2004’s big strategic issues

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in its many forms is looming large on the horizon, says Paul Kearns, and HR
needs to be ready to respond to the changes

I am always very conscious when I write on strategic HR issues that many
readers probably switch off immediately. Strategic questions might be a fine
topic for discussion on the conference platform, but HR practitioners cannot
always see how it might affect their day job. Also, many supposedly big issues
prove to be damp squibs (remember the false promise of ‘self-managed teams’?).
Nevertheless, before you get lulled into a false sense of security, 2004 might
just prove to be an exceptional year. It could be the first time ever that HR
strategy really attracts some serious attention in the boardroom. Here are some
of the reasons why.

Human capital management

Top of the strategic, HR list is the whole subject of human capital
management (HCM). This could easily become just another fad, but my guess is it
is likely to stick around because it is not being left to the HR function. HCM
is being driven by the Government (particularly by the DTI), by city analysts
and, increasingly, by business leaders themselves. Moreover, HCM holds out the
promise of significant gains in shareholder value and any subject that has big
pound signs attached to it tends to generate plenty of interest.

So the big questions for HR directors are ‘what do you know about HCM?’ and
‘what are you planning to do about it in 2004?’. But HCM is a strategic issue
not just another operational HR question.

HCM was described in last year’s Accounting for People Report as "an
approach to people management that treats it as a high-level strategic issue
and seeks systematically to analyse, measure and evaluate how people policies
and practices create value". This is a new area of HR measurement that
involves integrating people measurement systems with conventional financial
reporting systems, so a fundamental rethink is required in HR about the data we
collect and how we use it.

HR directors in the public sector probably think this does not apply to them
because they don’t have to worry about shareholders. That might be true, but
2004 is going to present them with even more of a challenge.

HR service delivery

Tony Blair and the Labour Government now have their sights firmly fixed on
the next election and one thing they have to demonstrate in the time they have
left is some big improvements from all the money they have been pumping into
the public sector. The Government now realises that just setting performance
targets and producing league tables do not make organisations more effective or
produce greater value for money. The only way the public sector will be
reformed is through creative people strategies that fully engage employees in
the task of reform. Whether much progress will be achieved during 2004 is
debatable, but HR directors in government departments and the public services
had better be prepared for much greater pressure to deliver.

They also have the additional challenge – shared with all those HR directors
supporting partnership arrangements with unions over the past 10 years or so –
of having to re-think their employee relations strategies.

The arrival of the ‘awkward squad’ is a clear signal of a change in mood
from the most vociferous and recalcitrant union leaders. Whatever partnerships
were meant to achieve, their success, from a strategic HR perspective, is now
questionable, and maybe another paradigm shift is urgently needed – possibly
requiring a shift in management thinking.


Last, but certainly not least, on my strategic HR list for 2004 is the
question of resourcing.

Transferring thousands of low-skill jobs to India might be no great loss to
the UK economy and some economists suggest that this ‘offshoring’ brings
greater benefits to the countries exporting jobs. But this is surely the thin
end of a long-term wedge.


Technology really is starting to shrink the globe and resourcing will become
more strategic than ever before. Certainly, any board seriously concerned about
costs has to look at what outsourcing abroad has to offer and not just in
low-skill areas. What about research and development, design, and probably the
easiest job in the world to outsource – those accountants who spend all day
analysing spreadsheets. I knew there was something to look forward to in 2004.

Paul Kearns is director of HR strategy consultancy PWL. His latest book
HR Strategy: Business Focused, Individually Centred is published by Butterworth

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Duncan Brown, Assistant director general, CIPD

Paul Kearns, Director, PWL

Jim Matthewma,n Worldwide partner,
Mercer Human Resource Consulting

Andrew Mayo, Director,MLI

Louise Allen, Director, LAPartners

Penny Davis, Head of HR operations,

Marie Gill, Head of organisational
development, Asda

Neil Roden, HR director, Royal Bank
of Scotland

Ralph Tribe, Vice-president of HR,
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Dilys Winn, HR director,
Gloucestershire County Council

Margaret Savage, Head of HR strategy,


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