Mature workforce – a team of domain experts, a talent pool!

Why should we hire mature, seasoned experts?
Hiring managers are often torn between hiring for domain knowledge, work skills relevant to the current era, and sheer experience. Experience counts in almost all facets of the professional dimension. While younger employees already have the upper hand in networking, face timing, and handling tech gadgets, but, what about in-depth knowledge derived from business experience?

Does age matter when you need domain expertise to run your business?
Age-related attitudes are a significant challenge in today’s workplace, largely influenced by skills, new age thinking, technology savviness, the pace at which businesses run, and the need for work opportunities across the age spectrum.

Our experience, and findings from our readings, have led us to understand that balancing age, work skills, and experience will be inevitable in work places of the future.
According to the United Nations’ World Population Prospects 2019, by 2050 one in six persons will be over the age of 65 – up from one in eleven in 2019. This longevity shift affects all societies globally, while some at an early stage, others at an advanced level.

Asia and Europe have some of the world’s oldest populations, with people aged 65 and older. Japan takes the lead with 28 percent, followed by Italy with 23 percent. At slightly under 22%, Finland, Portugal, and Greece round out the top five.

China’s population comprises 12% of people aged 65 and up. In the United States it is 16 percent, 6% in India, and 3% in Nigeria. (Sources: United Nations Population Division, World Population Prospects 2019)

According to Standard & Poor’s (S&P), by 2050 the number of elderly persons in the Saudi Arabian population overall, will rise to 15% from 3% currently.

So, what all this leads to is that traditional forms of retiring employees is a luxury that no society can afford any longer. Besides, science has proved that knowledge and skill (as obtained on the job, which are also the key indicators to any job performance) can continue to improve even at the age of 80.

Hence the question is – is it really wise to ignore the contribution of a valuable resource as the mature expert?

What’s our take?
As is our experience in our business, in today’s management parlance mature experts refers to the 45+ age group. Typically, a 45-year-old with management qualifications would have 20 years of domain experience. The majority of the mature domain management professionals on our own platform are under 60. People are retiring at the age of 50, either by compulsion or by choice.

According to the data above, certain countries are rapidly aging, while others are decades away from a similar fate. As a result, certain countries like Japan or Italy are experiencing a labor shortage, and others like Vietnam or HK are thirsting for the wisdom of experience. This imbalance is a business opportunity to explore flexible ways to engage the global workforce.

Source:https://solvecube.com/blog/mature-workforce-a-team-of-domain-experts-a-talent-pool/

Beamery Acquires Flux: A New Type Of Talent Marketplace

he Talent Marketplace space is red hot. Driven by the hot job market, companies are snatching up tools to improve internal mobility and the Talent Marketplace segment has become essential.

This space, pioneered by vendors like Gloat and Fuel50, was designed to use AI and skills inference to help employees find internal jobs, roles, projects, and mentors. These platforms work exceedingly well (I haven’t talked with a single company that didn’t find success here) so vendors like Eightfold, Workday, Oracle, PeopleFluent, Hitch, and SuccessFactors have all jumped in.

The leading vendors (Gloat is the leader at this point) have intelligent platforms that can import employee profiles, identify skills from experience and resumes, and instantly recommend new positions, projects, and mentors. They then go further and create a company-wide skills taxonomy that can be used for internal development, skills assessment, and eventually workforce planning.

Initially designed to create “Inner Mobility” (Gloat’s original name) or “Career Paths” (Fuel50’s pioneering), these are now all-in-one employee experience platforms that pinpoint learning, help recruiters head-hunt internal staff, and help managers staff teams. Companies like Schneider Electric use these platforms to help managers “staff and organize teams” and even let employees find mentors, create career plans, and plan their personal development.

In other words, the Talent Marketplace platforms are eating everything around them. They’re starting to look like Learning Platforms, Recruiting Platforms, Talent Intelligence Platforms, and more.

And this is all good stuff. Right now companies find it difficult to identify the skills they have, the skills they need, and the location and fit of job candidates for open and new positions. The Talent Marketplace, once actively used, has the potential to help with all these issues. Hence the reason big vendors like Workday, Eightfold, and Oracle are in this space.

Enter Beamery, a company well known for the Candidate Relationship Marketing (CRM) platform.

Beamery is a pretty cool company. The first time I saw it I was more or less blown away. Similar to Eightfold, Beamery is a “data platform” not simply a software system. The company imports tens of millions of employee profiles and indexes them to find job candidates, fit people to new roles, and create high-powered recruitment marketing programs. And it also does things like identify who is in your existing candidate database so you can find “silver medal” candidates as hiring gets tough.

Beamery has been very successful. Workday Ventures and Accenture Ventures are investors and many big companies (Wells Fargo for example) use Beamery for their sourcing, campus, talent attraction, and candidate marketing processes. And this is now very strategic. Our new research The Definitive Guide to Talent Acquisition discovered that brand reach and candidate marketing is now the #1 factor in attracting job seekers, so Beamery is an important system.

So what’s new? Beamery just acquired an exciting company called Flux (most of you don’t know them) which has been building a groundbreaking new talent mobility system. The combination of Flux’s platform with Beamery makes the company highly competitive with the likes of Gloat and Eightfold and lets companies combine internal and external resourcing in a single platform

I won’t try to explain all that Flux does, but let me point out that it was built with Uber as a design partner, focused on using AI to find internal and external candidates for full-time, part-time, and gig work. It also gives employees control over their own development and careers with intelligent job, learning, and mentorship recommendations (similar to other talent marketplace vendors).

In addition to using a skills inference engine (which most of these platforms have), it also embeds a proprietary “Job Fit” assessment. What this does is essentially diagnose your personal interests, behaviors, and aspirations and helps you find “the right fit” rather than just “a job that leverages your skills.”

This is actually a pretty big deal. A typical skills system might suggest that “because you have an engineering degree and work as a software engineer you probably would be interested in a cyber-security job.” But in reality, you might be tired of engineering and really want to become a team leader or executive coach. A skills engine would never know this, but Flux would figure this out.

While there are other such assessments on the market, by embedding this into the Talent Marketplace, Beamery lets everyone in the company understand their thinking, working, and interaction style. SuccessFactors new People Model does this, but no other vendor really offers this type of functionality. You can buy a third-party assessment, but with Beamery and Flux this comes out of the box.

A large enterprise in the transportation sector reported using Flux very successfully, enabling it to place thousands of employees in full-time, part-time, and gig positions.

How does this fit into Beamery’s business? The company is positioning this as Talent Lifecycle Management, a single platform to manage candidates, employees and alumni. As you can see, Beamery sees itself in recruiting, internal mobility, and Talent Intelligence all in one.

