THE FUTURE OF HR?

Dr. Peter Saul Director, Strategic Consulting Group

Paper presented to: Macquarie Graduate School of Managements People Management and Leadership Conference September 16-19, 2001

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SHIFTS THAT ARE RE-SHAPING HR ROLES

FROM
Local markets, operations Manufacturing, clerical work Hierarchy Intermediaries; face-to-face Obedience to formal authority Stability, efficiency, control Full time job Customer service Work done by employees Fixed work location Management prerogative Loyal service White, male workforce Financial performance Get a job

TO
Global markets, operations Service, knowledge work Networks Direct access,virtual relationship Questioning of formal authority Change, creativity, flexibility, order Part-time and project work Shareholder, stakeholder value Work done by many contributors Diverse work locations Social licence Marketable knowledge, skills Diverse workforce Triple bottom line Get a life
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CHANGING WORKER ASPIRATIONS

 RICHARD BRANSON  MICHAEL JORDAN  RICHARD BORES (Wizard Home Loans)  MERY STREEP AND JODIE FOSTER  ANITA RODDICK  NELSON MANDELA AND JERRY MAGUIRE
had a dream and went through with it...loved what he did lives life the way he wants... created this lifestyle for herself out of what could have been a downward spiralreally inspiring
AFR BOSS magazine, June 2001. Survey of work role models for white collar Australians, in 20-30 years age range.

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HR AT A CROSSROADS
Results of a forum on the "The State of the HR Profession" held in conjunction with the 2001 Annual Conference of the Society for Human Resource Management  Significant change is inevitable for HR but what HR will be and do is not yet clear  SRHM is doing research to develop a vision for the future of HR and a profile of the future HR practitioner  An HR practitioner might be "a hybrid line manager" who is "first and foremost a business executive" but has expertise in at least one HR function. SHRM President and CEO, Helen Drinan  We have to get management to understand that they're responsible for people AND If we do our joband work ourselves out of a jobso be it."
Also see FT.com online forum on Human Resources: A career in crisis?
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EMERGING LEGAL ISSUES AT WORK

 NEW TECHNOLOGY ISSUES  AGE CONSCIOUSNESS IN THE WORKPLACE  GLOBALISATION OF EMPLOYMENT LAW  TRAINING FOR LEGAL COMPLIANCE  WORKPLACE SAFETY
Source: Garry Mathiason (Littler, Mendelson, Fastiff, Tichy & Mathiason) SHRM Annual Conference June 2001. Results of survey of 400 employment attorneys Strategic Consulting Group

HR EXECUTIVES VIEW OF THE FUTURE

TOP 5 BUSINESS CHALLENGES  Developing new markets  Improving profitability  Market share growth  Becoming the recognised global market leader  Building shareholder value TOP 3 HR CHALLENGES  Attracting and retaining talented people  Improving organisational capabilities  Developing leadership skills

Source: Arthur Andersen survey of HR Executives in almost 70 Australian-based firms Reported in HR Monthly, August 2001, p.17 Strategic Consulting Group

The bad and the ugly in HR

 Many HR people still lack business acumen  We have not adequately managed high expectations of HR  Theres too much modeling of mediocrity and way too little real research going on  We have overhyped e-learning and some other fads  We do much order-taking and mistaking talk for action
Jim Moore, former Director of Workforce Development at Sun Microsystems in his address to the 2001 SHRM Annual Conference Strategic Consulting Group

Q. So, how do we organise all the shifts, trends, speculation and forecasts into a framework that can guide fruitful conversations between, and strategic decision making by, senior line managers and HR professionals?

A. Scenarios is one way

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FOUR AUSTRALIAN SCENARIOS

FIRST GLOBAL NATION
Australia capitalises on globalisation; promotes its internal diversity and ethnic tolerance; and boosts homegrown innovation and industry capability

SOUND THE RETREAT!

Globalisation stalls as political and social structures are not ready; trade barriers and nationalism re-emerge; we depend on bilateral national and commercial relationships

BRAVE OLD WORLD

Complacent, dependent on agriculture, tourism, new manufacturing and some biotech; clever people and companies move overseas

GREEN IS GOLD
We emerge from the growing imperative to protect the natural environment as a leading innovator of global environmental management

Source: Australian Business Foundation Alternative Futures: Scenarios for Business in Australia to the Year 2015 Sept 1999 Strategic Consulting Group

DEFENCE: In the Box Scenario Matrix Open globalised world economy

Global middle class

Social polarisation and exclusion

Source: Hardin Tibbs report to Australian Defence HQ 1999

Closed protectionist world economy

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DEFENCE: Way Out of the Box Scenario Matrix Revolution in basic science

Single world government

Social progress with no discontinuity

Psycho-social evolutionary punctuation

Discontinuity in human consciousness

Source: Hardin Tibbs report to Australian Defence HQ 1999

Science reaches a plateau

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TWO SCENARIOS OF THE 21ST CENTURY ORGANISATION

MIT Initiative on Inventing the Organizations of the 21st Century (January 1997) facilitated by Peter Schwartz of the Global Business Network:http://ccs.mit.edu/21c/21CWP001.html The scenarios were developed during 1994-1997 by MIT academic and research staff in discussions with hundreds of executives at various MIT Symposia, executive education programs, etc.

