Take part in Deloitte’s annual Human Capital Trends survey and we’ll give you as HRZone readers an exclusive on the biggest challenges facing UK companies in areas such as leadership, change management and talent acquisition.

1. What direction are talent management strategies going in? What are the best-performing organisations thinking?

Over the last 12 months organisations have increasingly focused on aligning their talent and business strategies. This is not new but post-recession we have seen many organisations investing in growth strategies.  This has created the need for organisations to develop new capabilities across their business.  Understanding what talent is available to deliver against these business requirements and how this impacts the need to ‘buy’, ‘build’ or ‘borrow’ talent is a key consideration. An awareness of how these capability requirements can be managed via HR systems is also important.

We have seen some forward-thinking organisations looking at less traditional channels to source their talent. For example, moving from a model of having most employees on an internal payroll, to the use of more freelance contractor resources and open source talent. Open source can be particularly helpful when specialist skill sets are required or an internal employee’s time is needed to focus on more strategic issues.  We continue to see those organisations that are thinking more strategically about their talent, taking a structured approach to which workforce segments they invest in.

2. Will 2015 be the year of HR analytics and increased focus on developing strategic HR metrics that align with the organisation?

Undoubtedly, interest in HR analytics continues and organisations are expanding both their aspirations as well as their capabilities, albeit more incrementally. There is a long way to go for most and the journey looks set to prove arduous. For the majority, the approach to building capability continues to be ad-hoc and piecemeal.  Game-changers will recognise the need for HR analytics to support their enterprise and will similarly see the need for insight driven HR. Those who will succeed will be clear on their strategy, capability requirements and the business case for HR analytics. Their leadership will drive an understanding of the intrinsic link between business success and people performance.

3. Last year leadership effectiveness was highlighted as a key priority for global businesses in the Human Capital Trends survey. Do you still think leadership development is a priority for businesses?

Yes, absolutely. It has been estimated that around 30% of business performance is driven by leadership and line management – but HR needs to be influencing these too. Not only by running leadership or management programmes but also by creating a talent ecosystem that enables impactful leader performance. The point in last year’s survey was really about “leaders at all levels”, including the leaders of the future not just those currently at the top. The other part of the question is therefore: how are we developing those future leaders? Or: how is our leadership pipeline? HR needs to give the organisation the tools and capabilities around succession planning, performance management and talent management, to create such a pipeline.

4. What effects will increasing numbers of Generation Y and Generation X employees in the workplace have on HR in 2015?

As we see increasing numbers of the baby boomer population moving towards retirement, there is a need for HR to address the resulting ‘brain drain’. Developing strategies to build, capture and share this knowledge and to build capability across their remaining workforce will be key. We know that each generation has differing values and expectations and as such, more significant numbers of Gen X and Gen Y employees in the workforce will also require HR to think about different strategies in terms of engaging, developing, leading and retaining these groups. Our Talent 2020 research series highlighted that the baby boomer generation favoured financial incentives as a retention mechanism. Meanwhile, Gen X and Gen Y populations had a stronger preference for promotion and job advancement as well as more flexible ways of working.

From a technology perspective, the increasing importance of Gen X and Gen Y is leading to a number of trends. The big one is that there is now more emphasis on the customer experience of the employee when interacting with their employer’s HR and employee service technologies. The experience is becoming increasingly digital, with convergence of employer and customer brands and platforms, as organisations look to unify the experience. Digital platforms are being extended to support the ‘whole’ employee with access to career, personal development and role enhancing applications.  It is no longer just about providing admin self-service to your employees. In addition we are seeing increased use of analytics to refine employer value propositions, and also the application of digital analytics and insight to key areas of people investment.

5. What do you see as the biggest challenges HR will face in 2015?

• Articulating HR value: Resisting further pressure to keep reducing the operating costs of the function by being able to identify or quantify the positive impact of great HR practices. The need to prove the link between investing in great employees and gains in shareholder value – a link that could be better articulated through analytics. Part of this is establishing control and future governance of data and analytic capabilities, to allow for trust in HR insights that translates to better business performance.
• People risk management: Extending the talent agenda to predict and mitigate against the factors that are deductive to performance across the organisation.
• Further optimising HR service delivery: Introducing additional technology adoption and re-evaluating sourcing options. Balancing cost, quality and risk of HR operations for maximum business benefit.
• Developing and managing capabilities: Having the right capabilities to deliver the HR service that is required, such as business consulting skills, occupational psychology, and data scientists.
• Leadership capabilities: Recognising the importance of leadership capabilities as they will continue to drive business performance and differentiation. This includes leaders at all levels, both those leading now and those who will lead in the future.
• The need for flexibility: There is a continual need to be flexible to changing business and economic needs – some CHROs still talk about three-year change programmes but that’s too long. Technology and employee needs are moving at a quicker pace. The need for organisations to flex and adapt their talent and performance management models is also likely to be a challenge in this tightening labour market.