The uniquely challenging global events of the past few years have underscored the critical importance of people management for companies.

Disruptions, including the pandemic and its aftermath, forced organisations to clearly define priorities and quickly build up specific capabilities in employee health and safety and more flexible working models.

But the environment going forward may be even more challenging, as we are likely to see more frequent and severe disruptions, increasing talent gaps, less fluid talent markets, and a growing need for digital transformation and innovation – especially around AI.

The need for digital technology will not go away – and smart, proactive investments in this area are necessary to anticipate and solve the most prominent business challenges.

However, just 35% of global HR professionals today believe that their people management functions are using relevant digital technologies, compared to 47% of people leaders in South Africa.

In addition, 43% of South Africa respondents agree that HR is using data and analytics to anticipate people challenges, and 58% cite people challenges and talent gaps as the biggest obstacle they currently face.

These are among the findings of a report by Boston Consulting Group (BCG) and the World Federation of People Management Associations (WFPMA), titled “Creating People Advantage 2023: Set the Right People Priorities for Challenging Times”. Based on a survey of 6 893 people leaders in 102 markets, including 45 people leaders from South Africa and 360 from the whole of Africa, the report is the latest instalment in an ongoing joint study conducted by BCG and WFPMA.

The survey asked respondents to consider 32 people management topics, grouped into nine clusters, and rank them by future importance to their organisation and by their organisation’s current capabilities. Strikingly, many of the topics on which companies show the greatest current strength rank only in the middle of the pack on future importance. The report also examines differences across geographic markets and company sizes.

“The respondents clearly recognise that improvement on priority topics – such as strategic workforce planning, upskilling, and AI adoption – is important to the continued success of their companies, but also that their current capabilities in those areas are very weak,” says Jens Baier, a BCG MD and senior partner, and a co-author of the report. “Prioritising proactive investment in digital and data capabilities is key to solving many of the challenges that limit the organisational impact that people functions can deliver.”

The talent gap challenge

“While 58% of respondents from South Africa cited people challenges and talent gaps as the biggest business obstacle they currently face, strategic workforce planning ranked only 24th overall among the 32 topics in terms of current capabilities,” says Rudi van Blerk, partner and Africa people and organisation practice lead at Boston Consulting Group, Johannesburg.

For South Africa respondents, current capabilities of upskilling and reskilling at scale, diversity, equity and inclusion management, employee engagement and well-being, and top talent management ranked much higher than they did for global respondents.

“Over 60% of survey respondents from South Africa say that diversity is engrained in all processes, and ways to benefit from the positive impacts are in place,” says van Blerk.

Current capabilities of HR staff capabilities and recruiting strategy and process ranked much lower for South Africa respondents compared to their global counterparts.

Current top talent management capabilities ranked significantly higher for Africa respondents, while current purpose and culture activation capabilities ranked significantly lower for Africa respondents than they did for global respondents.

For South Africa respondents, future importance of organisational development and design, agile principles, people analytics and reporting ranked much higher than they did for global respondents, while future importance of onboarding, health and safety and HR staff capabilities ranked much lower.

Future importance of employee relations, organisational development and design, and HR organisation and governance ranked significantly higher, while future importance of strategic workforce planning, employer branding, onboarding, and talent sourcing ecosystem ranked significantly lower for Africa respondents compared to their global counterparts.

“By segmenting HR topics by current capabilities and future importance we can identify people management priorities for HR leaders in Africa,” says van Blerk. For local HR professionals there is a strong need to act on leadership behaviours and development, employee engagement and well-being, organisational development and design, HR organisation and governance, change management capabilities, purpose and culture activation, and HR IT architecture and operation, and cloud software.

As workforce requirements continue to change across industries, failure to adapt data-driven insights may leave companies unable to close talent gaps and secure top-tier recruits.

“Companies need to continuously prioritise developing the talent they already have – and upskilling and reskilling, in conjunction with effective talent acquisition, is critical to making this happen,” says Anthony Ariganello, president of WFPMA. “It is important for companies to see digital transformation not as a goal, per se, but rather as an enabler for other goals such as greater efficiency, improved service levels, or a better employee experience. It is a foundational element of multiple people engagement topics.”

Closing the gap

Strategic workforce planning and recruitment processes are perennial challenges for most organisations. With the emergence of AI and other digital and data capabilities, these areas now represent an opportunity to build competitive advantage.

The core principles are not new, but the urgency to act has increased. The benefits for those who seize the initiative are clear: results from the first large-scale studies of AI in organisations suggest that productivity improvements of 20% to 30% are possible, depending on the task and starting position.

People and business challenges in South Africa are showing similarities with global averages. People challenges and talent gaps is a key challenge in South Africa and globally, while economic challenges rank second locally and third globally, and digital transformation and innovation rank third locally and second globally.

Rapidly changing skill demands is one of the key people challenges in South Africa and ranks second after required leadership behaviours, with changing expectations of talents ranking third.

“Talent scarcity mitigation seems to be the biggest HR challenge in South Africa with only 36% of respondents saying that HR finds proactive and effective ways to mitigate talent scarcity,” says van Blerk.

Business characteristics in South Africa are similar to the global average, however it seems leadership follows a more hierarchical top-down approach and fixed work structures and processes compared to the global average.

The report outlines five recommendations for people management leaders to adopt to prepare for challenging times:

* Leverage data to accurately plan for talent supply and demand.

* Transform current talent acquisition approaches.

* Invest in upskilling and reskilling the current workforce.

* Unlock value through AI.

* Focus on change management and organisational development.

“The impact of the pandemic proved that people management functions are good at responding to acute stimuli and can boost their capabilities when they focus on a set of sharply defined topics. For example, health and safety is the number one topic in our global survey in terms of current capabilities, and flexible work schemes jumped by 15 places since 2021 in the capabilities ranking,” says Philipp Kolo, a BCG partner and associate director, and a co-author of the report.

“The bigger challenge involves looking ahead and planning for the long-term future. By shifting their focus to topics that yield results in the medium to long term, people management functions can build up the right capabilities to shape their company’s overall people agenda in a truly differentiating way.”