The term ‘obsolete’ could have several meanings for HR professionals, all of them somewhat uncomfortable. It can feel as though the world of HR and talent management has gone through dramatic change in the last few years, due to the pandemic and the surge in remote working. Fosway Research reported in April 2022, that 92% of European corporates had to adjust their talent acquisition strategy and made lasting changes following the Covid-19 crisis. It might be easy for HR leaders to worry that they themselves are obsolete simply because it is challenging to keep up with all the changes that have happened. In my view, the impact of the pandemic was merely the next challenge that HR Directors have had to deal with. The next priority is to help organizations to cope with the economic downturn.
The pace of change, combined with the uncertainty in global markets, does make the job of HR professionals more difficult but I firmly believe that HR professionals have all the right tools in their kit bag to face into this current challenge and no doubt the next one. But in this context, the bigger concern is whether the HR team has the right tools to support the organization, because accelerating change and unknown threats require much greater agility. This demands tools that can adapt and respond dynamically to market conditions, so in this sense obsolescence refers to the ability of HR technology to keep up.
Such concerns are irrelevant, if the HR team approaches technology adoption with the mindset that it is an enabler that can flex to accommodate changing needs of the business.
Take the goals of the business. In the current economic climate, companies need to work smarter as they are being measured more on profitability than growth. This affects talent retention and recruitment. Take the technology industry. There is significant demand for IT and digital skills, not just among technology companies, but also a wide variety of organizations that are looking to digitize their operations. As a study from Bain & Company shows, there was growing demand in non-tech industries for tech talent in 2022. Add to this, employees continue to demand more flexibility as our Business Future Index revealed: 39% of organizations have seen people leave their businesses for more flexibility elsewhere over the past year.
In the past, economic downturn might have led employees to be more conservative about considering a move, but HR leaders must actively look at how they keep their best employees engaged with the business. Not only will this fend off competition, but it will also help business strategy as companies need to work smarter to upskill existing staff to cover more areas of expertise to help the organization to function effectively and grow and of course be able to retain their best employees once the macroeconomic environment improves
This leads to another definition of ‘obsolete,’ which is important to HR professionals: namely how do they avoid their organization being filled with obsolete skills that can’t help the company adapt to the future?
To be confident the HR team is helping to map the skills of the organization to both current and mid to long-term needs of the business, they must have a comprehensive picture of the people and skills within the organization. When we conducted research in the US last year it suggested only 34% of organizations have a formal skills framework. Without this picture, how does the organisation know where its gaps are? And how can the organization know who it needs to upskill or who has hidden talents that could benefit the business?
Therefore, the most important technology tool HR needs to get right is the one to manage employee data. The data must be accurate, it must be high quality and it must be integrated so the organization can have a single view of all the information related to employees.
If the HR team has a comprehensive picture of the data within the organization, they can use talent mapping tools with greater confidence and can be much more agile in terms of responding to the needs of an organization. Take a professional services firm which operates on a project basis. The skills required for each project may vary, but if leaders know who is available and what expertise they have, HR can avoid having to go into the market to recruit and you can provide existing employees with new career opportunities. The more sophisticated the approach to talent mapping the more value can be delivered to the business. In our US study, only 42% use skills gap analysis for succession planning and only 26% use it for talent mobility, which suggests there is a big opportunity to extend the strategic value HR brings to an organization.
Employee engagement and performance management tools also become essential to ensuring the organization is in touch with how employees are feeling about work and that they have learning opportunities and recognition which is not only based on their performance but is equitable with peers and the market as a whole. Obviously, compensation management fits into this discussion, but it is not just a case of deciding who deserves an increase. There are tools now that can enable a much more personalised approach to managing an employee’s career and compensation.
Longer-term, though, this focus on existing employees and upskilling them will be the next dynamic for HR teams. When we emerge from this economic downturn, employees who have a much broader range of skills and experience will be highly sort after. Organizations will have to work out their response to this risk factor. More innovative organizations understand employee tenure is changing, that staff may not want a ‘job for life.’ Indeed, research suggests the average tenure among 25 – 35-year-olds in 2.8 years and in Silicon Valley it is only 1.5 years. HR leaders will have to guide the business through this difficulty, helping business leaders to understand that an employee wanting to leave is not an example of disloyalty, but may be an opportunity. It will become important to use tools that enable organizations to stay in touch with alumni, as these individuals may return to the team with more valuable skills, or they may become customers; either way, a departing employee should be seen as an asset not someone to be shunned.
I remain bemused by dramatic statements that might suggest HR is becoming obsolete in any sense of the word. The period we’re entering now is really no different to any other. There of course are challenges, but if HR teams remain agile, adapt strategies to be aligned with the organization and ensure they have the tools to be responsive to changing conditions, then they will be able to continue to add meaningful value to both employees and the business.