Going horizontal? Where next for HR and people management?
24 Oct 2017
Duncan Brown, Head of HR Consultancy
Thirty years ago, as a donkey-jacket-attired employee relations officer, I entered the then Institute of Personnel Mangement’s (IPM, now CIPD) national essay competition on the future direction of our profession. The specified theme, just when North American ideas of business-aligned strategic human resource management (HRM) were starting to migrate across the Atlantic, was ‘The business of Personnel is “the Business”’. Ten years ago, when I was working at CIPD, I presented at IES’ annual HR conference and that theme of business alignment and partnering was the overwhelming focus of our audience’s attention.
Earlier this month, with a top-class audience and speaker line up, IES returned to that theme with our annual HR conference, considering HR’s future, provocatively titled, ‘Smaller function, bigger issues?’. The subsequent announcement by Sainsbury’s of thousands of HR redundancies as they abolish the function at store level has certainly driven home the continuing intense pressures on the function, to be lean, cost-efficient and business-contributing.
For all the well-informed debate at this year’s conference over the impact of digitalisation and robotics and the growth of the gig economy on people management models and jobs, we kept on returning to this central theme of ultimate ‘big’ purpose, in a very different context to the business confidence and stock market highs of 10 years ago. Now, in our post-Crash era, when governments and even business leaders themselves are increasingly questioning the hegemony of shareholder-value and the wider benefits (beyond boardroom remuneration levels) of globalisation and the multinational corporations benefitting from it, the IPM’s essay question posed today seems open to far more debate. The answers, and HR’s future, appear to be far more multi-dimensional and -directional.
Explaining the need for a more interventionist employment policy and legislative approach, the prime minister said at the start of the year that her government ‘will step up to support and enforce the responsibilities we have to each other as citizens, standing up for business as a great driver of prosperity and progress, but taking action when a minority of businesses and business figures tear away at the social contract between business and society by working to a different set of rules from everyone else’. Likewise, Sir Philip Hampton, GSK chairman, said at another conference this month that poor productivity was a result of the short-termist business outlook and short-term pay targets: ’More long-dated and fundamental drivers of success, such as the value of investment in training, tend not to figure prominently in most companies’ incentive structures.’
The dilemma and the challenge of this change in focus was perhaps best summed up in a brilliant presentation at our conference by one of IES’s most distinguished Fellows, and one of the first academics to bring those strategic HRM ideas into the UK mainstream in the 1980’s, Paul Sparrow, now Emeritus Professor of International HRM at Lancaster University. Paul followed Professor Sian Moore’s ‘warts and all’ account of her research findings on the harsh realities of the insecure and low-paid lives of workers delivering parcels, care and taxi passengers. As our own conference chair Stephen Bevan pointed out, the research raises deep questions as to the ‘current moral compass’ of employers and their HR professionals and helps to explain the low productivity of the UK economy.
Paul highlighted the potential return in HR from what he helpfully termed as a vertical to this wider, outward-facing, more horizontal focus, and the opportunities this presents us. When we both came into HR, boosting national productivity and exploiting ‘white heat’ technology; working with government and across-sectors on employment legislation and national initiatives; and developing new forms of worker management partnership and engagement (such as quality circles and employee share and bonus schemes) were central areas for HR attention and IES research.
Then, with the general move from the personnel to HR nomenclature came what Paul calls a much more ‘looking-in agenda’ for the function, focusing vertically on boardroom influence and building strategic alignment and capability. In doing so, we certainly achieved more efficient and, in some cases, strategic HR functions and policies, with our HR service centres, identikit competency frameworks and shareholder value-aligned incentive plans. But, in the process, did we lose perspective on ‘the bigger picture’ and more fundamentally, ‘lose sight of the workforce’ and the reality of the workplace experience today for many of them?
