HR’s transformation through the Noughties

Over the past 10 years, the HR world has undergone great change. It has had to cope with the impact of recession, a raft of employment regulations, and found itself outsourcing HR activities. So has HR changed for the better over the past decade? Is it taken more seriously as a profession, and how rosy is the outlook for the future? Helen Gilbert speaks to industry experts to find out.

Duncan Brown, director of HR business development at the Institute for Employment Studies

We’re in recession, so HR management is generally much harder than in 2000, but I am proud of some of the innovative ways in which HR professionals are helping to maintain jobs and staff engagement in very tough conditions. Achievements include the adoption of the concept of employee engagement in many organisations, and building total reward and best place to work approaches to enhancing their engagement. And HR information systems have generally improved a lot.

Failures include not closing the gender pay gap or addressing the issue of widening pay differentials; obsession in the profession with employment law; and failure, with notable exceptions, to measure the impact and effectiveness of HR policies and practices.

The most successful employment law change has been the right to request flexible working, which struck the right balance of legal ‘encouragement’. The worst was the retention of the default retirement age, which was a messy compromise and just gets in the way of organisations improving their performance management processes and encouraging more employees to work for longer. I hope in 10 years’ time the whole notion of ‘best practice’ – in other words, copying what everyone else has done – will be dead and buried, replaced by ‘best fit’, with HR professionals crafting differentiated approaches to people management in their organisations that suit their circumstances and their culture, as the best HR directors do already.

Paul Kearns, HR consultant and author of HR Strategy: Creating Business Strategy with Human Capital

The biggest change I have observed over the past decade is that HR has become hyper-legalistic and much more interested in political correctness. The younger generation is scared of breaking the law and is obsessed with the legality of all things. Years ago when I worked in industrial relations, the law was something you worked around. These days HR departments put the law in the way of helping people, always trying to satisfy the law rather than the organisation’s needs. Equal rights, diversity, equal opportunities, and lawyers have hog-tied the profession.

I also think the profession is taken less seriously. The number of HR directors on boards in FTSE 100 companies has gone down in recent years. Even where there is an HR presence on senior management teams, I don’t think they are taken that seriously.

I can’t think of any great achievements or failures by the Chartered Institute of Personnel and Development. Despite going chartered, I don’t think that’s done anything to improve the credibility of HR as a profession. You can still get a job without those qualifications. Doctors and nurses couldn’t do that. That’s the biggest failure – we’ve allowed charlatans to come into it, anybody can enter our profession.

David Yeandle, head of employment policy at the EEF

Before 1997 there was little employment legislation, no national minimum wage, no legislation about pay, hours or holidays. We’ve had a lot of legislation relating to flexible working and a whole range of issues that have an impact on the personal relationships between employers and employees. That has meant a different type of approach, and HR has had to get involved in many more of these contractual issues.

I’m still not convinced there are enough HR professionals who really understand the business in quite the same way as their colleagues in financial, buying and sales. HR professionals aren’t as well rounded as they need to be to make an impact at the top table – they remain too inward looking. To be able to have an influential role on business strategy, they have to demonstrate they can add value and understand key issues affecting the business. I don’t think it’s got better or worse over the past 10 years, it’s still a problem.

Andrew Kakabadse, professor of international management development at Cranfield School of Management

Where the HR director has the mind of a chairman, has a total business view and is conversant with business language and the language of accounts – which many people are not – that’s when you have an outstanding HR department. What I see happening is HR still talking about competencies, which is useless. There are a few more very smart strategic business-thinking HR directors, but not enough. Many HR people are not rising to the challenge. Either they don’t have the business skills, don’t have the courage to stand up to the chairman or CEO, or are not bringing the real problem to the surface.

Dr Clare Kelliher, senior lecturer in HR management at Cranfield School of Management

The global finance crisis has meant that HR practitioners have been involved to a greater degree in restructuring and downsizing, and in maintaining the motivation and morale of those who remain.

A number of other issues have also arisen. Organisations may need to be more strategic when faced with developing HR strategy on a worldwide basis. One largely unanticipated consequence has been that managers inside organisations have sometimes felt demotivated and less valued when reorganisation to a global level has changed the nature of their roles. Creating new roles and re-invigorating this group – which may include HR managers – is a major challenge.

Increasing interest in issues such as work-life balance, along with legislative support for working parents, has also raised issues for HR, not only in terms of developing appropriate policy, but also the actual implementation of these activities in an effective way. In this recession, flexible working has been used as a means of reducing costs and using labour more efficiently. I think managing and matching organisations’ and individuals’ need for flexibility is a challenge managers will need to embrace in the future.

Nick Holley, executive director, HR Centre of Excellence at Henley Business School

A decade ago it was much more about a profession doing HR stuff, driven by an HR agenda. It was an HR-centred debate. Good HR is talking the language of the business. You have to embed yourself in the psyche of the business, which means don’t sit in a little HR office – get out there. It’s moving away from HR to being part of the business that deals with people issues and capability issues. It’s not about seeing yourself as HR, separate on an island, but being seen as one of the critical functions that runs across the whole of the business.