And Beamery has something else up its sleeve. Understanding that the “skills engine” market is crowded and fragmented, the company wants its skills system to be a “hub” for others. While I haven’t seen how this works, Beamery designed its system to “translate” skills taxonomies from other systems, not necessarily to be “the single skills system of record.”

This, by the way, is what many other skills vendors are trying to do since most skills engines focus only on one part of the problem. Beamery, like other recruiting vendors Eightfold and Phenom, has a lot of experience inferring skills because of its large data set. So Beamery’s strategy, similar to that of Eightfold (and soon Gloat), is to let you add any type of data into the system – documents, email traffic, and other information that infers and validates skills.

In summary, Beamery is entering a very hot and exciting space.

In the last few weeks Gloat introduced its Organizational Agility (talent intelligence) and Opportunity Hub (third party content marketplace). Eightfold has expanded into vertical talent intelligence, intelligent job architecture, AI-enabled succession management, and new learning solutions. And other vendors keep piling on. So while Beamery has a pretty impressive system, they also have plenty of competition.

I will be discussing all this at our Irresistible Conference (May 23-25 in the beautiful USC campus) and explain how all this comes together. Please come join us to learn much more.

Source:https://joshbersin.com/2022/04/beamery-acquires-flux-a-new-type-of-talent-marketplace/

Agile and Accountable Organization Design the Need of Hour: Study

When it comes to organization design, the last few years have seen companies continuously experimenting with it, with changes in business dynamics, geographies, and new product or service launches. Organization design is a specific science. However, according to Josh Bersin’s latest study, many companies seem to be practicing it inconsistently or have very simplistic approaches. According to the study, as more than 90% of jobs are service roles today, traditional organization models do not work anymore; companies need models that empower people and encourage innovation. The study also found that organization design is one of the most important things to do today. It found that a great organization design is agile and accountable, creates clarity and productivity, and encourages growth. The study covered a few topics to help business and HR leaders develop a more agile and accountable design. Here are a few findings and recommendations from Josh Bersin’s latest study. See more: 4 Key Trends That Will Guide HR Strategies in 2022 Organization Design Matters Now More Than Ever Last year was one year of hope where businesses worldwide were looking to return to pre-pandemic levels. Just as they were starting to recover, the Great Resignation happened. Millions of people started quitting their jobs in droves in the U.S. alone. There were various reasons for this mass resignation. So, how can companies hire or retain great talent? According to the study, one way is to design models around remote and hybrid work, considering both are becoming a norm now. Simultaneously, the new models should also consider essential or deskless workers. Then, there is digital transformation industry convergence they must take into account. So, how should companies design their organization models? Josh Bersin’s study proposed seven major elements as part of its Organization Design Framework. They are business model design, operating model design, work design, job design, organizational structure design, methodology and approach, and implementation and adoption. Organizational Design Framework The Organizational Design Framework Source: Josh Bersin Company, 2022 According to the study, several management practices contribute to organization design. Hence, the framework groups them into seven elements instead of analyzing them independently. Leaders Lack Confidence in Their Organization Design The study surveyed over 350 companies and discovered a lack of confidence among leaders in their organization design. Most companies were not agile and accountable. They felt unsure when it came to managing their organization design and did not have clear guidelines for optimizing the redesign. The study also found that a few things worked, and a few were missing in the existing organization designs. Here are a few things that worked:
About 60% of respondents could clearly define the market segments they served.
About 51% consistently communicated their strategic direction.
About 50% understood the founder’s history and cultural impact.
Much of this clarity seems to have come about due to the pandemic. However, there were also a few critical elements missing.
Only 9% said they used agile organizational models
Only 11% used advanced methods to understand how work happened
Only 12% involved employees directly in organization design
The study further found that the organization design in most organizations surveyed was inconsistent, hierarchical, reactive, and traditional. To understand where companies are in the maturity level of their organization design, the study drew up an organization design maturity model as shown below. Organization Design Maturity Model Organization Design Maturity Model Source: Josh Bersin Company, 2022 While companies at level 1 have no expertise and perform poorly, companies at level 4 outperform others and can be considered role models. According to the study, 25% of the surveyed companies were at level 1, and 33% were at level 2. About 31% were at level 3, while only 11% were at level 4. Some Organization Design Strategies and Practices Are of More Importance The study tried to understand if all the strategies and practices of organization design matter or some have a bigger impact on business outcomes. After analyzing its organization design framework, it found that a few dimensions have a bigger impact. Accountability and rewards, flexible structure, and effective change management were found to have a very high impact on organizational outcomes. They were followed by purpose and business strategy, talent strategy, culture and leadership, skills and experience focus, and flexible role design. On the other hand, traditional job architecture and team-based structures had minimal impact. How can companies climb up the maturity model to become both agile and accountable at scale? Great organization design solutions are more strategic than having an agile manifesto and using traditional design models, jobs, and organizational structures. Here are five findings that can help.
As mentioned earlier, most companies feel insecure or inexperienced about organization design. Many of them also lack a dedicated organization design team. The study proposed that creating a dedicated team that owns, demystifies, and defines the domain pays off by enhancing business efficiencies.
Many companies have traditional hierarchical structures suitable for the industrial age and are least impactful on business outcomes today. Work design is the most impactful element, yet companies are least effective in the area. Hence, companies should focus on how they operate than how they organize.
Many companies think they need to be tech companies to work in agile ways. However, with the right approaches, any organization can become agile and accountable.
When many companies think of organization design, they focus on individuals when implementing the model. However, employee experience and capability considerations should be part of the design and not an afterthought.
A major finding was that accountability is vital to organization design. A focus on accountability and rewards makes success sustainable.
To help companies start, the study laid out 15 essential practices and strategies that have the biggest impact on business outcomes, including innovation, financial performance, and people metrics. 15 Essential Practices 15 essential practices of agile and accountable companies Source: Josh Bersin Company, 2022 See more: Tips for HR Leaders To Overcome 5 Common Objections When Proposing Change How Companies Can Move From One Maturity Level to the Next So, how can organizations move from Level 1 of the organization design maturity model to Level 4? The study lays down a few steps. However, before following these steps, organizations should know which level they are at. They should also realize that they cannot skip a step to reach the highest level. Further, they should commit the necessary resources and efforts to achieve the next level. According to the study, the following steps will help organizations move from one level to the next.
To move from Level 1 to Level 2, organizations should become intentional about organization design.
To advance from Level 2 to Level 3, companies should focus on strategy and culture.
To move from Level 3 to Level 4, companies should translate strategy into work activities.
With a good organization design becoming necessary, companies should also focus on operationalizing it. Here are a few steps they should take.
Identify the business problem to solve and define measures
Bring a cross-functional team together
Run organization design as a business process instead of a project
Build HR capabilities for organization design
To Conclude Organization design is no longer an option but a necessity for businesses to grow and thrive in a continuously changing world. Simultaneously, it need not be a mysterious black box that cannot be decoded. By identifying their level in organization design maturity, what capabilities they need to build, what elements they need to focus on to create the best impact on business outcomes, and what actions they need to take, companies can become agile and accountable. This will set up organizations for success, mitigating cost pressures, empowering employees, and finding the right solutions for partners and customers.

