THE FUTURE OF HR?

1. THE FUTURE OF HR? Dr. Peter Saul Director, Strategic Consulting Group Paper presented to: Macquarie Graduate School of Management’s “People Management and Leadership Conference” September 16-19, 2001

2. FROM Local markets, operations Manufacturing, clerical work Hierarchy Intermediaries; face-to-face Obedience to formal authority Stability, efficiency, control Full time job Customer service Work done by employees Fixed work location Management prerogative Loyal service White, male workforce Financial performance “Get a job” TO Global markets, operations Service, knowledge work Networks Direct access,virtual relationship Questioning of formal authority Change, creativity, flexibility, order Part-time and project work Shareholder, stakeholder value Work done by many contributors Diverse work locations Social licence Marketable knowledge, skills Diverse workforce Triple bottom line “Get a life” SHIFTS THAT ARE RE-SHAPING HR ROLES

3. CHANGING WORKER ASPIRATIONS • RICHARD BRANSON • MICHAEL JORDAN • RICHARD BORES (Wizard Home Loans) • MERY STREEP AND JODIE FOSTER • ANITA RODDICK • NELSON MANDELA AND JERRY MAGUIRE “…had a dream and went through with it...loved what he did…lives life the way he wants... created this lifestyle for herself out of what could have been a downward spiral…really inspiring” AFR BOSS magazine, June 2001. Survey of work role models for white collar Australians, in 20-30 years age range.

4. HR AT A CROSSROADS Results of a forum on the "The State of the HR Profession" held in conjunction with the 2001 Annual Conference of the Society for Human Resource Management • “Significant change is inevitable for HR” but “what HR will be and do is not yet clear” • SRHM is doing research to develop a vision for the future of HR and a profile of the future HR practitioner • An HR practitioner might be "a hybrid line manager" who is "first and foremost a business executive" but has expertise in at least one HR function. SHRM President and CEO, Helen Drinan • “We have to get management to understand that they're responsible for people” AND “If we do our job—and work ourselves out of a job—so be it." Also see FT.com online forum on “Human Resources: A career in crisis?”

5. EMERGING LEGAL ISSUES AT WORK • NEW TECHNOLOGY ISSUES • AGE CONSCIOUSNESS IN THE WORKPLACE • GLOBALISATION OF EMPLOYMENT LAW • TRAINING FOR LEGAL COMPLIANCE • WORKPLACE SAFETY Source: Garry Mathiason (Littler, Mendelson, Fastiff, Tichy & Mathiason) SHRM Annual Conference June 2001. Results of survey of 400 employment attorneys

6. TOP 5 BUSINESS CHALLENGES Developing new markets Improving profitability Market share growth Becoming the recognised global market leader Building shareholder value TOP 3 HR CHALLENGES Attracting and retaining talented people Improving organisational capabilities Developing leadership skills ? HR EXECUTIVES’ VIEW OF THE FUTURE Source: Arthur Andersen survey of HR Executives in almost 70 Australian-based firms Reported in HR Monthly, August 2001, p.17

7. “The bad and the ugly in HR” • “Many HR people still lack business acumen” • “We have not adequately managed high expectations of HR” • “There’s too much modeling of mediocrity… and way too little real research going on” • “We have overhyped e-learning and some other fads” • “We do much order-taking… and mistaking talk for action”Jim Moore, former Director of Workforce Development at Sun Microsystems in his address to the 2001 SHRM Annual Conference

8. Q.So, how do we organise all the shifts, trends, speculation and forecasts into a framework that can guide fruitful conversations between, and strategic decision making by, senior line managers and HR professionals? A. Scenarios is one way

9. FOUR AUSTRALIAN SCENARIOS “FIRST GLOBAL NATION” Australia capitalises on globalisation; promotes its internal diversity and ethnic tolerance; and boosts home-grown innovation and industry capability “SOUND THE RETREAT!” Globalisation stalls as political and social structures are not ready; trade barriers and nationalism re-emerge; we depend on bilateral national and commercial relationships “BRAVE OLD WORLD” Complacent, dependent on agriculture, tourism, “new” manufacturing and some biotech; clever people and companies move overseas “GREEN IS GOLD” We emerge from the growing imperative to protect the natural environment as a leading innovator of global environmental management Source: Australian Business Foundation “Alternative Futures: Scenarios for Business in Australia to the Year 2015” Sept 1999

10. DEFENCE: ‘In the Box’ Scenario Matrix Open globalised world economy Global middle class Social polarisation and exclusion Closed protectionist world economy Source: Hardin Tibbs report to Australian Defence HQ 1999

11. DEFENCE: ‘Way Out of the Box’ Scenario Matrix Revolution in basic science Single world government Social progress with no discontinuity Psycho-social evolutionary punctuation Discontinuity in human consciousness Science reaches a plateau Source: Hardin Tibbs report to Australian Defence HQ 1999

12. TWO SCENARIOS OF THE 21ST CENTURY ORGANISATION MIT Initiative on Inventing the Organizations of the 21st Century (January 1997) facilitated by Peter Schwartz of the Global Business Network:- http://ccs.mit.edu/21c/21CWP001.html The scenarios were developed during 1994-1997 by MIT academic and research staff in discussions with hundreds of executives at various MIT Symposia, executive education programs, etc.

