In a recent article in Forbes magazine online, Ron Ashkenas wrote a heartfelt piece on how essential the Human Resources function is in response to recent HR bashing. He wove a lovely story of how critical the function is, how deeply misunderstood its people are and how we should all band together to help this function succeed.
The idea that we should all club together to support a non-operational function outside both our remit and remunerative motivation is farcical. The truth is twofold: (i) Firstly, bad hires come from bad specifications. HR cannot be blamed for finding the wrong person that a business unit specified. (ii) Secondly, HR needs to force the various business units to communicate their needs proactively and pre-emptively.
There is often a lot of subtext, contextual knowledge and peripheral information which comes along with requests for a new hire. Internal HR managers need to get analytical if they are going to remain relevant and not cede their function. If they fail to grasp the cost and revenue interdependencies of various roles then external boutique consultancies will thrive. These companies will analyse, assess and source the best talent. There will be a premium on this cost and it will ultimately be funded by removing more internal HRs.
The research tells a story. In a recent survey by Mckinsey, CEOs identified the top 8 barriers to talent acquisition and management. At the top of the list was the failure of senior management to spend enough time on HR. This is not HR’s fault but that the blame lies with HR is topical. Another factor was perceived to be the failure of managers to understand that good people are good for good business. Good people execute strategy well. The secret to this is understanding (a) the structural roles which people satisfy that are vital to the effective functioning of the business, and (b) the functional knowledge which is inherent in executing those roles.
In a recent post I wrote about the likely demise of internal HR and the rise of boutique consultancies which had the skills to analyse, assess and source talent. Internal HR is better placed to deliver this role better and more cost effectively. They should know and understand the people, they should understand the dependencies, they should have a clear understanding of contextual knowledge and they should also be able to bolster the role specs with additional peripheral information. Critically, managers need to know which position which their staff play. Without this understanding businesses looks like an under-12 soccer team where everyone is chasing the ball.
What will HR look like in the future? If recent articles online are to be believed then the HR function will be more powerful and more important than ever. We do know the following:
- We do know that the standard job market will become more fragmented as better information management allows much work as we know it to become commoditised.
- We do know that in a world where executive education is highly specialised and more competitive the acquisition of top talent will become more difficult as senior executives look for a richer, more cross-functional, more multi-disciplinary skillsets in their stars.
- We do know that top execs will add complexity to HR through cross-functional skillsets (i.e. top talent will be less obvious because they will not necessarily rise in vertical portfolios. The best project manager may also be a registered psychologist, for instance).
What we do not know is just how the enterprise will react. The onset of better databasing technologies and mobile methods of capture did not ease the information management problem in organisations (rather it has just created mountains of unmanageable data).
- So, will the fragmentation of the labour market and the rise of cross-functional skill sets add too much complexity? Will the HR market be able to cope?
- Will the HR function reach an inflection point where complexity is too great and the entire function is outsourced completely? Or,
- will better information management allow line managers to integrate talent sourcing directly into operational business processes?
If a recent (27 Sep 2012) survey by KPMG is an indicator then cost pressures in businesses mean that they will have to get smarter about HR if they are to remain competitive. In boom times even with 35% of respondents arguing for greater direct collaboration with operational management, it is unlikely that even this volume of vociferous response would change the HR paradigm. However, with the cost pressures at almost unbearable levels and social media increasing the transparency and speed of operations, it is unlikely that the HR function will survive even as it stands today.
The following outcomes are likeley: (i) Commoditised work will be consumed by line management into standard operations, and (ii) top, cross-functional talent will be outsourced to ever more high-end boutique HR consultancies. Smaller HR firms will fall by the wayside but the high-end firms will demand higher margins and their clients will demand greater results. It is possible that, much like IT services of the ’90s boutique HR consultancies could take stakes in realised profit that certain new-hires make.
Whatever the answer is it will be global and there will be big money in it.