Talent and technology will drive the market forward in 2014.
By Russ Banham
As another year launches, two major forces—the hunt for skill sets aligned with strategic priorities and the use of technology to assist people to perform at topnotch productivity—are colliding to redefine the workplace and the role of HR.
These trends and other evidence in recent years, including the expanded reliance on contingent labor, the acquisition of innovative startup HR software firms by larger players, and the move toward more balanced shoring strategies, are solidifying in 2014. Yesterday’s HR environment is increasingly yesterday’s.
That’s the message from several top consultants and other astute observers of the HR space. “There are extraordinary technological innovations happening that are altering not just the physical workplace, but how people prefer to be working,” says Jessica Miller-Merrell, CEO of Xceptional HR, a Mountain View, Calif.-based HR consulting firm.
“More and more companies are leveraging such tools as video, mobility, big data, social sourcing, and the cloud to redefine how, when, and where employees work,” she explains. “Keeping up with these innovations is increasingly the price of entry to recruit talented skill sets, particularly from the Millennial generation, tomorrow’s business leaders.”
A recent report from expense management software provider Concur affirms these points. “Tasks that previously required employees to clock in and spend hours at their desks making phone calls, shuffling paper and physically meeting with colleagues can now be done anywhere in the world on a mobile device at any time,” the report states. “The `office’ as we have thought of it in the past, is being redefined.”
Obviously, organizations that fail to grasp the need to provide these useful tools to the workforce run the risk of losing this talent to competitors that already have implemented these technologies. As the Concur report notes, “If employees are chained to their desks attending to tasks they could otherwise be doing using a mobile device, their happiness and overall satisfaction at work may suffer.”
Yet, many companies still don’t offer an office environment or work experience that employees believe is personally enriching. According to Gallup’s State of the American Workplace Report, 7 out of 10 United States workers dislike the work they do. “What is keeping HR up at night these days is talent acquisition, management, and retention,” Miller-Merrell asserts.
Others share this view. “Talent acquisition and retention is writ large across the HR world as the primary focus of concern,” says Matt Charney, managing editor of recruitingblogs.com and recruitingdaily.com. “HR is consumed with the need to align the right skill sets with corporate strategy. Should they develop these skills internally or seek them externally are key questions.”
Charney ponders whether or not the stream of thought leadership around technology has “scared” HR. “There is so much technology, such as big data, video, and social media, all promising different experiences,” he explains. “HR is burdened by information overload and the need to make important decisions about these emerging best practices. They’re not sure where to jump.”
Josh Bersin, principal and founder of Bersin by Deloitte, at Deloitte Consulting LLP, also cites talent management as the most critical HR concern, particularly as it relates to leadership. “Building and improving leadership capabilities continues to crop up as the number one concern of HR,” says Bersin. Not surprisingly, second on this list is technology. “There is a pronounced need for HR to become more internally optimized,” he explains.
“We have witnessed a flurry of technologies like data analytics and social connectivity tools,” he adds. “New sourcing tools have emerged to reduce high turnover rates, new dashboard to increase employee engagement, and, in a softer way, other tools like mobility and smartphones that provide a more attractive user experience.”
These factors have pushed HR professionals to focus less on the operations of internal HR programs and more on ways to attend their primary task—finding and keeping talent that is aligned with business plans. In these regards, the use of sophisticated technology tools and the outsourcing of functional tasks to third-party providers with robust technology platforms are increasingly necessary. This explains why many HR departments, as Bersin puts it, “are madly buying new tools.”
He adds, “The HR software market is one of the hottest enterprise software markets at present. Companies like Cornerstone and Workday are growing 60 and 70 percent, year over year. The problem isn’t getting HR to buy these tools, but to get people to use them. The onus is on HR to ensure that the tools and the processes they entail are simple and easy.”
Sarah White, founder and strategic advisor at Accelir, a Milwaukee-based strategic growth advisory firm, agrees, noting the purpose of these new technologies in an HR context is for them to be strategic. “Recruiting no longer is just `post and pray,’” she explains. “It has to be strategic, where the use of metrics and analytics drive the process on who you hire, where you hire from, and the skills sets required in the position.”
All these various tools—social media, big data, mobile devices and apps, and the cloud—are intersecting, she adds. “We’ve seen the combination of these next-generation technologies provide value to other parts of the organization like sales and marketing,” White explains. “Now we’re seeing HR harness this power, which has dramatically changed the user experience in the last 18 months, due to the greater simplicity and accessibility of these tools. One no longer has to be at the desktop to get to something or do something.”
There is a growing importance of a user’s experience—and not just the ease of using technology, but the feelings of empowerment such tools can provide. “People want more strategic understanding of the work they do in relation to the organization’s success,” says White. “Yes, they want to feel comfortable using the technology or they won’t use it. But, when the experience positively affects their efficient, speedy execution of tasks, it guides feelings of engagement, which, of course, keeps talented people in place.”
For the first time in workforce history, she notes, the barrier to entry for a new hire no longer is a lack of computer experience, as today’s tools are extremely easy to learn and operate. “This is where HR should be spending their money in 2014,” White contends.
