Today when every function of business is open to scrutiny in terms of value, cost and efficiency, the case for maintaining and developing human resources in-house, needs to be made afresh. Despite improving functional excellence, HR costs are increasing by six per cent each year and HR is struggling to demonstrate value to business. Only by setting clear criteria is there a chance of developing the Next Generation HR to make it relevant and valuable to business in the 21st century and beyond. To lose HR as a distinct business practice and to attempt to split its functions into separate outsourced activities would be to risk losing a body of knowledge on organisational strategy and development that has been built up over a century. Protecting this body of knowledge of professional ethics is not self interest; it is common sense!
Vision For the Future
The pressure is mounting, and all eyes are on HR to see what happens next. Will the function become a purely strategic business partner as transactional work is outsourced? Will it serve indefinitely as an administrative back office? Or will it evolve into a patchwork of various specialities ranging from coaching to payroll administration to compliance training?
While there is no magic bullet, Hewitt Associates believe HR’s survival and success will depend on the following four ‘bold bets’:
• Serving as the research and development function for human capital
• Delivering a steady supply of needed talent
• Driving organisational performance
• Building integrity and trust in the workplace
Demographic challenges
According to the United States’ Bureau of Labor Statistics, organisations in the US will face a major worker shortage by 2010. This shortage is expected to be especially acute when it comes to highly skilled workers in the 35 to 44 year-old ‘key leader’ age range. As if that weren’t alarming enough, we’re on the brink of a serious dearth in the number of highly educated workers. In the last 20 years, the increase in the share of workers with a post-high school education was 19 per cent. In the next 20 years, it is projected to grow merely four per cent. The workforce of the future is projected to be highly diverse as well. In 2000, 27.8 per cent of workers were Hispanic, African-American or Asian. By 2025, that number will be nearly 40 per cent. The mandate for organisations is to manage a diverse and changing portfolio of employment relationships effectively.
Key Insights:
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HR of the future will be a hybrid, as the function balances new demands with more familiar areas of expertise |
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Strong evidence and analytics will be necessary to determine future talent needs and organisational performance drivers |
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In contrast to this call for hard data, restoring trust and integrity in the workplace will continue to be vitally important, with market research suggesting trust in business leadership, is at the lowest point in decades |
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Real, sustained change requires a clear vision for transforming HR, selling that vision to the business and HR staff, providing the necessary resources for implementation, giving strong attention to change management, and putting a plan in place to ensure that HR professionals have the skills needed to operate in the new environment |
Next Generation HR – the door to the future
For HR to maintain a business leadership role, Hewitt believes it will need to tackle and provide solutions for the following issues:
Talent Supply – workforce planning, sourcing, selection, employee introduction and first year performance
High Performance – High achievement goal setting, reviews and rewards, and skill development
Leadership and Key Talent – Succession planning, assessment, development, executive and talent rewards
Employment Relationship – Employment branding, benefits, engagement, and career development
HR Transformation – Based on the Next Generation HR model redesigning the HR organisation and processes
HR Strategy and Measurement – Developing on HR strategy and plan and creating business outcome measures leveraging on data and analysis
Assessment – Assessing how well the processes, practices and HR organisation supports the desired business outcomes
Next Generation HR involves maintaining leadership in thought on organisational development. It means providing organisational benefits that are clearly seen to outweigh HR costs, and it means adding value for stakeholders, but in a responsible way that protects the organisation’s ethical and legal position. If HR rises to these challenges, then the future of the Next Generation can be secured.
“To lose HR as a distinct business practice and to attempt to split its functions into separate outsourced activities would be to risk losing a body of knowledge on organisational strategy and development that has been built up over a century.”
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