Does HR have a future?

I am neither an astrologer nor do I possess the slightest abilities of Nostradamus in any manner to answer that with any authenticity beyond some calculated guesswork. This question first occurred to me some months ago when one of my colleagues raised this question. Honestly, at that point in time I did not have any kind of an answer. Ever since then I have been thinking about this My limited knowledge of the current trends and my understanding of the probable future tells me that HR in the manner it has existed in the last half a century is unlikely to remain for long. Many may not agree with me and I whole-heartedly respect their views because at this point in time, my guess is as good as theirs and it is only the coming few years which would have the ultimate say.

Let me first elaborate the way I see HR has existed as a Function over the last five or six decades or so and therefore elaborate which aspects of the same would change and which would not.

Human Resources Function, as a specialized department, came into being to ensure that companies were adhering to labour-related statutes as they came into being as well as to ensure that policies and procedures related to employees were in place and were being adhered to in letter and spirit. The name of the Function in those days was usually “Personnel” because it was meant to ensure that personnel of the company were being governed by a set of policies and procedures as were enunciated by law of the land as well as those decided upon by the companies themselves. The responsibilities of the Function ranged of record-keeping pertaining to personnel at one end of the spectrum to labour-relations at the other with specific emphasis on trade union management as that became a force to reckon with post the Second World War and India’s Independence. In between the two ends of the spectrum as it were lay the governance and administration of personnel policies from recruitment to performance appraisal to wages & salary disbursement to administration of training & development. Business environment changes over a period of time and so did the Function. Somewhere in early to mid-1990’s most organizations re-christened the name of the Function to Human Resources from Personnel as people increasingly became the most important asset for organizations.

However, the fundamental reason for existence of the Function did not change much between the 1950’s till the end of the century. All the deliverables for which the Function came into being at the first place still held good by & large with differing weightages to some elements of HR depending on the industry one was focusing on. For example, in information technology industry of the 1990’s the emphasis on hiring would be much more and labour relations in terms of trade union management would hardly be there if at all; whereas in textile industry of the same period it would probably be the other way round. That said, overall skill sets required for an HR professional and the expected deliverables from HR remained steady. Of course, there has been continuous evolution of the Function over this period and there have been new skills which have been warranted of HR professionals depending on the changing business environment. There was focus on management by objectives in the 1960’s to participative management in 1970’s to quality revolution in the 1980’s to business process re-engineering in the early 1990’s, there have been continual changes in the focus of management at large but the heart of that has always remained people. Therefore, there never has been a complete change in the role of the HR per se, not in the last six decades.

There was a reason behind this steady state of the Function over the last five or six decades. Business environment did change but changed at a pace which was predictable and humans were indeed the most important asset for every organization, if not for anything else, but because they did most of the work. There was by & large two generations of people who worked in any organization and average age in an organization was quite representative of the organization’s demographic profile.

All of that started changing rapidly from the middle of the 1990’s and accelerated with the dawn of the 21st century at a pace never experienced before in human history. On the one hand the technological progress has happened at a hyperbolic pace in the last decade and-a-half and on the other hand, there has been a significant shift in the demographic profile of the workforce with diverse generations being simultaneously present in the same organization- from those who are in their mid to late 50’s (or the baby –boomers) to those in their early twenties (or the millennials) with very diverse requirements. Coupled with that is the increasingly turbulent business environment across the globe leading to every increasing jobs getting either out-sourced or contracted out or getting automated to reduce dependence on humans within the organization. With increasing trend towards ejecting out anything which does not fall in the “core” business of the organization and focusing on only the core, the very fabric and nature of human resources is undergoing and would undergo dramatic changes in the coming few years.  As if the above were not enough, increasing globalization has meant that several organizations are operating across several continents and even if they are not, development in any part of the globe has immediate and non-trivial impact on the way an organization is operating anywhere.

This has meant that organizations need to be agile in terms of how they respond to the environment and they need to be more customized in terms of how they approach human beings working in their organizations. It is no longer the case that a policy pertaining to employees can be deliberated over months and once a decision is taken, it could be uniformly applied across geographies and even with the same geography across different sets of employees. This is an era where two things matter most- agility of response and individual customization at a mass scale.

The transactional part of HR is likely to wither away from being in-house. That may also mean that certain junior or front line so-called “generalist” HR positions may not remain in the same form and manner that they exist today. The obvious ones relate to payroll processing, payroll & other statutory compliance related positions for there is already an increasing trend towards outsourcing them to specialized agencies who are doing a fairly good job at doing the same work for several organizations. Similarly, there are Recruitment Process Outsourcing (or RPO) firms which take care of end to end recruitment process from creating job descriptions in consultation with the companies to sourcing of candidates to doing preliminary screening to administering psychometric tests to final offer. There are organizations today who are specialized in background verification for potential hires who do a thorough job of the same. Similarly there are enough and more organizations who do training of all sorts from out-bound training to in-company customized functional training. We are all aware of well- known consulting organizations which provide compensation and benefits benchmarking at a granular level for any organization and then there are organizations of equal repute who can do job-evaluations and provide recommendations on where to place a particular role within the organizational hierarchy.

