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Human capital management: The next generation

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The next generation of workersSomewhere tucked away in Oracle’s portfolio of acquired software companies is what used to be HCM champion PeopleSoft. But while CRM and database engines grabbed the headlines at Oracle OpenWorld, the firm was also keen to demonstrate that its HCM and talent management strategies are alive and well and gearing up to tackle Oracle’s vision of the future of work. Stuart Lauchlan reports from the conference.



The next generation enterprise will be based around next generation workers, next generation technology and next generation practices. According to Gretchen Alarcon, Oracle vice president, human capital management strategy, these three elements are the fundamentals that underpin Oracle’s vision for human capital management (HCM).

“Next generation workers doesn’t mean that you only employ 20-year-olds,” she smiles. “But it’s undoubtedly the case that the retirement of the baby boom generation is creating a real war for talent. That’s a phrase that has been around for some time – the first mention of the war for talent can be found 13 years ago in a article by McKinseys – but it’s now that we’re finally getting into that war in a big way. We’re hearing more and more customers talking about it from their perspective.

“We are starting to see many companies who are promoting exchanges between the mature workers and the younger ones through mentoring schemes.”

Gretchen Alarcon, Oracle

“There’s a generational change going on. We have an ageing population with more people over the age of retirement. We have people moving into a state of gloom and doom, worrying about the healthcare burden of all this. There are other implications: how can I promote people if I have baby boomers sitting in the middle management layer blocking the way? What we have to do is think instead about how we can accommodate this generation. How can we value the mature workers in our industries? Have we got the flexible work arrangements in place for our mature staff who may want to have different priorities? They possibly don’t want to travel as much as they used to. They may want to have three months on and three months off or the flexibility of schedules to have more time with their families.”

There’s lots to be learned from the more mature worker – but also from the younger ones. “We are starting to see many companies who are promoting exchanges between the mature workers and the younger ones through mentoring schemes,” she says.

“Some people think that this involves the old people sitting there saying how great their career has been and the younger ones taking notes. That’s not going to work. In practice, if you put people who are new in their careers alongside the elder ones, you can get more interesting results. You can get situations where the younger staff can teach the older ones about technology, for example, about working with Facebook.”

Glass ceiling

The 21st century workplace is also more diverse than previous iterations. “Another factor to be considered is the increasing role of women. The US Department of Labor did some ‘glass ceiling’ research at Fortune 500 companies and found that the companies which had made serious investment into moving women into leadership roles were anything between 18-69% more profitable. Now there may be something in that, but the range is so wide,” muses Alarcon.

“But it’s clearly the case that there is clear benefit to be had from leadership diversity with increased investment in minorities. You need to look at what type of leaders need to be brought forward into organisations. You need to move away from autocratic command and control structures where you can share responsibilities in a more consultative way and share out experiences from different groups. If you have a more diverse leadership, then you have a better chance of reacting to or anticipating change. You need a line-up of people who will respond differently in different situations.”

Freedom and flexibilty are the keywords to bear in mind, she advises. “There will also be a change in the structure of empowerment. There is increasingly a focus on people wanting more freedom to work as and when they need to,” she notes. “In my house we now have a rule that you can’t bring your Blackberry to the dinner table. We were all working and didn’t realise it until my son texted me over dinner.

“It’s important, though, to think about how work has changed,” she continues. “How many people now keep track of their hours in increments? In general people want to control how and when they work. We had this conversation at Oracle the other day with a manager who said that he had a guy on his team and he had no idea when he works. He came in after the manager and left after him, but was never in the office when the manager wanted him. I asked, does he get his work done? And the answer was yes, so that wasn’t a problem as far as I could see. People want to be more adaptive, to have some give and take. They’ll work the weekend, but that means they’ll take Monday off. They’re going to work late, so they won’t be coming in until noon.”

“There is increasingly a focus on people wanting more freedom to work as and when they need to.”

Gretchen Alarcon, Oracle

Oracle’s principle HCM product offering comes from the acquired assets of PeopleSoft. But, as with its CRM acquisitions, the firm is working through its Fusion strategy to create a next generation of applications that will include more social collaboration and Web 2.0 functionality.

“With technology, it used to be said that you should change your processes to fit the software. The process might work fine, but if the software doesn’t support it then you should change the process anyway,” explains Alarcon.

“The focus for next generation technology should be to work your way and to enable you to work better. We face a more technological generation of workers. There was a New Scientist study that found that 63% of office workers access social networking sites at least once a day, 52% spend an hour a week on social networks, while 46% discussed work-related issues on social networking sites. That last one scares companies so the IT people come down and ban access to social network sites.