Source:https://www.toolbox.com/hr/culture/news/agile-and-accountable-organization-design-need-of-hour/

Why Compassionate Leadership Makes Both Dollars And Sense

TOPLINE Elon Musk sold more than 4.4 million shares of electric car company Tesla earlier this week for just under $4 billion, according to Securities and Exchange Commission filings released Thursday evening, shortly after the billionaire Tesla CEO agreed to buy Twitter.


Elon Musk Visits Site Of New Tesla Gigafactory In Germany
Tesla CEO Elon Musk talks on August 13 near Berlin, Germany. GETTY IMAGES
KEY FACTS
The sales took place on Tuesday and Wednesday, at prices ranging between about $872 and $999 per share, the regulatory filings said.

Musk still owns more than 168 million shares of Tesla.

Shortly after the sales were disclosed, Musk tweeted: “No further TSLA sales planned after today.”

BIG NUMBER
$246.2 billion. That’s Musk’s net worth, according to Forbes’ estimates. His stakes in Tesla and rocket maker SpaceX account for most of his wealth.

KEY BACKGROUND
Twitter’s board of directors agreed Monday to sell the company to Musk, wrapping up a dramatic period that began with Musk buying up 9.2% of Twitter and later making an unsolicited bid to purchase the entire social media company at a valuation of $44 billion. The deal—which still needs to be approved by Twitter’s shareholders—will require Musk to come up with some cash: The billionaire offered to pay for Twitter using $21 billion in equity financing, in addition to more than $20 billion in loans.

TANGENT
Shares of Tesla have fallen more than 12% this week, closing at $877.51 Thursday. Some analysts think the sliding share prices are tied to Musk’s commitment to buying Twitter, which could distract the Tesla CEO and force him to sell part of his stake in the company.

Amid climate catastrophe and pandemic-induced disruption, a new age is taking shape. To prepare, business must lead with digital, empower consumers and act with purpose, says Euan Davis, who leads Cognizant’s thought leadership.

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The Future of Us COGNIZANT
Amid widespread dysfunction—a pandemic, a previously unthinkable war, unprecedented weather events, snarled supply chains, rampant labor shortages—it’s easy to sense the old world fading away, never to return. Less obvious, but as certain, is the dawning of a new era.

This new reality will be defined by a volatile planet whose citizens, businesses and governments discover new ways to function productively, safely, sustainably and meaningfully. It will also be infused with astonishing technological progress and innovation and hope.

Call it the “net zero era”—not because carbon reduction is the only need of the day but because the term encapsulates the many challenges the world faces, the most threatening of which is sustaining the planet. For business leaders everywhere, it will be essential to recognize the glimmers of this new era and grasp what’s important and what’s possible.

Field guide to the net zero era
We’ve developed a field guide to what the net zero era entails, as well as the three essential drivers forward-thinking businesses need to embrace to navigate it successfully. (For a full exploration of the topic, see our e-book “The Future of Us.”) Here’s a quick rundown on each driver—why it’s vital and how to prepare for it:

  1. Digital+: View everything through a digital lens.
    The complex solutions needed to solve our interconnected social, economic, health and environmental challenges will rely on the speed, automation, intelligence and connectedness that only a digital-first mindset can bring. New business and operational models—from “everything as a service” (XaaS), to circular business models, to systems thinking—will be supported by advanced modes of information sharing, collaboration and intensive analytics.

Going forward, organizations won’t find satisfactory solutions in isolation. Rather, they’ll need deeper collaboration through tech-enabled ecosystems that pool ideas, opportunities, capabilities and risk.

Organizations can prepare for this increased collaboration by empowering dedicated teams to swarm around a specific challenge, and connect these teams with other industry partners and innovative startups to unlock new insights about the art of the possible. Using systems thinking (mapping the impact of business decisions beyond the immediate next step in the supply chain and optimizing processes with objectives that extend to the benefit of a larger subset of players), businesses can also improve the value and effectiveness of their collaborations.

  1. Consumer empowerment: Understand the newly conscious, self-reliant consumer.
    The old customer relationship is broken. Consumers not only want to be known by the businesses they interact with through personalization initiatives; increasingly, they also demand agency over the formulation of the end products they buy, the services they consume, the choices they make, and the experiences they choose. Businesses need to provide the transparency, trust and control consumers increasingly demand.

Rather than placing consumers at the receiving end of the product development process, forward-thinking businesses are including them as partners in co-creating goods and services. The result: an end product completely suited to their lifestyle and principles, from reducing their environmental impact to getting the exact product for their needs or tastes.

This shift is already underway. Through social platforms, consumers are becoming more influential than traditional marketers, building and marketing their own content and even physical goods. Businesses must respond and prepare by identifying whether their current market segmentation offers enough insight about their customers’ values to engage them in a hands-on co-creation process. They should also consider which technologies could make it easier to obtain consumers’ input at different parts of the value creation process and product lifecycle.

  1. Purpose: Promote and support a sense of purpose and belonging.
    Shareholders, regulators and consumers are asking institutions to tap into a deep sense of purpose to persevere and thrive in a world redefined by illness and natural calamity but also refreshed by technological advancement and innovation. Attracting the next generation of talent and building closer relationships with customers will depend on developing and acting on a corporate ethos that guarantees workers of all stripes a supportive work environment.

In the net zero era, businesses seeking to attract and retain top talent must adequately invest in the planning, preparation and execution phases of hybrid work. A major piece of this strategizing will center on developing role-specific work-location strategies.

Using a heads-up/heads-down model, work-redesign teams can estimate how much of a given role’s time and responsibilities are spent on activities that are best facilitated in-office or remotely. The resulting flexible work structures should be customized, best-fit arrangements, based on employee input and guidance, and a work assessment based on activities instead of functional groupings.

Meanwhile, the physical workplace will become not just a place work gets done but an attractive place to mentor and be mentored, collaborate, exchange ideas, and develop cultural cohesion and a sense of shared purpose.

Facing the challenges of the net zero era will require targeted investment, innovative thinking and quick action. The pandemic has brought down the curtain on digital’s first act, and now the second act is about to begin. A new era is unfolding—the net zero era. This is the Future of Us.

Source:https://www.forbes.com/sites/joewalsh/2022/04/28/elon-musk-sells-about-4-billion-in-tesla-shares-ahead-of-planned-twitter-purchase/?sh=64f44b8c3d1e

Determining “nonnegotiables” in the new hybrid era of work

As businesses look for ways to move forward in a rapidly changing world, it seems that everything is in flux. “It’s a new era, one that’s focused on hybrid and new ways of working,” PwC’s recent workplace pulse survey reported. People are “all over the map” in terms of where they want to work—at home, in the office, or any combination of the two. At the same time, companies large and small are grappling with decisions over which mode of work makes the most sense for their business and their people.


