technology drives the role of HR and external agencies exert greater financial
accountability, HR directors are facing a heavier workload than ever. Here some
experts offer advice on how the industry must seize the chance to evolve and
shape the business agenda to suit HR’s future strategy
directors are always being told – or are always telling each other – to stop
complaining and get on with it. But even the most cursory look at the way the
profession is evolving seems to indicate that many of these complaints may,
after all, be justified.
the past five years the role has changed and broadened so much that some
pundits now claim it is “impossible” to carry it out with any degree of
comprehensibility. They liken it to asking a GP to run the entire NHS including
all the different medical specialisms, while maintaining an efficient day-
to-day practice in the surgery. In a nutshell, they claim, the job has grown
too big for any individual to manage it effectively.
we sanction an official day of hand-wringing, however, it’s worthwhile considering
how difficult it is to perform any senior management role in the current
climate, wedged as we are somewhere between what might be termed the ancien
regime and the beginnings of a new, yet largely uncharted, business age whose
sole defining feature is its unpredictability.
the most celebrated management gurus admit the way forward is so uncertain that
the only way to read the future, let alone the present, is to concede the
impossibility of it all. “If someone tells you they know the answer, they don’t
know the problem,” concluded CK Prahalad at an HR conference last year.
for the simplest exposition of the situation, we may as well turn to management
guru Tom Peters. “Nobody knows what’s going on any more”, is his informed
are two possible options open to companies confronted with this situation,
although the first – that of playing a game of wait and see – is widely
considered to be out of the question. “Stability is death: somehow the world
has to adapt itself to a condition of perpetual novelty, at the edge of chaos,”
claims yet another management thinker, John Holland. But the second option –
broadly summarised as covering all the bases and never making a single bet –
means a lot more hard work and insecurity for everyone when translated into
challenge of the digital economy means it is much more complex to run
businesses, simply because timescales have been shortened and you get only one
chance to get it right,” claims Colin Carmichael, a partner with the
organisation Consulting Partnership (OCP), which specialises in designing and
implementing management change programmes.
sort of impact is this situation having on the lives of managers? Research to
date has concentrated on chief executives – and the results are alarming.
According to the Harvard Business Review, CEOs are three times more likely to
be sacked today than they were in 1985, and even if they survive this obstacle
their average “life expectancy” in the job has declined dramatically. In some
sectors this is now as low as two years.
main reason for this shift is the rapid growth of influence exerted by external
agencies, most notably the financial markets. Increased activism on the part of
shareholders and the organisations representing them has dramatically altered
the role of the CEO in many organisations, and this in turn has had a knock-on
effect on other functions.
know that the length of tenure of CEOs is declining, and also that CEOs spend
more time dealing with issues outside the firm and less time managing the
inside,” says John Purcell, professor of HR management at the University of
Bath. And evidence would suggest that it is the HR function, above any other,
which is being called upon to fill the vacuum.
to this the other major side effect of the information economy – the rise in
importance of “soft” assets such as human capital in determining the value and
long-term health of an organisation – and it is hard to escape the conclusion
that HR is in the ascendancy.
isn’t this the kind of role and recognition the profession has spent decades
campaigning for? Perhaps, but evidence suggests victory, if it is such, is
being dished up with a decidedly sour accompaniment.
is not just that the average HR director’s workload has increased, although
this is now beyond question. As Purcell points out, many HR directors are
expected to do at least two jobs. “They do their day job, usually managing the
function, but they are also responsible for any number of set projects and assignments.
And that is very demanding.” Even the so-called day job has evolved into a
series of specialisms far too complex for one person to manage, even with an
effective team in place to help take the strain.
an issue as seemingly straightforward as improving the calibre and knowledge
sets of people in the organisation. According to Linda Holbeche, director of
research at Roffey Park Management Institute, that in itself requires multiple
skills sets, incorporating recruitment, building career tracks, setting and
working with appropriate performance targets and developing systems and
processes to underpin the whole thing.
me, that’s a big enough focus in itself. You could end up with 20 different
initiatives all springing off that one thing,” she says. “People expect a lot
from HR, from getting the basic delivery right – inclu- ding such contentious
things as directors’ pay – right through to instantly translating decisions
that are often political into organisational strategy, then delivering it.”
