Uncertain Times: Why HR Is Even More Important In Periods of Instability
We are living in challenging times. Unpredictability and uncertainty in the economic and political worlds continue to impact confidence in consumers and businesses at global and local levels.
While some welcome volatility, in general instability is anathema to business. HR leaders aren’t immune from these concerns. When questioned by the Chartered Institute of Personnel and Development (CIPD) for a report investigating their priorities today and into the future, senior HR professionals cited economic shifts (including globalisation) and the UK’s impending departure from the EU as two areas they believe will have a negative impact on business objectives.
But more positively, the same CIPD “HR Outlook for 2017” report also found that a majority (59 percent) of senior UK HR professionals believe they are in a position to have a positive influence and safeguard their organisation against challenges created by these changes. If nothing else, this shows that the UK HR community is facing these issues head-on.
And there’s more good news for HR leaders from the CIPD research. Ever unflappable, and perhaps in spite of current business conditions, HR professionals named cost management as their number one priority both today and for the foreseeable future. Talent management ranked as the next priority, with organisational agility and productivity third on the list.
These will doubtless remain HR priorities as we move into the future, giving the list an overall sense of “business as usual.” HR teams are clearly not ones to panic, a characteristic which will stand them in good stead – and empower HR to support and enable the wider business in these turbulent times.
Using data and analytics to see around corners
Business leaders can’t see the future, so one impact of uncertainty is that they will increasingly turn to their peers and line of business managers – including the HR function – looking for better insights and predictions. This too was evident in the CIPD report, where responses indicated that the use of data and analytics to strengthen evidence-based decision-making is becoming particularly important.
Areas including managing personnel costs, handling workforce composition and diversity, performance management, attraction, recruitment, and selection, and learning and development all featured as respondents indicated that data and analytics are starting to play a much more central role inside the HR function as it seeks to drive value and provide deeper insights to the rest of the business.
According to the report, two of the main barriers to the adoption of HR analytics are technology capability and business culture. Many of the organisations leading the charge on the use of analytics in HR – those which have already adopted the technology – report experience of some cultural hurdles. Often they reported that they had not yet fully engaged other departments and lines of business, even in closely associated teams. Over half of risk and compliance professionals and more than a third of finance managers reported that they had no access to reports and dashboards in use by the HR team.
These results show that despite some very promising early steps, HR leaders still have work ahead to enable their teams and organisations to deliver all the advantages of HR analytics capabilities. The reasons for this can be complex and varied, but one theme of the CIPD research in this area was that HR technology currently in place is not thought to be capable of flexing with the changing needs of respondents’ organisations.
In response to a question on whether their existing HR technology was enabling them to carry out their role effectively, a mere 41 percent of HR professionals said they were somewhat or very satisfied. Likewise, only 38 percent said they were somewhat or very confident in the agility of their HR systems – a critical success factor in turbulent times, where businesses are only as agile as their slowest-moving asset.
Transformation of the HR function is an ongoing process for most UK organisations, and it is even possible that some have shelved or postponed projects as they grapple with delivering on their day-to-day objectives in challenging conditions. But businesses must embrace technologies such as analytics and big data if they are to succeed – and these tools and the insights they deliver must be shared outside of the HR team to other associated functions within the business.
Finding tomorrow’s leaders, today
Alongside data and analytics, succession planning and equipping tomorrow’s leaders also becomes paramount. Recruiting suitably skilled candidates from within the business is one way of maintaining some consistency in uncertain times, and at the same time arguably holds less risk than the alternative of making an external appointment.
Questioned about their priorities for developing leadership behaviours over the coming years, respondents highlighted performance management (46 percent), people management (45 percent), developing staff (44 percent), engagement/motivation (40 percent), and change management. HR professionals will look to those key areas to take precedence as they develop, upskill, and reskill all employees’ leadership behaviours and skills over the coming years. Close behind those factors came two other significant priorities, which reflect clearly the challenges of keeping costs within narrow margins: “Managing difficult conversations” and “budgeting and financial management.”
Over the past year, half of organisations reported asking line managers to assume responsibilities which were once the preserve of HR professionals – things like performance management, absence management, and recruitment). This dilution of HR’s responsibilities comes alongside other costs, with one-sixth of the HR workforce saying that line managers do not receive formal training or bespoke support when they assume these new responsibilities.
On the one hand, these findings demonstrate the successful shift towards self-service and the continuing transformation of HR away from the transactional tasks which have traditionally been the department’s bread and butter. That said, HR leaders must remember that managers are not HR experts. Businesses should have structures and processes in place which demonstrate a commitment to the ongoing development of these staff and the employees they manage.
What next for the HR team?
Like it or not, the coming months and years will be characterised by a different political landscape in Europe, the UK and beyond, plus continued digital disruption as companies strive to achieve their broader transformation goals. Two of those goals – increased agility and improved flexibility – will enable organisations to respond to the changing environment and as such will remain key priorities.
Cost management is another priority as businesses wrestle to keep OpEx and CapEx under control, with talent management poised to become even more vital if impending changes to freedom of movement and labour laws in the European Union, the US and the UK decrease the availability of talent. For this reason, organisations would be wise to keep talent management at the heart of their HR and people strategies at least for the near future, to help them deal with uncertainty.
The CIPD has its own suggestions for six specific areas which it recommends as a key focus for HR teams. The CIPD advocates that HR leaders should: demonstrate the value of the HR agenda; use HR data to strengthen evidence-based decision making; harness the benefits of technology; prepare for economic uncertainty; adapt to the changing needs and desires of the workforce; and strengthen the capability of people managers. By focusing on these areas as key tenets of an HR strategy, HR teams can remain effective and support the changing needs of the business to help it prosper in periods of instability.
It’s tempting to think these macro changes (such as globalisation and Brexit) are beyond the reach of HR professionals. But people teams which think deeply about the global shifts and their effects on an organisation can not only improve business performance but also put HR on the map as a trusted resource to help guide the business through these tumultuous times.
This assertion is backed up by the CIPD findings and the conversations undertaken with HR leaders to carry out the research. It is a cliché to say that challenges breed opportunities, but like many clichés, this one carries more than a grain of truth. New technologies, such as analytics and big data, will play a pivotal role in guiding HR and the broader business through this challenging period.
By maintaining focus and leveraging new technologies, HR has a real opportunity to steer the wider business carefully through this period of economic and political uncertainty. In doing so, the HR team will prove itself an indispensable asset as the organisation sails through the storm and into calmer waters.