Our saddest moment was in the last two to three years in financial services. What was the profession doing? The lack of influence by HR there is one of the things that depressed me. It needs to be driving value-added, the moral compass of the business.

Also, too many HR people hide behind employment law. Most employment law is in many shades of grey, but there to help business understand potential risks and consequences, not to say what cannot be done. I don’t want someone on my management team who says: ‘you can’t do that’. I would lock them in a cupboard.

Alan Warner, lead officer at the Public Sector People Managers’ Association (PPMA)

We are seeing more outsourcing of HR activities; the development and growth of shared service centres; a realisation over the decade that talent attraction and retention is a big issue; greater use of technology leading to more flexible working; attempts to be more family-friendly; and a requirement now more than ever before for HR folk to justify their existence.

I’m a great believer in what works rather than a particular model. The idea of separating transactions is the most likely to survive. For me, the keys to the future are people who are businesslike and customer-focused, have a strong sense of purpose, are outcome-orientated, creative, resilient and passionate about doing a good job.

HR might look different in different places as the economy picks up. The politicians are predicting difficult times ahead for the public sector, and that will drive decisions about moving to shared services, outsourcing and the like.

Angus MacGregor, HR director at law firm Eversheds

HR has a strong voice around the management table. It has become a career of choice for talented graduates as it has the business focus, requires commercial and financial acumen, and offers great variety. More can be done to define the HR function and measure its value for it to achieve the recognition it deserves as a profession across other business services.

Key employment law milestones affecting the Noughties

  • October 1998 – The Working Time Regulations 1998 come into force, introducing a right to minimum rest breaks and periods, paid annual leave and a maximum working week.
  • April 1999 – A national minimum wage [of £3.60] is introduced.
  • July 1999 – The Public Interest Disclosure Act 1998 comes into force, giving protection against victimisation and dismissal to workers who ‘blow the whistle’ on their employer’s fraudulent, criminal or dangerous activities.
  • December 1999 – A new right to unpaid parental leave is introduced. The qualifying period for additional maternity leave reduces from two years to one, and ordinary maternity leave increases from 14 weeks to 18 weeks.
  • July 2000 – Part-time workers gain the right not to be treated less favourably than full-time workers.
  • October 2000 – The Human Rights Act 1998 comes into force.
  • October 2002 – Fixed-term employees gain the right not to be treated less favourably than permanent employees.
  • April 2003 – Statutory paternity and adoption leave and pay are introduced.
  • April 2003 – Ordinary maternity leave and statutory maternity pay increase from 18 weeks to 26 weeks. Additional maternity leave is for a further 26 weeks, giving a total maternity leave period of one year.
  • April 2003 – The right to request flexible working comes into force for parents with a child under the age of six.
  • December 2003 – Discrimination in employment and vocational training on grounds of religion or belief and sexual orientation is outlawed.
  • October 2004 – The statutory dispute resolution procedures are introduced.
  • March 2006 – A ban on smoking in the workplace comes into force in Scotland, followed by a ban in Wales and Northern Ireland in April 2007 and in England in July 2007.
  • April 2006 – The TUPE Regulations 2006 come into force, introducing a new service-provision-change category of relevant transfer.
  • October 2006 – Age discrimination in the workplace is outlawed, but an exception is allowed for retirement, with a default retirement age of 65 introduced.
  • April 2007 – The qualifying period for additional maternity leave is removed and statutory maternity pay increases to 39 weeks.
  • April 2007 – The right to request flexible working is extended to carers of adults.
  • October 2007 – Minimum statutory holiday increases to 4.8 weeks.
  • April 2008 – New laws on corporate manslaughter are introduced.
  • April 2009 – Minimum statutory holiday increases to 5.6 weeks.
  • April 2009 – The right to request flexible working is extended to parents of children under the age of 17.
  • April 2009 – the statutory dispute resolution procedures are repealed.

Source: XpertHR legal timetable

Most influential HR professionals and thought leaders of the Noughties

The following names cropped up more than once during discussions with our experts:

  • David Fairhurst, senior vice-president, chief people officer, McDonald’s
  • David Smith, former people director, Asda (and Personnel Today Awards 2009 judge)
  • Tim Miller, director, people, property and assurance, Standard Chartered (and Personnel Today‘s top Power Player 2009)
  • HR guru Dave Ulrich
  • David MacLeod, co-author of the government-commissioned Employee Engagement Review
  • Sean Tyson, professor of HR management at Cranfield School of Management
  • Lynda Gratton and Sumantra Ghoshal at London Business School
  • Peter Reilly, director of HR research and consultancy at the Institute for Employment Studies
  • David Guest, professor at King’s College London.

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