The Problem: The traditional human capital organization is not positioned to enable the growth of the future organization
Why it Happens: To minimize organizational risk, HR has shifted focus to policy enforcement versus business and talent enablement
The Solution: HR reintegration into the business by recruiting from the business team, rotating new professionals into operations to gain business acumen, and facilitating corporate continuous improvement initiatives to understand the interworkings of the business
Yahoo was not one to speculate where human resources would be in the future. Founded in the mid-1990s out of Stanford University by students that wanted to create a guide for the web. Within a year the idea had turned into a company that was now skyrocketing as a web leader into the dotcom bubble. Their product was groundbreaking, highly respected, and irrelevant after twenty-years.
Yahoo survived the bursting of the dotcom bubble but started to face stiff competition with Google. They attacked the competition through the acquiring of smaller companies to bolster their technology. Google focused on acquiring talented people to boost their technology. With economic downturns, Yahoo, went through multiple rounds of employee layoffs. This left a shell of employees to run the platform while the talented stars left in droves. The company had lost its ability to create and compete leading to its eventual consumption by Verizon.
This is not an uncommon story from the history of corporations, but the speed that took Yahoo from market leader to out of business is a new reality. Included in that reality is that talent is controlling the destiny of a corporation. The complexity of work combined with new technologies has shifted the model of having a few key players being able to manage a corporation to the need for an entire organization of key players to manage ahead of the market shifts in a dynamic world.
This is under the preconception that in the future when what we know as work pivots into something new, the workforce will have to react. The hope is that if organizations will have built a learning agile workforce, they will be able to acquire new skills rapidly and grab the early market share. Unfortunately, many organizations have reduced their human capital organizations to save costs which are putting their future sustainability at significant risk.
Why do we even have Human Resources? The modern-day organization has changed significantly over the last fifty years. Changing with the organization has been the workforce as the two’s evolution are inherently interconnected. For example, companies looking to achieve a competitive edge applied data-driven decision making which has created the new role of data scientists, manufacturing lines have been robotized and converted production workers into robotic technicians. This is the natural evolution of the marketplace that inspires talent wars.
These trends demand new skills that are rare and unique. Human capital organizations striving to put the right person in the right place at the right time scramble to find available talent to support the organization’s strategic shifts. When that talent becomes scarce, the organization focuses on building that knowledge through learning and development initiatives which typically come to fruition after the need has dissipated. The modern-day human capital organization not positioned to enable the growth of the future organization.
The history of modern human resources is connected to the laws enacted during the late 1800s and early 1900s that aimed to protect women and children. Establishing minimum wages, and protecting against hazardous conditions. This brought forward the age of personnel managers to shield companies from violating human protections. These functions evolved over time as work conditions transformed where personnel management became human resources and new roles were undertaken. These roles consisted of recruiting and hiring, training, compensation and benefits, labor relations, safety, and numerous other roles to keep the workforce connected to the organization. Over the past twenty-years, human resources have evolved their value proposition again. Becoming strategic partners with business leaders by providing the talent to enable future initiatives.
Recent enhancements in technology have increased marketplace complexity which has, in turn, created greater internal organizational ambiguity. To manage ambiguity, typical organizations break projects and functional areas into smaller sections and into repeatable processes to reduce this complexity. As ambiguity grows, manual processes grow until there is a tipping of scales. It tips when the bureaucracy of process management overtakes dynamic change. Roles can then shift from being strategic human capital partners to process and policy administrators. Leading to a long-term reduction of organizational value. Once in this role, human resources will no longer have a seat at the table to help shape strategy or enable it through personnel development.
Few organizations boast of a strong Human Resources position that is their competitive advantage. Partnering with business units to find and develop the right talent. The desire is to produce in a high performing work environment that they helped enable. Unfortunately, this is an exception and not the norm.
Human Resources has historically taken the role of referee instead of the player. Opting to watch the action taking place and judging if they follow the rules of the game to the letter of the law. This is a safe position for an organization to be in where the risk is minimal. By codifying policies out of legal best practices, their intent shifts from enabling business success to protecting the organization from lawsuits. There is a great deal of value in this service. However, it comes at a cost of separating itself from the mission of the organization.
Once Human Resources decouples from the business they will never be able to provide the value that the company needs. This ends with isolationism where Human Resources will be engaged only if permission is needed. Or if something has gone wrong. This sentiment is best captured by one of my first bosses, “you wouldn’t give your taxes to the IRS and have them check it for you, you try to slip it in without it being noticed.” Ethics aside, it resonated that there must be a better model for Human Resources than resorting to policy enforcement.
Spending the past months speaking with Human Resources executives, three key components kept rising to the top of each conversation. It helped in reframing Human Resources. The first was the importance of vision and strategy. This centered around HR not only being in the room of strategic planning sessions dictating what can and cannot be done. But actively participating in how they can contribute towards helping to achieve the strategy. This was helping build aggressive plans and knowing that they would be able to produce the people and culture to help the vision be achieved.
The second main topic discussed was the importance that talent management will play in the future if not already. At the time of this writing, unemployment is a record low. Talented workers cost a premium for limited use. Subsequently, competitors outbid for talent and they move on. History will repeat itself and unemployment will rise again, also the rampant infusion of artificial intelligence will be upon us. Logically the dots connect where talent availability increases once these factors strike, but again history repeats itself. With every great innovation comes new jobs to supplement, leverage, and expand from that technology. It’s not known what those new job fields are yet. However, employers will face a mass shortage of talent to fill those open positions. This links back to finding great talent, that has learning agility, and an environment in which they can develop.
The final component identified was the needed development of business acumen in the core of Human Resources. While HR had been decoupling from the core mission of organizations, they also lost their seat at the table of organizational strategy. The tours spent as a traffic cop, policy administrator, and planning company picnics led to a loss of credibility. This further separated HR from the business. During this period the business competence was lost and not developed in the core of new HR professionals further dividing the two units. Until Human Resources builds back its knowledge of the business and operations it will not be engaged in the strategy and will be unable to provide true human capital value to the organization.
If your organization has relegated Human Resources to the sideline, there are difficult steps to take to reconcile the relationship. Implementing a new framework for Human Resources begins with gaining back credibility. Accomplished by developing a higher level of business and industry acumen. Three tactics would be recruiting new members to the team from the business and then developing their knowledge of human resources.
The second would be to put in place rotational programs that would send your new professionals into the business for short periods to work and understand the teams from an ethnographic perspective. Lastly, involve the team in the organization’s continuous improvement initiatives. Ensure they play a role in facilitating the improvement processes. They will learn the processes, frustrations, and opportunities that the business endures.
As credibility begins to reestablish itself and seats are gained back at the strategy table, ensure that your team is in position to provide value. Understanding the business strategy is a necessity. Understanding industry best practices make the team valuable. Lastly, understanding the market and competitions’ strategies makes the team indispensable.
The ability to predict market trends enables the team to position the organization with on-boarding and developing the talent before needed. They will be able to enable a high performing work environment instead of a culture of control. This may be the catalyst that the organization needs to catapult itself into the new world of business or it may be the competitive edge that the organization can take advantage of. While common to not have Human Resources embedded with the business. In the future, it may be the final nail in the coffin of the business.
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