I spent an intense period during the spring, summer, and fall of 2005 researching and writing SPHR: Senior Professional in Human Resources and an equally intense period during the spring of 2007 updating the book for the second edition. During those periods I begin to appreciate the enormity of the body of knowledge of HR but realized there was little research in where the profession was going and what the practice of HR would look like in the future. We know that HR has changed significantly over the past decades but how will it change in the near future in relation to an increasingly dynamic and volatile environment? I am currently working on a book to address that issue. This brief article will provide an overview of where I think the practice of HR is headed in the next ten years.
Although space is limited, a brief discussion of what is driving change is merited to set the stage. I believe that the major drivers of change in the practice of HR are increasing globalization of business, hyper competition, dramatic increases in technology, changing demographic characteristics of the domestic and international workforce, domestic and international legal decisions and legislative initiatives, and rapid fluctuations and interdependencies in the world's economies. Not only do these drivers individually impact the HR function but they do so on an interdependent basis. For example, globalization influences and facilitates hyper competition, while technology permits management of globalized operations.
I have organized my thinking regarding changes around the six areas of the discipline of HR as defined by HRCI and will present them using that taxonomy. However, one must always remember that all programs in HR are interdependent and the division into these six areas of discussion is merely for organizational purposes. The components of the HR body of knowledge are Strategic Management, Workforce Planning and Employment, Human Resource Development, Total Rewards, Employee and Labor Relations, and Risk Management.
Strategic Management
At the organizational level, HR will increasing assume a strategic role. Administrative processes such as payroll and timekeeping will either be automated or outsourced. The same can be said for many or most of the programs currently delivered in the operational role. There is nothing sacred about recruitment, training and development, performance management and so forth that mandate that they must be performed in house. The outsourcing of traditional programs to HROs permit cost savings and access to expertise not available within the organization.
The strategic role means that HR becomes much more of a decision science and that means metrics, statistics, modeling, and simulations. At the strategic level, HR professionals must know the business of the organization and be able to articulate the value that HR programs add to the bottom line. In the knowledge-based economies of the future human capital becomes the core competency and differentiator in the market place. HR must be able to inventory and evaluate the worth of human capital and develop programs to increase its value. The organizational strategic plan and the HR strategic plan become interdependent and are developed simultaneously not in a lockstep manner as currently done. HR must be able to accurately model and run simulations on future program initiatives to predict their effectiveness in facilitating organization goals. If HR does not gain the ability to use these sophisticated techniques other professions within the organization will. However, as HRISs become increasingly sophisticated and are either embedded in ERPs or communicate with those programs, both the ease and power to improve HR strategic decision making increases dramatically. With the majority of HR programs outsourced, HR technical skills become less important and HR strategic knowledge becomes the paramount skill.
Not all HR programs have to be outsourced. The outsourcing movement permits the organizational HR department to become both a customer and a provider. Many HR functions that possess an expertise in a particular program area will keep provide those services internally and will become an HRO externally marketing its skills to other organizations. Thus the HR department becomes a profit center of its own. The combination of outsourcing of HR programs and marketing of internal HR expertise to other organizations creates new HR strategic skill requirements regarding marketing, contracting, and contract management.
Finally, I see only an increase, not a diminution of societal pressures regarding business practices and business ethics. Globalization will create not only domestic but international societal expectations at the strategic level. The role of HR as "Ethics Officer assumes even greater importance in the future.
Workforce Planning and Employment
Talent and brand management are the future of HR. Talent management is strategic and will become the "first among equals with respect to other program activities because it incorporates virtually all HR programs into a holistic and strategic effort to attract, retain, and motivate the type of human capital needed for organizational success. Brand management is an organizational wide effort that, among other goals, supports talent management.
