When I give presentations to groups of HR professionals around the world, I am constantly surprised by how few HR leaders have found the free time to talk about our future.
As a result, few companies have spent much time developing a plan to transition from the current administrative model to what I call the new “Business Impact HR” model.
This turnaround will play an increasingly important role, as the HR function of the future will be a combination of maximizing business impact and improving employee attraction and retention.
Perhaps most people in the field haven’t focused on this topic simply because they expect only a small change. Yet, I predict that the changes in HR will be so drastic, that in just over a few years, the new HR function will be barely recognizable. While it will double the impact on the business, it will be less than half its current size and literally, no current HR job will be left unchanged.
So, if you have a few minutes to think about your future, here's a snapshot of the future HR model.
Most HR functions don't even calculate the simplest measure of employee productivity — that is, the company's annual revenue divided by the number of employees. Current professionals in any HR sub-functions would be shocked if in the future they were required to provide quarterly statistics showing how managers and employees who participated in their programs/processes directly improve their productivity.
The focus on increasing employee productivity includes helping managers identify key motivation and retention factors for each of their employees. And HR will also play an active role in identifying and influencing any key associations with attractive employers. Associations that contribute to attracting, motivating, and retaining the right employees, will result in a higher contribution in terms of productivity.
Managers and HR professionals will then need to focus more on improving productivity and building a performance culture, where each of them will be measured and rewarded based on employee productivity.
For years, HR managers have stipulated how their goals ‘align’ with strategic goals. But in the future, coordination will be insufficient; overhead positions are expected to have a direct and measurable impact on the company’s strategic goals. Those with the highest-impact roles — recruiting, retention, training, onboarding, and internal movement — will need to prioritize their time, budget, and HR talent, focusing especially on the jobs, teams, and highest-performing teams that directly impact key strategic goals.
In most cases, HR will be expected to impact revenue, product development, innovation, and customer service. This will require the abandonment of the historical concept of equal treatment for all jobs and moving to a position of prioritization of workers.
HR sub-function leaders will need to learn to work with both the CFO and the COO's office to prioritize their work and accurately identify and calculate their contribution to business impact.
It may come as a surprise to most, but the biggest driver of change in the future of HR will come from the new ISO 30414 reporting standards.
Before 2019, every corporate HR function had no choice but to develop its own set of HR metrics to report internally or externally. But the International Standards Organization (ISO) in 2018 published reporting guidelines that will have the effect of standardizing HR metrics around the world.
As a result, business leaders will be able to quickly see how their organization is performing in every major HR area, compared to any other organization. This comparability of performance and quality will force any HR organization to focus on developing a performance culture that delivers industry-leading results.
Not only should all future HR leaders be familiar with these reporting requirements, but they will also be forced to learn how to use internal data and machine learning to improve performance in their areas of responsibility. Smart HR leaders will develop a single index number to quickly compare HR's overall performance (across the nine ISO factors) quarter-to-quarter.
Algorithms will have a powerful influence on improving human management decisions. HR will have to perform massive data collection because machine learning requires huge volumes of it to be accurate.
By being data-driven, HR can move from the current low-impact historical metrics and move on to the more impactful real-time decision metrics and predictive metrics which can mitigate future problems.
Of course, this means that every HR sub-function is staffed with data scientists and AI experts. With these experts, each sub-function can conduct annual performance audits to demonstrate that each of their individual HR programs actually delivered superior results.
After technology, digitization and machine learning will become dominant in HR. Nearly all current HR transactional work will shift to employees and managers. They will be able to perform most of the work independently using the mobile apps developed by HR.
HR will then move beyond the flawed “Centers of Excellence” model and focus on the transition of HR staff to the Talent Advisor model. HR will be a lot like an internal management consultancy.
A more strategic focus allows the remaining HR professionals to act as advisors to advise managers on strategic talent issues and focus on strategic opportunities and anticipate future problems. Freed from transactional work, these advisors will be able to increase the productivity, innovation, skills and capabilities of the teams they work with.
In the highly competitive business world of the future, simply having cost-effective HR programs and processes that improve incrementally every year will no longer suffice.
Competitive pressures are forcing executives to demand that even overhead positions find a way to give the company a competitive advantage. The new expectation starts with asking for semi-annual competitor analysis.
