November 22, 2014
In the slower-moving corporate environment of the pre-Internet world, as dramatized by the show Mad Men, the Human Resources department was little more than an administrative unit, responsible for calculating and cutting paychecks, and keeping track of vacation time. All of that is changing in the new landscape that is being shaped by the interconnectedness of the digital age. The result is that HR departments now have the power to greatly help, or greatly hinder, corporate performance. For those who want to keep up with this emerging paradigm, the situation is worth examining.
Personnel Is Policy
The environment in the global marketplace is growing ever more competitive, and the need to adapt to changing market conditions caused by the digital era is growing ever more critical. As a result, firms are increasingly reliant on key personnel within their organizations to drive innovation and profitability. That is where the HR departments that find and hire these workers enter the picture.
Observers of the corporate world are calling for companies to recognize, and to elevate, the strategic talent management and organizational design functions of HR departments. In some cases, the advice extends to separating those critical functions from the traditional administrative functions performed by HR, which include managing employee benefits and insurance coverage, compensation, training, and development.
Blast From The Past
In the corporate model of the past, the HR department would be responsible for reviewing resumes and for arranging interviews. Executives in other departments, however, had ultimate hiring authority, and Human Resources did not have that much of an ability to affect corporate performance. As a result, it simply wasn’t necessary for HR personnel to understand the core workings of the company and its competitive position.
Trapped In A Silo
It was also true that, until recently, a career path in Human Resources generally led to a “siloed” career. HR was like the Hotel California, as described in the famous song by the Eagles – once you enter, you can never leave. Workers who joined that department remained in it for their entire careers. While talented workers might rise within HR, they were not likely to be brought to other departments. As a result, there was little interaction between HR and the rest of a company on strategic issues.
Survey Data Confirms New Trends
Workforce.com collected survey data by holding a consortium at which representatives of eleven large corporations participated. The survey asked the participants to rate HR’s role in positively affecting their firms’ performance in relation to nine major business trends. The trends included globalization, generational diversity, sustainability, social media, big data, and gamification, among others.
The survey results indicated that there was a broad consensus that HR departments needed to devote more resources to understanding these emerging trends and developing talent recruitment strategies that included them. The survey participants also saw value in HR departments reaching out beyond their traditional roles, and in communicating with government, regulators, and investors in order to better perform the critical role of talent acquisition, development, and retention.
Employee Feedback Function
HR departments also had a useful function as sounding boards for employee complaints and/or suggestions, the survey results suggested. Because the HR department’s staff routinely interacts with employees face-to-face, and on a continual basis, Human Resources personnel know more corporate gripes and gossip than do the members of any other department. By skillfully and diplomatically bringing this information to the attention of management, unpopular, unproductive, and counter-productive company practices and policies can be examined and addressed. The survey participants agreed that no other department was truly in a position to perform this task.
Big Data Able To Unearth Big Talent
One survey participant, representing a financial firm, stated that the firm traditionally hired only top-tier university graduates with top grades as its sales people. A big data analysis conducted by the firm, however, revealed that grades and school quality were not particularly predictive of success in a sales role. Six other factors were found to be more predictive of success in sales, and the firm as a result shifted its hiring practices to favor those factors over grades and school quality.
Should human resources departments be performing such big data analyses in conjunction with their hiring practices? This is a question corporations are increasingly asking themselves, and more and more of them are answering in the affirmative. Other corporate departments, they are concluding, are simply not as good a fit for this function.
Traditionally, the HR profession involved application of psychology and anthropology. Big data analysis of human performance in different roles represents an updating of those older fields of study. It seems ever clearer as times goes on that HR departments will need to incorporate these academic disciplines, together with big data analysis, in order to develop the ability to tell valuable stories using information, in a way that will drive their companies toward increasing success.
You Need Talent To Recognize Talent
Today, the digitally driven trends that are reordering the corporate world are making recruitment a critical corporate function. CEOs in survey responses are acknowledging that talent is a key factor in facilitating, and in some cases limiting, growth and profitability. And it is the HR department that must identify, recruit, and retain that talent.
In order to revamp HR departments to support more effective and competitive organizations, HR staff members need to possess the same degree of business competence as employees in other departments routinely have. HR workers need to have marketing and finance expertise, for example, along with expertise in the firm’s core business.
This will permit the HR department of the future to participate in corporate strategy, and will empower the department to recognize, identify, and recruit the key talent that their business requires to succeed. Students of this corporate field are also calling for the HR department, or at least its non-administrative portion, to be headed by a chief organizational effectiveness officer, who should report directly to the CEO. It’s time, these observers, say, for HR to have a seat at the table.