Do We Need HR?

Our previous book, Leading HR,¹ was written principally for those with the responsibility of leading HR functions who wanted to have business influence. This book is written for those who have business influence and who want to understand the people and organizational challenges that this influence will create. We put people management into its rightful general management context. We have structured this book into eight chapters. After introducing its rationale in this chapter, we take seven contemporary themes — predominantly business-driven, but one purposefully driven by broader societal questions — and analyze the organizational and people management challenges that each creates.

In the opening chapter we argued that to some extent we have been in a similar situation to that faced today, in that typically post-recession organizations find themselves following one of three pathways, and there is every reason to assume we shall see the same this time. The issues that drive HRM are those that characterize the industry dynamics of the surviving sectors. These reflect a “life cycle pattern” that falls into one of the following:¹ In this chapter we pick on this last path, that of innovation. In doing so, we: To do this we have to draw on research on strategy, structure, technological leadership, organizational behavior and organizational psychology.

We have chosen customer centricity as the second of our strategic performance drivers because we believe that senior HR leaders need to be fully aware of the concept in order to understand its relevance for their particular business. Most HR Directors have for several years now picked up on the service-profit chain to argue a link between employee engagement and performance. But as they work with the other functions — notably marketing and operations — on problems of customer centricity, they can see that they need to realign their own resources accordingly to deal with the people and organizational challenges that this performance driver entails.

In Chapter 1 we outlined the scale of the productivity challenge facing many countries. Productivity or efficiency can be thought about in different ways — how busy and utilized people and resources are — or, more constructively, how fast value can be delivered to customers. We have chosen lean management as the third of our strategic performance drivers because in a post-credit crunch world, it has gained renewed attention. The conditions that spawned the birth of lean management — a shortage in both capital and resources in Japan after the Second World War — have become features once more in the new context of an “age of austerity.” Efficiency and effectiveness, coupled with attention to quality, are major drivers of change. Lean thinking has now been applied to a wide range of issues, spanning management, design and service delivery, and also business functions such as product development, logistics, service, sales, HR and production. Again, we need to look to expertise outside of HRM. Whilst the previous chapter took us into ideas and research from marketing and service management, this chapter takes us into work done mainly within operations management and management science.

In our previous book Leading HR, we argued that HR is being repositioned as a function in part because of internal organization design pressures resulting from complex business models, but also:

as a consequence of changes in the importance of external inter-dependence and partnership. The organizational “value web” is, in almost every case, extended across traditional organizational boundaries. This interdependence is a defining characteristic of business model change. Relationships with external bodies which were previously characterised as adversarial at best are suddenly having to be redesigned under a partnership model, as long term contracts are developed with other organizations in the same value web.

The previous four chapters have focused on a series of important strategic performance drivers: innovation, customer centricity, lean management and the need to deliver HRM beyond the organization’s boundaries. We have been looking into the strategy of the organization — one of the major roles of HRM. These are all very important challenges that must shape the design, focus and attention of much of the HR architecture. They all help to show that HR is indeed needed. They all require that any HR function of value is highly networked and interconnected with both internal expertise and the external developments that shape each performance driver. But, of course, the HR function, as the intermediary between the organization and its people resources, has to cope with those external developments that are beyond the organization’s immediate control, but will serve as powerful drivers of employee behavior nonetheless. The focus on customer centricity outlined in Chapter 2 brings the outside into organizations under the guise of strategy and markets. But this outside world also impacts the internal labour market via the attitudes, mindset and culture of the workforce. And this in turn impacts engagement, which as we saw in Chapters 2 and 4 respectively, plays a crucial role in innovation and in lean management.

In Chapters 2, 3, 4 and 5 we laid out a series of strategic performance drivers that organizations continue to grapple with. One of the ways that organizations are responding to these challenges is to become much more analytical — they are bringing skills around big data and HR analytics to the fore, a discipline that itself draws upon some of the ideas about human capital (or workforce) analytics or accounting (HCA) and later also on strategic workforce planning (SWP). What ties all of these developments together is the question of talent — and our changing understanding about what makes people talented in today’s business environment. We have clearly entered an environment of unprecedented business risk — nations are pitched against capital markets, markets could disappear overnight along with the ability to finance business models, and consumer behavior may take years to revert to normality, or indeed may start to create a new normality. As organizations continue to navigate their way through turbulent waters, even as business confidence is returning, the demands placed upon those deemed to be leading talent are extreme.

In the previous chapter we showed that organizations and their HR functions have learned how to engineer and hone sophisticated talent management processes. However, many are also looking at their talent Centers of Expertise and both broadening their remit and linking them much more flexibly to related areas of expertise such as Learning and Development, Resourcing and Engagement, and to broad change programmes. This is allowing us the option to think more strategically about the role, remit and value of talent management.