I've spent the last several weeks meeting with clients and many have asked me to talk about "the future of HR." In this post I'd like to share some of our findings and give you some perspective for things to think about in 2014.
1. Talent Management Now Defines HR.
Over the last ten years the role of HR has drastically changed. Today's HR organization is expected to deliver integrated, optimized, high-value talent management. This means optimized sourcing and recruiting, hard-hitting training and development, relevant performance management and succession, talent mobility, and world-class leadership development. These "centers of excellence" as they were once called have now become core to HR's role, and companies have to focus here first.
Look at Microsoft's recent announcement to do away with forced ranking. This enormous change in the way people are managed will have major impact on the company's ability to drive innovation and retention in its workforce. HR's role was to spearhead this change, drive it through the organization, and make sure managers and employees implement the new process well. The days of HR getting by as an administrative function are over. While HR leaders have to be excellent at the basics (payroll, employee relations, time and attendance, compliance), these are no longer nearly enough to be competitive.
2. Integrated Talent Management Has Shifted to Optimized Talent Management.
For the last ten years or so companies have been focused on "integrating" their talent practices. This means reorganizing the talent teams into an integrated group. Well as I travel around and meet many companies, I"ve realized that integration isn't really the issue any more. It's optimization.
The problem we now face in most businesses is a shortage of critical skills or leaders, a need to re-engage people, a shift from a product to services culture, and a need to create more accountability and career development. These are challenges which all come down to just being more competitive. So the job of HR is not to just do these things in an integrated way, rather it is to do them in a highly optimized, global and competitive way.
I spent a few hours with a major pharma company last week and they expressed all the issues above, plus the need to significantly improve their employment brand and recruiting practices. You can bet that all their competitors are going through the same thing. So the issue this company faces is not "integration" but rather "optimization" – how can they better compete to attract, retain, and engage their aging workforce?
3. HR Business Partner Roles Have to Change Dramatically
The original "Ulrich" model for HR created a job called an HR Business Partner. This person is also called a generalist – they represent all the HR programs and practices to their business constituents and work locally to help the team manage its people.
As our High-Impact HR Research is discovering, that job just isn't enough any more. Line leaders may want to use HR to offload their administrative work, but if they do they get little or no real value out of the HR team. What the business partners should do (and this is what line execs want), is become highly trained performance consultants. They need specialized and deep skills in all areas of OD, staffing, leadership, and employee relations – and they need to learn how to be consultants. And they need to become extensions of the Centers of Excellence through what we call "networks of expertise."
One of the companies I just met with is a large midwest utility. They have been struggling with this issue (as have most of the other clients I met with). The problem, as they and others have stated, is that the HR generalists are evaluated by the "level of satisfaction by their clients." This means that if they function as order takers, their line manager constituents are happy. So many of them are doing the jobs that their managers should do (ie. coaching people for them).
What this team did is create a special performance consulting group. This team, which consists of five senior HR specialists (staffing, OD, learning, labor relations) works on special talent projects. They went into one of the nuclear businesses and tried to diagnose the problem of high turnover and inability to hire. After looking at compensation, management practices, and a variety of other engagement measures, the team realized that the biggest problems was a lack of employment brand in the areas they serve. So they worked with the recruiting team to build a local, highly tuned employment branding program – coupled with internships and local universities and new sourcing tools – to gain access to engineers. Within a few quarters the problem started to go away.
Could a generalist have done this without a lot of help? Unlikely.
4. Business Thinking and Data Are Now Critical to Success
Despite the long history of weak HR analytics and poor measurement tools, HR analytics and integrated HR technology is now mandatory. Nearly ever major company we talk with is investing in analytics as a new Center of Excellence, bringing together measurement people and data from the various talent practices.
Think about it this way: if your CEO believes the biggest issue you have is hiring, developing, or engaging talent, shouldn't HR have a set of measures and diagnostics to understand how well we're doing at those things? And shouldn't we be diagnosing turnover and employee performance using data and not "gut feel?"
HR organizations today have to be highly business focused, or else they will be "disrupted" by a new HR leader. I met with three companies last week who brought in brand new heads of HR from the business. These individuals are very smart and they're asking all the right questions – they want data, evidence, and common sense – not a lot of "HR tradition." Without a focus on data and sound measurement, business leaders won't be able to trust that we're doing the right things. So now is the time to clean up our act and build talent analytics and workforce planning capabilities so we can prove that we're delivering impact.
We will be publishing our 2014 predictions in the coming weeks and one of the things I'll be writing about is the new role for the CHRO. This is an exciting time to work in the human resources industry – and we are all going to have to step up our game as the economy recovers around the world.