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Final destination? HR in the future


Future of HR: Light at the end of the tunnel? HR has come a long way since its previous incarnation as ‘personnel’ but that’s not to say its long-term future is assured. Louise Druce looks at some of the challenges that could lie ahead over the next few years.

There’s no doubt technology has been one of the key drivers in HR transformation over the last 10 years but it has also come with a shift in mindset. The latest mantra is that people are a company’s most important asset. Whether the same could be said of the HR function in another 10 years from now is another matter.

The problem with HR, according to the experts, is that it has always struggled to prove its value. There are many facets to consider in the role such as recruitment and retention, talent management, reward and recognition, managing absenteeism, policies and legislation, coaching and training… the list goes on. But, as Dr Peter Samuel, lecturer in human resource management at Nottingham University Business School, points out, some of the softer skills needed are still seen as a bit ‘fluffy’.

“In previous downturns and recession, it is always the companies that have retained the best people that have come out stronger.”

Tim Palmer, PA consulting

The success of HR’s performance comes down to company expectations. When all’s said and done in terms of value, is it the bottom line that should ultimately be measured? If so, what are the markers? Are you measuring other stakeholder values as well? What sort of practices are you using and are they seen as best practice? Is one practice more important than the other? “It’s the silver bullet managers are always looking for in times of uncertainty,” says Samuel.

“HR is constantly reinventing itself. There is an argument that HR is strategic. If it is, you would expect to see HR directors sitting on boards and being involved in the strategic planning process in organisations, but research evidence shows that while most private companies do have a voice on the board of directors, it has been declining.”

The research he refers to is figures that show influence at board level peaked just over 20 years ago, with 76% of companies having an HR director on the board. This now sits around 64%. His argument is that if the people are your most important asset, you would expect this figure to increase, rather than drop. “It suggests to me that HR is becoming more operational,” Samuel says, slightly mirroring its personnel days.

He goes as far as to say that HR could be blamed for the ‘fat cat’ culture. Whereas in the past personnel played devil’s advocate between employer and employee, they now seem to gravitate towards management sympathies. “HR hasn’t had the ability to bring in moral judgements and say, ‘hang on, if people are our most important asset you can’t do that’. It’s got to justify itself.”

Mobile job hunting

Workers could soon be job-hunting via their mobile, according to recruitment communications consultancy TMP.

“It’s about time employers recognise the potential that mobile phones have as a recruitment channel,” says TMP Worldwide managing director of UK and Ireland Jon Porter. “Innovative employers are recruiting through second life and video games yet, for the majority, mobile phones remain an untapped medium.”

Short-term codes mean users can text a code to register their interest for further information about jobs 24 hours a day.

Does money or talent make the world go round?

It’s open to debate. But is Britain still too focused on costs rather than people? Samuel believes the overall corporate governance framework places the premium on shareholder value and short term returns.

“I’ve had clients who, frankly, only cared about how to move work from Western to Eastern Europe without having an industrial relations issue,” says HR transformation expert Tim Palmer, of PA consulting. “They didn’t really get talent management. It was all about costs and being competitive.”

He questions what is likely to happen in regard to talent management over the next two or three years as we face economic downturn. “The really interesting thing is whether companies can retain and motivate the best people during that period so they come out fit and ready to compete in a meaner world,” he adds. “In previous downturns and recession, it is always the companies that have retained the best people that have come out stronger.”

Samuel is less convinced by terms such as talent management, believing it could be an “insidious means of segmenting the workforce.” He explains this by highlighting that the so-called ‘talent’ is likely to get all the investment, skills training, support and quality of working life, while the rest of the workforce is left out in the cold. In other words, what is being glossed over is that you’ve got HR for a few and ‘personnel’ for everyone else.

He suggests this could be partly down to a lack of CEO buy-in. However, he does believe the potential managers starting to come out of university are more immersed in this environment and will start to deliver accordingly. “As the new generation are exposed to the importance of HR and managing people effectively and fairly, that is in their blood and becomes matter of course for the future CEOs.”

Model of success

Two other potential key influences in future HR are business partnering and outsourcing. The Ulrich model has been the beacon. Yet, Palmer points out that while many companies strive to operate in this way, few have achieved their goal.

It comes back to value. “HR business partners are slightly at risk,” he says. “They have become a standard but there are lots of precedents where people haven’t done much with the business partner community and haven’t upskilled the team or recruited new people into these roles.