There are several dynamics that are driving talent management. First organizations operating in both the service and knowledge economies (the vast majority of American businesses) must rely on the capabilities of their people. In the service industry and even more so in the knowledge industry, it is the quality of human capital that determines the success or failure of the organization. Also the demographic realities of a large Baby Boomer cohort leaving the workforce to be replaced by a much smaller cohort means there will be more competition for talented people. Finally, the skills gap between the requirements of new jobs being created and the skill levels of new entrants in the workforce appear to be increasing making it critical that organizations be able to attract and retain a qualified workforce.
Talent management is both a program and culture that integrates all HR programs directly to strategic goals by engaging in activities to ensure the right people are recruited, retained and motivated and that the wrong people aren't. It is the holistic and strategic emphasis of talent management that is a sea change from the current disjointed and siloed HR program efforts. Brand management is the organizational component that transmits a uniform message and image to all stakeholders including customers and employees. For example, a company that provides a fun and innovated product and image to its customers must be a fun and innovative place to work.
Human Resource Development
Issues with respect to maintenance and development of skills driven by new technologies is a given. But I think there are some new areas in HRD that will become increasing important and the most important of those in knowledge management. First HRD must develop systems to capture the knowledge and experience of Baby Boomers before they leave. Equally important is the capacity to capture the knowledge and experience of current workers. In a knowledge economy, it is not the brilliance of one individual but the collective knowledge that is important. We do not need to reinvent the wheel every time an issue surfaces. Sophisticated knowledge management software systems can ensure that knowledge is available to those who need it.
Finally, organizational development professionals, typically a part of HRD, must design and implement new work systems and organizational designs that are more aligned with the realities of the environment. This means empowered work assignments and organic and virtual organizational design.
Total Rewards
Total rewards is the new name for compensation and benefits and reflects the fact that it is not only money and things that have monetary value that attract, retain and motivate employees. Increasingly, in direct support of talent management, compensation must reflect an individual employee value proposition that is specific to the needs and wants of the individual. That means that compensation and benefits in the future must be customizable to the employee. Standard grades, pay scales, and uniform benefits won't work. Compensation will need to be a potpourri of items which the organization can use to design compensation for one employee at a time.
Not only must compensation be much more flexible, it must be cost-effective. New systems must better reflect the individual's contribution to organizational success. This means systems which are merit based and at risk. A good performer must be rewarded when the organization is successful and poor performers should not. In addition, all components, particularly benefits, but be correlated directly with its impact or organizational success. It is not the high cost of health insurance, for example, that is the problem. It is the high cost of health insurance for non-performers that is the issue.
Employee and Labor Relations
The labor relations system is the U.S. is broken and sadly in need of repair. Unions now represent less than 8% of the workforce in the private sector. At the same time, employers are hampered in their ability to increase employee involvement.under 8(a)(2) of the Wagner Act. HR 800 is not the answer, but some legislative compromises are likely to occur. Prohibition of permanent strike replacements or of captive audience meetings might suffice as a reasonable legislative compromise to provide more flexibility under 8(a)(2).
The failure of Congress to enact employee relations laws that are aligned with the issues in the modern day work world will result in increasing local legislation. Living wages, immigration reform, overtime regulations, equity/discrimination issues and so forth will be enacted by state and local legislative bodies greatly increasing the complexity of multi-site HR administration and increasing the need for outsourcing to get geographic specific expertise.
Risk Management
Risk management is the new term of health, safety, and security. Two issues loom big in the futureterrorism and pandemics. First terrorism, both domestic and international, is becoming a daily fact of life. HR has failed to provide the necessary leadership in this area. In the future, even small organizations will need to invest substantial energy in terrorism preventing and disaster planning.
The same is true for medical disasters such as pandemics. It is not whether but when a major pandemic will occur. Again, HR will become increasingly involved in providing leadership and planning is this area. Could your organization survive with a 75% absentee rate for 30 days? How?
Summary
Due to limitations of space, I have only begun to expose the tip of the iceberg as to the how HR practice will look in 2017. However, this should be enough to get you thinking about the implications for your organization and your future.
