The End of the HR World

Based on the idea that the Mayan Long Count calendar ends Dec. 21, 2012, “experts” around the globe are predicting cataclysmic events for the end of the year. From rogue planets to massive sun storms, many are convinced the Mayans accurately predicted the end of the world.

Perhaps the Mayans were predicting something much more ominous for 2012: the end of the HR world as we know it. For the past decade, there has been a steady effort to transform the HR department from paper pusher to strategic business partner. Recently, this push has been accelerated by a shortage of critical skills, recognition that the workforce must be aligned with business objectives and rapid developments in HR technology.

The following trends may not spell the demise of the HR department, but they do indicate long-awaited changes for HR and enabling technology in 2012.

Trend No. 1: HR rebranding: The term human resources is becoming obsolete for many reasons. The label human capital illustrates that a resource is used, but capital is something invested that creates value. HR has long been classified as a department as well as a function with specific, narrow, mostly tactical responsibilities. HR needs a new brand.

If HR is to become a steward of workforce performance it needs to break the shackles of its image and create a different position. The isolated processes on which HR built its structure do not meet today’s diverse workforce needs or those for the intelligence-hungry, global organizations they serve. Along with technology vendors, HR is beginning to align teams, processes and applications in ways that reflect a new value to their employees and companies or customers. As a result, those in traditional HR roles have new responsibilities (Figure 1).

Forecast: As HR continues to rebrand, traditional silos such as recruiting, performance, learning and development, succession and compensation will morph into new functions. Some recent titles and those expected in 2012 include:

• Chief … collaboration officer, performance officer, productivity and innovation officer, officer of people and performance, officer of business intelligence.

• Vice president/director of … strategic talent alignment, talent pipeline development, people strategy, workforce process and technology, supply and demand planning, people connections, talent mobility, talent insights, HR business intelligence.

These new functions will help rebrand the HR department as a strategic business group whose role is to establish the talent strategy, ensure a diverse and agile workforce is productive and engaged and to deploy enabling workforce technologies that will deliver desired business results.

Trend No. 2: HCM suite replacement: For the first time in five years, a survey conducted by Knowledge Infusion and Human Resource Executive magazine shows HR technology buyers value integration over user experience and depth of functionality — a transition from automation (ERP) and optimization (best of breed) to decision support (HCM suite).

Business leaders demand more of today’s HR department, and this year will see an increase in companies looking to replace point solutions with a single HCM suite platform for core HR and talent management functionality.

The previous era of optimization left much HR data marooned, and organizations unable to answer business leader questions such as, “Where do our top performers come from? Do we have the bench strength for future plans, and if not, how do we acquire or develop it? How can we build business acumen in a global economy? Is our top talent being properly compensated to ensure retention of critical skills?”

HCM suite vendors now provide levels of integration and functional interoperability no best of breed or in-house integration platform can equal. Further, software as a service (SaaS) delivery allows vendors to release new capabilities to “almost” keep up with HR’s rapidly changing mission.

Forecast: In many ways, the HR function has leapfrogged the vendor community and will continue to propel advancement of the HCM suite. HCM suite sales and best of breed replacements will increase, with HR playing a leading role in purchases and IT.

As HR departments realize the true strategic value of HCM suites and realize deploying SaaS technologies is wholly different from implementing ERP, or on-premise software, HCM suite deployments will become the responsibility of HR, not IT.

Organizations that previously passed on wholesale system replacement because the value did not justify the effort will reconsider in 2012 because several top-tier vendors, including Oracle, SAP, SuccessFactors, Ultimate and Workday offer viable SaaS HCM suite options.

Trend No. 3: Talent intelligence replaces workforce analytics: The term workforce analytics seemed perfect to describe analyzing current and historical employee data to identify relationships and patterns to support workforce decisions.

In reality, the term has not inspired a movement in HR to deliver data-driven decisions. Like an amateur investor who makes stock picks by reading the newspaper stock page, HR has only been offering historical snapshots of talent data via colorful charts and dashboards. Professional investors analyze a wide range of data to predict trends. If HR wants to shape strategy, reporting on recent history needs to be replaced by trend analysis and proactive planning.

The problem with workforce analytics is as organizations construct their metrics, they think of numbers and graphs that measure and display some dimension of HR effectiveness over time, for example, time to fill, cost per hire or turnover rate. This narrow characterization constrains intelligence to quantitative measures and fails to address other types of predictive intelligence that business leaders crave to help plan for the future. To meet these demands, HR is moving toward a more predictive model of data analysis called talent intelligence.

Talent intelligence can transform workforce data into insights that support executive decision making. The genesis of this movement in HR can be seen in data visualization, expanding business and operational data sets and the development of deeper talent insights.

• Data visualization: Data visualization makes raw numbers consumable by putting them in context to tell a relationship story. Often referred to as infographics, these illustrations weave together data and design to create a visual data representation. HR can use data visualization technologies to show how mobility, skill and competency development, organization levels, pay structures and employee engagement levels impact financial and operational results.