“The key to success and continuation of that role will be what business partners do to make themselves relevant. [Currently] it’s not well done or uniformly defined.”

Samuel goes further: “There are far more business partnerships but they are susceptible to shocks, especially political. Their days could be numbered,” he predicts.

The future’s bright

“When it comes to legislation and performance objectives, you have HR, but line managers are determining the skills and training they want.”

Peter Samuel, Nottingham University Business School

The future is slightly brighter for outsourcing. Palmer says the problem at the moment is a lack of evidence for the longer-term benefits for HR. He believes these will become more prevalent in the next few years, with mature outsourcing contracts and shared services revealing the attractive consistency of process and data quality. “It’s about workplace cost and efficiency,” he adds.

“There are three roles for HR: delivery (which is where outsourcing, shared services and the division of labour in a logical way come in), policy and strategy. The centre of expertise is absolutely key to looking after the people assets.”

Samuel adds that the future is rosier for HR than it might seem and stresses it is unlikely to disappear altogether. Instead, it could mould itself into a more consultative type of role. “When it comes to legislation and performance objectives, you will still have HR, but line managers are determining the skills and training they want, rather than HR,” he explains.

“We are educating future managers. They will see the bigger picture and that HR is still a vital function. Managers are increasingly more aware of how to manage people, which is the fundamental of what HR does.”

3 Responses

  1. HR’s accountability
    “As I see it, HR is responsible for making sure that there is a process to be used, whereas the manager is accountable for making sure they manage their team members performance.”

    I’d agree with you that the accountability for using processes should stay with the manager, and so should the business impact of this usage (ie team / business performance).

    But I’d also argue that HR should take accountability for the results / human capital outputs of the processes as well as their design – eg raised engagement, increased capability, career moves made etc.

    This makes HR responsible for achieving successful outcomes through their line manager colleagues.

    Taking accountability for results rather than just processes is the only way that HR is going to become strategic.

  2. Future of HR
    In terms of the impact of ‘HR’ I think this is determined by how much time is spent ‘being operational’ versus ‘influencing strategy’.

    Certainly in some sectors I think the role of HR has been firmly put back in to an operational context – with the function just dealing with the day to day ‘hygiene’ issues and policing.

    I have witnessed other extremes where the HR lead thinks they are strategic and so the day to day collapses.

    The critical thing is to achieve balance between the 2 strands, clearly day to day is vital, but without HR input into the upper echelons of any business, how is it getting the whole business intelligence picture?

    On many occasions I have seen actions from what are mainly day to day operations transmuting into influence at the top.

    HR really can be the organisational engineers but in a subtle, coherently linked way, rather than as mavericks. This will then avoid the issue of lines like “oh here comes another HR initiative!” echoing around the place.

    In terms of the right types of role, HR Business Partner is great, if it is actually that and it is sold to the rest of the firm on its merits and real time added value. Simply changing an HR Advisors role title to HRBP won’t cut it and it may not be appropriate either. When I think of HRBP I think of the expressions ‘hand in glove’, ‘best fit’ ‘part of our team’ (as in the clients they are working with.

    Making this type of role work takes time, good communication and influence.
    One last thing to mention is that if HR wants its future then it needs to shout louder about its successes, it needs to challenge harder rather than just comply and ultimately it need to embed itself so deeply in the veins of business that it would simply be madness for it not to be involved in all organisational processes.

    On a separate note, I agree with Sven’s comments on Performance Management.
    I think HR should help facilitate the PM process but in terms of accountability for making it actually happen it has to rest with the manager and their team members. There is a danger here of blurring the lines between accountability and responsibility, and as I see it, HR is responsible for making sure that there is a process to be used, whereas the manager is accountable for making sure they manage their team members performance.

    Remember individuals have the right to be managed!

    Head of HR
    Lester Aldridge LLP

  3. Performance Objectives in HR’s responsibility???
    Interesting article.
    However, I’m a bit confused about the comment that HR should own the perfomance management process. According to my experience to much ownership from HR and not enough from line management is the reason why many PM projects fail – or linger on somehow without adding the expected value.
    In my opinion, best results are obtained, if HR has a very hands off role as a consultant and trainer.
    What are other’s thoughts and experience on this?

    Sven Ringling
    iProCon HCM ltd.

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