The UK is moving rapidly towards a ‘knowledge economy’. As a result, the mantra ‘our people are our greatest asset’ can no longer be ignored and there’s now a real need for HR to have a voice at board level and instigate effective people management processes, says Scott McArthur.

The relationship between organisations and consumers is rapidly changing. People are increasingly becoming much more interested in what an organisation does, its public reputation and the environmental impact it is having on society.

Additionally, individuals are increasingly looking to organisations that appreciate work-life balance and consequently offer flexible working environments, personalised employment contracts, mobility and personal development programmes.

This is happening as the use and application of Web 2.0 technology is also growing rapidly. Web 2.0, which encompasses web-enabled social networking software such as Wikipedia, Facebook, LinkedIn, blogs and so on, presents individuals with opportunities for networking and development, which were never freely available to them before.

The Facebook generation

The consequences of this for HR departments on a traditional ‘HR business partnering’ pathway could be catastrophic, as the strategies and tactics used to maximise employee performance in the 90s will simply not resonate with the Facebook generation.

Whilst this is a daunting prospect, for many HR professionals there are some ‘new Fords’ out there developing new approaches for organisational design, the use of technology and employee engagement.

The likes of Google, Apple and GOR-TEX have built their success on understanding what the contemporary human psyche needs and expects from an employer.

When considered as a whole, this environment represents potentially the most significant change in human relations since the industrial revolution. This will see the focus of organisations change from manpower to knowledge power.

According to a recent report from Microsoft, this revolution is already underway: in three and a half years, over half the GDP (gross domestic product) of the UK will be generated from knowledge.

At the same time, the development of Web 2.0 reveals a society where the traditional hierarchies of knowledge are challenged and everybody can share his or her knowledge via peer-to-peer networks, on-line blogs and so on.

These developments present significant opportunities and challenges to the art of managing employees. So how can HR respond to this constantly evolving landscape, and remain one step ahead in order to recruit and keep the best talent?

It is people who create business and, as we become more empowered and independent, businesses are being run from the bottom up with employees pushing an innovative and entrepreneurial agenda.

At the same time, knowledge as the critical business asset is converging with a new social system of technologies where anybody has the authority to share and publish knowledge in any manner he or she chooses.

This means that IT is no longer just a means of increasing efficiency; it now has the potential to identify, harness and develop knowledge networks and add real value to the business. How HR handles this shift will ultimately dictate its own role in the future business.

There are two, distinct phases to this:

The transition phase

The transition phase is to ensure that the current HR support system is as efficient as possible in handling day-to-day HR activities. In the past few years, HR departments in many larger organisations have looked to technology to improve their added value by removing transactional activities and creating space to focus on strategic issues. This has been achieved by:

• Automating administration of transactional HR
  
• Providing staff and management access to a self-service HR system
  
• Outsourcing non-core business
  
• Giving managers and employees up-to-date human capital metrics e.g. via HR ‘dashboard’ technologies.

Whist the changes described above appeal to most HR directors (HRDs) the cost of technology and its implementation has often been prohibitive for all but the largest and cash-rich organisations.

However, technology is also on the move and the rise of off-the-shelf affordable software, much of which is web enabled, is making these benefits much more accessible.

The knowledge phase

Whether technology enabled or not, ‘new Ford’ HRDs should be developing sophisticated people management systems and technologies to:

• Define skills and (critically) attitude requirements and ensure development targets and workforce planning are aligned. This involves a thorough understanding of your business unit or service direction and the skills and competencies available across the organisation.




• Invest in knowledge management methods and innovative knowledge generation forums which will result in a demonstrable and (where necessary) measurable increase in employees’ skill levels and begin to demonstrate that the right attitudes are developing. Examples of this include in-house networks, contributing to external blogs, web-jamming, structured approaches to creativity development and more.
  
• Create the infrastructure for self-development supported by multiple learning environments including coaching, mentoring and online or virtual training. For many organisations this is already well underway. However much of the existing Computer Based Training (CBT) is unit and text based which can be a real turn-off for users. Best practice learning theory indicates that for learning to be deemed worthwhile it should be inclusive and collaborative with as much interaction between (on and off line) participants as possible.
  
• Encourage innovation and knowledge sharing and then capture the results – this will help ensure that if key talent leaves the organisation, at least some of their knowledge will remain with colleagues. Successful reward strategies will demonstrate the link between individual growth and progression to knowledge acquisition.
  
• Monitor and harness the virtual organisations that are developing all around us – traditional corporate entities need to find a way to harness disruptive technologies.
  
• Exploit and develop global networks – what can the Eastern nations teach the cosseted West? Traditional thinking is that we are the innovators and we outsource our administration to India and China; the reality is these countries display a much higher level of entrepreneurship and innovation.

Finally, but perhaps most importantly, HRDs should be reviewing the functions’ approach towards measurement. People issues are hugely complex and as such do not always lend themselves to the accountant’s measures.

In a recent edition of the Harvard Business Review, Thomas Stewart explained the emerging context:

“Where the truth is not immediately evident even to an expert but emerges over time, where cause-and-effect relationships are not well established, where positive results come from offering incentives rather than issuing commands, and where, consequently, the tools of influence and decision making are subtle and ill-defined.”

HRDs should be asking themselves: are their metrics the right ones and does anybody outside of the HR department really care? The focus should be on people issues supported, where appropriate, by data and technology and not on measurement for measurement’s sake. HRDs beware – do not be distracted by the wrong numbers.

Scott McArthur is an HR consultant at Atos Consulting.