Rubens, senior European vice-president of Aon Management Consulting, has no
sympathy for the “mission impossible” argument – “people find ways of coping”,
he says – but nonetheless concedes that the job has certainly got bigger and
more difficult to manage.
now consists of a string of multiple disciplines that need to be coordinated.
In any typical [blue-chip firm], the HR department will have business analysts,
MBAs, occupational and organisational psychologists, IT people…” he says.
these we might add compensation and benefits specialists, employee relations
experts, staff relocation professionals, employment law gurus, change agents
and knowledge management wizards. In fact, you run out of synonyms for “expert”
before you even begin to complete the list.
Rubens points out, in well-run companies technology is beginning to take up
much of the strain, certainly in terms of administration. And in some
organisations much of the day-to-day responsibility for staff management and
development has devolved to line managers. Moreover, the arrival of specialist
HR outsourcing companies such as Exult and e-peopleserve is a trend that most
believe will accelerate.
none of these developments ultimately absolves the HR director from bearing
prime responsibility for the entire people function, in all its different
guises, and this is particularly true when things go wrong. In fact, the job is
arguably made more difficult when hands-on control of the situation is placed
whole point of outsourcing is to give the in-house function the time and space
to get on with more strategic objectives. But observers like Holbeche question
the reality of this. In too many cases, she argues, the outsourcing contract is
signed and then forgotten about, with predictably dire results. “You end up
spending more time doing damage limitation than anything else,” she says.
Unsurprisingly, it is generally agreed that the most important new skill HR
directors need to take on board, apart perhaps from project management, is the
ability to manage third-party relationships.
HR directors have a much bigger workload, a wider set of responsibilities and a
pressing need to update their management skill-sets. But all these issues,
while tricky to get right, by no means make the role impossible to carry out.
Where, then, does the real difficulty lie?
answer is that HR, above any other corporate function, is being held
responsible for solving some of the most difficult and seemingly contradictory
problems posed by the transition into the information economy. Yet in most
organisations, the function continues to be deprived of the necessary power and
tools to accomplish the feat. In other words, HR directors have become
embroiled in a classic Catch-22 situation.
is this better illustrated than in the issue of people capital. Certainly the
argument for the development of people as “hum-an resources” is won, at least
in theory, but practice continues to lag behind.
the heart of the problem is the unwillingness of many management boards –
themselves constricted by the greater influence being wielded by market
analysts and shareholder pressure groups, to commit the necessary funds to
people development – without the promise of concrete evidence that the investment
has paid off. And HR directors, in their continued efforts to be taken
seriously as business partners, have in the main gone along with this.
the fact remains that after nearly 30 years of trying, no credible means of
measuring the financial value of people has emerged. In fact, there is a
growing school of thought that maintains the quest will remain forever
fruitless on the simple grounds that however much we may hope to the contrary,
it will always be impossible to evaluate “soft” assets in the same precise
terms as their “hard” equivalents.
has been the Holy Grail since the 1970s, when it was called Human Asset
Accounting, and we are still no closer to finding a solution,” says Carmichael
at OCP. “The concept behind it is certainly important but attempts to measure
it have always been thwarted. I have seen several studies [that purported to
have tackled the question successfully] which were clearly wrong.”
the people capital question is only one of several conundrums bedevilling the
HR function that will always be impossible to solve so long as companies
persist in their attempt to impose new-economy thinking on old-economy
structures and mindsets. The question of mergers and acquisitions – indeed of
any sort of external deal-making – is another case in point.
most management boards will happily go along with the notion that HR has a
critical role to play in the success of any joint venture, they are still not
prepared to lend any real substance to the theory by insisting on change. Faced
with the choice of kowtowing to the continuing anti-HR prejudice of City
deal-makers, or of supporting the long-term interests of their own
organisations, the evidence suggests that most continue to take the easy
option. The result is HR remains “downstream” of the decision-making and people
issues are still considered, at best, a nuisance in any negotiation. Yet no-one
needs to be reminded which department will ultimately be responsible for
driving through the resulting changes.
perhaps the most pressing problem facing any HR director is still primarily
internal in nature and can be summarised as tackling what John Bank, lecturer
in HR management at Cranfield, calls “the new psychological contract” between
companies and employees. “Companies used to look after you like a parent, but
it’s tough love now,” he says. “As long as your competencies meet our
requirements you can stay here and develop. If not, you’re out.”
