The global economy is transforming into an integrated market, full of opportunity, competition and swirling change. Such change comes with its share of challenges. Indeed, the strain that global economic growth is placing on the supply of commodities and the environment has been well documented. Perhaps less well understood are the difficulties this expansion is causing today's organizations as they strive to make the best use of their most important assets: their workforces.

However, as any firm that has attempted to transform its workforce to meet changing conditions will attest, the journey is difficult and littered with obstacles. Understanding key workforce performance challenges and identifying the leading practices companies are using to overcome them have become central focus areas for our research and consulting.

This study is based upon primary research recently conducted by the IBM Global Business Services Human Capital Management practice and the IBM Institute for Business value, with assistance from The Economist Intelligence Unit. More than 400 human resource executives from 40 countries participated in a structured interview designed to capture insights on the subject of workforce transformation. To provide additional insights, we also drew from a range of sources, including: secondary research, financial analysis, previous IBM studies, our extensive experience working with clients and IBM's own internal transformation story.

Our analysis identified four important themes that require the attention and focus of senior executives across the organization, including those responsible for the Hr function. These are:

• Developing an adaptable workforce - A critical capability
• Revealing the leadership gap - Future growth at risk
• Cracking the code for talent
• Driving growth through workforce analytics.

Developing an adaptable workforce - A critical capability

There can be no doubt that winning in competitive and quickly shifting global markets requires responsive organizations. However, for many companies,workforce adaptability has been elusive. Among our study participants, we found that only 14 percent of respondents believe their workforces are very capableof adapting to change. What do these leading-edge adapters do that others don't?

Our findings suggest that three key capabilities influence the workforce's ability to adapt to change.First, organizations must be capable of predicting their future skill requirements. Second, they need to effectively identify and locate experts. And lastly, they must be able to collaborate across their organizations,connecting individuals and groups that are separated by organizational boundaries, time zones and cultures.

Many organizations are currently developing these capabilities as independent initiatives, rather than as part of a more comprehensive approach to workforce management. For example, the job of predicting future skills is often left in the hands of the learning and development function, while collaboration projects might be nestled within a newly founded Innovation team, or even the IT function. Yet, all of these capabil-ities require the joint attention and effort of multiple stakeholders, including the line organization, to truly contribute to bottom-line results. While emerging technologies such as automatic expertise locators and Web 2.0 social networking tools are slowly being adopted to better identify and connect experts around the globe, they need to be woven into the fabric of day-to-day work.

This white paper was published in October 2007.

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