Tuesday, November 07, 2006

The Future World of Work – How HR Can Adapt

As scary a thought as this may be, unquestionably, in tomorrow’s ‘world of work,’ after the employee, the next piece of major equipment in the corporate toolbox will be the human resources department and a key player in any firm’s ambition’s to succeed.

Over the past several years, as a result of the dramatic leaps in advanced technologies, an ageing employee base and a flattening world, many human resource professionals (and Al Gore) believed the pace of the internet / information technology-highway, together with the growing need for a top-drawer workforce would enable human resources to secure its place as a fundamental partner in the way firms manage themselves.

With the challenge of keeping their eyes on the ever-changing shape of the ball, many people felt top management would finally recognize personnel as the key element required to assist in shaping a firm’s attractiveness to both investors, consumers and, indeed, staff. Furthermore, increasing shortages in skilled staff worldwide would boost human resources importance in bringing the finest personnel available to a company, in addition to developing the strategic programs necessary to retaining vital employees.

Not many would argue in the negative that in this ‘brave new world,’ employment matters are critical to all businesses – large and small. The question, however, has all this change resulted in an increase in the share price of human resource departments and, more significantly, can they step up when called upon?

Clearly, the human resource function still adds value to employment chains – development and management of employment policies, fair and equitable compensation and benefits, best practice techniques on handling staff, etc. However, at the end of the day, business or unit managers still make most principal human resource decisions - who to hire, at what level of pay, and in what capacity. As such, many HR professionals are giving thought to whether HR enjoys as much authority within its own domain in relation to the ‘world of work,’ as perhaps they might.

Drastically Changing Employment Relationships
As less of a firm’s overall workforce are truly full-time, direct employees, the number of staff human resources actually maintain these days is waning. In principle, the challenges of a combined work force made up of regular career and part-time employees, retirees returning to contract/project work, temporary employees, on-site consultants and contractors, by rights, this should create new roles and challenges for human resources to fulfill.

As it happens, this has not materialised to the full extent that most human resource professionals would like to have seen. In actuality, the utilisation of non-traditional staff does, conversely, offer unit managers alternatives to working with their internal staffing departments. Rather than depend on personnel to assist hiring, many unit managers often place their faith in a host of external service providers such as compensation and benefits consultants, recruiting and staffing firms, and other outsourced firms. In a lot of cases, these firms possess more detailed knowledge of manager needs; market intelligence as to talent availability in a target industry and, importantly, where to find them. As such, when manager requirements are sourced elsewhere, generally in absence of boundaries encountered within the organisation, the share price of human resources begins to drop.

Transformations in The Work Performed
A personnel department’s capacity to successfully oversee a firm’s overall staff anchors on its capability to identify, recruit, train, appraise, reward and retain staff within the organisation. As the corporate world becomes more complicated - cross-border competition, shortened product-to-market times and work more intricate - it is increasingly harder to qualify the varieties of skills required for any particular job or assignment, in addition to tracking what staff know, can do and need to know in order to enhance productivity. To make these decisions, a thorough familiarity and technical knowledge of the work at hand is required. Naturally, line managers possess this ability; while, human resource practitioners (outside of financial and work-life rewards), on average, may need to spend extra effort in attaining such knowledge. If not, the personnel department drifts a little wider of the employment decision circle, and… HR share price drops some more.

Longer-term, this watering down of the human resources area is very likely to manifest itself in negative costs - financial and competitively for firm and staff - as human resources, customarily, has been the one area fully-committed to preserving the ongoing strength and reliability of the firm’s personnel structure. Line managers, traditionally, are only really interested in getting a job done and often give primary regard to immediate needs vis-à-vis development of staff knowledge and skills. As such, while line decisions contribute to bottom line business results over the short-term, a firm’s ability to recruit and, indeed, strategically develop an effective workforce longer-term becomes diluted. Through such a strategy, firms become increasingly reliant on a tiny group of knowledgeable tenured individuals, a firm’s knowledge and competency base narrows, and the capacity to develop a next lineage of creative, high-calibre individuals, reduced.

Therefore, to keep pace with the changing ‘world of work,’ how have corporate and personnel professionals reacted? The most common suggestion emanating from both sides is to place the human resources department as a partner to line and senior management; that is to say, working more closely with functional departments to integrate employment strategies in order to install the workforce the company needs to ensure commercial success. This concept is based on the general acceptance that, while human resources may lack the wider business savvy necessary to make key employment decisions, they can be engaged with corporate decision-makers as a provider of sound advice in building a successful workforce.

However, given the competitive day-to-day pressures of most companies’ business lines, most unit or line managers have little, or any motive to actually regard human resource advice. Furthermore, human resources seldom have the internal clout to force them to listen and, indeed, act on any advice given. As a result, further erosion in HR share price takes place.

There’s no question that tomorrow’s human resource functions - traditionally handled internally - will eventually be shared by a myriad of external providers from the outside. Consequently, for human resources to wholly engage itself in the future ‘world of work,’ they will need to become adroit at not only working within the corporate address, but also outside in managing the total supply chain of external consultants and talent providers that most firms need – both with immediate effect and tomorrow. This will mean the ‘new’ HR professional becoming acutely skilled in developing and managing not only internal relationships, but external ones with staffing, contracting and outsourcing companies, schools and professional bodies, all of whom will supply the next wave of frontline staff.

Additionally - and although traditional personnel roles and responsibilities will continue - by overseeing a wide array of employment arrangements for many different kinds of ‘employees,’ managing this variety of relationships will require a new perspective, mix of strategies, and skill sets.

By doing so, human resources strengthen its rightful, essential and strategic role as the key player in the staffing supply chain and… their share price will rise again.


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