need to wake up to this. The successful organizations will be those that realize their employees are a unique asset and can help them meet the challenges both now, and as they intensify in the future,” he remarks.
Keeping up with change and making the right decisions will require new levels of collaboration. "Big collaboration" will mean bringing together teams, functions, organizations, and even competitors to reach solutions. But despite 80% of organizations globally placing team-working amongst their strengths, Hay Group’s research reveals that close to half of employees (44%) say their teams are not adequately supported by counterparts elsewhere in the business. Furthermore, 40% don’t believe there is a cooperative culture in their organization and more than a third (35%) feel that cooperation and sharing of ideas and resources is not readily encouraged.
Continuous training and clear communication are critical to helping employees cope with changing demands – yet only 50% of employees say that they are given enough time for training, and 43% don’t believe that their company communicates openly and honestly about change. Working in an agile way also requires a different way of thinking and behaving, and reacting to constant change with quick decision making at the right level. Hay Group data indicates that this is something many organizations struggle with, as more than a third of employees (36%) feel that decisions are not generally made at the right level and close to half (46%) are concerned about the speed of decision making at their firm.
The research identified a dangerous lack of clarity around reward and development. Less than half of employees (45%) feel that there is a clear and transparent connection between their performance and their pay, and 43% feel that better performance won’t lead to opportunities to progress. Meanwhile, more than half (52%) believe they are not paid fairly for the work they do, and 41% lack clarity on the possible career paths available to them. “When employees fail to see a link between their pay and performance they can end up feeling unfairly rewarded or insufficiently recognized for their contribution to the business,” comments Martin Palimeris, consultant at Hay Group. “If they feel there’s a misalignment between the efforts they exert and the expectations of their employer, they can feel demotivated and disengaged. Organizations can improve this link by creating a clear performance management framework that sends a consistent message about how performance is evaluated and how it links to reward and promotion. When announcing a promotion, business leaders should highlight examples of the employee’s work that have led to their progress.”
Managers should also be made aware of their responsibility to explain the performance management programme to team members, including how it affects reward, which elements of performance have the biggest impact on pay, and what’s needed to progress to the next level, advised Palimeris. “In addition, managers should be encouraged to set specific goals for each team member, and catch-up with each one regularly on how to improve their performance.”
Innovation is another area where global firms are failing to capitalize on the ideas of their employees. More than a third (37%) of employees don’t believe they’re encouraged to take reasonable risks to try out new ideas and ways of working, and more still (47%) feel their ideas aren’t put into practice. There is a dangerous risk for organizations that see responsibility for innovation sitting solely with the R&D department. Successful innovation either makes money or saves money, argues Palimeris. “With these advantages in mind, it’s within businesses’ best interests to make innovation part of their culture, values, and mindset – part of business as usual. People generally want to work for organizations that offer good prospects and many understand that it’s the forward-looking businesses that will succeed in the future.”
Creating environments that help employees get their tasks done as efficiently as possible will be crucial, yet many organizations don’t have the right enablement policies in place. Hay Group research indicates that, even within existing structures, productivity levels are far from optimized, with almost half (44%) of employees believing their organization does not operate efficiently and is not effectively organized and structured (45%). In addition, over half of employees report that staffing levels are inadequate in their particular area of the business.
Author: Karen Higginbottom