Looking forward to a more strategic role

Over the course of 2003 my columns focused on a range of issues that HR
professionals needed to tackle so that they could provide support and continue
to add value to UK businesses. These included innovation, management and
diversity issues. But what of the year ahead?

Crystal ball gazing can be an unforgiving exercise, particularly when we
look back on our predictions, but we can be sure of a few things. There is
little doubt that one of the most significant developments in the coming months
will be the impact of the Accounting for People taskforce recommendations that
people data must be included in annual reports.

Many businesses will view this requirement as yet more unwanted regulation.
However, it will not be long before the recommendations take effect, with the
Company Law Review requiring the boards of larger companies to demonstrate they
understand the factors, such as people, that are essential to companies’
performance. The inclusion of people data is likely to be compulsory by 2005,
giving HR teams around 18 months to put systems in place.

The recommendations are designed to ensure that human capital reporting is
not a burden for HR professionals by encouraging them to measure generic themes
rather than working to specific definitions. But it will be a challenge for HR
– particularly for smaller organisations with fewer resources – to set up new
systems and to work with the board to bridge the gap between the softer issue
of people management and the harder issue of robust data.

In 2003, we saw increased acceptance of the benefits of outsourcing and this
will continue in 2004. I also expect the war for talent to reignite. The
economic downturn and the difficult job market have meant that the issue of
retention has been almost dormant. But we are now beginning to see signs of the
economy improving.

Since August 2003, Deloitte’s Report on Jobs has found a notable improvement
in the job market. An inevitable consequence is that staff turnover rates will
increase rapidly and HR will be faced with two problems: how to ensure that
talent is retained and how to attract the talent coming into the jobs market?

Tough economic conditions have entailed cuts in training and development for
the workforce and other elements of their reward package have also been
affected. In 2004, HR departments must focus on developing effective retention
policies that attract the skills and talent vital to the success of the
business and create employee commitment to the company and its strategic goals.

The year will no doubt bring with it a number of other challenges for HR
directors, as all years do. However, what remains clear is that HR’s status is
evolving and 2004 will provide more and greater opportunities for HR to
demonstrate its strategic contribution to the business as a whole.

By John Connolly, Chief executive and senior partner Deloitte

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