PEOPLE-READY BUSINESS SURVEY



PEOPLE-READY BUSINESS SURVEY

People matter. That is the resounding verdict from business leaders at over 200 UK companies recently surveyed by PricewaterhouseCoopers (PWC) on behalf of Microsoft UK. In fact, over three-quarters of them (78%) say that their workforce is their company’s most important asset, far outranking other business assets such as products and services, market leadership, knowledge, information or technology.

The value placed on employees by UK business was reflected in many respondents’ comments to researchers at PWC’s International Survey Unit. “People are the core of our innovation and technology advancement,” said one “We rely on our people to come up with new ideas for growing the business,” said another.

That is because businesses do not close deals, invent new products or find ways to eliminate inefficiencies – people do. “Companies that recognise that fact also know that they need to create an environment that enables them to attract, develop and retain talent,” says Alistair Baker, managing director of Microsoft UK.

A number of business pressures are fuelling that awareness, he says. “Globalisation, rising customer and shareholder expectations, and a volatile social and economic climate exert tremendous pressure on business leaders to generate results, create efficiencies and outperform the competition – on both a local level and the world stage,” he says.

In order to remain competitive in that kind of environment, he says, companies need to equip their people the right tools, information and opportunities that they need to do their jobs to the very best of their abilities. “Companies that do this are what Microsoft calls ‘people-ready businesses’. These are the companies that foster a winning environment where employees are empowered to drive the business forward,” says Baker.

The results of the PWC survey demonstrate that, at present, UK businesses have some way to go before they can truly consider themselves ‘people-ready’. In fact, less than one-quarter of respondents told PWC that they “definitely” considered their businesses to be people-ready. A more encouraging 57%, however, felt they were “somewhat” people-ready.

In particular, the research highlights a disconnect between what business leaders see as their most important asset – their people – and how they support that asset in terms of providing people with tools that can help them to transform data into insight, ideas into action and change into opportunity.

FOCUS ON PEOPLE?

The disconnect between people and technology is highlighted by the fact that, while the vast majority of companies say that people are their top asset, only half say describe their business as “people-focussed”. A quarter (26%) describe their organisations as ‘process-focussed’ and only 21% of respondents saying that their companies focus on both people and processes equally.

Larger companies were more likely to describe themselves as ‘people-focussed’. Nearly two-thirds of companies (61%) with a turnover greater than £50 million felt that they were people-focussed organisations, compared to 41% of companies with a turnover of less than £50 million.

“These findings suggest to me that many companies are still failing to make the connection between people and processes. The two are highly inter-related – you can’t have one without the other,” says Tim Ringo, a partner with the Global Human Performance Service at management consultancy firm Accenture.

At companies that have made the connection, however, managers are starting to see the impact that the way people are managed has on how well business processes run. That is leading, says Ringo, to a surge of interest in human capital management – a strategic approach to people management that works on the premise that the workforce is a valuable resource that companies can develop for mutual benefit.

In line with that, many of the companies surveyed by PWC have undertaken initiatives to make working life better for their employees – but most have some way to go. Most (88%) conduct regular performance reviews, for example, but less than two-thirds (64%) operate a flexible working policy and only 51% offer an employee loyalty scheme. Still fewer have a dedicated training budget for each employee (39%).

“Considering how highly respondents say they value their people, you would really expect them to be offering them far more comprehensive and attractive benefits packages, but they don’t,” says Alison Blair, director of the International Survey Unit at PWC.

PWC’s researchers found that, among the responding companies, those that are both people- and process-focussed performed consistently higher in terms of the benefits they offer their employees, says Blair. “They had a high incidence of Investor in People awards (68%) and employee loyalty schemes (66%) than those that focus primarily on people or on process,” she says.

From the survey results, employees at larger companies do not necessarily receive better benefit packages, she adds. “Companies with a turnover of less than £50 million are less likely to have an employee loyalty scheme (46%) than those with a turnover of more than £50 million. However, they were more likely to have a training budget allocated to each employee (49%) than their larger counterparts,” says Blair.

But if companies are (to a greater or lesser extent) rewarding their employees, they are also prone to blame them, rather than the tools they use, when something goes wrong, says Ringo of Accenture.

“The disconnect between people and technology often manifests itself in ways that are hard to trace back to the source. If a company isn’t meeting its sales targets, for example, the tendency is to blame employees, rather than look at the ways in which a lack of information or inefficient processes are hampering them in their ability to meet targets,” he says.

In the survey, respondents said that inefficiency of people and inefficiency of process were the greatest inhibitors to optimum performance at their companies. What they are failing to address, says Ringo, is that the effectiveness of people and processes “is very much dependent on the technology that supports them”.

That disconnect often leads, he says, to a knee-jerk reaction in many boardrooms: “They start to say: ‘We need to cut jobs. We need to hire new employees. Maybe we should outsource this function entirely to a third party service provider?’ And these steps won’t necessarily provide the answer to a far more fundamental problem.”

THE TECHNOLOGY ARMOURY

At the root of that problem is a need to better understand of technology can smooth a business’s path to people-readiness.

