Louisa Peacock asks HR practitioners from Europe, Asia and the US about HR’s role within their organisations and what they consider to be the main challenges in managing the people agenda.
Asia is a rapidly developing continent and the ubiquitous ‘war for talent’ is accentuated for Intercontinental Hotels Group (IHG) with rival hotels from China constantly approaching staff with job offers. HR’s biggest challenge, according to Ricky Wong, HR director, IHG Hong Kong, is finding and keeping the right people in such an aggressive labour market.
“I’m really concerned that our staff will be poached by competitors,” Wong says. “Managers from hotels in Macau come to our hotel and sit in the lobby to check out the staff they want to poach. The particular hotel I’m talking about has 3,000 rooms and they need experienced managers.”
So where will they find them? “They’ll find them at the five-star hotels in Hong Kong – hotels like ours,” says Wong. As a result of such measures, he takes career development very seriously. Many of IHG Hong Kong’s employees have been at the company for several years, and while he cannot promise promotions, on-the-job learning with greater participation in management decisions is a must to keep staff engaged.
“Many employees are looking for personal development. They can suggest how to do the job better, and we encourage that. They can disagree with managers – and that’s not easy in the traditionally hierarchical culture of Asia. We ‘allow’ them to disagree and to have a sense of involvement,” says Wong. This mature approach to managing employees seems to be working. IHG’s staff turnover is at 12%, a hefty 8% lower than that of its main Hong Kong competitor (another five-star hotel), according to Wong.
Retention of key skills is crucial, especially when employees are actively encouraged to learn new languages, such as Japanese, to cater for international guests. But Wong says the Japanese market is still suffering from the aftermath of the 9/11 attacks, and adds that he is working with senior management to explain the market to staff.
Wong says the HR function in Asia is generally made up of women and, as the only man leading an HR team of six, is himself a clear case in point. Wong reports to the managing director who, in turn, reports to the chief operating officer for the China region. He also works on manpower planning, employee engagement and rewards and benefits. “We’re not here to [just] routinely hire staff,” he says.
“People are a very important part of our success and HR plays a very important role in developing and grooming successors for current leaders,” he says.
While there are professional HR qualifications and a few membership institutes that offer practical advice and case studies – the most popular being the Institute of HR Management – nothing beats practical experience, says Wong.
“We really focus on meeting the needs of staff. Asian people are not the most outspoken. We have to read their minds and work out if they are happy or have concerns.” Although this sounds difficult, it’s what Wong likes about being an HR director.
Within 10 years, Robert Geerkin, HR manager, Euroforum, The Netherlands, predicts all HR departments in the country will become outsourced. That’s not just transactional activities such as hiring and payroll, but strategic services too, such as succession planning and talent management.
But Geerkin’s not overly concerned about his own job security if HR did go down that route. As a board member of publishing group Informa’s conferences and courses provider Euroforum, and having been at the company for eight years, Geerkin has all the specialist knowledge needed to sell his services as an HR strategist. “I’ll just charge a higher price if I’m outsourced,” he jokes.
Geerkin is much more serious about the global financial crisis, however.
“Topic number one in my management team meeting will be the economic downturn. On results, we’re doing very well – last year was a record year. But we’re very worried about next year. It’s psychological. Everyone’s getting nervous and the future is very uncertain, especially with our product because companies are looking at [cutting] training budgets for staff.” Measures taken to ease internal costs include a temporary recruitment freeze. “Some positions we haven’t filled yet, but we will wait a few months first,” he says.
Geerkin is also making sure HR staff feel as involved as possible in company decisions. “I give employees as much responsibility as possible, and delegate a lot – absolutely necessary in the current climate.”
HR professionals also face longer-term challenges, according to Geerkin, including the shifting demographics of the workforce. As in the UK, the Dutch working age population is getting older, but employers fear a gap in hiring as fewer Generation Y (18- to 28-year-old) people are entering the workforce.
“The pond is getting smaller and we’re all fishing in it,” he says.
Euroforum has 160 employees but, including Geerkin, just two-and-a-half HR people to look after them. As a result, career progression is hard to promise, but the upside is that those people are experienced in several disciplines.
And it’s experience that counts, rather than qualifications, as far as Geerkin is concerned.
“You can study for an HR qualification, but you don’t need it. Experience in the company is more valuable,” he explains.
Yet Geerkin says it’s important to join the National Association of HR Managers to keep networking with peers. He also sees networking with staff and chatting about their concerns as a large part of his role – he refers to it as the ‘tea and sympathy’ approach, and believes that this human interest factor is why so many women are drawn to the HR profession.
Nevertheless, he insists that the department means business.
“HR is more strategic than just offering day-to-day services liking hiring and firing. People are the only capital we have and we treat them as such,” he says.
HR in the US has gone through an immense period of change, moving significantly away from the ‘personnel’ role and more towards human capital management (HCM), explains Michael Fenlon, people strategy leader, PricewaterhouseCoopers in the US .
“It’s moved beyond some of the administrative processes that HR has traditionally managed and started to become a service that builds competitive advantage,” he says.
Operational line managers now complete transactional activities, such as recruitment or payroll, and Fenlon’s human capital team focuses more on strategy, such as talent management, or, as he puts it, risk management.
The risk factor
“Risk management is used in the financial sector – but there’s also a tremendous risk related to human capital. The pace of the world is accelerating so fast, the question is, do I have the right skills in my company to meet the needs of the marketplace?”
He adds that HCM is a “fancy phrase” for describing simple values about what makes employees stay at a company.
“Learning is traditionally focused on technical skills, but moving beyond that, learning is about leadership, management and development skills. We use the firm itself as a business school so that our managers become coaches and teachers.”
But this is more than just learning for learning’s sake. HR has a duty to make sure that chief executives understand just how managing talented employees can influence the bottom line.
“Talent management is at the heart of a company’s advantage. Sometimes there’s too much complacency in doing what we’ve always done and doing it well, rather than getting out of the comfort zone,” he says.
HR directors have an increasingly important role to play in closing the gap between what leaders expect and what is actually provided, which can often be done by exploring new ways of doing things, Fenlon adds. And that’s why he loves his job.
“Being at the centre of building a high performance culture is a great opportunity. And those are the kind of challenges that attract top talent to the profession,” he says.
Fenlon says the HCM profession also attracts more people from diverse backgrounds and careers, such as individuals with MBAs, or those that have come from the corporate sector – partly a sign of how much the function is changing.
At PricewaterhouseCoopers, HR employees are encouraged to obtain a certificate from the HR Certification Institute to gain valuable insight and to network. However, this is not a requirement, Fenlon says, but a tool to help people develop. “There are multiple career paths in the human capital profession – and people could specialise in performance management or coaching and development.”
He explains that PricewaterhouseCoopers in the US has a committee of partners whose mission is to provide guidance and leadership on the people agenda. Fenlon reports to the human capital leader on this committee.
“There is an intense focus [at senior level] on the human capital function and how we get the most value from it,” he adds.
The HR department is also moving away from a bias towards female workers, he says.
“Traditionally, it’s been the case that more women than men are in HR, but I think the direction we’re heading in is increasing the diversity of individuals overall.”