Facing the Human
Risk Factor
need for protecting against the shortage is an urgent
one, considering the only constants on this turbulent
worldwide stage appear to be unpredictable growth
patterns, skills shortages and technological change.
Research suggests one of the biggest predictors
of success in any role is “learning agility,” said
Ashford, or the ability to “assess a situation and flex
your style and approach to deliver outcomes in a
challenging situation.”
“One of the ways in which you can manage and
mitigate human capital risk is if you can hire more
people with learning agility, who can figure out the
best approach in an ever-changing situation,” he
said.
Learning agility has become a focus at PepsiCo,
the Purchase, N. Y.-based food and beverage
conglomerate, as it transforms itself from a company
known primarily as a maker of soft drinks and
snacks to one that also emphasizes healthy, or what
it calls “Good for You,” products such as vitamin
water, fruit juices and oatmeal.
“When I joined the company back in 2000, $3
billion of our revenue was ‘Good for You’-derived,”
said David Henderson, the company’s chief talent
development officer. “Today, it’s $13 billion, and
we’re planning to take it to $30 billion by 2020.”
To that end, the company is looking to diversify
its array of talent, looking to incorporate outside
perspectives as well as skills to ensure it has what
it needs as it continues developing new healthy
products and more “sustainable” manufacturing
processes, said Executive Vice President and Chief
People Officer Cynthia Trudell.
“Learning agility and curiosity go hand in hand,
and curiosity is the precursor to innovation,” she
said.
In addition to poor talent optimization, low levels
of employee engagement represent another human
capital risk companies can’t ignore, said Ashford.
At Milwaukee-based Johnson Controls Inc.,
an employee-engagement survey conducted five
years ago that had an 82-percent participation rate
revealed workforce engagement levels of 56 percent
and “leader effectiveness” scores of 55 percent, said
Simon Davis, the company’s vice president of talent
strategy and organizational excellence.
While those numbers were considered “average”
for a manufacturing company, they were below
average for industry in general, he said.
At this point, a big risk for the company would
have been to simply move on, said Davis. JCI, a
mammoth organization with 150,000 employees and
operations in areas ranging from automotive parts
to heating-and-air-conditioning controls, was—like
many companies during the recession—struggling
to stay profitable and innovative while absorbing
employees from smaller companies it had acquired
in recent years.
“One thing we know about surveys is that if you
ask people their opinion, the best thing you can do
is first listen, then share the feedback and create
action plans,” he said. “The worst is to ask and then
do nothing.”
All leaders are now required to have quarterly
reviews with the employees at their locations to talk
about the business’ performance and results, and
how employees can help their respective business
achieve its goals, he said, adding that many leaders
hold monthly reviews on these topics.
“I think people appreciate being talked to
honestly and openly about the state of the business,
but ultimately, they’ve got to have confidence that
; TALENT RISK
A MOMENT of reflection. An executive strikes a pensive pose behind her laptop. The loss of skilled managers and workers has been identified
as one of the most pressing issues facing business leaders.
Corporate leaders at the nation’s largest companies are taking steps
to manage what has been identified as one of the top risks facing
businesses: a shortage of qualified talent. BY ANDREW R. MCILVAINE
The word “risk” is finding its way into human
resources considerations with increasing frequency.
Take by way of example, the 2011 Lloyd’s Risk
Index, a poll of 500 C-suite and board-level
executives that was released in December. Lloyd’s
found “talent and skills shortages” to be the No.
2 risk facing businesses, up from 22nd place in
2009. The No. 1 risk in the latest index was “loss of
customers,” while “reputational risk” was No. 3.
“We have gone from a credit crunch to a talent
crunch, despite the unemployment picture,” said
Lloyd’s CEO, Richard Ward, in announcing the
findings.
In addition to their concerns about skills
shortages, he said, CEOs are also worried about
having leaders and managers who can help them
navigate today’s difficult business environment.
These findings come as no surprise to Orlando
D. Ashford, senior vice president and chief human
resource officer at New York-based Marsh and
McLennan Cos. Inc.
“If you think about the financial meltdown of
2008, it was driven by human capital risks—you
had major companies being brought down by the
investment decisions of a few people,” said Ashford.
Summary
• Lloyd’s identified talent and skills shortages to be
the second most feared risk.
• Not enough members of the C-suites are focusing
on talent risk, according to experts.
• Learning agility, the ability to assess a situation and
manage it, is a desired trait.
