Cover Story: At the Crossroads

If people are critical drivers of business success, why aren’t more human resource managers sitting at boardroom tables? It’s fair question and one that some folk in the industry are voicing with greater vigour as research increasingly uncovers significant link between people management issues and business performance. Could it be that companies either don’t regard their people as source of competitive advantage, or perhaps pay the notion little more than lip service?

Could it be that HR practitioners haven’t taken enough of lead in advocating people-centred approach to business success? Either way, pressures for more strategic HR role are increasing as the industry goes through period of unprecedented change.

Worldwide, the industry is having to respond to increased competition for globally mobile talent, changes in both workforce attitudes and composition, shifts in the employer/worker relationship, and rapid advances in HR technology.

Such factors are impacting on the traditional functions and focus of HR management. Sure it is still involved in hiring, firing, compliance and remuneration issues – but it is increasingly moving from the purely transactional into more strategic realms. Attracting and retaining top talent has become key HR issue and traditional financial incentives are not necessarily sufficient drawcard. There’s new breed of worker about – culturally diverse, older, multi-skilled and global in outlook, they want more from work than pay packet. They’re after challenge, meaning, and personal growth. Employers, in turn, want more than competent bums on seats – they want to engage both the minds and the hearts of their employees. And they want people skills clearly aligned with organisational goals.

These trends are altering the nature of the contract between employer and employee from one of benefactor/supplicant to one of equals engaging in mutually beneficial partnership.

Coaches and mentors

Achieving this win-win ideal is what’s driving the growth surge in coaching and mentoring, in team-building and leadership development, in upskilling and personal development.

It is also prompting companies to see their employees not just in terms of their work skills but as people with wide range of other needs, interests and values to be met.

Hence the greater emphasis on finding beneficial “work/life” balance that takes into account employees’ family and community commitments, sporting interests and personal health needs.

It’s not just matter of building an employee-friendly culture but an employment “brand” to help haul in the talent in much the same way good product branding helps haul in the customers. And the nature of employee brand statements – whether family-friendly, fun, innovative, values driven, ethical, socially responsible, or environmentally conscious – are more than potential attractors, they’re highly strategic.

While this bundle of new issues is landing on the HR plate, more traditional functions are being steadily eroded. Technology advances and increased outsourcing – the latter perhaps more rele-vant offshore than in New Zealand – are nibbling away at once-core HR activities such as recruiting, administration, payroll, performance assessment and training, as well as more strategic roles. Some industry pundits believe as much as 75 percent of the current HR workload could be handled by IT systems and much of the remainder outsourced. So where does that leave today’s HR practitioner and what will the HR function of the future look like?

Business savvy and boardroom bound

HR practitioners of the future will be fewer in number but higher in profile, reckons Ross Pearce, principal consultant with Business Consulting Services, IBM (formerly PricewaterhouseCoopers Consulting). “They will be seen as internal consultants, operating at pretty senior and strategic level and contributing much more value in terms of proactive, forward-looking business input.”

Earning seat at the boardroom table will be easier if HR can show clear link between what it does and the success of the business. And to do that, HR managers must be business savvy as well as people savvy. They will not only need to be functionally expert in all HR disciplines and be administratively efficient, says Pearce, “they’ll also need to understand the business”.

Chanting the “people are our best asset” mantra will not be enough. They’ll have to be precise about the how, where and who of value delivery. The question HR will increasingly have to answer is: “What value are you adding?” says Pearce.

That’s not always easy to quantify. While there is growing evidence of link between people management and business performance, measuring the dollar value that HR initiatives bring to the bottom line has proved elusive. lack of useful measures for HR performance was one of the issues that emerged from recent survey of HR consultants by the US-based Society for Human Resource Management.

If administrative cost is not to be the metric most typically applied to HR, then other ways of measuring its contribution must be developed, survey respondents warned.

Measurement and reward both need to be embraced, according to John Sullivan who is head of HR management programmes at San Francisco State University and the author of books on recruitment, retention, metrics and productivity.

People should be rewarded for their HR performance in the same way salespeople are rewarded – otherwise they are not accountable for hiring errors or retention failures. As well as answering the “what value” question more precisely, HR managers need to be better advocates for their profession, suggests Keith Macky, lecturer in human resource management at Massey University’s Albany campus. “They need to develop compelling vision of the contribution HR can make to their companies. They need to be better at selling that vision and planning how it will happen.”

Given that HR is becoming more complex and more dynamic, its practitioners can’t afford to stand still. “HR professionals are going to have to be constantly training and self-developing to stay on top of the changes that are happening in their field. While that is true in many areas of management, it seems to me that where it involves dealing with people, the pace of change is more visible,” says Macky.

They’ll also have to be educators – ensuring that line managers know what their obligations are in the employment relationship, facilitating and driving leadership development, coaching and mentoring at all levels in an organisation.

Macky suggests it would make sense to devolve more HR functions to frontline managers. “They’re the ones at the coalface who know best what employees’ needs are. HR folk then become consultants and advisers to those people to help them handle their own HR issues. Lots of smaller companies do that anyway.”

Building on that educative role is one of several competencies he believes HR professionals need for the future. Others include:
• Change management – instead of coming in after and patching up stuff-ups, HR managers must be smarter and savvier and more actively involved in managing organisational change;
• better understanding of what it means to be strategic in HR;
• More knowledge about e-HR technology – employee self-service, e-recruiting, e-learning, e-performance measures;
• Keep doing the basic HR administration – but better.

Most HR commentators believe technology-driven reduction of the more transactional aspects of HR is good news for the profession. “We’ve spent so much time talking about how can we move HR from being reactionary, bureaucratically oriented and administration focused into being more strategic. Now we have an enabler that will allow this to happen,” says Macky.

That opportunity should be embraced with sense of urgency. The realisation that people are crucial source of competitive advantage has been well flagg

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