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FUTURE OF ORGANISATIONS: Scenario 1

SMALL COMPANIES,LARGE NETWORKS
    Autonomous teams of 1-10 people Temporary - task or project based Linked by high bandwidth, electronic network Venture capital infrastructure identifies promising teams and provides financing

 Independent organisations for social networking, recreation, learning,reputation building and income smoothing evolved from professional associations, unions, clubs, university alumnis, neighbourhoods, families, churches they are home for our identity as projects come and go
Examples: Film industry; Prato Mills (Italy); Nike; Nokia PC Display Division
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Small Company, Large Network HR

 Very specific HR scope focused on project organisation (e.g. talent scouting/selection, pay, health & safety)  Outsourced
agents, brokers, specialist providers contract staff organisations handle the HR for their talent as part of their brand and competitive strategy

 Mutual employment obligations spelled out in project contracts

or implicit in industry standards or assumed from past working experience

 Project Managers reputation depends on his/her people skills and hence there is a reluctance to delegate to HR specialists
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Small Company, Large Network HR (cont.)

 Selection is via networks, personal references, reputation  Performance management is via peer pressure and industry/ professional standards  Rewards are contractual or entrepreneurial (equity based)  Development is via doing leading edge projects  Innovation is via brokers, deal makers, agents, sponsors  Individuals rely on professional associations, guilds, managers/agents
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FUTURE OF ORGANISATIONS: Scenario 2

VIRTUAL COUNTRIES
Keiretsu-like alliances with operating companies in every country Minimal national allegiance - primary loyalty is to the corporation Traditional hierarchy or decentralised divisional structure Company is the focus for individual identity Company meets employees needs from cradle to grave Employees own the firm AND have right to elect the Board and management  Open book accounting informs management elections  Specialist organisational designers travel through firm brokering partnerships and fostering cross boundary communication        Role of governments, industry unions is significantly reduced
Examples: Asea Brown Boveri; GE; Johnson & Johnson
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Virtual Country HR
 HR almost replaces social welfare, education systems and provides financial management and estate planning services, etc  Corporate (strategic) HR
sets standards and monitors the corporate culture helps Marketing build the corporate brand

 Divisional (operational) HR
total care of employees so they are free to focus on performance

 Actively involved in local communities to reinforce the company culture and image

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Virtual Country HR (cont.)

 Selection emphasises fit with corporate values  Performance management focuses on results achieved the XYZ way and on being a company ambassador in all areas of life  Reward is via promotion, enhanced status, rights, benefits - and pay  Development is via corporate colleges and universities in partnership with the worlds best educational institutions  Innovation is through internal R&D and improvement programs with heavy emphasis on protecting corporate intellectual property
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CHANGING HR ROLES: Some Generalisations

PAST
HR ROLE WAS CLEARLY DIFFERENTIATED mechanistic (Personnel Admin) ritualistic, legalistic (IR) CEOs eyes and ears with the troops distinct professional career paths

FUTURE
PEOPLE/LEADERSHIP ROLE IS DISTRIBUTED AND DIFFUSE knowledge management relationship management; teamwork legal compliance change management no distinct HR profession new hybrid roles emerge

HR is HRs responsibility

People/Leadership is everyones responsibility

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NEW CRITERIA FOR RATING HR?

 Profit generated per employee (compared to industry benchmark)  Salary/wages costs compared to industry median (reflecting value of corporate reputation/intangibles in labour market)  Number of talented candidates applying for advertised (and unadvertised) vacancies  Time taken to satisfy customer orders, inquiries, complaints (compared to agreed service standards)  Incidence of customer complaints caused by employee behaviour  Cost of re-work  Cost/risk due to time lost through injuries, absences, disputes  Rate/cost of unplanned turnover among good performers  Percentage of customers citing service quality or competent, caring staff as a competitive edge for the company  Net cost of generating organisational improvements  Percentage of revenue/profits coming from initiatives taken in last 3 years  Share price premium compared to industry peers
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AN INTEGRATING STORY?
OUTCOMES
(Stakeholders)

ARCHITECTURE
(Leadership)

FUNCTIONS
(Management)

Shareholder/ Investor

VISION & MISSION CORPORATE STRATEGY Competitive strategy Development strategy Leadership style Culture/Values/Ethics ORGANISATIONAL DESIGN Structure Technology Place

Finance Investor Relations Sales & Marketing Operations R&D Contributor Relations Contracts (Legal) Supply PR Community Relations

Customer

Contributor - employee - other

Community

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MAPPING YOUR ORGANISATIONS CURRENT TRAJECTORY

Get Talent Motivate Reward/ Talent Recognise Talent Develop/ Skill Talent Tap/ Utilise Talent Retain/ Transition Talent

2000s 1990s 1980s 1970s 1960s

Derived from an HR framework proposed by Brian Young PeopleFirst Solutions Previously Asia Pacific HR Director for Deutsche Bank Strategic Consulting Group

MORE WINDOWS INTO POSSIBLE FUTURES

SOME WEB SITES ENGAGED IN THE SEARCH: http://ccs.mit.edu/21c/index.html http://www.foresight.gov.uk/default800.htm http://www.defence.gov.au/nspb/htibbs-futuresV.4.ppt http://www.dol.gov/dol/asp/public/futurework/welcome.html http://www.fastcompany.com/ http://www.bsr.org/ and http://www.csp.uts.edu.au/

http://www-csc.mty.itesm.mx/~laava/KMetaSite/menu/sitemap.htm http://www.managewithoutthem.com/ http://www.futurists.net.au

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