The long and short of the story is that name any of the traditional HR Function’s roles and it is certain that there would be enough specialized organizations of repute who could do the same job better and, over a long run, at a lower cost.

Coupled with the above is the general trend towards automation and employee and Manager self-service across most organizations. As technology tends to become cheaper by the day, it makes much more economic sense to invest in technology. Gone are the days when a simple automation would cost hundreds of thousands of dollars; the cost of technology today is cheaper than the cost of hiring and retaining human resources, certainly in large numbers.

Hence the ownership of people by the respective business leaders is already on the upswing and is likely to go up even more significantly in the years ahead. It is no longer the case where people management can be left to another department while the business managers can focus on business alone. In today’s knowledge economy, people management and business management are so intrinsically linked that any business manager who thinks that he can let another function take care of his people needs would be doing so at his own peril. In a knowledge economy where speed is of ultimate essence business managers would have to take up the direct role of people management for their teams and that is exactly what is happening in most progressive organizations of today.

What would be the new Avatar of HR?

To me, the single biggest thing would be specialization- the need for specialists in various aspects of human resources would be the need of the hour. Whether it is those specialized in labour relations or compensation (and there could well be super specialization even within that, for example, specialist in expatriate compensation or frontline compensation, etc.) or organization design or counselling or coaching or psychometry or mass hiring or leadership development or succession planning and the list goes on. The fundamental point is that whether in-company or whether in specialized organizations for the purpose, specialization would be what today’s HR professionals would be in demand for. The in-company growth of generalist HR professionals from starting at the bottom of the ladder and moving up steadily and slowly through a variety of roles and reaching the top echelons of HR hierarchy would be a thing of the past, if not already in several organizations.

What would be a necessity in most organizations even going forward would be someone who understands the business very well and has a good understanding of the people and the culture within the organization to be able to source and use people interventions from specialized agencies. For this, one needs no specialized training in the field of Human Resources; what is required is a very good grasp and threadbare understanding of the business and all its nuances as well as ability to sense the culture and prevailing morale of the employees within the organization along with the innate ability of empathy. Most of this cannot be taught in any formal training of human resources function. It is no wonder that so many organizations today have CHRO’s who have not spent their earlier careers in the Function at all.

It is not that trained HR professionals cannot play that role. But they have tune themselves to get into that mould. They have to cease operating from a specialist’s paradigm doling out prescriptions basis some diagnosis of issues. They have to get themselves to understand the business like a business leader would. Internal HR needs to know the business like the back of their hand. The litmus test for this would be if they can be selected for an equivalent business role without anyone batting an eyelid (they may not opt for it but that is a different matter altogether).

Understanding of culture within an organization along with an in-depth knowledge of the business would be the critical success factor for in-house HR as we move along the 21st century.

The third element of HR which would be very relevant in the years to come, would be the ability to simplify and innovate. Gone are the days of complex policies and procedures. In today’s and more importantly tomorrow’s world where speed is of essence, organizations would look forward to simplification of processes and procedures to get things done. Long winded, bureaucratic procedures and processes would be discarded and thrown out of the nearest window. The ability of HR professionals to be able to simplify processes through innovation is what would make them indispensable in tomorrow’s world and the absence of the same would render them redundant. The bedrock of this ability in the context of HR processes and procedures is again a very thorough understanding and appreciation of the culture of the organization besides the business model.

The fourth element of HR which would increase its importance tremendously over the next few years would be the use of predictive analytics. Predictive analytics is very different from the “dashboards” from HR Function which one see in dime a dozen. Those are more in the category of descriptive analytics which describe what the status on certain parameter is. The need from HR analytics is to be able to make data-based predictions on likely HR trends. Besides analytical skills, it calls for being able to extrapolate meaningfully basis trends. If done well, that would be immensely valuable for business specific decisions and would immensely enhance the credibility of HR.

The last but perhaps the most important element for HR would be the ability to use social media to build and maintain employee value proposition. In a world where word can spread faster than the speed of light, building and maintaining a high employee value proposition across 720 degrees (i.e. employees, potential employees, vendors, clients, educational campuses, government institutions) as an employer of choice is going to be a herculean task which would require focus and sustained efforts.

To summarize, the new face of HR would have the following features:

1. Increased specialization of the order we have not witnesses in HR till date;
2. Thorough knowledge and understanding of the business of the organization along with grasp of the company culture with all its nuances;
3. Competent in simplifying & innovating processes basis knowledge of culture and business;
4. Ability to equip business with predictive analytics on people related parameters
5. Ability to use social media for building and remaining an employer of choice.

It is not that every HR professional would need to have all the above. However, at least one amongst the above would be essential for survival.