By: Dan Hilbert
Part 1, http://danhilbert.com/?p=36, examined three primary drivers that will dramatically change the landscape of HR and its leadership.
1) New SEC and government regulations related to shareholder risk, executive compensation and new risk responsibilities of the Board of Directors
2) The Tipping Point of Strategic Human Capital Management
3) The end of the era of “gut-based” HR decisions
Part 2 examines the three additional primary drivers changing HR and Human Capital Management in 2010.
4) The Newly Required HR and HCM Competencies
As new SEC and government regulations and fact-based decision support systems become the standard for strategic Human Capital Management (HCM), a new set of competencies, different from those used for tactical HR processes and functions are required.
According to my esteemed colleague at Tatalent2 in Australia, Neil McCormick, “Much of what HR considers being strategic is actually tactical processes. With software, most HR tactical processes are becoming a commodity. The next realm for HR is business aligned workforce strategy.”
When HR gains control of these new strategic risk functions, the value of HR grows exponentially. CHCO staff meetings will consist of HC financial specialists, HC operational specialists, HC technologists, HC process improvement specialists and HC risk management specialist. Staff meetings will be focused on mitigating HC risks to the Board of Directors and the C-Suite, capital projects, operational performance, new strategic plans and driving financial results.
HR leadership staff meeting participants will use predictive decision support systems to proactively discover HC risks before they impact the business just as other businesses leaders use to manage other mission critical functions. Jim Holincheck, the global head for Gartner’s HCM and Risk Management practices pointed-out in 2007 that decision support systems will provide the capability to drive unprecedented value in HCM. That day is here as is the demand for the specialized competencies required.
The HR Business Partner function will transform into a strategic, evidence-based, decision support role constantly delivering value in areas of business risk management, revenue optimization and operational productivity. As with the CHCO, the HR Business Partner will be supported by a team of Human Capital strategic specialists. Specialization is the domain of evidence-based decision support – in all mission critical functions.
In those instances where HR does not gain control of these new strategic responsibilities, advanced technology and outsourcing will be the primary new competencies required by HR.
5) A New Level of Communication – Linking and Aligning HCM with the Business
HR leadership cannot implement this next stage in strategic HCM without a new level of communication with operations and finance leadership. HR leadership can put the primary pieces into play clearly demonstrating the value of strategic HCM to leadership. However, strategic HCM is about measurably driving profitability, operational performance, risk management – the science of having the right people at the right place at the right time at the right cost, performing optimally.
This level of strategic value can only be provided when HR leadership is aligned with organizational and financial leadership. Training, development and succession planning are future-facing functions. To be financially and operational effective, these functions will become dynamically aligned to changing business conditions and objectives.
Neil McCormick referred to Nike, “Nike used to be a shoe manufacturer. The decision was made to transform Nike into a marketing company within 3-years. This required new skills, new positions and new: training, development, succession, retention and attrition strategies to support a marketing company – not manufacturing. “ If not aligned to the future of the organization, future-facing HR functions are wasteful and prime suspects for outsourcing. In this economy, there is little room for financial and resource waste.
New services, new products, capital expansion projects, new locations, acquisitions, new customer profiling systems, new technologies, new financial instruments, new markets are the key strategic plans that drive organizations. HCM strategies will be proactively and dynamically aligned to these critical business programs. Unlike many traditional HR tactical functions, strategic talent functions will become agile and rapidly scalable. The result will be delivery of value added HCM services providing competitive advantages, increased innovation and reduced time-to-market of valuable business services and products through new levels of strategic communication.
6) Management of all Talent Functions as a Single Unified Resource
Today, the domain of business is filled with new government regulations, global competition, advanced technology and an ever increasing rate of change.
Businesses that depend on one or more supply chains, which account for the majority of Enterprise 5,000 companies, cannot manage the individual components as separate entities and survive. If manufacturing or product acquisition is not based on customer demand, wasted expenses are incurred. If logistics cannot supply the required level of product to stores and distribution channels, again wasted expenses are incurred.
To business leaders, the ability to manage all components of the supply chain is essential to business success. Each component can be improved individually, thus increasing the overall performance of the supply chain. However, it’s imperative that all supply chain components are aligned and managed as a single entity.
Recruiting, contracting, training, development, succession, compensation and performance management are the exact same as supply chain components. Inefficiencies, costs and risks of managing talent functions as disparate pieces are huge and will place organizations at risk going forward in today’s economy. The software and decision support systems exist today to manage talent with the same level of performance as supply chains. These technologies will empower a new level of HCM leadership with business aligned vision, communication from the C-Suite and opportunities to prove the real advantages of organizations’ “Most Valuable Asset,” – and usually most expensive!