What is the future of HR? A new article in Harvard Business Review (Cappelli, 2015) discusses some of the ways that HR can shed its bad reputation and prove itself a strategic business partner:
It’s no wonder that human resources functions have developed bad reputations in many organizations. It falls to HR to make sure employees complete their new hire paperwork, to penalize individuals who do not attend required training, and to remind employees to elect their health benefits for the coming year. Furthermore, human resources professionals who offer anecdotal evidence rather than solid business metrics to back their visions, may reduce HR professionals’ credibility as masters of personnel management and change leaders. However, many HR departments have recently made great strides in quantifying the value of people processes and in using people metrics to support their cases for HR programs.
HISTORICAL TRENDS
Historically, top executives have relied on HR professionals the most when the economy is on the upswing. During times of recession, employees value job security and work their hardest to keep their jobs; turnover is down because employees know they are replaceable. When labor is scarce, sourcing the right people and retaining top talent becomes an ever more critical business priority.
As the economy continues to recover from the 2008 financial crisis, HR will increasingly be called upon for meaningful support.
STEPPING UP TO THE PLATE
Few CEOs have formal experience working in the “people” side of business. They must rely on their HR teams to keep a pulse on critical talent both inside and outside their organizations. Human resources professionals have valuable insight to impart on important people topics like layoffs, recruiting, flexible work arrangements, and performance management.
While most human resources professionals have a strong understanding of the people-side of the company, many lack financial acumen or business sense. In order to truly make the most of their people metrics, HR departments need to attract and cultivate analytical HR minds that can identify important relationships in HR data and interpret people trends. Companies like Microsoft and Google have had great success in using their companies’ personnel data to encourage better hiring decisions, and IBM has a long history of leveraging its employee data to create more effective project teams.
RETURN ON INVESTMENT
Bringing HR into the 21st century means HR will need to be able to prove the return on investment (ROI) of its people programs. Human resources is in a prime position to show the relationship between employee engagement and important business outcomes like turnover, sales, and profits.
THE FUTURE OF HR
Rather than reacting to immediate talent needs, HR can and should become a strategic business partner by predicting future talent trends and preventing problems before they arise. Human resources professionals must also take greater steps to study the impact of human capital initiatives, and to measure progress towards goals and intended results. For example, Comcast has decided to bring its IT capabilities in house rather than outsourcing IT needs. As a result, the company’s HR team must now source desired IT talent from the Philadelphia area, which is no small task. Frequent measurement of the success of talent acquisition and retention measures will enable Comcast and its senior executives to understand and assess progress towards desired targets.
By challenging long-held misconceptions about HR as a function, and by quantifying the impact people processes have on business, a new breed of HR leaders will prove themselves an invaluable asset to any team.