Retention of valuable employees, the main HR challenge for 2017

Retention of valuable employees, the main HR challenge for 2017

According to the survey "Trends and challenges in HR for 2017", carried out by Valoria in collaboration with Business Mark, 60% of companies in Romania say the most important strategic challenge in HR is the retention of high-potential and high-performance employees.

"Companies consist of people who should be provided with a collaborative environment for them to perform and for the company to be profitable. The conditions in which the people work, the company's values and the technology influence the effective employee engagement, as well as the activity in HR. At the second edition, the survey Trends and challenges in HR is the only one in Romania that gives the comparative perspective of CEOs and HR directors. The strategic, operational and resource challenges and actions to be implemented in HR are revealed by this survey", says Constantin Magdalina, Emerging Trends and Technologies Expert, co-author of the research.

Strategic challenges of the HR function

The main strategic challenges facing the Romanian companies in the HR function are more serious in 2017 than in 2016. Thus, the retention of high-potential employees is in the first place and the importance score rises from 4.39 to 4.69. Maintaining a high level of employee engagement is now second, after last year's top position. Providing leadership skills to help the organization respond to the rapid pace of change is in the third place, with a score of 4.35. Unfortunately, companies have a low level of readiness, because the number one challenge is only in the sixth place when it comes to the ability of companies to address this challenge effectively.

Other strategic challenges on the HR agenda include the following: lack of competent and motivated graduates (67% of respondents), lack of specialists and craftsmen (61%), need to adapt to inconsistent legislative changes (54%), lack of employees’ direct involvement in personal development (36%) and shorter working periods for an employer (34%).
The strategic HR challenge that Romanian companies say are best prepared for is to create an organizational culture that will bring a competitive edge to the company. Unfortunately, this challenge is only fourth by importance score. Beyond the response ranking, all readiness scores are at a considerable difference (more than 1.1 points) from the top importance scores. The consequences of this situation have a direct impact on the performance of the companies and how they manage the economic and social risks.

Challenges to HR practices

At the level of HR practices, the development of the next generation of leaders of the organization, which ranked first last year, now comes second with 12 percentage points down (-12pp). On the first place in 2017 is finding and recruiting employees with specialized skills, with an increase of +17pp. Employee retention remains second, but increases by +14pp.
Among the essential resources available and that can be used by companies to successfully meet the challenges of HR practices are the stronger skills of the HR staff (3.86 in 2017 vs. 3.64 in 2016). The collaboration between HR and management for strategy alignment is on the second place (3.82 in 2017 vs. 3.60 in 2016). The third place is held by the solid support the top management extends to the HR function (3.81 in 2017 vs. 3.78 in 2016).

The key actions that could be taken by the companies in the next 3 years to give a more strategic orientation to the HR function are different than in the previous edition. The involvement of the company's top management in the development of the HR strategy rises from third place in 2016 (score 3.97) to first place in 2017 (score 4.27). The second place is held now by the more intense involvement of the executive management of the company in the implementation of HR strategies (4.25 in 2017 vs. 4.08 in 2016), and on the third place we find the former first place for 2016 - the alignment of the HR strategy with the business objectives.

"We attach great importance to human resources and organize annual events dedicated to HR specialists in Bucharest and in the main cities in Romania. In the current context, the human resources are essential for the strategic development of the business. Organizations are concerned about creating a positive organizational culture, having a high engagement of the employees, good retention, access to talent, and developing management’s leadership skills. HR support by top management is very important to meet organization's strategic challenges", says Daniel Dragan, Managing Partner, Business Mark.

Automation of the HR function

In the recent years HR has begun to shift from a transactional to a more transformational role with a truly strategic contribution to the company. In this evolution, an important contribution plays the technology which lifts the burden of routine processes from the shoulders of the HR team.

In 2017, 5 out of 10 respondents say they have a solution for automation of HR processes, 34% say they do not have but want to implement, and 15% say they do not have now and do not even intend to implement one.

Of the responding companies, 47% believe that the use of HR technology is of increased importance for the measurement of the department's performance (ROI), 28% are undecided or believe it is only somewhat important, and 19% consider it is a key element for success.

Companies in Romania say the most important trends that can significantly change the HR function in the future are: mobile and social media applications (47% of companies), artificial intelligence (43%), political and economic developments (43%), and demographic change (42%).

"The survey Trends and challenges in HR is a mirror of the HR profession and a testimony from the top management about what the HR professionals represent for the company. The findings in the survey report show the reality of the strategic role the HR function plays in the Romanian companies. This survey asks tough questions on HR development and provides the HR professionals’ answers about who they are, what they do, how they cooperate with the top management of the company. Used to interview the candidates, the HR professional takes now an interview with the top management", says Elena Badea, Managing Partner Valoria, co-author of the research.