21/05/2014

By Gareth Cummins, Associate Practice Partner, Wipro Consulting Services

Recent economic forecasts have predicted that the economic recovery we saw in the latter half of 2013 will continue at a steady pace*. Those companies that move quickly to take advantage of this prediction will be able to get ahead of their competitors as we progress further into a more economically stable period.

Returning to an expansionist strategy after a long period of stagnation isn’t an easy task. The business — or more specifically the CEO — needs to have access to a wide range of information to take the right decisions to drive growth, but currently the HR department isn’t in a position to support this need.

The challenges faced by the HR department can be broadly summarised into two core areas: years of under investment in technology have resulted in a platform unable to meet basic information requirements (without significant effort); and the downturn itself has created workforce challenges that fundamentally impact the ability to compete in a dynamic global environment.

Understanding and addressing these challenges are critical in taking advantage of the new opportunities that the economic recovery has presented.

Workforce Management

The HR department must ensure that the workforce is fit for purpose; able to support the business strategy and in good shape to compete in the new global, social and real-time world. However, the economic downturn has created a complex talent environment characterised by a lack of investment in new technology to enable employee mobility and stagnation in personal development.

One aspect of this has been that more mature members of the workforce have seemed reluctant to leave their positions, neither venturing to new pastures or taking retirement, due to the financial instability the economy has presented.

Simultaneously, squeezed budgets often resulted in a hire freeze meaning younger workers with newer skills have not been taken on. Now that the economy is improving there is a danger of a mass exodus creating a “green” workforce with a lack of relevant skills.

The skills shortage across the European region has been well documented** caused partly by fewer graduates studying the subjects that employers demand, and partly by reduced investment in workplace training. Younger workers can bring new skills to a business but their relative inexperience in terms of working years can be detrimental.

While retirement is inevitable, the HR department needs to cultivate a workplace that attracts new employees and also fosters loyalty and knowledge sharing amongst current employees.

This can be done through a range of employee centred workplace benefits, such as offering greater flexible working and staff incentives, and promoting a social work place culture.

Today a company’s social and ethical “footprint” can be a key deciding factor for candidates looking for a suitable job. Social awareness is growing and companies that actively support both the communities in which they operate and the wider world are often seen as better places to work for. As part of fostering a better workplace culture, actively investing time, and possible resources, into community projects and charity can project a positive outward image to those who may consider working for the company.

Attracting, hiring and maintaining the right workforce is essential to every business and solving the workforce conundrum is key to any company looking to speed out of the downturn ahead of its competitors.

Technology Implementation

With the rise of data analytics across businesses the C-suite now asks more complex questions about the workforce. What skills do we need (and when) to support growth? What skills do we have? Are we able to leverage these skills quickly? And how easily can we move workers across a business to take advantage of the expertise we already possess? For an HR department coming out of the recession the answers to these questions are not available without a tedious and time consuming investigation.

In addition to providing intelligence to support decisions, the systems have severely hamstrung HR in being able to create, manage and develop a modern, agile and increasingly global workforce. A lack of integration across processes and applications, limited self-service and inability to react to the changing needs of the workforce (mobility and social being two examples) create a situation where HR is mired in an administrative role rather than providing value-add services contributing to business growth.

The simple reality is that the technology budget cutbacks caused by the downturn affected the HR department gravely. Many of them are now running on outdated systems that do not have the necessary elements needed to answer such questions quickly.

Many businesses think that to address this, a large amount of CapEx is required to renovate outdated IT systems. However, there are things that can be done: improving existing interfaces to provide a more integrated journey across processes and systems, resulting in better control over the data will improve the quality of information, but ultimately there’s no substitute to having a long term strategic solution aligned to the business needs.

With the advent of cloud technology and cloud based systems, businesses can revamp their HR system around standardised processes. Cloud based services can be more cost effective as they are quickly deployable and do not require an in-house system to be built, meaning a faster return on investment and a reduction in upfront costs.

There is no escaping that an initial spend is required, but providing an HR system that can grow with the business to meet changing needs while providing an improved user experience (increased self-service, mobility solutions, improved analytics to name a few), means that the ROI and insight offered by a modern HR system more than justifies the investment.

Getting off the starting blocks

Before the HR department can move into the more central role, the wider business demands that these two core areas of under investment in technology and workforce challenges must be addressed. A greater depth of knowledge of the workforce is needed to offer agility to the business and this cannot be done without having the right technology in place. Only when the HR department can identify a workforce strategy aligned to the business needs, supported by a robust future-proof technology platform, can it take its role as a trusted CEO level strategic advisor.

*European Commission, Winter forecast 2014 — EU economy: recovery gaining ground, February 2014
**BBC News, Skills gap ‘damaging young and employers across Europe’, 13 January 2014

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