13. FUTURE OF ORGANISATIONS: Scenario 1 SMALL COMPANIES,LARGE NETWORKS • Autonomous teams of 1-10 people • Temporary - task or project based • Linked by high bandwidth, electronic network • Venture capital infrastructure identifies promising teams and provides financing • Independent organisations for social networking, recreation, learning,reputation building and income smoothing • evolved from professional associations, unions, clubs, university alumnis, neighbourhoods, families, churches • they are home for our identity as projects come and go Examples: Film industry; Prato Mills (Italy); Nike; Nokia PC Display Division

14. Small Company, Large Network HR • Very specific HR scope focused on project organisation (e.g. talent scouting/selection, pay, health & safety) • Outsourced • agents, brokers, specialist providers • contract staff organisations handle the HR for their talent as part of their brand and competitive strategy • Mutual employment obligations spelled out in project contracts • or implicit in industry standards • or assumed from past working experience • Project Manager’s reputation depends on his/her people skills and hence there is a reluctance to delegate to HR specialists

15. Small Company, Large Network HR (cont.) • Selection is via networks, personal references, reputation • Performance management is via peer pressure and industry/ professional standards • Rewards are contractual or entrepreneurial (equity based) • Development is via doing leading edge projects • Innovation is via brokers, deal makers, agents, sponsors • Individuals rely on professional associations, “guilds”, managers/agents

16. FUTURE OF ORGANISATIONS: Scenario 2 VIRTUAL COUNTRIES • Keiretsu-like alliances with operating companies in every country • Minimal national allegiance - primary loyalty is to the corporation • Traditional hierarchy or decentralised divisional structure • Company is the focus for individual identity • Company meets employees’ needs from cradle to grave • Employees own the firm AND have right to elect the Board and management • Open book accounting informs management elections • Specialist “organisational designers” travel through firm brokering partnerships and fostering cross boundary communication • Role of governments, industry unions is significantly reduced Examples: Asea Brown Boveri; GE; Johnson & Johnson

17. Virtual Country HR • HR almost replaces social welfare, education systems and provides financial management and estate planning services, etc • Corporate (strategic) HR • sets standards and monitors the corporate culture • helps Marketing build the corporate brand • Divisional (operational) HR • total care of employees so they are free to focus on performance • Actively involved in local communities to reinforce the company culture and image

18. Virtual Country HR (cont.) • Selection emphasises fit with corporate values • Performance management focuses on results achieved the “XYZ way” and on being a company ambassador in all areas of life • Reward is via promotion, enhanced status, rights, benefits - and pay • Development is via corporate colleges and universities in partnership with the world’s best educational institutions • Innovation is through internal R&D and improvement programs with heavy emphasis on protecting corporate intellectual property

19. PAST HR ROLE WAS CLEARLY DIFFERENTIATED mechanistic (Personnel Admin) ritualistic, legalistic (IR) CEO’s eyes and ears with the troops distinct professional career paths HR is HR’s responsibility FUTURE PEOPLE/LEADERSHIP ROLE IS DISTRIBUTED AND DIFFUSE knowledge management relationship management; teamwork legal compliance change management no distinct HR profession - new hybrid roles emerge People/Leadership is everyone’s responsibility CHANGING “HR” ROLES: Some Generalisations

20. NEW CRITERIA FOR RATING “HR”? • Profit generated per employee (compared to industry benchmark) • Salary/wages costs compared to industry median (reflecting value of corporate reputation/intangibles in labour market) • Number of talented candidates applying for advertised (and unadvertised) vacancies • Time taken to satisfy customer orders, inquiries, complaints (compared to agreed service standards) • Incidence of customer complaints caused by employee behaviour • Cost of re-work • Cost/risk due to time lost through injuries, absences, disputes • Rate/cost of unplanned turnover among good performers • Percentage of customers citing “service quality” or “competent, caring staff” as a competitive edge for the company • Net cost of generating organisational improvements • Percentage of revenue/profits coming from initiatives taken in last 3 years • Share price premium compared to industry peers

21. AN INTEGRATING STORY? OUTCOMES (Stakeholders)Shareholder/InvestorCustomerContributor- employee - other Community ARCHITECTURE (Leadership) VISION & MISSION CORPORATE STRATEGY Competitive strategy Development strategy Leadership style Culture/Values/Ethics ORGANISATIONAL DESIGN Structure Technology Place FUNCTIONS (Management)FinanceInvestor RelationsSales & Marketing Operations R&D “Contributor Relations” Contracts (Legal) Supply PR Community Relations

22. MAPPING YOUR ORGANISATION’S CURRENT TRAJECTORY Derived from an HR framework proposed by Brian Young “PeopleFirst Solutions” Previously Asia Pacific HR Director for Deutsche Bank

23. MORE WINDOWS INTO POSSIBLE FUTURES SOME WEB SITES ENGAGED IN THE SEARCH: http://ccs.mit.edu/21c/index.html http://www.foresight.gov.uk/default800.htm http://www.defence.gov.au/nspb/htibbs-futuresV.4.ppt http://www.dol.gov/dol/asp/public/futurework/welcome.html http://www.fastcompany.com/ http://www.bsr.org/ and http://www.csp.uts.edu.au/ http://www-csc.mty.itesm.mx/~laava/KMetaSite/menu/sitemap.htm http://www.managewithoutthem.com/ http://www.futurists.net.au