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Human capital needs to break out of its comfort zone, says McKinsey

Human capital (HC) departments are in a state of 'paralysis', according to a report published today by The Conference Board and McKinsey on the State of Human Capital 2012.

It claims there cannot be an HC leader alive who doesn't sense the urgency and the size of the challenges facing the function, in that few HC executives can confidently say they know what to do about everything that now confronts them. Along with too much uncertainty, there are too many factors to manage, too many unfamiliar operating environments, too little support, too many risks.

The report mirrors the KPMG research that was published yesterday (LINK) as it says that human capital professionals are struggling to meet the needs of an ever-changing global business landscape. As global markets and technology evolve, 'people processes' are failing to keep pace.

While tremendous strides have been made over the past decade in areas such as workplace diversity and flexibility, the human capital function has largely lagged behind in effecting organisational success, the McKinsey report says.

As a consequence, human capital leaders must work harder - and smarter - to cement their place as a key business partner on decisions central to the present and future success of their organisations, it says.

The report believes that HC is failing to achieve results it would like to deliver because of: a lack of capability, a support function mindset, and an inability to relate to the ROI or business impact of their function.

It has said there is no overarching answer to these failings but it is possible to identify certain characteristics that have been successful for some HC functions or are likely to be successful: engage with the organisation's business leaders strategically, take risks in the pursuit of innovation and redouble every effort to manage HC efficiency.

Rebecca Ray, senior vice president of human capital, Conference Board said: "Human capital functions need to break out of their comfort zones, take risks and become a true business partner.

"Right now, human capital departments are struggling to deal with a global talent shortage, adapt to a changing workforce, and develop fresh, flexible working models to meet the needs of tomorrow's workers," Ray said.

Bryan Hancock, a partner in McKinsey Atlanta office said: "Only by partnering with other parts of the organisation will human capital departments and executives be able to address critical business issues with long-term, systemic impact on human capital."

Responses to the report were collected between March 8, 2012 and April 6, 2012. The 517 respondents represent companies across the globe and include managers and senior executives spanning the HC spectrum.