In those industries in which remote and hybrid work is possible, flexibility is essential to attracting and retaining great employees, particularly amid low unemployment. “We are both seeing the fiercest labor market of our lifetime and employees making demands in terms of how they want to work, where they want to work,” said Harvard Business School professor Tsedal Neeley earlier this year. “So they do hold the power today.”

The current moment presents an opportunity for businesses to develop new arrangements: helping employees find the work experiences they seek and aligning new modes of operating with new people strategies. As Denise Hamilton noted in strategy+business, instead of a “great resignation,” there could be a “great renegotiation.” Of course, the need to negotiate new ways of working does not negate any of the absolute necessities for businesses to succeed. In advising companies, we have found that it is crucial to determine which facets of the work experience are “nonnegotiable.” (In this context, we use nonnegotiables to mean elements that must be strong within the organization. The flexibility of hybrid work brings benefits, but it must not damage these elements.)

Though nonnegotiables may differ somewhat from organization to organization, many of them apply to most businesses. We find it’s helpful to break them into four major categories.

A pyramid chart groups four categories of “nonnegotiables” in a hybrid work environment, applied to individuals, teams, customers, and communities.


The biggest category is nonnegotiables for the individual. There’s no higher priority for organizations than recruiting and retaining highly skilled workers. But in the hybrid era, organizations face something of a catch-22. “If businesses insist that people return to the office, they risk losing talent,” PwC US’s Governance Insights Center has noted. But at the same time, “if they let employees stay at home, they may have to grapple with maintaining a culture that was established onsite.” And, as PwC’s 2021 global culture survey found, cultural cohesion is important for ensuring employees feel connected to the workplace.


Meet the four forces shaping your workforce strategy
Businesses that are open to having top-notch, diverse employees as part of their team, regardless of where those employees live (or need to live for personal reasons), benefit. Businesses also must make sure their top picks are saying yes when given job offers—and are still with the company years later. This means closely tracking the experiences of prospects, new hires, and existing employees; learning why potential hires turn down jobs and why existing employees leave; and continuously working to improve both recruitment and retention.

It also requires close support of each employee’s growth through mentoring and skill development. In a 2019 article on training and development, the University of Massachusetts Global cited a survey in which “60% of respondents said they’d choose a job with strong professional development opportunities over one with regular pay raises.” And the following year, in the Harvard Business Review, Margaret Rogers, a vice president at consulting firm Pariveda Solutions, called more effective development programs the “most obvious solution to upping employee retention.”

Teams
Connections between colleagues are crucial for building teamwork, collaboration, and morale—and increasingly, productivity. These connections have also taken a hit during the pandemic, according to a study by Microsoft. And in a 2021 PwC pulse survey, chief marketing officers said their top concern was the potential loss of innovation stemming from diminished teamwork. The survey analysis concluded that technology, including “tools that enable collaboration at a distance—as well as tools that put the right data in front of the right people at the right time,” can help to mitigate the loss. Relationships and interactions can also be improved through use of cross-functional teams and peer coaching.

Prioritizing development on both the individual and team levels is also a nonnegotiable because of the challenges presented to organizations by skill gaps. “Half of all employees around the world will need reskilling by 2025—and that number does not include all the people who are currently not in employment,” PwC Global Chairman Robert E. Moritz and World Economic Forum Managing Director Saadia Zahidi wrote in the 2021 report Upskilling for Shared Prosperity.

Customers
Other nonnegotiables involve how your business connects with its current and potential customers. If customers feel ignored or underserved, they’ll bring their business elsewhere. Amid the current labor market churn, this has become a growing problem. CMOs report that current staff shortages are having a negative impact on the customer experience, with 40% citing it as a major issue.

As organizations test out possibilities for hybrid work, they need to ensure that staff are still having genuine, relevant interactions with prospects and new customers, while also nurturing existing customer relationships. For example, a business might need staff to travel to the office or to a client site for events celebrating customer milestones. Depending on what the client prefers, this could be an example of a time when a “Zoom party” just wouldn’t cut it.

Communities
Finally, it is critical to consider the implications of the hybrid work model on the broader community. More than ever, all stakeholders in a business—including its employees, its customers, its investors, and those who live in the same cities as its facilities—are looking for companies to take action on major social and environmental issues. They want to see organizations involved in the community.

The 2022 Edelman Trust Barometer found that “all stakeholders hold business accountable.” Personal beliefs and values now help determine which brands 58% of customers buy or advocate for, which companies 60% of employees choose to work at, and which businesses 80% of investors choose to put their money into. Having a prominent, active voice in addressing the biggest challenges of our time has become a business imperative.

So, as organizations experiment with hybrid work options, it’s crucial that they also examine their impact on communities and show a strong commitment to helping lead the way in creating positive change. Through employee surveys and other workforce engagement metrics, as well as regular check-ins between managers and their reports, executives can keep close tabs on all these elements and make sure the organization is advancing on them.

As businesses look to navigate through this time of profound change, there are no one-size-fits-all answers. The needs of all the different groups we’ve discussed must be balanced against one another—and those needs will keep changing, too. But, as long as your business knows what its nonnegotiables are, you’ll know which factors to keep a close eye on. And you’ll be in a strong position to chart a new path forward.

Source:https://www.strategy-business.com/article/Determining-nonnegotiables-in-the-new-hybrid-era-of-work

The importance of providing mental health support for staff

Mental health has dominated the headlines since the pandemic began. Uncertainty, anxiety and loss have affected many of us over the last 20 months and resulted in an increase in demand for mental health supports and services.

This experience has been no different for global workforces, many of whom shifted to remote working overnight and are now navigating a new hybrid model of working which is being interrupted by further restrictions as new variants emerge.

According to multi-market research we recently carried out with Ipsos MRBI, employers have more to do when it comes to supporting their staff’s mental fitness.

Just two in five employees feel that the resources provided by their employer during the pandemic have been sufficient to support their mental health.

Support for employees’ mental health:

HR calls for more wellbeing support after coronavirus

HR spends a third of time on mental health support for employees

How wellbeing initiatives have boosted employee engagement post-pandemic

The need for employees to have access to quality services to support their mental fitness and health has never been greater.

Employers have an opportunity to address this and reassure their staff that they will be there for them, through good times and bad.

Tailored supports for staff

When it comes to addressing mental health issues there is no one-size-fits-all solution.

Every workforce is made up of individual employees that have different levels of comfort when it comes to accessing and using different resources.

Employers need to consider the diverse nature of their specific workforce. Factors such as access to private space in their homes and familiarity with using apps and digital services all play a part in how employees view and use the resources offered to them.