• Expanded data sets: HR is beginning to break free of HR-owned systems to bring data in from sales, finance and other operational and social platforms. This allows HR to deliver insights that help drive bottom-line performance. However, this requires HR to be more connected with business leaders and understand how business performance is measured.

This is starting to happen as HR technology improves the ability to capture and use data across disciplines. A recruiter once bound to analyzing only hiring data could show a reduction in days-to-fill for a given position — an HR-centric process metric. Today, that same recruiter can measure additional sales per new hire per year and demonstrate a contribution to the bottom line.

• Talent insights: In the last few years, HR has recognized the need to know more about employees than their name, department, job code and pay rate. Talent profiles provide organizations with an employee file, but much of the most valuable data remains a mystery to managers. These talent insights — the employee’s willingness to relocate, when they do their best work, what keeps them engaged, who they network with, how they learn and from whom and whether they are influencers in the company — help managers drive higher employee performance and productivity on a daily basis, and higher business performance over time.

Forecast: HR leaders will begin to move the HR business intelligence function out of HR operations to become its own center of excellence (COE), reporting directly to the chief HR officer. Many organizations will bring in someone from the business side to lead this team. This will foster a true partnership between HR and business leaders and allow the HR business intelligence COE to drive strategic workforce decisions.

Technology vendors will accelerate data visualization into traditional HR applications such as recruitment, performance management, compensation and succession. They also will open up their applications to data from finance and operational systems, as well as social collaboration platforms such as LinkedIn, Facebook and Twitter.

Trend No. 4: HR data goes big: Look for “big data” to replace “cloud computing” as the top buzzword in 2012. It is estimated that organizations use less than 5 percent of available data. Traditionally, the rest has been either too costly or impractical to use effectively. The idea of “big data” offers new tools and techniques that allow companies to affordably exploit the other 95 percent.

The ability to handle and analyze large data sets is rapidly becoming a prerequisite for competition, innovation and growth. Some analysts say data has become as important to business success as labor and capital.

To leverage the big data tools making their way into HR technology, organizations will need to redefine a strategic approach to their data by focusing on three key components: the global data model, data governance and data consumption. Each area requires HR to get its hands dirty before and during a technology deployment.

By defining a robust, global data model, HR can better understand how large amounts of information flow into, out of and between systems and identify the people who need it. This will allow HR to move away from a point-to-point, transactional data approach and consider strategic relevance to the organization.

Organizations are also focusing on data governance — an emerging discipline that embodies data quality, management, policies, business process management and risk management in data collection and handling. Here, questions regarding the quality and ownership of data are addressed by data stewards or data custodians.

The final piece is data consumption — defining who needs the data and how it will be used. As HR continues to evolve from process automation to decision support, this area will be critical to realize the value of talent intelligence.

Forecast: The explosive demand for data from all areas of the enterprise will bring about an increased focus on HR’s ability to deliver relevant workforce data to support strategic decision making. This will spawn a new role within HR responsible for global data governance. A data steward or data governance council will be charged with defining how workforce data is captured and utilized, the desired outcomes and key enterprise metrics.

Technology vendors will improve “big data” integration and analytical tools to meet the requirements defined by this emerging function.

Trend No. 5: Rethink performance management: Originally designed to justify or deny an annual merit increase, the annual performance review is being replaced with emerging models designed to manage, not just measure, workforce performance.

As organizations become more candid about their business strategies, workforce alignment is vital to communicate business objectives to employees. Ensuring strategic alignment requires a greater commitment to employee performance management and providing managers with tools to allow them to define individual feedback frequency, skills, competencies, goals, development activities and other components to foster better employee/manager communication and capture day-to-day performance metrics. Emerging use of social media tools is also creating a performance mindset where continual, real-time feedback between employees, managers, customers and partners is expected.

Today’s performance management systems offer an exhaustive list of options to facilitate just about every performance management methodology. Companies that effectively manage employee performance take the time to define the methods and measures that will have the greatest impact before selecting technology, and implement only those that deliver the desired outcomes.

Forecast: Performance management is in the early stages of a complete transformation. In 2012, more companies will rethink how they manage workforce performance 365 days a year leveraging new data, measures and technologies. Some organizations will elevate workforce performance management to a higher level of organizational ownership and move to a cross-functional business performance team responsible for managing and measuring multiple levers of business performance.

If the Mayans were right, HR and technology trends probably don’t have much meaning in 2012. However, it is more likely we will all still be hard at work in companies wrestling to make good on the quote in the annual report that says people are the greatest asset. But the top HR and technology predictions for 2012 would not have emerged if vendors and HR leaders were not talking strategy instead of automation, business results instead of process. The next 12 months will show how well they listen to one another.

Heidi Spirgi is president of Knowledge Infusion, an HR consulting company. She can be reached at editor@talentmgt.com.