This charge was levelled powerfully the following week at CIPD’s chief executive Peter Cheese by Professor Roget Seifert in a debate on productivity and HR’s contribution at the annual labour relations conference organised by IES’ friends at Eversheds Sutherland. Peter was forced to admit that ‘productivity is all about people, […]at times HR, and business itself, has lost sight of that’.
Certainly, if I review IES’ current work on gender pay reporting and closing pay gaps, for example, and the general HR response so far, it seems to be very narrowly focused on the immediate tasks of somewhat belatedly calculating the required statistics while echoing the business lobby group mantra of reluctant compliance; that reporting will have little impact on what is essentially a social problem of gender stereotyping and segmentation. IES’ arguments and research on the longer-term economic and social benefits of gender pay parity are little in evidence in the published reports so far. And at the other end of the pay scale, as Seifert asserted, where was HR as executive pay levels ballooned ahead of those of the rest of the workforce over the past 20 years?
It is precisely these national issues of low productivity, inequality and insecurity, declining living standards and weak training investment that Paul Sparrow presented as offering tremendous opportunities for HR to contribute in new and innovative ways, if it can raise its sights and look more outwardly from its current inward, cost and legal-compliance focus. With technological change, business and organisation design models are becoming increasingly collaborative and ever more dependent on human capital, offering new opportunities for HR ‘to take on intellectual leadership in the process; […]to use HR analytics in new ways to deliver business insight and form stronger relationships with customers, the community and employees[…]; to better align behaviours and values[…]; to reconfigure career systems and talent management processes’, as Paul stated.
A perfect example of someone leading a function that is successfully taking these opportunities came later in the day at our conference, from Sandy Begbie of Standard Life Aberdeen, a case study in IES’ recent talent management research. Just as the change in title from ‘personnel’ to ‘HR’ signalled the function’s shift in emphasis 30 years ago, so Sandy’s job title, Global Head of People, Organisation and Culture Integration, seems to indicate the switch now required.
It is far more than titular change that has been occurring at Standard Life Aberdeen. Sandy described an impressive array of processes and actions by HR to accelerate and develop high-potentials, increase and diversify the talent pool, strengthen their employer and talent brand, and act internally and externally as a talent acquisition and development consultancy. Perhaps most impressively of all, HR, he described, was ‘working with managers to deliver the talent experience daily’ and avoid the divorce between HR ‘rhetoric and reality’ that Roger Seifert criticised.
In some ways, Standard Life Aberdeen’s approach could be seen as a return to an unashamed commitment to investing in staff training and development and defining all employees as ‘talent’ that was more obviously evident in the 1980’s. This is opposed to HR’s focus in the last decade on an elite ‘core’ of ‘top talent’ as overall UK training investment has declined. In this case, the approach is supported and championed by a chief executive who has himself benefitted from having been part of a high potentials’ programme earlier in his career. However, this commitment and investment is delivered now in a very different manner, in a faster-changing organisation, with, for example, talent pipelines replacing a more static succession-planning process, and key metrics in place to monitor and demonstrate progress and success.
Using HR analytics to produce insight rather than just statistics and data was also a strong theme in oneSource’s HR and OD director Caroline Nugent’s case example, questioning how effective many HR functions really are and encouraging them to ‘challenge the status quo’ and ‘tackle the unknowns’.
So, to sum up our conference, Stephen Bevan and I spoke of HR being at something of a crossroads, between realising a future as organisational boundary-spanning innovators with the knowledge and relationships to deliver on ‘big ideas’ for employers, the economy and society; or continuing down the road of administrative efficiencies and cut-backs; and delivering low costs and ‘tough medicine’ in the organisation, at least as far as the increasing volume of employment legislation and requirements will allow.
‘Does it want to play’ this role as thought-leaders and innovators, was Paul Sparrow’s closing challenge to the members of the profession present.
Well, do you?
(I won second prize in the essay competition, by the way, and my mum asked me who had won…)
Any views expressed are those of the author and not necessarily those of the Institute as a whole.