Seven Seismic Shifts
The HR profession is undergoing a revolution – indeed, several revolutions; as a number of different global trends converge. In this article, Zachary Misko looks at the most prominent of those trends and how they are impacting upon the profession – and the professionals within it.
As businesses across the globe evaluate and continue to assess their recruitment needs, HR departments are being confronted by a daunting array of challenges. On one hand, in the aftermath of historical highs in unemployment, there is supposed to be an abundance of talent – yet attracting the best people is more difficult than ever. At the same time, there is unprecedented pressure on HR to lift its game, and become more aligned to the key strategic drivers of business performance. This article examines seven meta-trends that are shaping the new workforce, and provides insight into how the role of HR is being severely stressed to meet the needs of business and commerce in the 21st century.
The demographics are turning hostile
Recent events have caused a sudden shift in the critical labour shortages that had plagued developed economies for more than a decade. With millions of workers having lost their jobs in recent years, the basic rule of numbers would suggest that labour supply should be plentiful. However, the issue facing HR organisations is an increasingly critical talent shortage: those individuals who bring education and occupational skills to an organisation that can make an immediate and lasting impact.
Essentially, we are entering a phase in the demographic cycle that will be characterised by chronic talent shortages in certain sectors over the long haul. It is part of a longer-term trend dictated by population cycles. Population growth in major economies is below replacement rates, meaning there will be increasingly fewer people of traditional working age, relative to the older population. Unfortunately, many of the countries with fast-growing populations do not have the educational infrastructure to develop a level of skilled labour that can be readily substituted for the shortfall in industrialised countries. This results in a paradox: we may see high unemployment while at the same time recognising a global shortage of talent.
The Millennials are rewriting the rules
The influx of Gen Y, or the Millennials, into the workforce is changing many of the ground-rules that prevailed for Gen X and baby boomers. Gen Y has entered the workforce with different attitudes, expectations, and ambitions that range across issues of job selection, tenure, work-life balance, remuneration, promotion, and not least, the use of technology. For the Millennials, the workplace is not solely about work: it is a place for social interaction and shared learning.
Gen Y is also bringing new approaches to the issue of ethics, the environment, and social responsibility in the workplace. HR managers and employers worldwide – some with more success than others – are adapting to these behaviours and striving to get the best out of this diversity that characterises the modern workplace. Critical to recruiting this generation is an understanding of their social and cultural drivers – something which is beyond many HR organisations today.
The rise of the Free Agent
One of the most important workforce trends of the past two decades has been the rise of a new breed of independent free agents: consultants, freelancers, contractors, and ‘micropreneurs’, many of whom may have been laid off from well-paid full-time jobs in the 1990s recession, or the most recent global downturn. Instead of waiting for new opportunities to come to them, they have started up their own businesses, providing services to clients on a project-by-project basis. They have redefined the orthodoxy of lifelong employment to one of lifelong employability.
For employers, this “age of the ‘disposable worker’” ushers a new era of flexibility, with all the benefits that brings. But it also heralds a much more complex way of managing organisational talent. If key people can jump from one assignment to the next, how do organisations retain the critical talent that provides their competitive advantage? How do they protect the knowledge and IP that can slip out the door? How do they go about accessing the talent they need across the globe, juggling myriad legal, financial, and regulatory issues across jurisdictions?
The task of grappling with a shifting contingent labour force, while safeguarding critical knowledge, and maintaining morale in the permanent workforce, will be one of the key challenges of the coming decade.
Technology: friend or foe?
The days of help-wanted signs and newspaper job ads have passed, replaced by a vast array of platforms and technologies that are transforming the recruitment landscape. People are on the move, and the use of electronic and social networking tools are enabling recruiters and candidates with innovative ways of reaching their targets: this has led to a levelling of the playing field as organisations with media power and large advertising budgets are competing with no cost or low-cost blogs or webcams to post information.
However, while technology provides speed to market, recruiting and sourcing skills are still ultimately the driving factor in success. In this environment, it is not so much about the technology, but the appeal of sophisticated and savvy strategies that penetrate the electronic noise, able to reach potential candidates, both active and passive. Capable recruiters cut through the clutter that permeates much of the traditional media, and engage in interactions that can uncover exceptional talent.
Globalisation is here to stay
Labour is the latest ‘market’ to be engulfed by the tide of globalisation, as human talent becomes a fluid and exchangeable asset across international borders. In certain industries where skills are highly transferable, there is little to stop workers from being recruited for assignments in any location around the world. This is truly revolutionising the way that we search for, locate, and deploy talent.
Companies realise the potential of tapping into this vast global labour pool, especially at times of talent shortage – but will need their HR partners to show them the way. HR will be expected to become proficient with a range of technologies and platforms that support an ever-broadening set of functions. They will also need knowledge of labour markets, cultures, key recruiting methods, and labour laws in a variety of different jurisdictions, requiring a level of expertise that many HR departments have never been called on to provide.
Making HR a strategic priority
For a long period, HR has largely occupied a position on the periphery of strategic decision-making in the enterprise. The HR profession as a whole must take much of the blame for this. In the past, it has relegated itself to the limited value added around staff acquisition and benefits, and has not been able to move up the value chain in keeping with the transformation that is occurring in global labour markets.
That operational direction, however, is rapidly changing: HR practitioners are being charged to engage more in strategic business issues and are thinking more like corporate executives, moving out of the HR silo and putting themselves in the mind of those who are guiding the organisation. But this strategic shift comes at a price: HR practitioners will need to develop a broader business understanding in areas such as corporate finance, marketing, and strategic management. HR must know business as well as it knows HR.
Maximising recruiting efficiencies through outsourcing
Increasingly, HR organisations of all sizes have been shifting their focus to outsourcing the recruiting and screening function. Outsourcing allows an organisation to manage and participate where needed, while still providing maximum flexibility.
The complexity of the HR landscape means that many HR professionals are becoming bogged down in transactional tasks, at the expense of more strategic priorities. Much of the work around hiring is largely tactical, but it is also increasingly complex, and moving beyond the capacity of some HR managers. These are the type of jobs that are ripe for being outsourced.
It will be a matter for individual organisations to determine the scope of any outsourcing decision, but it seems clear that this path is increasingly being taken to liberate HR as it grapples with a multitude of issues. The steady growth of Recruitment Process Outsourcing (RPO) as a specialised industry supporting the HR function is testimony to this.
This article is an abridged version of the KellyOCG white paper “Seven seismic shifts: trends shaking the HR profession and reshaping strategic HR value”, © 2010 Kelly Services, Inc.
About the Author
Zachary Misko is the Global Director and member of the Leadership Team at Kelly Services, Inc. Outsourcing & Consulting Group (KellyOCG). He is a Senior Executive Board Member of the Best Practice Institute (BPI) and a chair of the HROA Research Committee. He is also a columnist for Outsource online.
“Equipment, procedures – those things can be duplicated. Human capital is the only area where companies can really differentiate themselves.” – Meldron Young