Lack of employee engagement is the top issue currently facing 87 percent of HR and business leaders (up from 79 percent last year), according to Deloitte's third annual "Global Human Capital Trends 2015: Leading in the New World of Work" report released today. Yet, the majority of organizations are still failing to take action to improve their culture, potentially jeopardizing future growth.  

The survey was conducted among more than 3,300 HR and business leaders in 106 countries, and is one of the largest global studies of talent, leadership and HR challenges. The number of HR and business leaders who cited engagement as being "very important" doubled from 26 percent last year to 50 percent this year. Sixty percent of HR and business leaders surveyed said they do not have an adequate program to measure and improve engagement, indicating a lack of preparedness for addressing this issue. Only 12 percent of HR and business leaders have a program in place to define and build a strong culture; while only 7 percent rated themselves as excellent at measuring, driving, and improving engagement and retention.

"As demand for talent picks up, the balance of power in business is rapidly shifting from the employer to the employee," said Josh Bersin, principal and founder of Bersin by Deloitte, Deloitte Consulting LLP. "Moreover, workers are becoming more mobile, contingent and autonomous, and as a result, harder to manage and engage. In this new world of work, organizations need to re-imagine the way they manage people and come up with new, out-of-the-box ideas to make themselves relevant."

Leadership, learning, and skills gap take center stage
Leadership gaps – last year's most critical issue – continued to be top of mind for HR and business leaders, 86 percent of whom cited it as a top issue this year. However, the number of respondents who said this was a "very important" issue jumped from 38 percent last year, to 50 percent this year. Interestingly, according to the "Deloitte Business Confidence Report 2014," only 49 percent of C-level executives surveyed indicate that they are committed to developing leadership skills at all levels of the organization.

Recognizing the fact that a general lack of skills is likely to impede business growth, 85 percent of HR and business leaders ranked learning and development as a top issue, compared to 70 percent last year, making this the third most critical issue in this year's survey. Meanwhile, 80 percent of respondents cited workforce skills as a top issue (up from 75 percent last year), and 35 percent rated the lack of skills in HR as a "very important" problem, up from 25 percent last year. 

"There are significant shifts happening in the global workplace that business must actively manage," said Brett Walsh, global human capital practice leader, Deloitte Touche Tohmatsu Limited. "In addition to workers' changing expectations of employers, skills needed on the job are changing faster than ever. Organizations are quickly falling behind on developing the right skills across all levels. There's an urgent need for organizations to re-evaluate their learning programs and treat leadership development as a long term investment, rather than a discretionary training spend item when times are favorable."

Businesses are struggling to simplify the workplace
In addition to the challenges of employee engagement and leadership, the Deloitte report shows that companies are struggling to decrease workplace stress, simplify business processes, and reduce complexity. In fact, 66 percent of respondents believe their employees are "overwhelmed" by today's work environment; and 74 percent cite workplace complexity as a significant problem. While more than half of the surveyed organizations have some type of simplification program, 25 percent have no plans to implement a program.   

"Simplification is a new theme emerging from this research," said Bersin. "Engaging and supporting employees today requires fresh design thinking about how work gets done."

Cognitive computing is changing the way we work 
The increasing cognitive power of computers and software is challenging organizations to rethink the design of work and the capabilities their employees need to succeed. Fifty eight percent of leaders indicate that "redesigning work with computing as talent" is an important trend. However, while many executives are concerned, few have a strong grasp of the impact of cognitive computing on talent. Only 5 percent of executives surveyed say they have a strong understanding of what computing will do to their workforce.

"There is a need to redesign the workplace to integrate technology," added Bersin. "By leading the process of 'job redesign,' developing hard-hitting training programs, and working with technologists on the implementation of new technology, talent and HR leaders can help ease the transition of these technologies into the workforce and, ultimately, improve productivity and engagement."

Organizations are missing the growth opportunities presented by analytics
The Deloitte report reveals that analytics is one of the areas where organizations face a significant capability gapi. Three quarters (75 percent) of respondents cited talent analytics as an important issue, but just 8 percent believe their organization is "strong" in this area—almost exactly the same as in 2014.

"HR and people analytics has the potential to transform the way we hire, develop and manage our people," said Jason Geller, principal, Deloitte Consulting LLP, and national managing director of the U.S. human capital practice. "Leading organizations are already using talent analytics to understand what motivates employees and what makes them stay or leave. These insights help drive increased returns from talent investments, with huge consequences for the business as a whole."

Deloitte research shows that it will take several years for businesses to develop and absorb talent analytics technology, and "the sooner HR teams start working on building this capability, the better positioned they will be to address future talent issues," concluded Geller.

To gain further insights into the report, including detailed information on specific countries or industries, click here to access the Deloitte Global Human Capital Trends 2015 Dashboard.

Access the full report here and infographic here.