In general, respondents demonstrated a good understanding of the people-ready concept. “A people-ready business is one which encourages staff to develop new ideas and to bring those ideas to the attention of the company for further development,” said one. “It’s an organisational climate where people excel,” said another.

And most recognise that IT is a key factor in establishing that kind of climate. In fact, the vast majority (91%), for example, say that IT has already enabled their people to work better, either to some extent (41%) or to a great extent (50%).

“It’s encouraging to see respondents starting to recognise that, done properly, IT is a key enabler of business success. Now, they need to get people and IT aligned. That will enable them to make a much better business case, based on return on investment [ROI] fundamentals, for new technology purchases,” says Baker.

However, the survey found that UK businesses still have some way to go in terms of aligning their technology armouries with the needs of their workforce. Only 39%, for example, say that their technology strategy exists to help people do their jobs better.

“Here, there is a clear contrast between mid-size and enterprise companies,” says Blair of PWC. “Mid-tier companies are more likely (42%) to have a technology strategy focussing on people than enterprise companies (26%),” she says.

Overall, around 40% of respondents say that their company’s technology strategy is primarily focussed on making business processes more effective. Less than one-fifth (18%) say that their technology strategy takes both people and process improvement into account.

That has worrying implications for the UK economy. At the end of December 2005, according to the Office of National Statistics, some 82% of the UK workforce was employed in service-industry jobs, suggesting that over 22 million employees work in people-centric industries. If only 39% of these are being supported by an IT strategy that focuses on them, then over 8 million UK-based knowledge workers may be struggling to get the tools and information they need.

Indeed, when asked to what extent IT ensures that people are equipped to do their jobs to the best of their abilities, less than one-third (31%) answer “to a great extent”. Just over one-half (53%) say that employees are “somewhat” equipped in their organisations.

Either way, most respondents can point to IT initiatives at their own companies that have made their people more effective. These include projects to implement technologies focussing on customer relationship management (CRM), portals, web access, email, remote working and mobile, intranet, instant messaging, collaboration, web conferencing and business intelligence.

And most respondents recognise that people and technology need to be better aligned. When asked if they feel that a business needs to strike the right balance between process efficiency and innovation of people, one-half reply “to a great extent” and over one-third (36%) reply “somewhat”.

“It doesn’t surprise me that businesses are starting to look for improvements in the technology procurement process,” says Baker of Microsoft. “In recent years, even technology basics such as word processing, spreadsheets and email have done an enormous amount to shorten lines of communication, help employees make better decisions and speed up administrative processes. But in order to keep getting real business value from IT, they need to see hard returns and they want the support of trusted technology partners that can help guide their thinking and steer implementation projects in the right direction,” he says.

The good news is that, over the next year, IT strategy will focus on the people using it at the majority of companies. Just under one-third (32%) strongly agree that that will be the case, while 30% agree with it. “It seems to me that respondents are very much taking steps in the right direction to tailor their technology to suit the needs of the workforce and in getting far more impactful projects up and running,” says Baker.

That shift, it seems, will be spurred by small and medium-sized companies. A higher proportion of business with revenues under £50 million (40%) strongly agreed that their IT strategy would focus on the people using it, as compared to 22% of larger businesses.

In order to make that shift, says Ringo of Accenture, companies aiming to get people-ready will need to put a concerted effort into requirements capture, where end-users are given the opportunity to have their say in the development or implementation of new IT systems, according to their daily business needs. “These days, companies are far more likely to seek the input of end-users. Much more thought goes into capturing the requirements of end users and IT is listening far harder to their needs and wishes,” he says.

“Having said that, end-user requirements often fall by the wayside on the journey between development and deployment,” he says. “That’s usually because the IT effort is disjointed, developers take short-cuts in order to deliver fast results to schedule and sometimes build what is easiest for them to build, rather than that which has actually been requested by the end users.”

This is a situation, he says, that many companies will need to resolve, ensuring that, all along the line, the people who will eventually use the system are involved in developing the specification, alongside the technical staff responsible for building or configuring it.

The results of the PWC survey indicate that more input into IT strategy is needed from outside of the IT department. In particular, the findings suggest that there is certainly not enough dialogue between human resources and IT. At 89% of companies, the finance department typically has an impact on IT strategy, while marketing is involved at over half (54%) of companies. HR, by contrast, has an impact on IT strategy at just 49% of companies.

That needs to change, says Baker of Microsoft. By getting the entire workforce involved in decisions about new applications and systems, he says, companies will be able to overcome many of the barriers that they currently report in getting staff to embrace new technology. These include a general lack of IT knowledge (cited by 39% of respondents), a lack of training at the implementation stage (33%) and a general mistrust of new IT products (28%).

“An IT deployment that centres on the needs of the people that will use it is more likely to attract their interest and enthusiasm and will therefore see more ‘employee buy-in’ when it goes live,” he says.

One thing is clear, however: a tangible shift in thinking is underway. “What I see happening in the marketplace is a shift from talk to action among chief executives,” says Baker. “We’ve heard business leaders say for years that their people are their greatest asset. Now we’re hearing them ask how they can start to get that asset better equipped to deliver real business results.”

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