THE EVOLUTION OF HUMAN RESOURCE MANAGEMT - FROM TRANSACTIONAL MANAGEMENT TO THE STRATEGIC BUSINESS ADVISOR

“The days of simply maintaining personnel files and advising on hiring, firing and compensation are long gone for HR professionals. Today they fulfill a variety of roles that require knowledge and competencies in areas that were foreign to them in the past.” Salvatore et al. (How the law changed HR, 2005)

The history of labor in America provides a good insight into the evolution of Human Resource Management, HRM. Its history can be viewed from the pre-colonial era, the post-world war era including the depression and the 21st Century with the advancements it brought.

During the pre-colonial period, labor was perceived as a cheap factor of production which in part explains slave labor and its proliferation. In the early 1800s, unions began and advocated for better working conditions for workers eventually prompting legislation. Unionization efforts among the trade professionals began to spread to more skilled factory workers.

The early 20th century was characterized by enormous growth in industrialization and the country’s labor pool. The World Wars also had their contribution. The military needs of the war spurred dramatic industrial growth. The war created new challenges as it contributed to massive employment in the military resulting to a high demand for labor in the industries and farms yet working conditions remained deplorable.

The emergence of the industrial relations professional and the personnel administrator in the 20th Century marks the beginning of HRM as a profession. Compliance to the arising regulation and the need to manage union relations indeed gave rise to the profession.

Regulation also played its part in molding the development of HRM. Notably, 1980s and 1990s marked the highest number of labor related laws passed. In later years, theories developed around driving employee productivity and eventually focusing on employee engagement.

Admittedly, a quick scan of the challenges the modern HR professional faces demonstrates that the evolution of the profession continues. Increased regulation has continued to put pressure on the need for greater compliance. Productivity remains at the heart of the discussion while employee engagement has taken center stage. That said, how these are managed today greatly differs from how they were dealt with in the past. Some may argue that a lot of this can be attributed to the generational cycles that reflect today’s employee and the modern workplace. That notwithstanding, the essence of human resource management has also changed.

Today, everything a HR professional does can either be classified into a transactional, tactical or strategic element. The development of the profession begun with a focus on transactional elements like time management, discipline management, leave management and statutory compliance. Most of these are largely automated today. At the tactical level, the profession became less reactive and more proactive providing for futuristic planning e.g. workforce planning and succession planning. Strategic HR is at the highest level and this is the component evolving the fastest today. It is not just about talent management, for instance, but applying predictive models that will ensure the best fit at leadership level for organizational success.

Welcome to the HR Manager as the Strategic Business Adviser. They are expected to use data and business analytics to inform business decisions. It is not about reporting past data like staff turnover statistics or the cost of leave liability - it is about using available data to predict its likely impact on future organizational performance and hence inform the pertinent decisions that need to be made. The HR professional as the Strategic Business Advisor needs to develop a deep understanding of the organization and its operating context so that they can anticipate its future talent needs and plan for them well in advance. It is about building talent pipelines outside the organization to cater for its future growth needs. It involves adopting Artificial Intelligence not only to recruit but integrating it into the talent management process. For instance, many organizations providing services have workflow systems that are reservoirs of data and a good opportunity for business analytics. Using data analytics and Artificial Intelligence, the HR professional can design responsive interventions for capacity building that will ensure better on-the-job training, coaching and training-on-demand. Take a situation where a manager consistently delays in making approvals related to specific task. The system will automatically pick this up, create an alert to their manager including providing the manager relevant tips for a coaching session or even proposing a training, e.g. on delegation, to that specific employee.

In addition, the workplace of the future requires a more dynamic work environment that inherently promotes innovation. Creation of “agile teams” that break functional silos begins the process of cutting across boundaries to respond to key business issues. Inevitably, it also means the continuous fine-tuning of the culture to respond to the rapidly changing business needs.

Whatever the case, it is clear that while human resource management has undergone significant transformation, the magnitude and speed of change of the profession will only be greater. HR transformation has never happened this fast before and it will never be this slow again.