Jennifer Diaz
+1 (305) 347 4383

Laura Schneider
+1 (845) 362 5093

July 14, 2004
Companies Not Well-Positioned to Compete as War for Talent Intensifies, Accenture Research Finds

Failure to Build Critical Workforce Skills May Hinder Ability to Address Marketplace Challenges

NEW YORK; July 14, 2004 – The war for talent will escalate as confidence in the economic and business climate continues to improve, but many companies will not be well-positioned to compete in the new environment, according to a new research report released today by Accenture.

The research, the fourth annual High Performance Workforce Study, is based on interviews with 244 senior executives in the United States, Europe and Australia. Its goal was to identify trends and other factors that are currently affecting the performance of workforces and businesses.

More than one-third (41 percent) of respondents said the war for talent will have an impact on their companies in the next 12 months, compared with less than one-quarter (23 percent) who said the war for talent is currently affecting their organizations. Despite this, most respondents said their organizations do not have the skills and capabilities that they view as critical to addressing marketplace challenges.

For instance, while nearly two-thirds (65 percent) cited “developing an effective leadership capability” and half (49 percent) cited “creating an organization and culture that adapt effectively to change” as very important organizational capabilities, only 8 percent in each case said their organizations are performing very well in these areas. Furthermore, just 17 percent of respondents described the overall skill level of their entire workforce as industry-leading.

Survey findings also indicate that executives are shifting their focus from cost control to growth. For instance, one-third (32 percent) of respondents said their primary focus today is on cost control, compared with about one-quarter (27 percent) whose primary focus today is on growth. However, while more than one-third (42 percent) of respondents said their companies will focus primarily on growth in the coming year, less than one-fifth (18 percent) said they plan to focus primarily on cost control during that time.

“The recent focus on cost-cutting has led many companies to lose marketplace momentum. Now, as they ramp up investment in growth-oriented activities to achieve higher levels of performance, they need to regain their competitive edge in terms of recruiting, retaining and developing high-caliber employees,” said Peter Cheese, managing partner of Accenture’s Human Performance service line. “The way forward involves a more strategic approach in human resources. Organizations should understand how to effectively engage employees, focusing on learning and performance management and aligning both to business strategy.”

The research found that shortcomings in the respondent organizations’ human resources (HR) and training practices account for the lack of solid workforce performance. For instance, while the three most important HR initiatives that respondents identified were improving worker productivity (69 percent), improving the adaptability of the business to new opportunities (68 percent) and facilitating organizational change (66 percent), no more than 12 percent said they were very satisfied with their progress on any of these initiatives, and just 18 percent said they were very satisfied with the overall performance of their HR function.

Similarly, when asked to identify their most important training initiatives, respondents cited “aligning learning strategy with business goals,” “ensuring learning content meets workforce requirements” and “boosting workforce productivity and agility” (selected by 77 percent, 75 percent and 72 percent, respectively). Yet only 11 percent, 16 percent and 9 percent, respectively, said they were very satisfied with their progress in these three areas, and just 16 percent said they were very satisfied with the overall performance of their training function.

The survey also found that, in virtually every case, the mean satisfaction rating with the HR and training functions is higher among respondents who outsource all of a particular training or HR activity, such as recruiting, payroll, training content development or training delivery, than among those who outsource none of that activity.

Additionally, the research identified 38 companies that fared better than the other companies in the survey in terms of various measures of workforce and business performance. For example, as a group, these 38 companies have stronger overall financial performance; are more likely to be planning to grow their businesses in the coming year; see human capital-related capabilities as more important to addressing critical marketplace challenges; use IT effectively to support HR and training; and regularly measure the link between HR and training investments and business results.

“These companies prove that there is light at the end of the tunnel,” said Hap Brakeley, president of Accenture Learning, an Accenture business that provides learning solutions to companies on an outsourced basis. “They understand just how critical people are to their overall success and, consequently, devote the attention and resources to help their workforces perform at the highest level. Ultimately, they provide a model for other companies to emulate.”

Methodology
To identify trends and factors that are affecting the performance of workforces and businesses, NOP World, on behalf of Accenture, conducted e-mail and telephone interviews with 244 senior executives in the United States, United Kingdom, France, Spain, Germany and Australia between December 2003 and April 2004. Respondents’ companies represented 17 industry segments, including financial services, resources, services, manufacturing and government.

About Accenture
Accenture is a global management consulting, technology services and outsourcing company. Committed to delivering innovation, Accenture collaborates with its clients to help them become high-performance businesses and governments. With deep industry and business process expertise, broad global resources and a proven track record, Accenture can mobilize the right people, skills, and technologies to help clients improve their performance. With approximately 95,000 people in 47 countries, the company generated net revenues of US$11.8 billion for the fiscal year ended Aug. 31, 2003. Its home page is www.accenture.com.

###