The Changing HR Structure: Leadership, Foresight, & Strategy

In an annual survey from the London-based Economist Intelligence Unit entitled, CEO Briefing: Corporate Priorities for 2006 and Beyond, senior executives worldwide indicated they were unhappy about their company’s HR functions. Historically known as a support department with a lot of responsibility and little control over outcomes, HR has taken a direct hit. To survive in organizations driven by globalization, changing demographics, cost containment, advanced technology and legislation, HR must prove its importance by acting as a strategic partner and aligning with company wide objectives, or face outsourcing themselves.

The new HR professional performs transformational work that involves knowledge management, foresight, and strategic redirection and renewal. Knowledge programs evaluate and manage the process of accumulation, creation, and application of intellectual capital. Foresight is used to plan for the future. According to Edward Cornish, those who study the future concentrate on three areas. First, they believe that the world and all its systems and inhabitants are interconnected and dependent on each other. Second, they are focused on time as a critical force and believe that to change the course of events, one has to begin now. Third, ideas of the future are paramount for improving the lot of humankind. Knowledge management and foresight are both used in the strategic processes. Strategy-making involves capturing data from all sources, including insight, internal and external material, and then synthesizing the learning from that data into a direction for the business to pursue. It encompasses projecting knowledge into a future state of existence. These skills allow HR leaders to act as consultants in the advancement of state of the art systems and processes for use within the organization, and to help business unit line executives strategically address and forecast staffing needs.

There is a two-way relationship between human resource planning and companywide strategic planning. Human resource planning helps the organization create a feasible strategy that makes sure people are available with the appropriate skills to pursue the firms’ strategic objectives. It identifies gaps between staffing needs and current or projected demographics, determines the strategy for recruiting, retaining, or retraining critical talent, and monitors those strategies to ensure alignment. According to Raymond Noe, from his book, Employee Training & Development, “human resource planning includes the identification, analysis, forecasting, and planning of changes needed in the human resources area to help the company meet changing business conditions”. Planning allows a company to anticipate the movement of employees due to turnover, transfers, retirements, or promotions. Rapid technological advances can cause serious mismatches between the jobs available and the number of people with the necessary skills to fill those jobs. Strategic HR matches employee skills with other positions in the organization when necessary and provides training to prepare employees for increased responsibility or predicted job opportunities.

Since strategic staffing involves forecasting the supply and demand of appropriate human resources for the organization, planners must understand the external business environment and the trends that occur within it. In an article called, “Workforce Planning: The Strategy Behind Strategic Staffing,” Christina Morfeld suggests using a four-step model to staff strategically.

1. Supply Analysis: Identify the demographics and competencies of your current workforce by examining attrition statistics, including resignations, retirements, internal transfers, promotions, and involuntary terminations. A skill inventory that captures information on each employee’s knowledge, skills, abilities, education, experience, and compensation history can address changing needs.
2. Demand Analysis: Forecast the competencies that will be required by the company’s future workforce to be successful. Review internal and external influences to predict how the nature of the work will change. These include reviewing the business mission, strategies, goals, legislation, economic conditions, technological advances, and market competition. Scenario planning is an effective way to systematically evaluate these variables by answering the question, “What would happen if…?” They may also be developed through the use of back-casting.
3. Gap Analysis: Compare the supply and demand data collected during steps 1 and 2. The results determine skill surpluses, skill deficiencies, and help pinpoint who is at risk.
4. Solution analysis: Develop strategies for closing the gaps identified in step 3. Identify ways to build skills that are in short supply and reduce those that are overly abundant in relation to the organization’s projected needs. Focus on optimizing the current and future workforce.

Strategic human resource planning drives the other human resource management functions by providing a framework for policies and programs such as compensation and training. The process is used to determine how people will be hired and used in the firm as it considers:
· Tasks and responsibilities that are tied to business goals
· Competencies and skills necessary to produce outstanding performance
· Which combinations of resources are most productive
· Tools designed to make the better hiring choices

A strategic staffing plan that is carefully designed and executed transforms hiring practices to align with the organization’s human capital and strategic goals. These methods improve employee utilization and the company’s overall effectiveness and competitive positioning.

In concluding, we must realize that job markets today are about variety, choice, and change. HR professional’s that think like futurists and take a strategic approach to designing organizational structures can lead their company into a new era. This involves the continuous process of futures fluency; gathering data to monitor changes, accessing the implications of change, imagining alternative futures, envisioning ideals, and planning. The success of future American corporations relies on the development of systems and practices that attract, retain, and develop a skilled, educated, and talented workforce.