According to our research, the top five supports most valued by employees are:

Information

Digital team get togethers

Counselling services

Extra time/days off

Classes
By providing a menu of options for staff when it comes to supporting their mental fitness, both in person and online, employers can be sure to connect with staff from all demographics and meet various accessibility issues.

Lead by example

Our research indicated that most individuals are more comfortable talking to family and friends about their mental health than their employer.

Only one in 10 respondents feel comfortable talking to their employer, as opposed to six in 10 comfortable speaking to family. This may be because staff fear negative repercussions if they open up about their mental health struggles to their employer.

So there is a responsibility for employers to lead by example and normalise conversations around mental health in the workplace.

By having open and honest communication from the top down, employees can feel safe to share their own experiences without it impacting their career.

Greater awareness of the services available through employee assistance programmes (EAPs), like counselling, is also needed.

We witnessed an extremely low uptake of EAP services during the pandemic, which is surprising given the pressure people have been under during that time.

Staff need to be reassured that this is a completely confidential and free service that is there to help them through both physical and mental challenges and EAP contact details need to be easy to find and frequently communicated. Staff may also need further information and education around the different life scenarios where counselling can help.

The past 24 months has brought about an unprecedented amount of change to the personal and professional lives of people across the world and the conversation around mental health has, thankfully, been front and centre.

There has never been a better time than now for employers to step up and support their employees through all of life’s ups and downs.

Source:https://www.hrmagazine.co.uk/content/comment/the-importance-of-providing-mental-health-support-for-staff

Growth-Support Professionals Are Key To The Future

Professionals with the skills to support short-term growth are the big winners in the immediate aftermath of the pandemic, according to new data analysis.*

With nearly three-quarters (73%) of senior business leaders reporting that they are more confident in their growth prospects for the next 12 months than the 12 months prior, many are investing in talent that can enhance growth strategies, pushing up demand and subsequently salaries in some sectors.

Robert Half experts reviewed salary data from thousands of placements across more than 200 finance and accounting, financial services, technology, HR and marketing roles, finding that median starting salaries for professional services roles have increased by 4.9% over the past six months.

Businesses are hitting the ground running with revised growth strategies that include increasing headcount, driving customer growth and supporting demand. Analysis reveals that the four areas experiencing the highest wage growth over the past six months relate to these plans:

HR (+24.5%)
Businesses are increasing headcount to drive growth, and to manage hiring processes and onboarding they require talented, experienced HR teams who are able to make great hires at a fast pace

Marketing (+8.6%)
Including design, digital, marketing and communications, these professionals are responsible for increasing awareness, consideration and action, which is essential to driving customer growth and loyalty

Business intelligence and data analytics (+7.7%)
Data analytics and business intelligence experts provide information that identifies focus areas for growth, providing insights that can support hiring and marketing strategies, and ensure that businesses are using their resources effectively

Software development and testing (+7.2%)
Business leaders are preparing for increased customer volumes by working with DevOps professionals to strengthen and overhaul systems. Ultimately, organisations need sales of their products and services, which means they must be able to handle heightened demand

Commenting on the highest median starting salary increases, Matt Weston, Senior Managing Director for the UK, Ireland, UAE and BeNeLux, said: “Having been amongst the first to be cut during the pandemic, HR and marketing roles are now being created and backfilled at incredible pace, creating voracious demand with limited supply.

“These roles, along with analysis and DevOps roles, are on the front-line of business growth, supporting demand generation and helping to manage increased customer demand. However, the immediacy of the need is likely shielding more consistent demand in compliance and digital transformational roles.”

Despite the significant increases in the areas of the technology sector above, the sector average increase was 4.8% over the past six months, reflecting more consistent demand for skilled tech talent.

While businesses may be focusing on short-term growth, long-term transformation projects designed to extend digital capabilities and futureproof organisations are continuing in the background. Technology median starting salaries for technology roles have increased by 4.8% in the past six months, but salaries for tech transformation roles have increased by 6.9%.

Matt Weston added: “Steady business growth through technology is a long-term strategy for many businesses, and as they continue to digitise and automate, and improve systems already in place, technology talent will stay in demand. However, skills are, and always will be, in short supply.

“The pace of technological development means that tech professionals must constantly update and learn to ensure their skills stay relevant, and therefore there is always a slight lag – and those ahead of the curve are able to command higher salaries as a result.”

Functional, but still essential roles remain in high demand – for example within the finance and accounting, and financial services sectors. However, salaries within these sectors are not enjoying the same meteoric increases as others in professional services. Median starting salaries in finance and accounting creased by an average of 2.5% in the past six months, while starting salaries in financial services increased by 0.5%.

*Data for the study was collated for an update to Robert Half’s 2022 Salary Guide, which includes salary data for more than 200 roles by region, as well as analysis on the latest hiring trends across the UK.

Source:https://www.thehrdirector.com/business-news/remuneration/growth-support-professionals-key-future/

Workers Facing Inflexible Office Returns Are Stressed Out And Anxious. Their Bosses? Not So Much.

A new survey shows full-time office mandates are tied to lower worker experience scores. Companies such as Hewlett Packard Enterprise, Atlassian and State Street share ideas for making different hybrid models work.
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s the pandemic threat recedes and more employers call workers back to the office, new data from a survey of 10,000 workers describes a “troubling double standard” in the realities that employees and their bosses face, with non-executives showing much steeper declines in measures of work-related stress, anxiety and work-life balance.

Future Forum, a research consortium on the future of work launched by Slack and other partners, released on Tuesday its latest Pulse survey of 10,000 knowledge workers globally. The consortium, which also spearheads a working group of executives to discuss future workplace issues, found that non-executives are nearly twice as likely as top managers to work from the office every day, and their work-life balance scores are now 40% worse than executive respondents. Workers also reported more than twice the level of stress and anxiety as top bosses.

There was also a sharp divide between the employee experience scores of workers who have full-time in-office mandates and those who have hybrid or remote options, with declines twice as steep for full-time office workers when it comes to work-life balance and 1.5 times as steep for scores on stress and anxiety, the survey found.

“Executives are embracing flexibility while they’re telling everybody else to come back to the office,” says Future Forum vice president Sheela Subramanian. “What we’re seeing is just a lot more rigidity, more top down mandates happening and executives are not necessarily setting that model from the top.”

Meanwhile, Subramanian says, the overall declines in employee experience scores since its research last quarter come as some companies are requiring workers to revert to pre-pandemic approaches to office attendance. The new survey found that 34% of knowledge workers have gone back to working in the office daily, the largest share since the consortium began its research in June 2020.

Yet recent weeks have seen a wave of companies launch their hybrid returns to office, with many introducing policies that range from a few days a year to a few days a week onsite. At Overstock.com, most workers’ in-office mandates will be limited to a few days in the spring and late summer. Apple is easing workers in with a requirement of one day a week, which will grow to three days a week starting in May. Google has also said it expects workers to be in the office three days a week.