many HR directors are still struggling to manage this new project-based
attitude to work, in which notions of loyalty and reward have shifted
dramatically, in the context of often resolutely unchanging corporate models.
are not changing as quickly as many would like because there are systems in
organisations and society that resist that change,” concludes Martyn Brown, a
business director at Ashridge, in a recent paper. Yet the business environment
is evolving so quickly that companies do not have the luxury of taking a
conventionally planned long-term view.
he says, “The most challenging and scary implication [facing senior management]
is that of letting go – as in not having the same kind of traditional control –
of their role of planning, control and strategy formation, and of not being
able to predict outcomes.”
then, is the best means to go about dealing with this series of “impossible”
problems? For a start, recommend the experts, get your own house in order.
directors need to start making some tough choices – choices about what the
department will and will not do, what it will outsource, and how it will manage
that outsourcing,” says Holbeche. “You also need to look very closely at your
own team: has it got the skills you need? Again, this might be the time for
tough choices. Train people to work across boundaries and aim for a
three-to-five-year strategy, but be prepared to be flexible with it. Bolster
this with short-term projects.”
meanwhile, recommends some inward gazing. “Know yourself. Understand your peak
times for learning and try to make sure you don’t give up this creative time.”
He claims there are three strong core competencies in every successful
executive: “Time management, project management and strong internal values, so
you don’t spend too much time agonising over individual decisions when they
the real conclusion to all this is clear. For too long, perhaps, HR has been
lambasting itself for a perceived failure in getting to grips with the business
needs of organisations. Yet the transition into the new economy has already
demonstrated the growing irrelevance of many of these structures and mindsets.
of always trying to comply with someone else’s business argument, therefore, it
is time HR seized the initiative and began dictating its own terms. If you
really believe the future of your organisation lies in the quality of your
people, then you must accept the challenge of reshaping business strategy to
fit that goal – and of summoning up the necessary influence to push it through.
HR directors realise the necessity of setting the new business agenda
themselves, they will continue to play a central role in Mission: Impossible.
sectors for HR
Every sector poses its own HR challenges and difficulties.
we list a few of the more tricky ones.
The current travails of BT demonstrate the speed at which this sector has
shed its comfortable high-value, high-tech past, evolving into a cut-throat,
low-margin business. In terms of remodelling business models to cope with this
new environment, it’s likely to be a case of pain, pain, pain.
The recent market decline of such new economy stalwarts as Intel, Cisco and
Dell demonstrates that the industry’s problems extend much further than a few
shakeouts in the dotcom sector. Many of these new-model pioneers have yet to be
tested by a significant economic downturn – will their structures be resilient
enough to cope? Will the previously heavy investment in training prove its
worth if hard times kick in?
Morale is up from the depths following a much-needed government cash
injection but recruitment is still the paramount problem. The UK is short of
some 40,000 nurses. Searching questions need to be asked as to how this decline
can be halted and how it was ever allowed to happen in the first place.
The financial sector is never immune from the pressure of downsizing and
observers predict new waves in the months ahead as merger and acquisition
activity continues apace. Increased customer competition in the financial
services arena from sectors such as retail means the pressure to innovate is
Manufacturers continue to be dogged by the twin pressures of exchange rate
and continued cost-cutting. Employee tension and insecurity is growing in many
industry sectors. Motivation becomes a real issue when, as happened at
steelmaker Corus, huge improvements in performance lead to – the chop.
Hotel & Catering
The industry’s perennial problem with recruitment could be replaced by
something much worse as the wider ramifications of the foot and mouth epidemic
begin to bite. Three weeks into the crisis, and there is already the prospect
of mounting international cancellations. The industry is facing very precarious
Maintaining staff morale in the face of continuing financial losses and
layoffs is proving an uphill struggle for many in the sector. With even
Amazon’s future considered increasingly open to question, expect a rocky road
Again, merger and acquisition preoccupations abound. Either you’re trying
to rebuild morale and devise new post-merger structures or you’re contemplating
an imminent buyout. Renewed international political pressure on drug patents is
another unwelcome hornets’ nest this sector is having to deal with.
How much time do you have?