Their #1 challenge today is finding the right talentThe Predictive Index reveals that for many CEOs, 80% of their top five challenges are people problems
March 13, 2019 — BOSTON–(BUSINESS WIRE)–While “people problems” have traditionally been siloed under Human Resources departments, the Annual CEO Benchmarking Report 2019 by The Predictive Index (PI) finds talent optimization challenges are actually keeping CEOs awake at night.
“CEOs’ fixation on optimizing their talent makes sense—not just on an emotional level, but also on a financial level,” said Mike Zani, CEO of The Predictive Index. “If left unchecked, by 2030, the talent shortage could result in about $8.5 trillion in unrealized annual revenues. So there’s the ubiquitous reality that ‘our people are our most valuable asset,’ and another truism uncovered in the survey: People are most companies’ biggest expense.”
1. Strategy development and talent strategy are CEOs’ top priorities
“As a former CEO, this report really resonated with me, because, of course, your priorities are strategy and talent,” said Kirk Arnold, Executive in Residence at General Catalyst and PI board member. “What’s most interesting is the order in which you need to think about strategy and talent is often reversed. The #1 priority needs to be talent. Getting the right team together is the most important piece of the puzzle, and only then can you tackle the strategy issues.”
2. Business problems are people problems: Four out of the top five biggest challenges CEOs face relate to talent optimization:
- Finding the right talent
- Aligning employees with strategy
- Getting the most out of people
- Creating a great work environment
3. People are a company’s biggest expense: 64% of CEOs report having employee-related costs that constitute at least half of their overall costs
4. CEOs need help with talent optimization: Nearly 70% of CEOs report needing help with talent strategy and execution. The top three activities they need the most help with are leadership development, employee performance, and pre-hire selection
5. Even CEOs find it hard to hold the line with employees: CEOs’ biggest weaknesses are holding people accountable and getting rid of underperformers
Excerpts from the CEO Benchmarking Report
CEOs’ #1 priority
We begin by looking at the issues that consume CEOs. What are their biggest priorities and biggest challenges? As you’ll see, strategy and talent are top of mind.
We asked our panel of 156 CEOs to identify their single biggest priority. The data tells us strategy and people come first—and then there’s everything else.
CEOs’ fixation on optimizing their talent makes sense—not just on an emotional level, but also on a financial level. In fact, if left unchecked, by 2030, the talent shortage could result in about $8.5 trillion in unrealized annual revenues (Korn Ferry). So there’s the ubiquitous reality that “our people are our most valuable asset,” and here’s another truism:
People are most companies’ biggest expense.
We asked the CEO panel what percentage of their total costs are employee-related. For 63 percent of companies, employee-related costs constitute at least half of their overall costs.
On average, employee-related costs make up 55 percent of total company costs.
Given what a big challenge (and cost) talent is for organizations, we wanted to understand where CEOs feel they need help when it comes to talent strategy. Simply put—they need help across the board. Their top three answers were leadership development, employee performance, and pre-hire selection.
A copy of the Annual CEO Benchmarking Report 2019, including charts, is available here.
In January 2019, The Predictive Index conducted a survey of company CEOs, presidents, and chairpeople, securing respondents through Respondent.io, Critical Mix, and the company’s own existing database. Through those means, the company collected 156 completed surveys.
About The Predictive Index
The Predictive Index (PI) is an award-winning talent optimization platform that aligns business strategy with people strategy for optimal business results. Sixty years of proven science, software, and a robust curriculum of insightful management workshops make PI the solution for any company looking to design great teams and culture, make objective hiring decisions, and inspire greatness in their people anywhere in the world. More than 7,000 clients use PI—including Nissan, Citizens Bank, DocuSign, Subway, 47 Brand, Blue Cross Blue Shield, and Omni Hotels—across 142+ countries. Learn more at http://www.predictiveindex.com/.