At Hewlett Packard Enterprise, which officially reopened its offices April 4, about 80% of its workforce is designated as hybrid, with no mandate for the number of days they should be in the office. These employees, as HPE CEO Antonio Neri wrote in a recent blog post, will be “working primarily remotely but encouraged to come into the office for collaboration.”

The company’s chief people officer, Alan May, says that HPE is doing more to articulate when those collaboration times might be. For instance, the tech firm asks leaders to meet with their employees every couple of months for targeted career, strategy and performance-metric discussions.

“We’re encouraging all of those to occur face-to-face where possible, in the office,” May tells Forbes. Collaboration events, meetings with customers and meetings designed to recognize workers should also be done in person, he says. Yet at the same time, there’s “certainly not an edict or a quota on the number of days people have to show up,” he says.

Still, May says, they’re trying to make the office a draw, with a new headquarters in Houston that includes make-at-home meal kits to take home, large outdoor screens for movies, onsite health and fitness facilities and a pop-up “makerspace” with equipment like 3-D printers for workers to dabble in their own projects or attend workshops with peers.

Of the “makerspace,” May says, “it’s an additional amenity that I think, frankly, is a lot more thoughtful than just another foosball table.” People are excited to be back on the new campus together, but that doesn’t mean “they suddenly jumped back in five days a week,” he says. “I think those days are gone.”

“Actually I don’t think you come together to work. You do the work remotely. You come together to build social bonds.”

—Atlassian cofounder Scott Farquhar
Future Forum’s Subramanian agrees being flexible doesn’t necessarily mean there’s no role for the office. Despite all the focus on where people will be working, their new survey showed that when employees are expected to work may be even more important to workers than where. While 79% of respondents say they want location flexibility, 94% say they want to be able to choose the hours they work.

When making plans for coming together in person, she says, companies should create team-level agreements for a set of core hours and be “really intentional about why you’re getting together—rather than ‘you need to come into the office so I know that you’re working and responding to my messages quickly.’”

“Intentional” is exactly the word Scott Farquhar, Atlassian’s cofounder and No. 123 on our 2022 billionaires list, used when describing his software company’s strategy recently. In an interview with Forbes, Farquhar said details are still being hammered out, but he expects the direction to be that employees who don’t live near one of the company’s offices will travel about four times a year for what he calls “intentional togetherness.”

He says he doesn’t call it working together “because actually I don’t think you come together to work. You do the work remotely. You come together to build social bonds.” When people come together, “I think it does look much more like a conference you go to.”

At Atlassian, the company allows people to work anywhere as long as three criteria are met: They’re legally allowed to work there, the company is legally allowed to employ them in that location, and the time zone works for their team, wherever people are based. Farquhar said about 10% of the company’s U.S. employees have moved states over the past 18 months, and 44% of its new hires in the U.S. in the past year live two or more hours from one of its main office locations.

Subramanian says it’s critical for companies with hybrid policies to set “behavioral guardrails,” as it’s “very easy for things to become inequitable.” That goes for executives, too. Ben Langis, head of workplace of the future at State Street, which has announced a hybrid work plan, says the giant asset manager has asked senior leaders to model the expectations it has for employees around working hybrid, and offers managers training on this new approach to work. “Everyone has to realize this is a large social experiment,” Langis says.

At Atlassian, where its Trello team has always had a remote-first approach to Zoom calls, if one person is remote, everyone else is join calls that way, too. That includes Farquhar: He once flew in from Australia for a town hall meeting at Trello’s offices but conducted it from a phone-booth sized room since some employees were dialing in remotely.

“I call it the Brady Bunch mentality,” he says. “Everyone has their own little box.”

Source:https://www.forbes.com/sites/jenamcgregor/2022/04/19/workers-facing-inflexible-office-returns-show-worsening-scores-for-stress-anxiety-and-work-life-balance-their-bosses-not-so-much/?sh=5259582f525b

A Fast-Growing New Player In Coaching And Development

The corporate coaching market is on fire. Today more than $360 Billion is spent on all forms of corporate training (average company spends around $1,400 per employee per year) and you can add an additional $300-500 per year on coaching. The result is a massive market, one that might be over $450 Billion or more.

Why all this spending? Companies are desperate to provide more personalized development for employees, and quite frankly, coaching networks work very well. Instead of paying $1000 an hour or more for an executive coach, you can give employees personalized development through a platform like BetterUp, Torch, SoundingBoard, Bravely, or CoachHub and they get personalized coaches for a fraction of the cost.

And the demand is growing. A new study by MetLife shows that almost 70% of employees are burned out and overworked, the highest they’ve ever seen. Traditional training programs simply cannot address this issue: employees need personalized coaching and mentoring to help.

Torch: A Pioneer With A New Approach

The current leader in this market is BetterUp (now valued at over $4.7 Billion), an aggressive company with many advanced offerings. But Torch, a disruptive competitor, is taking a new approach.

Torch was founded by Cameron Yarborough, an executive coach who wanted to add more value to his clients (interestingly, Alexi Robichaux, the CEO of BetterUp, was also a coach). Cameron partnered with Keegan Walden, a clinical psychologist and behavioral scientist, to build a platform that embeds coaching into an organization’s development programs. Through their acquisition of Everwise (a pioneer in mentoring networks), they now offer an integrated platform that combines coaching, mentoring, and digital learning into structured programs for a variety of use-cases.

Let me explain how it works. Most coaching providers can assess employees, assign a coach, and deliver and manage coaching experiences. While Torch does this too, at its core it is a “program-centric system.”

You can design programs with Torch (e.g. manager training, HIPO programs, DEI programs, onboarding), embed various forms of content (e.g. LinkedIn Learning courses, LMS content, articles, quizzes), and then add content and mentoring on top of these experiences. This makes any learning program even more personalized and sticky.

In a sense, Torch is a new type of content development solution. And since the platform embeds coaches and mentors (I’ll show the difference between coaching and mentoring below), the programs can focus on behavior change, not just education.

And to better align with an organization’s needs, customers can add their own leadership competencies, cultural values, and other forms of strategic content.

Most leadership development programs focus on topics and information. With Torch you can help leaders “directly change behavior” in a way that aligns such changes to the company’s culture, strategy, or initiatives.

FICO, for example, uses Torch for its senior leadership development programs. People watch videos, take courses, self-reflect, and embark on directed coaching programs during the experience. Torch, like BetterUp and others, gives people a 360 and helps them identify their weaknesses. The platform then uses this information to create a structured learning journey, designed specifically to build on strengths address the gaps.

