HR has often struggled for credibility in its efforts to become a serious business partner. HR must transform if it is to survive inevitable business and budget pressures. Craig Donaldson speaks with the authors of the report The Future of HR and looks at the changes ahead for the profession and what practitioners need in order to get there
HR has often struggled for credibility in its efforts to become a serious business partner. HR must transform if it is to survive inevitable business and budget pressures. Craig Donaldson speaks with the authors of the report The Future of HR and looks at the changes ahead for the profession and what practitioners need in order to get there
The future of HR is uncertain in many camps, and much has been said about the role of HR and its effectiveness in today’s business world. Executives know that HR has to become more strategic and business-focused, and an increasing number of HR professionals recognise this. HR must step up to the plate and become more of a holistic player within organisations or risk being forever sidelined or even discarded in the face of inevitable change. HR is in a great place to read and understand critical people and business planning issues, but the function must be able to translate them in a way that is relevant to the entire business, in the context of its strategic direction.
UK-based HR and business management research and publishing firm CRF Publishing will release its The Future of HR: Creating the Fit for Purpose Function report next month. Co-authored by Chris Ashton, Mike Haffenden and Andrew Lambert, the report details research, case studies, expert commentary and analysis on several critical aspects of transforming HR.
What does the future of HR look like?
As organisations change and greater expectations are thrust upon HR, the future clearly demands more expertise in people management, according to Haffenden. “If HR can deliver this, it may differentiate the organisation and create a competitive advantage – and the function’s future will not be in doubt,” he says.
Haffenden is ultimately optimistic about the future. Important and interesting work is available for good HR people to make a significant contribution to the business – making 10 per cent of the organisation 5 per cent better. “This will definitely move functions forward,” he says. “But, those that claim not to have time to do this work, or that have unrealistic expectations and make judgements based on the immediacy of business situations rather than looking at longer term cycles, will flounder.”
Lambert believes that structurally, HR needs to move on from its brief – and only partially understood – flirtation with the roles articulated by Dave Ulrich, and really get to grips with what is needed to support organisational performance. “Simply put, the critical deliverables are developing the organisation to meet future challenges, while still supporting and improving its current capabilities. HR organisation and objectives must reflect this.”
The HR function of the future will include people with varied background and skills – whether from front-line management or other functions – bringing a much broader perspective to bear than the archetypal ‘personnel professional’ concept of the past, according to Lambert. This will develop strong administrative performance as much as wider strategic perspective.
“This will be a function that is at the heart of organisational achievement, not the periphery, and a place that real achievers will want to be,” he says. “Critically, the function will need to be led by people that have the courage and respect to shape behaviour at the top, and ensure that the organisation has the role model achievers that will provide resilience and cohesion through the tough times as well as the good. HR leaders also need to be able to demonstrate that they can get things done, and inspire or select for action orientation among their key executives.”
HR professionals’ role in the process
There appears to be a two-tier trend, with some functions transforming themselves and others not, Haffenden says.
“In transformed functions, we see strategic HR thinking from strategic or business partners. These professionals are focused on organisational change, working with the board and senior management team on critical people issues,” he says. “In these situations, HR’s agendas are shaped by cultural change, creating a productive climate, talent management, top team development and so on. Their organisations compete on the quality of people. These functions do – and achieve – more with less.”
Second-tier functions have lots of people and spend too much time on HR process issues, Haffenden states. Professionals in these functions act as journeymen doing menial tasks because this work is straight forward and unchallenging. They prefer the status quo. But, as costs bite and demand for outsourcing HR increases, he says HR staff ratios will change dramatically. These functions face a reduction of services and marginalisation.
“HR leaders need to bring real experience of managing change successfully to the party,” Lambert says. On the one hand, this includes having genuine vision while also being effective orchestrators of projects. They need to have the analytical ability to re-think the function to align with what the future business vision and operating context indicates – and if those aren’t clear, they’ll need to help the top team fix that fast, he says. “They’ll need the courage and personal conviction to lead their colleagues through what is likely to be a combination of slimming and re-skilling of quite painful proportions.”
Lambert states that some of the important elements in this process include:
• ensuring that key stakeholders feel that their interests are important factors in decision-making about the planned transformation.
• having the before-and-after data or evidence to demonstrate the nature of value created.
• investing in skill development and satisfying new roles to help re-form psychological contracts after major surgery.
The common challenges and pitfalls along the way
Forging leaner and higher capability HR functions and practices will not be easy in many organisations, Lambert predicts.
Firstly, it is clearly desirable that the key decision makers share an understanding of what they really want, and thence understand the realities of delivering real change in terms of resources and time – they will have a part to play, he says.
Secondly, there may be generational issues at work, he adds. For example, is the HR leader sufficiently forward looking and change oriented to lead transformation? Is he or she sufficiently dispassionate about people and processes to effect real transformation, while still recognising what is sensible to keep?
Another common challenge is the paucity of business-centred and transformation-oriented talent available to fill the more demanding posts of the leaner, meaner functions of the future. “HR leaders need both to inspire high achievers with rounded experience to join, while ensuring the skill and knowledge is sufficiently high, and longer-term career prospectslook rosy,” Lambert says.
