#InternationalHRDay: The Strategic Future of HR

by Mark

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​A few days ago (May 20th) was international HR day, a day to recognise the importance of the profession, the work that HR teams do and their positive contribution to individuals and organisations internationally. The theme for 2022 was “HR shaping the new future” and this comes at a very important evolutionary juncture for HR, as workforces return to offices (or not) now that the Covid19 pandemic is subsiding.


Today we take a quick look at the evolution of the HR discipline and how the HR role is leading a future focused on greater inclusivity, flexibility and participation, to benefit workers, organisations and society as a whole.


HRM – a potted history


·        Pre-1900s

The first real efforts in the form of human resource management (HRM) were related to Industrial Welfare in the 19th century. In 1833, the factories act (in the UK) stated that there should be male factory inspectors and excluded child workers under nine years of age, with limited working hours for children above that age. During the 1860s and 1870s, more legislation followed, while trade unions started to become established, with the first trade union conference held in 1868 - the birth of collective bargaining.


·        1900-1920s

By 1913, the number of people employed in the area of industrial welfare had grown significantly, prompting English sociological researcher, reformer and industrialist, Seebohm Rowntree, to hold the first Industrial Welfare Conference. This gave rise to the Welfare Workers Association (later changed to Chartered Institute of Personnel and Development).


During the First World War, personnel development initiatives increased as governments looked to encourage the best use of people under mass mobilisation. In 1916, it became compulsory to have a welfare worker in explosive factories and much of the development work around workforces during this period came under the purview of the military, including testing abilities and IQ, and furthering research in into human factors. This was a turning point in the evolution of recruitment and selection.


·        1920-1950s

In 1921, the National Institute of Psychologists established in the US and published results of studies on selection tests, interviewing techniques and training methods.


During World War Two, there was renewed focus was on recruitment and selection and later on training; improving morale and motivation; discipline; health and safety; joint consultation and wage policies. This meant that a personnel department had to be established with trained staff. As a result, consultations between management levels and the workforce increased during the war and the personnel departments became responsible for its organisation and administration, with specialists employed in the areas such as health and safety, while the personnel manager led on relations with trade unions.


·        1950-1980s


From around the 1920s through the 1950s, economists and sociologists had started to realise the need to address the emotional and psychological needs of employees in order to retain and get the best out of them. In 1958, a professor of economic and social relations at Columbia University, Jacob Mincer, published his article "Investment in Human Capital and Personal Income Distribution" in the Journal of Political Economy - of the first economists to use the term Human Capital, in the sense we understand it today.


Moving on to the 1960s and we start to see laws being passed to ensure fairer employment (such as Equal Pay Act of 1963 and Civil Rights Act of 1964 in the US), introducing a culture of compliance. At the same time, human motivation theories including Herzberg’s Two Factor Theory and Deci and Ryan’s Self-Determination Theory, began to transform the understanding of organisational and industrial psychology in the workplace, with a focus on employees' need for achievement, advancement, and recognition by matching the nature of the work itself with a person's skills and interests.


·        1990s-2019


The last 30 years have seen major milestones for HRM. During the 1990s, employers started seeking increasingly flexible working arrangements due to an increase in number of part-time and temporary contracts and the arrival of distance working. Both the workforce itself (especially with the introduction of anti-discrimination laws) and way the way people worked became much more diverse and agile.


After the year 2000, the internet exploded and world moved to an always-on culture, giving rise to new jobs such as in eCommerce. The pace of technology change brought huge opportunities and huge challenges and HRMs started thinking much further forward to future-proof the business, becoming more strategic in approach. At the same time, technology helped to support or replace some traditional HR department roles, improving efficiency in complex tasks such as e-recruitment, online training, psychometric assessments, payroll systems and the generation of employment data.


As Silicone Valley grew, so did the focus on creating a work/life balance so that HR departments spent more of their energies managing employee engagement and strengthening the company culture. HRMs are now responsible for overall happiness and employee retention, as well as Employee Value Propositions.


2020 and beyond.


During the pandemic years, HR had to become highly agile and adaptive. HRMs were instrumental in helping organisations move to a fully virtual environment while quickly redrafting benefits and sick leave policies for essential workers. They were also on the giving and receiving end of furloughs and layoffs. HRMs had to help re-educate businesses around recruitment expectations and job interviews while working with the senior management teams on what the post-pandemic workforce would actually look like. Their hands were full.


During this time, we also saw a dusting-off of the concept of organizational support theory (OST); the idea that an employee’s perception that the organization values their work contributions and cares about their well-being should be at the centre of retention and development strategies. This theory, actually developed in the 1980s by Linda Rhoades and Robert Eisenberger at the Department of Psychology, University of Delaware, has returned to prominence with remote working where, arguably, emotional perception has become critical in non-human contact working environments.


This is, then, perhaps the critical juncture when HR turns from a model of ‘getting the most out of employees’ to ‘showing employees we care about their work and wellbeing’.


This is a move away from compliance and administration into areas of data analysis, transformation and risk mitigation – all of which are strategic areas.


Here are the top-6 trends for the future of HR:


  • Moving from task-orientated to service focused. HR as a practice must now adopt a human-centred approach; listening, creating a positive and caring environment for employees, creating a culture of trust and mutual commitment between employees and the employer, acting more like an internal consultancy

  • Big Data - predictive analytics and big data can now process everything from employee retention to recruitment strategies and can be used to monitor the success of wellness programs. This means that strategic HRMs can access real-time high-quality data to better inform decision making

  • Direct-line to SMT. As a key strategic function, HR must now provide guidance and advice directly to the C-Suite. No more back-to-the-floor days. The SMT must know what the employee experience is at every level in real time. The CHRO should now be at the same strategic level as the CFO in terms of projecting future risks and opportunities

  • Inculcating HR into the fabric. HR should now be in a position to educate and train the rest of the business in terms of connecting employees’ perceived individual purpose to that of the organisation. Training management levels to hold collaborative check-ins and career development discussions with their direct reports to understand their purpose relieves emphasis on promotion and pay rises to promote employee engagement

  • An every-individual approach. The workforces of today presents a smorgasbord of employees going through a variety of personal and professional life stages and changes, some of which may require adjustments to find a balance between work and life (for example the needs of their children). Technology now allows these requirements to be better accommodated

  • Employee value front and centre. Firms must now integrate their employee value into their external communications. We’ve all seen how bad working culture and practices has led to the criticism and negative impact on firms over the last few years (Sports Direct in the UK, Apple in Asia, and more recently Top Glove in Malaysia). Customers want to know they are working with ethical companies who look after their workforces, wherever those teams might be in the world. HR is responsible for gathering the data and writing the story on this, so HR is moving into a closer relationship with external communications, customer relations and marketing.


We hope you enjoyed this run-down of the evolution of HR and our thoughts on its future. We’d also like to take the opportunity to recognise the hard work of HR and to and celebrate our colleagues and associates who work in this field – thank you for all your efforts, especially through the pandemic, and we look forward to many years ahead working with you hand in hand.