When it comes to how HR must adapt to meet today’s challenges, it seems everyone out there has an opinion. There are those who want to reset it; others would prefer to reboot it. Some want to eliminate it completely. Along those lines, of course, there is the infamous Harvard Business Review cover (July-August 2015) that literally said to “blow up” HR and start over (the articles inside, as it turned out, were hardly that Draconian).
Mercer, one of big brands among HR consulting firms, has a few new ideas along those lines. You might say Mercer is taking a genteel approach, looking at ways to “redefine” HR’s value. Mercer, in fact, is offering a report, "HR Transformation - It's Time to Redefine the Value of HR,” that includes some positive thoughts and concrete suggestions on how HR might get ready for the turmoil that lies ahead.
“We believe HR has made significant progress over the last decade,” says Karen Piercy, a partner in Mercer’s Talent business, “particularly around getting close to its customers, organizing and staffing more effectively, getting the right work delivered from the right place, working as one HR and making better use of technology.”
That’s the good news. Piercy says that double-barrels of emerging workforce trends and the evolving HR technology landscape create tough demands for HR – needing changes that will enable the profession to remain relevant, be a true business partner and, best of all from HR’s perspective, avoid being eliminated altogether.
While it applies mainly to large organizations, Mercer’s Piercy believes all companies will face the same workforce pressures and be buffeted by the same technology trends.
“Becoming leaner, being the talent strategist, being more innovative and a technology leader absolutely applies to all organizations,” she says.
What’s driving HR to Change?
Piercy offers several factors that are forcing HR to adapt, including:
Manager Role - Managers are the key to a successful employee/employer relationship, and managers’ coaching and employee development skills must improve.
Digital workforce - Technology is transforming how people access, retain and apply information. Demand is on the rise for continuous, just-in-time access using digital, mobile and social platforms.
Workforce analytics - There is an increasing demand for metrics and analytics to understand key roles, talent flows, obstructions to talent mobility and the cost of not getting it right from business and talent perspectives.
“Globalization” - Global and multinational companies struggle with setting global HR policies that can also be flexible enough to meet the needs of local lines of business, regulations and employee expectations.
Branding and employee experience - Organizations are taking a close look at how they are perceived in the marketplace — formally and socially — to ensure that they are meeting the emerging “employee as consumer” expectations.
Boomer/millennial transition – The loss of institutional knowledge combined with changing expectations and work styles will create significant talent management challenges across every industry.
Piercy explains that for HR to redefine its value, the new operating model must:
- Embrace the new work equation including the new digital workforce, a flexible workplace, and employees as consumers
- Understand and champion the role of the manager and new ways of driving business results through performance management
- Articulate a compelling employee value proposition that is globally consistent but locally relevant
- Infuse technology, data, and analytics into all that HR does
“We expect HR to become leaner,” Piercy says, noting that productivity enhancers like HR service centers, self-service and enhanced technology – along with increased outsourcing of operations, strategy and design activities – will decrease the size of the HR function as organizations are pressured to continue doing more with less. “We expect to see smaller staff sizes with clearly defined roles,” she predicts.
Also, HR will focus on being what Piercy calls talent strategists, a new buzzword for being a successful partner with the business – HR’s never-ending Holy Grail. That means HR will need to lead the strategic identification, development and retention of talent, with simple and streamlined processes and systems.
“It will be HR’s job to guide managers in talent decisions, provide them with a clear understanding of their key players through metrics and help them identify the interventions and development activities needed,” she says. “Data-driven insights will underpin success here.”
Next up is innovation, Piercy says. HR must position itself to anticipate how work and employee relationships are changing, and be ahead of the curve in adapting and responding. HR leaders will change policies/programs and leverage strategic partnerships and technology to support the business to succeed with this new diverse workforce.
Finally, to control its own technology destiny, HR needs to become true technology leaders. Successful HR leaders will understand and embrace technology with a willingness and ability to use data to drive business decisions. HR must be ahead of the continuously evolving HR technology market, and sort through it to identify and then importantly be able to build the business case to obtain the technology that they need to be successful.
Where to start?
Piercy suggests starting with assessing the current state to understand and document the starting place. It helps build the case for change. Next, use the information gained during that assessment, along with the business requirements, to design the HR operating model and then the organization structure. Finally, identify critical changes in technology, processes and talent required.
For HR leaders and technology, Piercy says it’s time to look at an organization’s current landscape and understand what’s working and what the problems are, and then to develop a 5-year plan for implementation or optimization of the solutions.
Once the HR function has been redesigned, it’s important to have the right HR staff in the right roles with the right skills.
“We often find, for example, that about one-third of the current HR business partners cannot live a true HR business partner role – they are more transactional or tactical than strategic,” she says. “And really that’s often because many HR business partners are former HR Generalists who got a new job title.”
Having said that, it’s a good time to assesses HR talent against the required competencies and then develop specific action plans to close the capability gaps in the HR function and improve capability overall.
Once an HR plan is developed – actually implementing it is critical. Mercer’s research has found that 36% of organizations have a plan to invest in HR development, however only 13% actually have a systematic curriculum. So creating a structured plan and curriculum is key to making actual change.
“Of course, it is critical first to understand and acknowledge that HR needs to change and adapt,” Piercy concludes. “And that primarily means being self-aware and willing to continue making changes to better support the business.”