Why HR management will never be the same again

There have always been predictions of the imminent collapse of the HR function – a warning often made by executives and management gurus alike.

Such injunctions range from ‘the first thing a new chief executive should do is fire the personnel department’, to the more subtle suggestion that maybe most of the activities in HR have been subsumed with general management roles, or outsourced.

Whatever motivated those opinions – which could, for example, be the partial, personal experiences of job applications rejected run-ins with personnel over rewards or the pervasive view often found among the management ‘chancers and cowboys’ that HR just produces rules and promulgates adherence to inconvenient laws – we can take it as part of the territory.

But in talking to HR directors and senior managers over the past few months, I have gained the distinct impression of a fundamental change in the HR field. And the changes that have been gaining most momentum over the past few years are more like major shifts in the approach to HR and the organisation of the function.

There are three main drivers for a significant change in the way human resource management (HRM) is delivered:

  • The desire on the part of HR specialists to become more ‘strategic’.

  • The impact of new technology on the way HR services are delivered.

  • The impact of substantial outsourcing.

The ‘strategic’ desire has been fuelled by a need to be near to the key decision-makers, and to be able to influence in moments when HRM can make a difference. For many in HR, that has been achieved. ‘Business partners’ have sprung up all over the place, whose role is usually to provide advice to senior managers on the ‘big picture’ aspects of HRM, and to be a source of consultancy and sometimes executive decisions. Closeness to the business means knowing the business well, the business model, the competition, and how the business is expected to develop, as well as the effect of all these factors on customers, structures, prices, costs, staff, and so on. Eventually, success in this field of business partnering brings the HR specialist into a quasi-general management role itself.

New human resource information systems (HRIS), which provide data for the strategic role, often also include self-service, which together with HR service centres means the transactional role is more automated. A part of the business case for the introduction of new systems usually concerns the efficiency savings that will result from a reduced HR headcount, as well as improved overall efficiency, consistency and speed of service.

Inevitably, this has an effect on the structure of the function.

As there will be fewer lower-level HR generalists, a new breed of specialists in HRIS is emerging, and overall we can expect fewer roles as efficiency savings are sought.

Outsourcing is a further factor in these changes. Hardly a day goes by without some further news on this front. Big names such as Unilever, BBC, BT and Cable & Wireless are often quoted as examples.

Even if the whole HR function is not outsourced, often substantial parts of the activity are. There is now a whole range of industries supporting HR activity within organisations. The specialised nature of this produces what I called the ‘Balkanisation’ of HR, where sub-specialisms develop careers in their own right.

For the future, we might expect a smaller, more general management-orientated HR function, supported by an industry of external specialists and professions. The old bureaucracies are being replaced, and the world of the future belongs to fast-moving, agile organisations capable of organic change. HR will be configured around this model. HRM will never be the same again.

By Shaun Tyson, professor, Cranfield School of Management

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