By Mark Vickers
A lot has changed in 20 years. Two decades ago, the Soviet Union was still in business, the first President Bush was soon to be elected, and the World Wide Web hadn't even been invented. No one knew the makeup of the human genome, and today's wildly popular iPod wouldn't be launched as a product for another 13 years.
And yet, many things have remained remarkably constant—some would even say intransigent. This includes a lot of the top priorities of HR professionals and other managers. Consider the latest data from i4cp's 2007/2008 Major Issues Survey, which gathered responses from 580 participants. Versions of this survey date back two decades, and, while not scientifically comparable due to an evolving list of subjects, the surveys provide a unique insight into the long-term challenges faced by business leaders and managers.
Chronic Health-care Cost Problems
Back in 1988, an issue called "Health Care Cost Containment" was the highest rated of 60 different topics tracked by the Human Resource Institute (HRI), i4cp's predecessor. That topic remained at the top of the list of issues through 1995 and took only a short-term dip in 1997 (to a rank of 17th), when it looked as if managed care might control costs over the long term.
Alas, by 1999, survey participants were realizing that managed care was a short-term fix, at best. That year, health-care costs rose to become the ninth most important issue; in 2002, it was up to seventh place, and then it hit the fifth-place ranking in 2003. Today, it is ranked as fourth most important out of a whopping 121 different issues. Like an illness that just won't go away, the condition seems to be chronic, and managers are no longer the optimists they once were. When asked to look 10 years into the future, i4cp respondents ranked health-care costs as the second most important issue. In other words, they expect things to get relatively worse rather than better in regard to health-care costs. Whether or not this pessimism is warranted, it can be viewed as a striking indication that, unless some dramatically effective strategies are adopted, the future will look a lot like the past in this crucial area of U.S. business.
Long-term Leading Indicator
But there is one issue that beats even health-care costs in terms of its staying power over this two-decade-long period: leadership. Two decades ago, the institute asked respondents to rate an issue called "Motivation and Leadership." At the time, it was ranked second, with 58% of respondents saying it was extremely important. In later years, it was referred to simply as "Leadership," and it has remained on the list of the five most important workforce-management issues ever since. In fact, its significance has tended to grow stronger over time. From 1997 to 2003, leadership took the top spot on the list of major issues. In 2003, fully 73% of respondents said it was extremely important, the highest percentage in the history of these surveys. In 2008, the percentage calling leadership extremely important was 59%, down from 2003 but nearly the same as in 1988. Remarkable consistency, indeed!
Why leadership? After all, this issue has been at or near the top of the management priorities for a generation. You might think that the plethora of development programs, leadership consultants, and best-selling management books would make it less important over time as companies "perfect" their processes for turning out excellent leaders. However, it hasn't happenedprobably for two key reasons. First, in an era such as the previous two decades, organizations place a premium on finding people capable of dealing with fast and often turbulent change. Excellent leadership is most critical in times like these. Second, some of the competencies needed for excellent leadership have changed with the times. Organizations haven't "perfected" leadership development not only because it's difficult to do but because it continues to be a work in progress.
Then Came the Customers
Back in 1988, the Major Issues Survey didn't even ask about the importance of "customer focus." In the 1980s, the term "quality" was all the rage, and there was tremendous emphasis on learning how to compete against Japanese manufacturers, which were becoming renowned for high-quality products. Total Quality Management was on the minds of many business leaders. But at the same time, the idea of focusing on customer needs was an important ancillary idea taking root in the business culture. By 1990, HRI was including the issue of customer focus in its surveys, and it quickly jumped into the top four issues seen as most important for workforce management. A series of metrics and programs started to emerge around the concept. By 1994, for example, the University of Michigan developed its influential American Customer Satisfaction Index.
Today, "Focus on the Customer" tops the list of the 121 issues looked at in the Major Issues Survey. In a global marketplace, many businesses can no longer afford to compete strictly as the low-cost provider of products and services. Instead, they try to compete on quality, design and customer focus. The last increasingly means that firms need to tailor products to the needs of narrower groups of customers or, indeed, to individuals. Some manufacturers, for example, are referring to the emerging era as one of "mass customization." Such trends make customer focus a fast-changing issue.
Looking to the Future
i4cp's 2007/2008 Major Issues Survey also asked participants to look 10 years into the future to try to predict what the major issues will be at that time. Again, the data shows some remarkable consistency, with "Leadership," "Healthcare Costs," and "Focus on the Customer" remaining the top-ranked issues (in that order). Time will tell how it actually turns out, but there is considerable historical evidence to suggest that these truly are perennial priorities. Developing state-of-the-art strategies for any one of these areas could give organizations a major competitive advantage going into the future.
About the Author(s)
Mark Vickers is an associate with the Institute for Corporate Productivity.