While BetterUp continues to lead the coaching market, Torch is carving out a powerful niche. Zendesk, which is a BetterUp customer, uses Torch for its inclusive leadership program called “Ignite.” The Ignite program combines multiple modalities, mentoring, group coaching, and online learning, supplemented with C-Suite fireside chats and masterclasses.

As you can see from the flow chart below, this is a pretty interesting solution. A new manager can build self-awareness, meet in a group coaching event, create their career journey, and then meet with an individual coach for support. And this blended model works:

95% of employees who participated in the program reported high satisfaction with their mentor pairing and mentoring experience, and 91% saw an increase in their motivation to take on more responsibility and own their careers. More than 80% of managers found the group coaching sessions useful and engaging.

What does this tell us? The coaching market is starting to mature. Some companies want an end-to-end coaching solution for all employees, focused on democratizing and personalizing development. Others want a more architected solution, where coaches and mentors are integrated into programs that are aligned with organizational initiatives, competencies, and values.

Lots Of Innovation In Leadership Development Is Needed

The market for leadership development and soft skills (we call them PowerSkills) is massive. While traditional vendors like DDI, Harvard Publishing, Skillsoft, Franklin Covey, Ken Blanchard, and others have been around for years, today companies are desperate for highly personalized solutions that can drive meaningful behavior change. Coaching networks, which have exploded as important disruptive systems, are disrupting the market in an important and exciting way.

Source:https://joshbersin.com/2022/04/torch-a-fast-growing-new-player-in-coaching-and-development/

Going Beyond Budgeting

Is it finally time to slay the three-headed corporate budgeting monster? Many CFOs we talk to think so. They question the effectiveness of a rigid process often fraught with internal conflicts as they try to build resilience and improve agility when responding to unforeseen events. New heights of volatility and uncertainty unleashed by COVID-19 have pushed their frustrations to the boiling point. The C-suite is more open to change than perhaps it has ever been.

Among CFOs, alternative approaches to budgeting are getting a lot of attention. In particular, Beyond Budgeting, a concrete alternative to traditional budgeting, is gaining mainstream traction. The approach is producing impressive results at a growing number of global companies, including Handelsbanken, Bayer Pharmaceuticals, Volvo, Equinor, and Roche Pharmaceuticals. Moreover, a December 2020 BCG study confirmed that Beyond Budgeting has significant benefits: 59% of 174 finance executives surveyed reported increased sales, 56% saved significant costs in the budgeting process, and 41% freed up formerly held back financial resources. At the same time, respondents reported important improvements in organizational effectiveness, such as better business decisions (52%), more effective performance management (51%), and greater agility in reallocating resources (45%).

CONFLICTING PURPOSES
Traditional budgeting is like trying to square a circle, because the process tries to meet three ultimately incompatible objectives. (See Exhibit 1.) First, budgeting sets targets to motivate and promote performance. These targets require directional and stretch goals. Second, budgeting provides forecasts of what lies ahead, but the forecasts only work if they are realistic, unbiased predictions. Production, for example, has to know what the expected sales are, as opposed to the stretch targets that sales strive to meet. In addition, the timeframes for useful forecasts can often be longer or shorter than the one year set by most budgets. Third, budgeting allocates resources by setting boundaries around future spending so that management can control costs and intervene to cut them when necessary. The C-suite typically tries to ensure that resources are allocated to the most value-creating opportunities while preserving short-term agility.

Given these conflicting objectives, it’s no wonder that companies often fail to achieve them with the same instrument at the same time. The traditional budgeting process leads to a long list of problems and challenges, ranging from the significant cost and effort required to create the budget to counterproductive motivations, unrealistic targets, gaming, and year-end spending fever.

The Beyond Budgeting movement has distilled 12 principles that form the basis of its approach, 6 regarding leadership and 6 regarding management processes. (See “The Principles of Beyond Budgeting.”) Together, they are meant to help organizations create a comprehensive and consistent new steering model. Companies that have implemented Beyond Budgeting have slain the corporate budgeting monster. They have stopped traditional budgeting and achieved each of the three objectives separately and in new ways.

THE PRINCIPLES OF BEYOND BUDGETING
DIRECTIONAL AND RELATIVE TARGET SETTING
With Beyond Budgeting, companies still set targets, but they are typically directional, relative, and established by the business units themselves. The level of detail is also much lower than that of a typical budget.

Top-level metrics, such as revenue, EBIT, or ROCE, are all effective targets, especially when compared with peers and complemented with relevant nonfinancial metrics. Ratios, such as unit costs, are typically more meaningful than absolute numbers. A company can instill stretch motivations by defining targets relative to internal or external benchmarks. These targets motivate and steer performance by articulating a clear purpose, ambition, and strategic direction. Roche, for example, places a strong emphasis on openly communicating strategy as a guardrail for performance. Ultimately, a strong performance culture guides day-to-day decision making.

Targets should have time horizons dictated by need and circumstance: shorter if there is urgency (a turnaround situation, for example) and longer if required by goals or complexity (entering a new market or starting a new venture). End of December deadlines become the exception more than the norm.

Some companies go even further. Handelsbanken, a Swedish bank with 700 branches in multiple countries, does not set targets. The company aims to deliver return on equity higher than the average of its competitors, and it has achieved that goal every year since 1972—two years after management booted the budget. Branch performance is measured not against targets but against comparable branches—on cost-to-income ratios, for instance. Alternatively, a branch might set a target itself. The branch managers are trusted to know best how perform well against peers. To avoid unhealthy internal competition, there are no individual bonuses, just a common bonus scheme for all employees, driven by the bank’s performance against the competition. This stimulates collaboration and sharing of best practices across the bank.

UNBIASED, DECISION-CENTRIC FORECASTS
We all know what happens when leadership asks for revenue projections from unit managers who are fully aware that the number they submit will serve as the basis for a target, often with a contingent bonus attached. Or when finance requests capex and opex numbers, and everybody knows that this is their one chance of getting access to next year’s resources—and that whatever number they submit will most likely be reduced. A forecast should be neither an opening bid in a target negotiation nor an application for resources. Forecasting should be its own separate process, dedicated to producing a realistic prediction of future performance.

The distinction between targets and forecasts becomes clear when the first forecast is completed. If it is below target, that does not mean the target cannot be met. Rather, the unbiased information that the forecast provides serves as a basis for determining the actions required to achieve the target. Finance has an essential role to play in framing and preparing management discussions accordingly.

The objective is to support good business decision making in areas such as short-term production capacity planning or long-term investment approval. Forecasts should be made for the time horizons relevant to the decisions at hand—which are not necessarily one year—and they should be updated as often as needed. Because the outside world moves quickly, most companies need to look ahead more frequently than once a year—at least quarterly, if not more often. Many companies use quarterly rolling forecasts with a five-quarter time horizon. Usually, forecasts are less granular than in prior budgets, because they are not conducted as a detailed, bottom-up exercise.