Miller-Merrell notes that technology like big data can serve the strategic purpose of providing streams of valuable information to decision-makers. “I read an article in the Huffington Post that said HR should go the way of the buggy whip, which might have made sense a few years ago in those companies where HR was stuck in the world of functional tasks,” she says. “In a way, technologies like big data justify the need for HR. They’re helping HR push boundaries, venturing beyond simple recruitment to look at where the company is going this very moment and the people it requires to move it further.”
Big data also helps HR discern the truly important bits of information. “Without data analytics, all that information would look like my master bedroom closet—a disaster,” she confides with a laugh. “Big data helps you determine the important, key pieces of information you need, which you can then prioritize from a human capital standpoint to strategically assist the organization to generate profitable business growth.”
Strategic employment decisions are not limited to just full-time workers, however. What appeared to be a temporary fix during the recession—the expanded use of contingent labor—is now a fundamental part of workforce dynamics.
“We’re never going back to the ways things were before,” says Miller-Merrell. “The younger generation, women in the workforce, and the availability of all these new, exciting mobile technologies, have redefined the composition of the workforce. Since people no longer need to be in the same physical space to conduct work, such concepts as part-time labor and contingent contractors on a project-by-project basis have become efficient, cost-effective ways of getting done what needs to get done.”
White shares this view, noting that the subject of contingent labor has been around for more than a decade, but is only now an accepted part of business operations, in large part due to the aforementioned demographics and intersecting technologies. “Back when I was in college, the technology was not set up to recruit and manage the contingent workforce properly,” she says.
“HR tended to separate these people from the rest of the organization from a technology standpoint—they were not seen as an extension of the workforce, which is what they’ve now become,” White explains. “HR technology vendors are now up to speed, but many organizations still strain to recognize the value.”
Charney believes companies have cut headcount to the barest minimum, have since filled these voids with contingent workers, and aren’t going to pull back from the new model. “I don’t see a return to the old ways of adding headcount and the overhead costs that come along with it each time the business grows,” he says. “I also don’t see plugging in a contingent worker here and there when needed, or the creation of a fully `free agent’ workforce. Rather, I see the continuing development of specialized projects and teams that are formed from full-time, part-time and contingent workers for a specified outcome.”
Bersin agrees that a free agent workforce is unlikely. “The data we are seeing indicates that a certain percentage of the workforce will be full time and another percentage will work part-time from home,” he says. “The talent strategy will be designed around this, while not restricting the use of outside contractors. Otherwise, companies will miss out on a vitally important part of the workforce—people in their 50s and 60s that want to work on a project-by-project basis, and those with young children at home that want to work part time. This is what the workforce is like now and for the foreseeable future.”
Shoring Up and Buying
Today’s workforce also includes non-employees tasked with specific responsibilities both offshore and nearshore. More balanced shoring is in the cards in 2014, the experts maintain, with efforts toward nearshoring outpacing those toward offshoring.
“While labor is inexpensive in different parts of the world, I think there is increasing concern about putting workers in remote places,” says Miller-Merrell. “My bet is that we will see more balanced options, although offshoring will continue.”
Bersin also predicts more nearshoring rather than offshoring, given that the low cost of labor has moderated in places like India and China. “Companies are experiencing problems with turnover in these regions and in Eastern Europe because of all the other companies wanting the same thing, driving up the pricing,” he says. “Places like Mexico are becoming nearly as cost-effective. There is also no problem with regard to the time zone impact on when people would prefer to work.”
Technology—notice a pattern?—is also having a demonstrable affect on shoring options. “We’re seeing the shifting of work to virtual teams and functions in other markets to prevent downtime in business, as opposed to simply offshoring undesirable or cheaper to fill roles,” says Charney. “Shoring is now strategic, as opposed to simply cost-effective. For example, you’ll see Silicon Valley IT companies with public relations located in Utah, programmers in Bangalore, and developers in India as part of their overall operation.”
As more startups come on the scene with novel technology tools, the observers predict an increase in strategic partnerships initially, followed by the acquisition of these smaller fry. “It’s so much easier for a startup to develop an innovative product quickly because large companies have to cut through so much red tape,” White explains. “Larger companies also would prefer to buy a product with a proven track record and solid R&D behind it, and then do a `plug and play,’ as opposed to building this competency internally.”
Miller-Merrell agrees: “M&A is just a much quicker model than building from the ground up.” So does Bersin. “Little by little, we will continue to see the nimble, niche startups subsumed by the bigger companies offering bigger and more end-to-end solutions,” he says. “For now, they might engage in a partnership model, but the future bodes a lot more M&A. Emerging markets like the new tools we’re seeing for employee collaboration and performance management will eventually get bought.”
All these trends are predicated on the key pressing need in organizations—talent acquisition and management. Obviously, this burden falling squarely in the lap of HR is also a tantalizing opportunity to earn that coveted seat at the strategy table. Says Bersin, “Finding the right people that fit your goals, your culture, your management style and your work environment—that’s the key. It’s a big matching game. And HR is the matchmaker.”