Thinking on how HR creates internal organisational value is evolving in line with external changes including the scarcity of talent and the movement around corporate social responsibility (CSR), according to the CIPD.
The role of HR is no longer just about policies and processes or trying to gain a seat at the executive table, said CIPD research associate, Louisa Baczor, who observed that recent public scandals involving well-known brands such as VW have put business integrity in the spotlight.
“While some may argue this has nothing to do with HR, actually what each of these scandals comes down to is people and culture,” she said.
“To earn and maintain people’s trust in business, we need to create management systems that benefit not only shareholders, but also employees, customers and wider society.
“So, the remit of HR is expanding and moving into the enabling space, to ensure that the business delivers sustainable value for all stakeholders.”
“While some may argue this has nothing to do with HR, actually what each of these scandals comes down to is people and culture”
Now that there’s a need for people management practices which develop organisational value in a sustainable way, Baczor said a key priority is better understanding how people actually drive value in the business, and the types of value they expect to gain in return.
As such, HR analytics is at the top of the agenda in many organisations which she said are seeking to use data and insights to shine a light on how investing in people impacts on organisational performance.
“There is growing recognition that people are at the heart of value creation, which places HR as an integral part of the business, not just a partner to it,” said Baczor.
The evolution of HR
With greater alignment between society and business agendas, HR is likely to become more focused on brand management and building trust to attract both customers and talent, according to Baczor.
This will require a wider knowledge base and improved skills to find solutions that meet the expectations of multiple stakeholders, while influencing the business to act in a responsible way.
Recent CIPD research, for example, found that almost half of current HR directors said their last job role was outside of HR.
“So, the profession might continue to incorporate other areas of expertise to develop organisations that are fit for the future,” she said.
“Innovative job and organisational design and quick upskilling of employees will be needed to make the most of the emerging opportunities that technology brings”
Secondly, as companies rely on technology more and more, Baczor said the scope of HR may continue to expand into the areas of innovation and organisational knowledge.
“For example, innovative job and organisational design and quick upskilling of employees will be needed to make the most of the emerging opportunities that technology brings,” she said. “Technology will also give people even more discretion over how, when and where they work, which will require more flexible approaches to people management and ways of working.
“We’re already seeing the focus shifting onto the actual outcomes that employees produce, rather than the number of hours they spend in the office, as more people are working remotely.
“Trust becomes even more important when the bulk of your workforce isn’t in the office every day, so more sophisticated systems will give people easier access to organisational data, and create greater transparency and autonomy.”
Opportunities for HR
The one thing that remains constant in the evolving world of work is the concept that human capital is what drives value in organisations – and this presents a “huge opportunity” for HR to make a difference, according to Baczor.
“As the world of work becomes more diverse, and we start working in new ways, the employment relationship will need to be managed differently – which is where HR and L&D professionals can take centre stage,” she said.
HR already holds a unique body of professional knowledge on the science of human and organisation behaviour, and Baczor said it’s exactly this expertise that can help organisations adapt to new challenges and opportunities.
“This type of valuable knowledge will allow HR to develop innovative ways of delivering sustainable business value through people”
“We need to put the ‘human’ back into HR by going back to our roots, and building behavioural science understanding into commercial strategy,” she said.
“For example, insights from neuroscience tell us what motivates people, which can enhance employee engagement and boost productivity.
“Together with better analytical capability, this type of valuable knowledge will allow HR to develop innovative ways of delivering sustainable business value through people,” said Baczor, who added that HR has the opportunity to increase its credibility and influence using this specialist knowledge, helping businesses become more people-savvy.
Hurdles for HR
Baczor also observed that it is difficult to refocus HR management away from policies and the bottom line, towards people-centricity.
“Credibility has always been a problem for the profession, and HR is often not seen as part of the solution in organisations,” she said.
“But to become trusted advisers to the business, HR professionals need to have the knowledge and courage to make sound expert judgements.”
HR also has to be very clear on what it stands for when applying expertise and skills, added Baczor, who said this becomes tricky because most people management decisions involve conflicts of interest and there’s rarely a right answer that meets the needs of both employees and the organisation.
“Inevitably, there will be tensions between their professional values and the business strategy”
“If you think about the trend of increased flexible working, how do you balance what’s best for staff with operational demands of the business?” she asked.
“HR practitioners will need to have the courage to challenge business leaders where a decision has potentially negative consequences for wider stakeholders.
“Inevitably, there will be tensions between their professional values and the business strategy, and so cultivating the right culture to make a multi-stakeholder approach work will be a key challenge.”
Most business leaders believe that their people are their most important source of competitive advantage, but Baczor said they will need HR’s help and advice to run the business in a way that harnesses that.
The CIPD research also found that the most commonly mentioned future priority for HR functions is leadership development and capability.
“That’s likely to become more challenging as we operate in a wider range of contexts,” said Baczor.
Steps for HR
Having a strong set of professional values will help HR to make balanced decisions and give trustworthy advice is critical for the profession, according to Baczor, who said the CIPD is currently in the process of defining the professional competences that HR needs for the future.
“Ethical competence is a key area – involving sensitivity to the available ethical choices, above and beyond legal requirements, when making a decision,” she said.
“This is important for all different types of professions, but within organisations HR is uniquely positioned to give a balanced viewpoint.”
HR also needs to move beyond relying on ‘best practice’ (which doesn’t always provide an answer in ambiguous situations), towards leading with a deep understanding of people, their relationships at work, as well as with the business’s vision and strategy, she said.
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