“There is undeniably a distraction factor about social networking. I know I start to look for something on the internet, but soon I have multiple browser windows open and I’ve started shopping. The goal from an HR perspective is of course that people remain focused on what they’re doing. So we need to look at how we keep people focused and how we bring them back into the work mode. Everyone needs a break so we don’t ban social networking, but we have to bring social connectivity, goals, calendaring etc all together. From a technology perspective, how do we bring social content into HCM? How do we allow a measure of control but keep control ourselves. How can we help people to collaborate within the system?”

Focus on the talent

There also needs to be a focus on talent management, suggests Colleen Neymeyer, HCM product strategy, Oracle. “Effective HCM is also about how you recruit new talent and manage it, of course. We are seeing a downturn in talent, real shortages across lots of areas,” she notes.

“CEOs are moving away from asking questions about how their companies can be more efficient. It’s now all about how they can differentiate themselves through having better talent. How can you differentiate, innovate and compete in your industry. How do you address your need for succession? Can you keep on top of the idea that you’re experiencing attrition in key areas? Do you have the ‘bench strength’ to move forward?

“CEOs are moving away from asking questions about how their companies can be more efficient. It’s now all about how they can differentiate themselves through having better talent.”

Colleen Neymeyer, Oracle

“So the role of the HR executive is starting to change to take on more of a business focus,” she adds. “HR used to be the party planners and the feel-good people. Now it’s more important for HR people to understand the goals of the business. It’s more important to align talent management initiatives with the business strategy. Analytical skills are becoming more important. How do you take data on employees and make informed decisions using it?

According to a study by McKinsey in August, the influence of HR people in organisations is actually declining, notes Neymeyer. “Some 58% of line managers felt that HR people lacked the skills to develop talent strategies that were aligned with the business objectives of the company. Only 25% of HR people felt that. Line management also didn’t feel that HR is held responsible and accountable for its decisions whether successful or not.

“Clearly HR needs to be more proactive,” she states. “It’s no longer good enough to make sure that payroll happens on time. People problems used to be the province of HR, but McKinsey suggests that perhaps they ought to be the responsibility of line managers. For years HR managers have been working with managers to say that they should be working with their staff, with HR’s role being to coach them.

“What tends to happen? You have compensation people who make salary changes and hope that people are happy. You have line managers who do appraisals of staff and hope that it helps. You have learning co-ordinators who send people on courses and hope they help. But hope is not an effective strategy. The insightful recruiter needs to be alerted to critical hiring needs in advance.

“It’s easy enough to see what the staff turnover has been in the past, but you need to be able to see what it might be in the future as well. Can you predict when people will leave so that you know when the critical talent will need to be replaced? That’s why you need systems that provide the information that enables such analysis. Just imagine how much more a lucky recruiter can achieve if they have access to such information.”


Stuart Lauchlan is news and analysis editor of MyCustomer.com, sister site to HRZone.co.uk.


One Response

  1. Human Capital via Human Resources and Personnel?
    I am moved myself to make some comments about this article!

    It launches into the sort of thing we read about so much at the moment: snappy expressions, woolly logic about generation gaps and diversity:
    “But it’s clearly the case that there is clear benefit to be had from leadership diversity with increased investment in minorities.”

    Great, so let’s have some hard evidence to back up this interesting statement!!

    The following is just downright patronising and stereotypical:
    “You can get situations where the younger staff can teach the older ones about technology, for example, about working with Facebook.”

    I and many of my contemporaries in our dotage have been pioneering social networks for some years now.

    “There is increasingly a focus on people wanting more freedom to work..”
    Events are superseding this assertion; flexibility of work has already been observed by some recruiters as not as desirable as actually having a job! This will intensify as we experience the full blowback of the fiscal events of recent days.

    “HR used to be the party planners and the feel-good people. Now it’s more important for HR people to understand the goals of the business…”
    When was this article written? This view has been prevalent for a number of years, and I am sure that HR practitioners don’t need to be told one more time to be proactive, strategic, etc. Those who aren’t have been losing their place in the HR core for some time now.

    Finally, I would question the use of the expression “Human Capital” in this context. As with any other capital, it needs to be measured; if you can’t measure it, you can’t manage it.

    It’s not good enough for application providers to re-brand their HR & Payroll systems as “Human Capital software” any more than an unconnected series of metrics constitute Human Capital measurement. Next, HR people will be styling themselves as “Human Capital Executives”!

    Do Human Capital systems tell you what organisations are not using their workforce to maximum effectiveness? I know of one that gave low ratings to both RBS and GM in 2005….but then I must declare an interest!

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