Trends impacting human resources and what HR leaders can do

12 August 2019 6 min. read
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Human resources (HR) management faces a time of rapid change, with technological, regulatory and shifting workforce expectations converging in a perfect storm. A new report by LACE Partners delves into how the HR function must change with the times.

Since co-founding LACE Partners, a UK-based consultancy which specialises in human capital transformation work, Cathy Acratopulo has seen HR undergo an age of rapid evolution. However, judging by her experiences so far, she insists that more is still to come, as the modern labour market faces a period of rapid upheaval.

“As we enter a period of unprecedented turbulence driven by technological innovation, hyper-competitiveness, changing social attitudes and political instability, the stresses on our organisations and the people who work within them are increasing. The HR profession is at a tipping point,” she said.

Business Priorities

The HR scene is shifting rapidly to incorporate the growing trend of digital disruption. According to a study conducted by LACE Partners, based on the views of HR leaders in the private sector, three-quarters of organisations now believe HR analytics are a major priority as they look for new ways to tap into the best talent amid an ageing population, in the UK particularly. Trends like this are only set to pick up pace in the coming years, as organisations look to keep pace with new, digitally savvy competitors.

Acratopulo elaborated, “In recent years we’ve seen the introduction and success of some radically dynamic and flexible businesses, such as Uber and Airbnb, which have turned traditional organisational and commercial concepts on their head. To remain competitive, it’s no longer enough to rely on the strength of an organisation’s brand or lean operations – organisations are looking to transform themselves through technology or customer-driven change.”

As a result of this, technology is now driving huge changes throughout every organisation. While work is being digitised, robotics process automation (RPA) and artificial intelligence (AI) are also being deployed to overhaul the very way work is done. In the coming period, this is set to trigger a major realignment of the modern labour market. While initially, companies might expect to be able to reduce their bottom lines by having technology fulfil the roles of a growing number of staff; this will lead to pressures being placed on fees, as clients wonder what they are paying for if not labour. As a result, companies will need to find new ways for staff to add value, rather than resting on their laurels.

Current HR Capabilities

“People are becoming more central to commercial success,” Acratopulo explained. “Intangibles such as a brand, intellectual property, relationships and customer insights are all human-driven activities that have never been higher in the strategic mix. HR needs to reposition itself as the architect of value-creation through people – a huge leap from compliance, policies and procedures.”

This need to reposition itself is seeing the HR function undergo its own “digital revolution”, according to the expert, who during her career has worked in both in-house HR and consultancy roles at companies including Barclays, Accenture and Maxxim Consulting. As HR professionals look to streamline their repetitive work and free up time and resources to add value elsewhere, many organisations are considering a move to SaaS HR solutions for their core HR system, while the use of self-service is increasing.

This will ultimately not be enough, however, and Acratopulo concludes that with the growing number of ‘plug and play’ tools to complement the core solution, it has become “increasingly difficult to navigate the numerous HR tech options and meet the demands of the workforce”, in order to manage their work lives in the same way they do their social lives. Therefore, she argued, “HR needs to lead the digitisation of how we work and set the tech roadmap for the HR function itself.”

This technological change will ultimately prove essential to navigate rapid fluctuations in the regulatory and political arenas, as well as in terms of the changing attitudes of an evolving workforce. As a scarcity of skills emerges amid an ageing population, there will be more choice of where and how talented, skilled individuals choose to work, including the rising gig economy, should firms fail to position themselves to meet the demands of labour, including CSR and inclusivity efforts. On top of this, Brexit could well compound these issues, by reducing the option for companies to source talent from mainland Europe. 

Be bold and take action

Elsewhere, the 2017 Taylor Review proposed a private sector IR35 reform in 2020 to modernise workplace rules, something which will make a major impact on HR departments. The UK’s withdrawal from the EU will likely lead to a wave of new regulations in HR as well, alongside the seemingly increasing possibility of a future Labour Government, determined to improve the workplace rights of staff and gig economy workers.

What HR should do

Regarding what is to be done amid all this, Acratopulo said, “HR has a once-in-a-lifetime opportunity to help businesses to be more successful. Over the next three to five years, we need to be more strategic and analytical, leading the business with evidence-based decisions, while transforming our own capabilities, jumping into the driving seat of organisational and transformational change versus acting in a support role.”

She also suggested that HR professionals must develop effective leaders who can manage in an increasingly agile, networked way and connect with people to create an engaging workplace, while also dealing with increasing complexity. This can be facilitated by building a culture that involves meaningful work, helping people develop and grow their skills, especially in the fields of increasing regulation, growth or cost reduction.

While data and the use of innovation can be a catalyst for all this, however, Acratopulo warned that firms should not assume technology will solve everything. Ultimately, she concluded, it is a matter of culture, stating professionals must “become the catalyst of change and stop focusing on your comfort zone.”