Best-in-class forecasting leverages algorithms to create unbiased predictions and provide managers with solid feedback on the impact of actions and initiatives already underway. Daimler Mobility has built a forecasting engine to produce monthly high-quality forecasts without expending prohibitive amounts of extra effort. Leaders are allowed to overwrite the algorithmic forecast to reflect information that the central engine was not able to incorporate. Changes in forecasts show whether an initiative actually affects performance. They foster discussions that focus on needed forward-looking action rather than on explanations or excuses for past results.

Some companies—such as the energy company Equinor—have switched to dynamic forecasting, which operates around a few predefined time horizons. Forecasts are created when circumstances change, and they support specific business decisions. Local units renew their forecasts when something happens that they believe requires an update. A common forecasting database enables the group to aggregate a companywide forecast, when needed, by tapping into the latest data.

BROAD AND TRANSPARENT RESOURCE ALLOCATION
Instead of defining rigid, top-down spending envelopes a year in advance, companies that use a Beyond Budgeting approach address resource allocation by combining broad target setting with better reporting. This allows them to delegate detailed decisions to the operational level, where the understanding of what’s required is clearest and resources can best be allocated in an agile way. Management can also issue burn-rate guidance that provides clarity on recommended cost levels.

More freedom and flexibility come with more accountability. To control and safeguard performance, finance sets up a transparent performance monitoring process that allows for quick intervention if needed. Reporting numbers in accounting-like detail usually does not achieve performance transparency. Instead, ratios, trends, and benchmarks for key business drivers provide easy visibility into where costs are moving in the wrong direction. For example, control charts, which track actual results against a trend or an average, are an effective way of monitoring cost development. Variances are investigated if they move outside of statistical control limits, effectively distinguishing signals (to be probed) from noise (to be ignored). Discussions between finance and managers should move from the descriptive (“Costs have increased by 20%”) to a focus on the drivers of costs and what can be done about them.

A company that uses Beyond Budgeting allocates capital dynamically rather than a year in advance. It typically replaces the traditional capex budget with a more continuous decision process, which also keeps one eye on the latest financing capacity forecast. In this way, the bank is always open to funding promising ideas or ventures.

Transparency on spending can become a “social” control mechanism that is highly effective at keeping value-destroying costs at bay. The Norwegian IT company Miles, for example, has no budgets (and no targets), including for travel and training. Employees can attend any course or conference they want. But when they return to work, they have to post on the company’s intranet where they went, what they did, and what it cost. Similarly, Netflix’s expense policy does not focus on detailed budgets but consists of a single sentence: “Act in Netflix’s best interest.” Expense transparency reveals any misconduct and ensures that people adhere to this principle.

MAKING THE CHANGE
Abandoning traditional budgeting is more of a journey than a one-time decision. We recommend a three-step approach: create the case for change, separate the budget objectives, and improve each process individually. (See Exhibit 2.) There will also inevitably be barriers to overcome.

Articulate the case for change. Most companies start by identifying all the issues that managers have with the current budgeting process using surveys and interviews. The results can make for surprising reading for the executive team, as pain points turn out to be not merely irritating but symptoms of larger systemic issues.

Management needs to define a clear vision of what it wants to achieve and how Beyond Budgeting can solve identified challenges. This will provide motivation for the business and finance teams tackling difficult change and ensure that all the various measures are moving in the same direction.

Separate and improve. Separating the three budgeting objectives is the next step. CFOs need to establish distinct processes and practices for each one—target setting, forecasting, and resource allocation. One of our clients renamed the existing forecast “Predict” to ensure a common understanding of what those numbers really mean. For those that find it nearly impossible to operate without a budget, remember that all the purposes of a budget will still be fulfilled—but in much more effective ways.

To make this kind of journey bear fruit, finance executives need to adopt a systems-thinking approach. Reducing the granularity of targets is only possible with better reporting, for example. Without performance transparency, management will have a hard time delegating responsibility. Changing processes can require changes in leadership style and the promotion of new values such as empowerment, trust, openness, and transparency. Consistency between words and actions, between management’s messages and management processes, is essential. Preaching autonomy and empowerment has little credibility if people remain bound by detailed travel budgets.

Overcoming the barriers to change. Organizational changes are always challenging. The three biggest barriers to implementation of Beyond Budgeting cited by executives in our 2020 survey were concerns about higher costs (46%), implementation risks (44%), and limited board support (33%). These concerns need to be addressed.

Concerns about higher costs arise from the management myth that without budgets, costs will rise and performance will suffer. The truth is that value-added spending might rise. It’s common to see a change in the cost mix, from less value-eroding costs to more value-creating costs. Also, if managers no longer need to maximize budgets in negotiations, the incentives that lead to year-end spending fever disappear. Many companies actually report cost decreases once the budget floor is abolished. In 2020, a public-sector organization in Norway ran a pilot allowing two of its units to operate without cost budgets. Because of COVID-19’s impact on travel and external activities, costs fell in all units, but none dropped as much as in the two pilots, which reported declines of 50%.

As for implementation risk, history shows that very few organizations go back once they have started, which should be a clear indication that this risk is low. And if things should go wrong, the old process can be quickly reinstated. No one will have forgotten how to budget. The downside risk is minimal compared with the huge upside potential.

We also recommend applying an agile approach: prototype, test, learn, and adjust. Run pilots in certain business units, if relevant. This will ensure demonstration of early benefits via quick wins, which in turn will create buy-in for more daring changes.

A skeptical board is an understandable concern. But this is often fueled by a second management myth: that budgets provide control. In fact, while having the next year described with accounting precision might sound safe, the only thing we know for sure is that the budget will be wrong. The fact that variances can be explained does not mean that managers have control. More often than not, variances are caused by bad planning assumptions or unforeseeable events. Detailed budgeting a year in advance can actually undermine the agility that many boards strive for in the current business environment. Beyond Budgeting gives CFOs the opportunity to make their companies more agile.

Finance is often the greatest enemy of Beyond Budgeting, which challenges its traditional role and accustomed practices. However, practice shows that the Beyond Budgeting approach actually makes finance people’s job much more meaningful. While the overall effort does not necessarily change, the work becomes more future- and business-oriented. The usual autumn sprint is replaced by a more continuous, and arguably a more manageable, process.

Beyond Budgeting has proven to be not only effective, but in many ways superior to traditional processes. This is especially true in today’s uncertain and volatile business environment. Many large organizations have successfully made the change. It is also a model that can serve as a window into what future financial management can look like. But remember: Beyond Budgeting involves not just a change in process but also in how management thinks about the future and about managing people. Managers shift from politburo-style central planning and command-and-control decision making to directional guidance, delegation, and trust. CFOs should plan carefully for the change and the journey.

Source:https://www.bcg.com/publications/2022/the-future-is-beyond-budgeting