HR leaders must focus on developing the workforce of the future, with more diversity, different career paths and other employment offerings that appeal to the needs of top talent.
The What’s Next for HR in 2016? 11 Trends from HR Leaders report found that more than 60 per cent of HIPOs are dissatisfied with their development experiences, and two-thirds of organisations will face an internal skill shortage in the next three to five years.
In response, 76 per cent looking to internal rotations (eg, to another business unit, function or role) in 2016, along with mentoring (76 per cent) and executive leadership/coaching (72 per cent) to help develop HIPO talent.
“The best organisations assemble diverse change teams as needed and adjust their composition over time to ensure that the right skills are deployed to each change initiative”
Another factor in the future of the workforce is an organisation’s ability to adapt, and the report found that only 21 per cent of organisation are able to initiate change as soon as they need arises, and 62 per cent of organisations have or are considering establishing a change management centre of expertise.
However, CEB observed that establishing a dedicated change team does not significantly affect the probability of change success due to expense, narrow specialisation, and fixed capacity.
“Instead, the best organisations assemble diverse change teams as needed and adjust their composition over time to ensure that the right skills are deployed to each change initiative, and that HR has the capacity to lead multiple, overlapping change projects,” the report said.
Deloitte’s Global Human Capital Trends report, outlines the trends in reshaping the nature of work and the ways organisations approach talent management.
Leadership – According to the report, companies are struggling with leadership development at all levels, leading many employers to invest in new and accelerated models. Creating excellent leaders remains highly important, ranking as the second biggest priority for HR – the capability gap for developing leaders has widened in every global region.
Learning and development -Companies will need to be actively exploring new approaches to learning and development as they confront increasing skills gaps, the report said. The need to transform and accelerate corporate learning was deemed as important. But while the importance of the issue increased, HR’s readiness to handle it weakened – just 40% of respondents said that their organisation was prepared for L&D, compared to 75% last year.
Culture and engagement – Organisations are continuing to recognise the need to focus on corporate culture and dramatically improving employee engagement .
Workforce on demand – All aspects of the workforce are being managed sophisticatedly, including the hourly, contingent and contract workforces within organisations. Eighty per cent of respondents said workforce capability would be an important issue, indicating that the demand for skills will drive a trend towards greater use of hourly, contingent and contract workers.
Performance management – Traditional performance management is being replaced with innovative performance solutions. In today’s world of work, the need to rethink organisational management – including managing, evaluating and rewarding people – is one of the biggest necessities, according to Deloitte. Agile performance management has arrived, and will become a core component for this year’s focus on engagement, development and leadership.
Reinventing HR – HR is undergoing an extreme makeover to deliver greater business impact and drive innovation. The need to reskill HR itself weighed in as the fourth biggest issue, but also showed little progress from last year. The report also found that there is an increasing trend for CEOs to bring in non-HR professionals to fill the role of CHRO.
HR and people analytics – Few organisations are actively implementing talent analytics capabilities to address complex requirements for business and talent and HR departments and organisations appear to be slow in developing the capabilities to take full advantage of its potential.
People data everywhere – The report found that over the next year, many organisations are expected to expand their HR data strategies by harnessing and integrating third party data about their people from social media platforms. External people data has created a new world of employee data outside of the corporate environment. The report’s authors wrote that “it is now urgent and valuable for companies to learn to view, manage, and take advantage of this data for better recruiting, hiring, retention, and leadership development”.
Simplification of work – Companies are predicted to simplify work environments and practices, by implementing design thinking and overhauling the work environment to help employees focus and relieve stress. We are entering an era of “doing less better” rather than “doing more with less”, the report said.
Machines as talent – The increasing presence of intelligent software is challenging organisations to rethink the way they work and the skills their employees need for success.
Cognitive computing—the use of machines to read, analyze, speak, and make decisions—is impacting work at all levels. HR teams must think about how to help redesign jobs as we all work in cooperation with computers in almost every role.
The report also had six “key findings”, which outline the changes HR will need to manage:
- “Softer” areas such as culture and engagement, leadership, and development will continue to be urgent priorities.
- Leadership and learning have dramatically increased in importance, but the capability gap is widening.
- HR organisations and HR skills are failing to keep up with business needs.
- HR technology systems are a growing market, but their promise may be largely unfulfilled.
- Talent and people analytics are a high priority and a tremendous opportunity, but progress is slow.
- Simplification is an emerging theme; HR is part of the problem.
Next generation functional effectiveness
Traditional HR models are struggling with change, and the What’s Next for HR in 2016? 11 Trends from HR Leaders report suggested that business acumen is the number one skill that heads of HR need to develop in 2016 in order to succeed.
“A CHRO’s effectiveness as a strategic partner is compromised when his or her strategic planning process does not identify, explore, and translate business strategy into HR strategy,” the report said.
“To create effective and lasting HR strategic plans, CHROs must understand business needs by interacting more with other leaders and developing strong professional relationships, and demonstrate how HR can be a strategic partner by translating the business’s needs into HR solutions.”
“CHROs have a dual relationship with C-level executives”
The report also noted that CHROs aren’t just HR leaders anymore, and found that 71 per cent of HR leaders are spending more time on business issues not related to HR or talent, and a further 70 per cent are spending more time participating in business projects in a leadership capacity.
“CHROs have a dual relationship with C-level executives. First, they are peer business leaders, working side by side on strategic and board-level priorities,” the report said.
“Second, CHROs are peer coaches, guiding new-to-role corporate officers through difficult transitions and performance challenges.
“So CHROs must excel at enterprise leadership and continually share new ideas, tools, and processes to accelerate their peers’ performance.”
The HR makeover
As HR pursues its own makeover, its strategic role must also change to meet the intense pressures of today’s business environment.
Business leaders look to HR for advice as they develop business strategies to drive growth, where HR is considered the developer of talent and leadership across the business.
HR departments must focus on internal and external customers.
However, obstacles stand in the way of achieving this stakeholder management balance:
To begin with, the skill set that is required to impact internal customers, including line managers and employees, is substantially different from the skill set that is required to impact external customers and investors.
Research at the University of Michigan shows that HR professionals have greater knowledge of HR processes and internal business issues than they do of external realities (i.e. customers, competitors, capital markets, industry trends), but knowledge of external realities differentiate high-performing HR departments to a much greater degree than knowledge of internal factors.
Their focus on internal operations has established HR’s internal focus in the minds of senior leaders, who in turn expect HR departments to maintain the internal focus which the HR departments themselves have created.
To create value for line managers and employees, HR departments must provide HR practices that are fully integrated and reinforce each other. Line managers and employees expect HR departments to vertically integrate HR practices with the business strategy. This business integration is then reinforced by HR policies, practices and procedures that work together to provide seamless solutions to the business.
If HR departments are to support the organisation in creating value for these external stakeholders, they must help identify, access and import important external information. The problem is that helping to manage the flow of external information through the firm is what HR departments do least well, and yet when it is done well it has more impact on external stakeholders than anything else that they can undertake.