The future of HR

By Rebecca Goozee

The downturn has certainly brought the HR function into the spotlight, raising important questions about business operations and highlighting the importance of a well performing department and the perils of one that is not up to scratch. Looking forward it is clear that the role of HR is evolving and needs to be redefined for a new generation.

Indeed, there are several factors that will influence the way HR will function in the future: the millennial generation have different expectations of work and career; corporate responsibility and climate change issues are gathering momentum; the measurement of people is becoming vital and can no longer be regarded as a ‘soft’ discipline; and, health and wellbeing is playing a key role in tomorrow’s metrics orientated world.

The latest PricewaterhouseCoopers report from the Managing People series has recently been published and one report entitled ‘Managing Tomorrow’s People: The Future of Work to 2020’, has identified three possible work worlds for the future by identifying macro factors, scenario planning and using survey data. The study looks at how these three worlds function and the impact on business and how HR specifically could be transformed.

According to the report, the downturn has irreversibly affected the world of work for some businesses with pay and promotion freezes, changes to pension schemes and cuts in recruitment budgets eroding the bonds of trust between some employers and employees. On the other hand, some organizations have excelled at doing more with less to engage and develop their employees, despite an unstable employment landscape.

In early 2007, a team from PwC started exploring the future of people management, sparked by the rising profile of people issues on the business agenda, such as the talent crisis, an aging workforce and an increase in mobility. Exploring the work aspirations and expectations of over 5000 professionals worldwide in the millennial generation, PwC identified three possible ‘worlds’ or plausible futures looking at the way organizations could operate over the next decade. Three strong themes also emerged from PwC’s research. First, was the dramatic change expected in the way business models operate as the pace of change becomes even more fundamental to the way people work. It is here that PwC identified three future scenarios or worlds: large corporate businesses turning into mini-states and taking on a prominent role in society; specialization creating the rise of collaborative networks; and, the environmental agenda forcing fundamental changes to business strategy. 

PwC has illustrated these scenarios with three fictitious companies and assigns them colours that work with their outlook. In the imagined Green world scenario, demands for greater transparency and social responsibility in business will be magnified by the economic crisis and will resonate with the desire for environmental responsibility already present in the green agenda. In the Blue world scenario, there is an increased focus on hard people metrics to measure performance and productivity as companies look at the long-term reality of having to do more with less. And in the Orange world scenario, the opportunity for radical new ways of working will emerge through innovation.

Will the future prove to be Blue, Green, Orange, or a mix of all three of something else entirely? PwC believe that it is highly plausible that all three organizational models will feature in the future model and that some companies are already heading in the direction of certain business models, highlighting multinationals as the Blue world model and the energy industry demonstrating elements of the Green world, while the Orange world represents the most radical departure from today’s world.

The second theme identified in the report was that people management will present one of the greatest business challenges as orgnizations grapple with the realities of skills shortages, managing through change and creating an effective workforce. PwC predicts that by 2020 companies will be faced with three main issues: the boundary between work and home life, which will disappear as companies assume greater responsibility for the social welfare of employees; measurement techniques will need to be in place to control and monitor productivity; and, the rise in importance of social capital and relationships as the drivers of business success.

And the third theme that emerged from the research is around the transformation of the role of HR. PwC believes that it will go one of three ways. It will become the heart of the organization that takes on a new wider people remit influencing many other aspects of the business. Or, it will become the driver of the corporate social responsibility agenda within the organization. Alternatively, it will be seen as a transaction and will be almost entirely outsourced, so that HR exists in a new form outside the organization while in-house HR will be predominantly focused on people sourcing.

There is no way of knowing exactly how the HR function will change over the next 10 years, but there is certainly a need for all companies to start examining how their own organization fits into PwC’s predicted scenarios and look at how the macro trends will impact their business or industry. For employees there is likely to be many different ways of working in the future, all of which will fit in with various industries, allowing employees to align themselves with organizations that fit their priorities in the most idealistic way, whether that be financially, environmentally or the ability to work in a flexible way or overseas for example.

There is no doubt that there is a significant potential afforded to the HR function to own the people management agenda within organizations, drive strategy and have the tool to become the most powerful part of a business operation. It is imperative that this is taken advantage of if HR wants to stay influential and avoid becoming almost entirely outsourced. As such the fate of HR currently hangs in the balance, and with 2020 just a decade away time is ticking.

The Future of Work, by Richard Donkin

“The world has already changed for our children, but it is changing for all of us just as quickly. Unless my generation – and I belong to the boomer age group (those aged between 1945 and 1960) – learns to understand and take advantage of these changes, we are going to create a damaging economic and organizational vacuum for future generations.

“It is already happening. The reasons for the credit crunch and its near-catastrophic undermining of the global banking industry were multifaceted and complex. Intrinsically, however, they reflected a society chained to production-led economic growth. There is apparently virtuous circularity to this society. We are paid to make things that are bought with the money we earn. It is a very simple kind of economic roundabout, oiled by debt, supported by earnings. If one part of this mechanism fails or becomes distorted, the whole machine is placed jeopardy.

“This is what happened when banks and other lending institutions overstretched themselves extending and trading in high-risk mortgage debt, insured, as it was, by rising property prices. As soon as property prices began falling, as people began defaulting on their debts, these policies rebounded, squeezing financial liquidity to such an extent that banks and building societies, relying on an ease of sourcing credit for their daily transactions, became forced increasingly to look to their own resources. Those with few cash reserves were in trouble.”

An excerpt taken from Richard Donkin’s The Future of Work.