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The following is an excerpt from Human Resource Executive Online by Dan Kaplan, Managing Partner and Head of the Global Human Resources Practice at CTPartners.
Read the full article here.
The human resource department — the corporate home of hiring, firing, compensation and employee benefits — is undergoing a major transformation. Technology has automated basic functions, forcing HR to reshape its identity.
Boards are demanding higher-level HR executives to become strategic partners in dealing with new regulations and the problems facing companies battered by the global recession. And the financial crisis has forced companies to evaluate their management teams and revamp entire workforces for a post-recession economy.
The challenges are great, and a new kind of HR executive is emerging to meet them, in the process turning our traditional concept of human resources on its head. Five major forces are driving the changes that will end HR as we know it by the year 2020:
1. Technology Changing the Game – For decades, technology has been helping companies automate basic HR functions. Through employee self-service systems via intranets, employees can access the information and support to manage their own health benefits, 401(k) programs and day-to-day HR transactions. Companies have also been reducing costs and staffing requirements by turning to outsourcing providers to handle benefits administration, payroll, employee education, workforce analytics and recruitment-process outsourcing for junior-level positions.
2. New Rules – The Sarbanes-Oxley Act of 2002 riled the business world by setting new standards for all U.S. public-company boards, management and public-accounting firms. Nine years later, the debate goes on about whether the law really improved governance or added excessive costs and hurt U.S. competitiveness overseas.
3. Multi-level Succession Planning - Succession planning is always stated as a board priority, but the National Association of Corporate Executives reports that 50 percent of boards do not have formal plans for CEO replacement. Cautionary tales abound when succession, hastily planned or decided on the sole basis of who is next in line, creates disruption, excessive turnover and shareholder unrest.
4. The Three Percent Rule – While many organizational experts call for succession planning in large companies to include executives 10 layers deep, others suggest that every company regardless of size should concentrate on the top three percent of employees as the critical assets that drive the business — assets that need to be constantly educated, evaluated, motivated and rewarded.
5. A New Kind of HR Leader – The rise of the CHRO — Chief HR Officers, participating in the highest levels of decision-making — confirms the seriousness of boards of directors in elevating the role and capabilities of HR leadership. While historically CHROs were added to boards as a way to add diversity, companies in recent years have begun to add top-notch CHROs to broaden their perspective on organizational issues and expertise in talent matters.