They then expect every major HR program and process to be differentiated so that competitors have a hard time copying it and are clearly superior in performance and design to your company's competitors. This requires HR to have a much greater external focus along with exceptional business intelligence capabilities.
Today, the business world can be characterized as volatile, with frequent business scenarios and constant change. In order for the organization to handle this dynamic environment, HR will need to change recruitment, training, leadership development, and retention processes to produce a workforce that is measurable and more flexible.
Specifically, hiring and retaining only employees across the organization who are rapid, self-directed learners, who work quickly and adapt quickly, and are welcome to change.
Within HR, this volatility means it will have to focus on hiring only HR professionals who automatically assume that every existing process and program will soon become obsolete. The constant state of unease allows a company's HR function to remain a first mover in its industry.
In addition to the need for a flexible workforce, you will need one which is also scalable. As companies become more global, there will inevitably be periods of growth and business slowdown in different regions. This, coupled with a shift to more project work, requires a large percentage of a company's workforce to scale quickly. To get this flexibility, it could mean that as many as 50% of the people who work at a company might have to be gig workers, salespeople, or contractors.
This requires HR to deviate from the "permanent employee" model and develop the ability to frequently and quickly add diverse talent to a new area, and to free up surplus or surplus talent quickly and without legal entanglements.
Management will change as robots and technology take over most everyday tasks. More than half of the remaining employees will be highly trained professionals and because these professionals are going to be in demand, they will know their value. They will not tolerate being managed under a command-and-control approach.
That means HR will have to focus solely on recruiting, developing, and promoting managers who know how to leverage influence, freedom, transparency, and collaboration to get things done with knowledgeable employees. With the ever-expanding capabilities of technological robots, HR will also need to develop the ability to objectively recommend people or robots when new work arises.
The continued growth of the internet and Social Media is making it easier for potential applicants to get a broader view of what it's like to work at your company. Unlike the information provided on corporate websites, this information cannot be controlled by the company.
So to stay competitive in the job market, companies will be forced to adopt an employer branding approach that is as advanced as product branding and marketing. As a result, only experienced Social Media, market research, and data-driven marketing experts can work in message recruiting and employer branding.
The brand strength, positive Internet visibility, and ability to attract a leading number of qualified candidates will be used to measure success in this area.
The costs and many unintended consequences of data breaches on the business side will become more apparent to executives. The competition for data security experts will explode. This will lead to executives requiring HR recruiting, retention, and training groups to develop the capability to provide all the data security experts the business needs.
However, once executives also realize the equal importance of protecting employee records and privacy, the HRMS position will also be tasked with maintaining 100% data security and becoming experts.
As global competition grows, executives expect every overhead position to get leaner. This cost-saving pressure means that a continuously updated powerful business case will be needed, even to maintain current HR budget levels.
To minimize these constant cost savings, HR leaders will have to learn to work with the CFO's office to continually build the strongest business case possible for maintaining – or even increasing – HR funding. This constant battle for budget and to prove HR's ROI requires that every new hire in HR has both business and financial insights.
I am often asked about the most accurate approach to predicting the future of HR.
For me, the secret was to follow the advancements which are occurring in the faster-changing and less risky business functions such as marketing, supply chain, and IT.
It doesn't take a lot of research to find out that while ISO reporting guidelines are fairly new in HR, they've been used in manufacturing on the business side for over three decades. You will also find that mobile phone apps are used quite often by employees for transactions in sales and customer service positions. Yet, these kinds of apps are quite rare in HR.
Finally, you will find that Six Sigma has been used for decades to measure the quality of results in a variety of processes, but the hiring function in almost every company still has problems measuring the quality of new hires.
If you are currently working in HR and want to ensure a secure future in the position, I recommend that you use this list as a guide to your future organization of the company, your career, and the roles of your HR staff members. While learning, don't be discouraged because most of the people you meet in HR don't think that way. There are certainly exceptions, but data-driven thinking and acting are not yet the standard.
If you're interested in finding out more about Employer Branding and how to get yourself ready for the new world of HR, if you wish to tackle a specific project, content pitch, strategy, website content, or simply want to discuss alternative and strategic approaches to shape your Employer Branding, don't hesitate to reach out to us!