2008: What’s in store for HR?

HR has come a long way in the last 10 years. Coming from a traditional administrative role, HR has worked hard to revitalize its services, aiming to better fulfill its strategic and tactical role. Administrative services have been optimized and made as (cost-)efficient as possible. Now that most organizations have achieved this minimum standard, the focus can be turned towards strategic and tactical support of the business. External factors and the increasing complexity of the business environment all indicate that companies should gather their forces to try to differentiate themselves from the competition, and to survive in this turbulent world economy. HR, as a crucial supporting element of the company, takes the lead in determining any developments that play a part in any business decisions.

The start of a new year is a good moment to reflect upon activities and make new plans. Do the HR goals still match those of the company? Or are external factors developing so rapidly that the goals must be re-evaluated to enable the company to meet new challenges? In this article we aim to challenge HR to think about this by listing the most influential external factors, and to translate these findings into possible goals for HR in 2008.

EXTERNAL FACTORS

When looking at external factors, we think the following factors have an effect on how the company operates, company strategy, and thus also on HR strategy. The extent is different for each company, depending on the position of the company, and needs to be evaluated.

1. Economic:
a. Unemployment for higher educated people is at an all-time low.
b. Volatility in the stock markets has led to a world-wide financial crash.

2. Demographic:
a. The demographic makeup of the society is shifting: young people (generations X and Y) can in numbers not replace the retiring generation (baby boomers)

3. The business sector is changing from a capital-intensive to a knowledge-intensive economy. Capital belongs to the company, whereas knowledge belongs to the individual.

4. Globalization: New technological advances allow for work to be done there where knowledge is most readily available, or where the price is lowest. Terms such as near shoring, off shoring and outsourcing describe this phenomenon.

5. Partnerships: Companies are forming partnerships with each other for the duration of a project (think of Philips and Sara Lee to create Senseo). This even occurs between competing companies. The borders between companies are thus becoming less strict.

6. Compliance: Companies, in particular those listed on the stock market, must comply to an increasing amount of rules and regulations to be allowed to operate.

7. Individualization: Society no longer consists of groups of people, but of individuals, each with their own goals. They demand individual solutions, not only with respect to the place and type of work, but also to compensation and benefits, free time and work-life balance.

It is crucial to place the development of the company in the context of these external trends to be able to adapt to them as an HR department: if the company is downsizing, then the fact that part of the workforce is becoming younger might not be much of a problem. A small labor market has a different effect on a company that focuses on customer intimacy than it would on a company that prides itself on operational excellence. The role of HR is ultimately to focus on goals that suit the combination of external factors and internal developments, and which will galvanize the growth of the company. In the remainder of this article, we will discuss the HR trends that we have observed. The urgency and applicability of these trends to your own organization will be different for each company.

Over the next couple of weeks, we will be posting the trends that we believe are crucial for HR in 2008