Globalization, diversification of business models, technology, and increased competition have modified human resource (HR) managers’ current roles to that of strategic managers. The paper is organized into four parts: the first part defines HR functions to ascribe meaning to the concept discussed in the essay. The second section provides an overview of current HR practices and how these activities have evolved. The third segment offers a rationale as to why evolving HR functions might interest fellow CIPD members. The last section of the essay reflects on the future of HR roles. Understanding HR functions’ evolution can help pertinent professionals align their skills and competencies with practice trends. The paper’s overall aim is to evaluate the future of human resource management (HRM) functions in the ever-evolving environment.
The Human resource department is responsible for a wide range of functions in an organization. The Chartered Institute of Personnel and Development (CIPD) defines HR functions as practices that help an organization deliver its corporate strategy and goals through effective recruitment of people and performance management (The HR function, no date). Strategic HR functions are integrated with a company’s strategy formulation, implementation, and firm performance practices (Kim and Sung-Choon, 2015). The procedure requires the alignment of every HR function with the firm’s strategy.
The Evolution of HR Practices
HR professionals’ responsibilities typically range from planning to recruitment selection, compensation, career development, and performance management. The primary goal of strategic HR functions is to enhance employees’ productivity and identify areas of improvement in human resource operations to obtain better organizational outcomes. Over the years, it has become apparent that HR duties change depending on the macroeconomic business conditions. The coronavirus, for example, has become a workplace transformation accelerator of the present time. During the pandemic, work settings shifted from formal environments to remote or informal environments. Many companies accumulated training resources to support employees who have embraced technology to deliver tasks.
HR managers had to undertake strategies to ensure that the workers’ performance does not deteriorate despite the adjustments made in their working conditions. A recent survey revealed that many HR professionals see the pandemic as an opportunity to redesign business processes, services, models, and cross-training practices (Meister, 2020a). For example, Walmart announced that it was partnering with Strive Enterprise to train the workforce to manage Black Friday shopping with minimal risks (Meister, 2020a).
PriceWaterCoopers company, on the other hand, has invested in physical, mental, and spiritual wellbeing to help employees manage anxieties triggered by the pandemic (Meister, 2020b). The FlexJobs and Global Workplace projected that there might be a significant increase in remote working following the pandemic’s onset (Meister, 2020b). HR managers need to adjust their strategies and practices to meet the needs of the organization and employees.
During the pre-pandemic era, globalization, changes in business models, technology, and demographic factors influenced HR roles. These functions have evolved from administration, personnel management, and human resource development to strategic management (Rowe, no date). The Ulrich HR model has dominated the specialty’s functioning in the last two decades. A survey conducted by the CIPD showed that 95% of companies had heavily invested in transforming the discipline’s practices within their operations between 2004 and 2014 (Changing HR operating models, 2015). Over 50% of the institutions involved in the survey claimed to have invested in Ulrich’s three-legged HR function framework (Changing HR operating models, 2015).
On further analysis, CIPD discovered that 77% of the managers felt that the model positively impacted the unit’s services. Ulrich’s model had the most significant impact on the department’s operations, which were ranked at 95% improvement rates (Changing HR operating models, 2015). The benefits associated with the framework include improved HR capability, operational efficiency, and alignment with organizational objectives.
The framework is mainly characterized by transactional HR services, the role of HR as business partners, and centers of expertise. Ulrich categorized the specialty’s functions into four major categories: strategic partner, employee champion, administrative expert, and change agent (Pay, 2018; Yusuf et al., 2017). The framework has become the standard approach for the delivery of HR functions in recent years. Traditionally, HR roles were typified by payroll management, avoiding tribunals, developing company policies, and attracting staff with requisite skills and personality. However, as organizational structures changed from hierarchical into matrix models, so did HR managers’ roles. Talent became the priority issue for most business executives as they realized that talent played a significant role in organizational outcomes (Changing HR operating models, 2015).
The HR business partner role later became relevant to organizational effectiveness and success. HR professionals were expected to lead the transformations by recruiting and retaining engaged, high-quality, and well-aligned individuals. The service center of HR became focused on spearheading talent outcomes, creating a compelling business brand to sell to high-performing candidates, and aligning the performance processes with the company’s outcomes.
