What is the Future of the Human Resource Function

From time to time we respond to questions about the future sent in via email by readers. We don’t have a lot of time for this, but when a question seems especially interesting we offer our thoughts.

I am Manager in the Human Resources Function in a large Indian Pharmaceutical company. My question is what is the future of the Human Resource Function? Regards,

Gaurav Gupta
Manager-HRD
Ranbaxy Laboratories

Response by Richard Wilkinson, 2001

Glen Hiemstra asked me to respond to your inquiry. I think you have asked a simple but powerful and important question. My view is the future of HR appears contradictory.

OPPOSING TRENDS

On the one hand, the view of HR as a marginal contributor to organizational success seems to persist. Periodically the HR function is excoriated in the business press for its alleged irrelevancy to customer satisfaction, business profits, and increasing shareholder or stakeholder value. In this view HR is, at best, a collection of well-meaning but out-of-touch corporate bureaucrats who present barriers for employees and managers to hurdle as these real workers strive to deliver quality and value for the customer. Looked at this way, HR will become even more marginal as the strategic decisions and focus of organizational leaders are directed elsewhere.

Here’s the contradictory part: Never before has it been so clear that effective human resource management practices lie at the heart of organizational success. Dr. Jeffrey Pfeffer of Stanford University makes a compelling case for high performance people strategies in his 1998 book The Human Equation (Boston: Harvard University Press). Here are four pertinent citations from this book:

A number of studies spanning different organizations operating in various service industries provide evidence for a positive relationship between employee attitudes and customer service and satisfaction and, moreover, a relationship between employee attitudes, customer attitudes, and profits. p. 55

[C]ustomer satisfaction and perceptions of service quality were significantly related to measures of employee attitudes about fairness of pay, whether management was concerned about employee welfare and treated people fairly, and whether supervisors encouraged an open and participative work environment. Ibid

Better service and higher employee satisfaction do, however, frequently produce higher profits. [N]umerous firms, such as Singapore Airlines, have succeeded financially by emphasizing employee well-being and customer service. p. 56

The existing research clearly shows that: “prior empirical work has consistently found that use of effective human resource management practices enhances firm performance.” p. 60

My view is that it is HR’s job, though not HR’s job alone, to champion and shepherd effective human resource management practices at both the strategic and day-to-day levels. That is, to be effective, human resource management practices must be grounded in two ways. First, they must reflect company wide commitments as to how it will manage and relate to its employees. Second, HR must follow-through on such commitments in the moment so that the words of the enterprise and deeds of its agents are congruent.

HR’S PREFERRED FUTURE

Although I see a different emphasis for HR in the future, I see HR’s fundamental purpose-to build a positive, productive workplace-remaining unchanged. With this in mind, I see a successful future of HR revolving around three complementary and overlapping roles. I believe in fulfilling these roles HR will prove itself an important and legitimate contributor to organizational achievement. The heart underpinning these roles is “less control, more learning”. Here are the roles:

  1. FACILITATOR

    Facilitating the employee/employer connection, principally through empowering technologies (both digital and procedural) that emphasize employee self-service and managerial independence.

    The corollary to this role is consistent striving to minimize dependent relationships between employees/managers and HR through transferring knowledge and expertise from HR to HR’s clients. This is accomplished in part by using computer technologies enabling employees and managers to handle transactions online that they formerly needed HR to administer. Through employee and manager self-service features, such technologies also put greater access and control over information in the hands of employees and managers, thus increasing personal mastery and independence.

    HR’s task here may best be conceived as a “help desk” function: Set-up the systems, teach others to use them, and then get out of the way, answering questions from the field only as these arise.

  2. DESIGNER

    Designing and helping implement high performance people strategies in partnership with line staff. The scope of such efforts could be quite narrow-at the team level-or system wide. As in #1, the focus is on developing employee and manager self-reliance through the skillful sharing of expertise by HR. The focus, though, is on applying that expertise in ways that are explicitly tied to priorities of line staffs.

    What are high performance people strategies? Dr. Pfeffer identifies, “seven dimensions that seem to characterize most if not all of the systems producing profits through people”.

    1. Employment security.
    2. Selective hiring of new personnel.
    3. Self-managed teams and decentralization of decision making as the basic principles of organizational design.
    4. Comparatively high compensation contingent on organizational performance.
    5. Extensive training.
    6. Reduced status distinctions and barriers, including dress, language, office arrangements, and wage differences across levels.
    7. Extensive sharing of financial and performance information throughout the organization. p. 64-65
  3. EDUCATOR

    Serving as a catalyst for learning and communication. As educator HR has three jobs: (A) Introduce fresh thinking and new ideas to promote creativity, innovation and successful adaptation within the enterprise; (B) Persist in developing mastery of adopted organizational practices and process improvement methodologies by employees and managers; and, (C) Communicate extensively what’s happening within the organization and why, especially as these relate to the seven high performance people strategies identified above.

What will such a function be called? I doubt it will be called human resources. While the new name eludes me, I believe it will be along the lines of “Center for Organizational Effectiveness”; not a department that is separate and apart from other departments, but a Center people are drawn to for nourishment, insight and understanding.

I hope this assessment of the future of HR has some appeal to you. Since I am a strong believer in designing the futures we prefer, the Facilitator/Designer/Educator role may be more reflective of the kind of HR function I want to create, as opposed to where the field is heading generally. Nonetheless, I hope you find the ideas useful as you consider the future human resources function that will best serve your organization.

Best of luck!