Another challenge is to strengthen the will and ability of line managers to become more effective people leaders, and to require less hand holding by HR executives, at what ever level, he adds. Achieving this shift starts with HR’s exertion of influence on leadership role models. “Of course, the context is potentially dizzying market and organisational change. HR needs to have the strength both to steer this and to effect more personal transformation – its own key executives need to be role models in their own right.”
The crucial challenge for HR is to understand that change is endemic to society – and that business must accept the need for continuous renewal, Haffenden says. Understanding this enables HR to advance an organisation’s change agendas focused on the business context and how to create the type of organisation where people flourish. Here, organisational development gets the context right and develops a flexible organisation model while HR drives the people strategy.
“The irony is that success in organisational renewal often leads to ossification and preserving the status quo because of complacency. This is the biggest danger that even good HR functions face. In addition, all functions face the challenge of using technology and its HR applications,” Haffenden says.
The HR professional of the future
HR professionals will need to take a number of steps – both internally and externally – to ensure that the credible future of the function is ensured. “Perhaps the most important requirement is a combination of persistence, courage and influencing skills,” says Lambert. “This, combined with the knowledge of what are the right things to do, makes for a winning combination, as described to us, for example, by CEOs of HR leaders that they admire.”
Many interviews across organisations and among headhunters indicate that these personal characteristics are ultimately more important than ‘personnel knowledge’ when identifying real talent – the latter can be acquired and experience built, Lambert adds. “The challenge is to find enough people who will make a difference and see HR as a place to do this. Only truly convincing HR leaders will attract such people into the function.”
There are also some important skill areas that HR has been slow to address, and which are only recently starting to get the focus they deserve. “I would pick out firstly organisational design, which starts with jobs and roles and must incorporate a high level understanding of organisational economics, working processes and corporate identity,” Lambert says.
Another much observed gap is knowledge of how to use and deploy technology – both for HR’s own use and to ensure that people issues are at the heart of technology decisions, investment and implementation.
The third area for improvement is project management, Lambert says. There are disciplines and standards to be learnt that are still foreign to many personnel generalists. At the same time, the prevalence of change initiatives does mean that this is an area where HR is having to learn the necessary tools and techniques. Focusing on this consciously as part of an HR skills program helps to make this a less painful journey, according to Lambert.
Finally, there is the field of evaluation and measurement. So often the lyrics are along the lines of ‘it’s too hard to measure’ or ‘we’re working on it’ or ‘really, it’s an act of faith’, Lambert says. “This is changing – the methods and skills are clearly observable at work in the best managed organisations, which drastically reduces the tendency to adopt fashions without establishing a business case, and allowing bad behaviour to persist in parts of organisations like rotten apples that queer the barrel. However, for most in HR this still remains a steep hill to climb.”
Haffenden echoes Lambert’s comments, and says there are a number of factors which define a HR professional of the future:
• Demonstrable expertise in areas like OD, reward, learning and talent management.
• Becoming more business aware – understanding not just financial statements but, more importantly, globalisation, competitiveness and commercial realities.
• Proven integrity, honesty and loyalty – so HR professionals can act as an organisation’s confidante.
• Powers of analysis and judgement for circumstances, events and people – the need here is to size up situations accurately and apply solutions.
Securing executive buy-in for the future of HR
“I have never seen a CEO who is not interested in business performance and how that can be improved by the performance and collective outputs of people,”says Haffenden. Working with the board and top team to implement this interest is the domain of HR. The problem is, most HR directors are not good enough to work at a senior level. He believes they lack the credibility and expertise in relationships at a top level, ideas for business and people strategy, good solutions to executives’ people issues, business acumen and the courage to tell it as it is with top people, preferring instead to tell them what they want to hear.
“A further problem is that not all CEOs are good CEOs. So, an HR director needs guile – and even needs to be cunning – to satisfy a CEO’s interest. As a senior HR colleague in a global business once observed: ‘What interests my boss fascinates the hell out of me’,” Haffenden says.
Lambert encourages HR professionals to help CEOs and top teams to know what good looks like. “Back this up with more rigour in demonstrating cause and effect, particularly where – as so often – the route to better deployment of human capital lies in better management, rather than tweaking HR processes,” he says. “This requires the courage – at HR leader level – to be both a great colleague and a guardian of the organisation’s true interests.”
There can be tensions and conflict, for sure, particularly when talking about issues of power, personal reward and future prospects. HR should be able to demonstrate the balance of business understanding and organisational psychology to provide convincing arguments for doing the right thing, thus ensuring long-term performance, survival and success, Lambert says.
“Having the experience and instinct to anticipate, rather than being reactive, will win respect once it is clear that the solutions are robust and meet real organisational needs.”
The Future of HR will be published by CRF Publishing of London in March 2005. Human Resources readers may benefit from the discounted rate of £250 (normally £295) for orders received by 31 March 2005. For more information, contact [email protected] or on +44 020 7470 7104.
