2008: Playing the risk game – HR
As economies of either side of the Atlantic attempt to strip risk out of the economy by wrestling with interest rates and simplifying financial structures, the need to manage risk in all aspects of outsourcing is fast becoming the theme for 2008. For example, a wide-ranging study carried out by HR services multinational Hewitt Associates reveals that the development of a risk management policy is the number one priority for HR departments this year.
The study of 53 organisations employing a total of more than two million people also reveal fears over cultural and organisational changes, together with labour shortages and tough productivity targets. In four out of 10 organisations, HR departments said they must improve services to match business expectations, notably on issues such as demographic change, work-life balance programmes, and HR due diligence.
The survey also found that HR departments expect to embrace new competencies and responsibilities over the period 2008-2010, while some traditional HR activities will be transferred to business operations.
The findings are interesting, as they suggest that HR – all too often seen as a simple two-stroke hiring and firing engine under the bonnet of the enterprise – is reappraising its role, and sees the need to be more business like and proactive, but also to be less protective of tasks that may be best placed elsewhere. In a global economy, in tough economic times, and with greater pull and influx from the East, these are certainly the least risky options.
There was some good news for HR at a time when tough decisions and bad news may be on the immediate horizon. The research reveals HR directors’ satisfaction with their jobs, loyalty to their employers and trust in their CEOs. Eighty-five percent of participants said they like their company and their role, while only seven percent would give up their HR role and move to another function. Some 40% said they would be happy to work in locations elsewhere in the world.
As in previous surveys, talent management is where HR has the greatest impact on business performance. Organisational effectiveness, performance evaluation and leadership development are also ranked highly. However, it’s fair to say that the results perhaps reflect a more positive economic environment than we find ourselves in at present, and in any catastrophic downturn HR departments are often asked to manage the loss of entire layers of management, lock down on strategic marketing, and to lose expensive employees.
Leonardo Sforza, head of EU affairs and research at Hewitt Associates and chairman of the committee leading the study, said: “The current business context of global interdependence, of economic uncertainty, and, in some cases, of mistrust in the financial markets, is one that is likely to emphasise the need to embed sound corporate values into the daily operations of the entire organisation.
Similarly, the strategic relevance of cross-border people issues is being emphasised by the increasing internationalisation of European business. But by confirming their own CEOs and their companies’ employees at the top of their personal trust ranking for the second consecutive year, HR executives are well positioned to ‘join the dots’ within their organisations, linking leadership and execution across borders.
“However HR is also conscious that it continues to struggle to delivery consistently on – and above – business expectations. There is a shared responsibility among the different corporate functions to overcome the current gap. Better and more timely involvement of HR professionals each time that new business direction and strategies are defined – together with improved business acumen by HR – are key pre-conditions of success.”