However, CIPD noted that the strategic roles of HRs are not uniform in all organizations. The functions of HR differ depending on the organizational structure, size, business model, and level of growth of the business. For example, as a firm moves from one level to another, its purpose and mission change. During the first and second phases, the primary focus of the organization is on efficiency. Therefore, the institution will establish a service center and designate business associates tasked with the duty of minimizing inefficiencies or ineffectiveness during service delivery. The company will leverage the duties of HRs as generalists to support its needs. HR generalists mainly deal with a broad range of activities, including management, capacity building, change management, and conflict management (HR generalist role, no date). Their responsibilities center around the organization’s needs; therefore, decisions, priorities, and solutions will focus on the establishment.
During the third phase of an organization’s growth, HR managers focus on talent programs’ effectiveness. The immediate focus of the HR role at this stage is individual outcomes; they typically emphasize driving talent, quality hires, and a leadership pipeline. The latter refers to the process of building leaders from a company’s workforce. At this point, the primary objective of HR is to develop world-class talent through training and career development (Changing HR operating models, 2015). Strategic training and career development should be in line with the company’s goals.
The use of strategic approaches facilitates the specification, measurability, and efficacy of professional advancement initiatives. Strategic career development starts during the recruitment and selection process. For example, HR will assess the market position of their organization, determine the talent and skills needed to remain competitive in the market, and then select candidates whose career plans match that of the organization (Alhalboosi, 2018). Finally, they align an individual’s objectives with that of the firm through training.
During the last growth phase, HR functions in the organization adopt new practices. At this point, the firm has a strong service delivery. A company must have spent at least three to five years optimizing internal talent to be at the optimal growth phase (Changing HR operating models, 2015). The HR practices at this stage are characterized by network recruiting, a strong employment brand, and digital self-learning. The institution uses data analytics to determine the best candidates, and individuals can choose to learn on-demand either through formal or informal learning.
At the top level of the strategic business role, HR directly supports business efficiency through agility and responsiveness. They hire, oversee the business brand, and market the firm to prospective candidates. Approximately 65% of teams in high-impact firms are specialists. HR specialists’ primary focus is to optimize processes in a given area (Changing HR operating models, 2015).
For example, they can focus on risk management, HR information system, labor relations, and organizational development to enhance positive outcomes (HR generalist vs. HR specialist, 2020). As opposed to service centers, executive HR business partners build a network of expertise. A system of knowledge refers to HR services that are decentralized and shared across a spectrum of experts. Often, strategic partners will collaborate or work with line managers to deliver HR functions.
Traditionally, HR spent a considerable amount of time doing paperwork. In response to the seismic changes in the macroeconomic environment, outsourcing became imperative for organizations seeking to maximize organizational efficiency. Increases in interim resources, consultants, contractors, ERP technology, and partnership arrangements made outsourcing even more attractive to organization leaders (Changing HR operating models, 2015). Outsourcing became an alternative to help HRs focus on strategic roles such as career development, information management, and performance management.
During the first evolution of HR outsourcing, HR mainly outsourced payroll functions as a standard practice. Contracting-out was done to standard HR operations, reduce HR costs, and help the company access innovative technology (Changing HR operating models, 2015). In the second wave of outsourcing, HR managers not only outsourced payroll functions but also oversaw benefit administration, the recruitment process, learning, and contract. HR managers used tactical tools such as shared services, software-as-a-service, business-process offshoring, single-source outsourcing, and professional employer organizations (George, 2020).
Sub-contracting reduced the amount taken in transactional and administrative duties, allowing HR to focus on strategic management tasks. The evolving roles have made outsourcing to become an essential tool in HR practice.
Various traditional roles of HR are currently being done by line managers. For example, overseeing the day-to-day responsibilities of team members is mostly delegated to the line managers responsible for the productivity of staff that directly report to them. Historically, these roles her part of the HR scope of practice. Delegating these responsibilities has helped line managers to develop better people management activities (Changing HR operating models, 2015). Internal outsourcing is based on the Human Resource Business Partner (HRBP) delivery model that asserts that partnering with internal managers can translate to cost-savings and positive organizational outcomes (Beatty, 2019). The HRBP framework can enhance operational efficiency and business competitiveness.
Apart from internal outsourcing, HR can outsource various functions externally. The diversification of business models, i.e., partnering up with allied businesses to create new markets, has increased the need for synergy, collaboration, and specialization (Scur and Queiroz, 2017). External outsourcing vendors offer expert services in HR activities such as background checking, legal compliance, benefits administration, and production of employee handbooks and policy manuals (Shellenback, 2017). For example, the NHS Wales company provides services ranging from auditing, employment, e-learning, training services, and recruitment services (NHS Wales, no date).
