How has HR Changed in the Last 20 Years?

There is no question that the business environment has changed dramatically in the past twenty years, but the HR function in most organisations does not look very different than it did fifteen to twenty years ago. The period since 2010 has witnessed enormous change in the business environment: a global economic recovery; the continuing economic growth of India and China; and fundamental changes in technology-driven social platforms, personalisation, and device-centric applications.

There is widespread agreement and much writing about the need for HR to change and how it needs to change to be more strategic and more of a business partner; offer higher-quality HR information systems (HRIS) and human capital management systems; and be more of a leader on issues such as globalisation, sustainability, workplace personalisation, and organisational agility.

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What has changed?

Some significant changes have occurred in how HR functions are organised and how they deliver services. The most significant changes are the way the HR function is organised, where HR activities and information are located, and HR’s role in employee advocacy and shaping a labour market strategy. These changes may well set the stage for a greater strategic partnership, but they are largely focused on how the HR function itself is organised and managed and how it defines its relationships with its clients. The most important changes are as follows:

• HR is more likely to use service teams to support and serve business units.
• HR is more likely to have corporate centres of excellence.
• Companies are more likely to have similar HR practices in different business units.
• HR is paying increased attention to recruitment and selection as well as organisational design and development.
• More companies have most rather than some of their HR processes as information technology based.
• Employees are increasingly making use of HRISs on a self-service basis.
• There is greater satisfaction with the interpersonal dynamics and business understanding skills of HR professionals.
• HR decision support contributions are increasingly associated with HR’s strategic role.
• HR is increasingly effective in helping to shape a viable employment relationship for the future, providing HR services, operating centres of excellence, and being an employee advocate.

Most of these changes occurred in the late 1990s. Since then, the major changes have involved information technology.

All this and more on LBTC’s HR seminars and workshops.

What has not changed?

In spite of the aforementioned progress in the last 20 years, it is clear that a number of things have not changed very much, if at all. Many of these elements reflect HR’s role in shaping strategy and building effective HR skills. Among them are the following:

• The belief that HR has increased the time it spends as a strategic partner and the estimated time as a strategic partner.
• The extent to which HR is shaping business strategy.
• The desire of HR executives to be business and strategic partners.
• The rotation of individuals into and out of HR.
• The tendency of HR advice to boards to be about executive compensation and succession and not about change, governance, risk, strategy, or sustainability.
• The moderate quality of the human capital decisions that business leaders make.
• The relatively low levels of business leaders’ use of sound principles for human capital decisions compared to their use with respect to more tangible assets.
• The infrequent use of HR systems to educate business leaders about the quality of their talent decisions.
• The implementation of HR metrics and analytics systems and their effectiveness.
• The moderate use of efficiency and effectiveness measures and the less frequent use of measuring HR impact on decisions and strategy.
• The use of fully integrated HR information technology systems.
• The perception that more than 80 percent of HR professionals have the skills they need to be effective.
• HR skill satisfaction averages below “neither satisfied nor dissatisfied” for all HR skills except those in traditional areas of HR technical skills and interpersonal dynamics.
• The business partner skills of the HR professionals rated as moderate to low.
• The highest effectiveness of HR in traditional areas such as providing HR services and being an employee advocate and the lowest effectiveness in areas related to business strategy.
• Little improvement in the key areas that are strongly correlated with HR’s role in strategy and HR functional effectiveness.

It seems as though more things have stayed the same than have changed. Although many of the changes are significant and important, the amount of change is surprisingly small. Frankly, given the tremendous amount of attention that has been given to the importance of HR being a business and strategic partner and adding value in new ways, more is expected. This “stubborn traditionalism” is also apparent in the continuing flow of articles about frustration among non-HR executives with HR’s unrealised potential.

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What will it take to change how HR operates in organisations?

HR can and should be more of a strategic contributor. It appears to have some influence when it comes to how staffing relates to strategy and in influencing organisational structure and its relationship to implementing strategy, but HR plays a less prominent role when it comes to the development of strategy, consideration of strategic options, and other strategy areas, including acquisitions and mergers.

A number of HR capabilities and practices are significantly associated with a stronger strategic role for HR, including:

• Having an HR strategy that is integrated with the business strategy.
• The use of information technology by HR.
• Focusing on HR talent development.
• Using HR service teams that provide expertise and support the business.
• Having HR activities that focus on organisational design, organisational development, change management, employee development, and metrics.
• Using computer systems for training and development.
• Having an effective HRIS system.
• Having effective HR metrics and analytics.
• Having business leaders who make rigorous, logical human capital decisions.
• Having an HR staff with technical, organisational dynamics, business partner, and metrics skills.
• Having effective decision support.
• Having an HR function that effectively provides services.
• Strong HR involvement and support of sustainability initiatives.

Overall, HR being a strategic contributor demands that high levels of business knowledge and skill be present in HR. It also requires HRISs that have the right metrics and analytics, and organisational designs and practices that link HR managers to business units. Last, but not to be overlooked, is the need for effective and efficient delivery of HR services.

All this and more on LBTC’s HR generalist training course.