Australian businesses are bucking global trends when it comes to human capital, according to a new Deloitte survey report, Global Human Capital Trends 2016: The new organisation. Different by design.
The critical need to redesign the organisational structure to meet global demands has been identified by business and HR leaders as the top global trend in what is one of the largest ever global studies of workforce, leadership and HR challenges.
Yet for Australian businesses, this is not the case.
Organisational design ranked fourth in Australia, behind culture, leadership and engagement. Despite being identified as a priority by 92% of respondents globally, only 87% of Australian respondents saw organisational design as ‘very important’ or ‘important’, behind leadership (94%), culture (94%) and engagement (88%).
“The shake-up of traditional organisational structures is a global experience, but for Australian companies this is being fuelled by challenges to leadership hierarchies, digital disruption and the emergence of the employee experience, rather than a proactive desire to redesign,” says David Brown, Deloitte Human Capital lead.
“Businesses both here and globally are going to have to adapt quickly to the rapidly evolving business eco-system, whatever the trigger, especially with our survey showing that businesses don’t in fact believe they are ready to effectively redesign.”
The good news for Australia is that despite organisational design not being the top priority, businesses are actually prepared, with over 55% of executive level respondents having a ‘very good’ or ‘good’ understanding of organisational design, compared to 49% of executive level respondents globally.
Leadership hierarchies being replaced by empowered teams and younger, globally diverse leaders
Deloitte’s research highlights that organisational structures are shifting away from functional, hierarchical models towards a network of connected, empowered teams.
“Leadership is a key focus for HR and business leaders in Australia – as evidenced by the survey results,” says Brown.
“Traditional leadership hierarchies are being challenged by the future generation of leaders who have expectations and demands around the way they work that just don’t align with current structures. They want to see a new model of management.”
Deloitte’s recent Millennial Survey 2016: Winning over the next generation of leaders found that almost half of Australia’s Millennials expect to leave their organisation in the next two years, citing a perceived lack of leadership skills development and feelings of being overlooked, compounded by larger issues around work/life balance, the desire for flexibility and a conflict of values.
Culture as a competitive advantage
Changing expectations around ways of working also impacts culture. This is especially significant when these changes are being driven by Millennials, who will make up around 75% of the global workforce by 2025. With culture ranked as the top priority for Australian businesses, it is unsurprising that over half of executive leader respondents believe that leadership teams see culture (‘to a great extent’) as a potential competitive advantage, with 74% recognising that changing demographics and talent markets are driving this change.
“We’re seeing leadership teams place far greater value on culture as a strategic driver, more so in Australia than globally,” says Brown. “But we must ensure that this emphasis at the top flows through the entire organisation, as our survey results show that the rest of the business is not recognising the importance being placed on culture by their leadership.”
Technology, business disruption and the employee experience
Going hand-in-hand with shifting demographics and cultural change is employee engagement. Identified by Australian respondents as a top priority, employees are being put at the centre with digital HR tools and services, employee empowered learning and engagement and retention programs.
“Digital disruption is not only changing the way we work but also the way we interact with employees and the experience they have with their organisation,” says Brown. “HR leaders are turning to digital means to enhance the employee experience, with 39% of Australian executive level survey respondents advising that they are currently redesigning their HR capabilities, and 48% are considering changes.
“Employees are increasingly being put in charge of their own learning and development, with forward-thinking organisations implementing open learning technologies. As traditional organisational structures are broken down and the way we work changes, we also need to adapt how and what we learn.
“A new generation of tech savvy professionals, hungry to develop their skills and progress more quickly to leadership roles, will pounce on these innovations and in turn create stronger, more competitive organisations.”