HR can focus on management issues that are centric on employee performance, such as onboarding, performance management, and succession planning through outsourcing. Succession planning refers to the process of identifying and nurturing individuals who can fill leadership positions in the future. It involves self-analysis and organizational reflection to determine its next succession line (Weeks, 2020). It allows HR to strategically utilize employees for the firm’s benefit and ensure that employee programs are implemented measurably. Given the dynamic changes in modern business environments, it is not enough to focus on administrative efficiency or strategic execution.
Why Evolving HR Functions Should Interest Fellow CIPD Members
Companies often determine the job design and employment models for most individuals in modern society. However, alternative forms of organizational models and structures are emerging, and stakeholders need to collaborate to ensure that the emerging models provide the same output levels for all involved stakeholders. Any gaps and mismatch between HR functions and a firm’s models, needs, and delivery systems can result in inefficiencies in business operations and processes. Understanding how HR roles are changing in the short, medium, and long term can lead to better strategic planning, workforce management, and change management practices (Milligan, 2018).
Therefore, aligning HR practices with the external dynamics will help HR enhance skills, productivity and mitigate attrition losses. Stakeholders should seek awareness of this subject because it has positive individual and organizational outcomes.
Implications for Future Practice
A New Operational HR Model: The Centre of Excellence Model
The CIPD reports that operational and transactional HR models will be of minimum value to organizational strategy building in the future. Because HR managers working in the Ulrich model tend to focus more on HR efficiency, talent abandonment has become normalized. Most HR managers lack the skills needed in talent management (CIPD, 2015). Consequently, it projected that the HR operations would shift from operational models to talent management models in a decade. The HR model will be the order of the day due to its emphasis on talent management (Messenböck et al., 2015). The following will be the priorities in the next HR model:
- Alignment of talent with the business model of the organization– HR will need to align talent strategies with the growth agendas of the business.
- An integrated talent management process will be critical in eliminating operational silos within the company. The integrated approach will be mediated by technology that will recognize the interconnection between learning, performance, succession, resourcing, and rewards.
- Integration of the model with the transactional services– The transactional services will be prerequisites for supporting talent management to safeguard the credibility of talent operations.
- Realistic competency framework
The CIPD identified a gap in the model, especially in human resource practitioners’ roles as business partners. The business partner role is characterized by ambiguity, long decision-making timeframes, and excellent delivery breadth (CIPD thought leadership, 2019). Rather than focusing on performance outcomes, HR will focus on talent outcomes in the future. Therefore, HR will focus on the growth opportunities of an individual rather than the performance outcomes. This way, HR will avoid mismatching individual capacity and role complexity.
Enhanced HR Roles
The key areas for action will include (CIPD thought leadership, 2019):
- Roles such as creating an organizational culture, enhancing collaboration, influencing employee mental models, and enhancing business success will still be relevant even with technological and socioeconomic changes
- Predictive analytics will be the main role of HR; planning, recruitment, attracting, career development, and training will be data-driven. A key HR competency will be the ability to use and translate data insights into an intervention that will optimize the workforce (Vulpen, no date). The DBS Bank has adopted a chatbot that augments talent acquisition as the main recruitment platform. It is reported that the chatbot significantly reduced screening time and responded to 96% of candidate questions (Meister, 2020b). More organizations are expected to follow the DBS Bank path.
- Organizational development strategies will be aligned with overall business goals to ensure that succession planning, career development, and leadership development practices are fully supported.
- Outsourcing services will focus on consultation and specialist advice rather than service centers. Service centers will gradually diminish because cloud-based systems will be widely adopted in organizations.
- HR tasks will be automated and the number of manual tasks, including routine skilled tasks, will be significantly reduced.
- The disparities in the labor market will be characterized by fewer high-skilled jobs and many low-skilled jobs.
- Job settings will be characterized by job insecurity and less turnover.
Strategic HR functions refer to operations aligned with the strategic objectives of a company. Over the last two decades, the roles of HR have become more than just personnel management and administration. The outcomes from HR functions have become the basis for an organization to win its niche in a competitive marketplace because organizational outcomes are tied to talent. The Ulrich model has been the standard model for HR practices; however, the model is soon to be replaced with the COE model. Although operational roles are expected to remain relevant, the future HR roles will be mainly driven by predictive analytics and an integrated talent management process. In the future, HR will align talent management, operational HR functions, and organizational development practices with business models and strategic goals through the use of predictive analytics. Outsourcing services will focus on consultation and specialist advice rather than service centers.
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