These are uncertain times. Never has that statement been more pertinent in 2016 which played host to seismic political events such as Brexit and the election of Donald Trump to the US presidency. This allied to a sluggish global economy presents plenty of challenges for multinational firms operating across the globe.
The acronym VUCA which stands for volatility, uncertainty, complexity and ambiguity is a trendy management term that perfectly encapsulates the conditions that many multinationals are operating under. So what are the main business challenges facing HR directors of global firms in 2017? Some of the challenges facing HR directors are long-standing, remarks Professor Paul Sparrow, emeritus professor of international human resources management at Lancaster University Management School. “It’s about continuing to build a global mindset and leadership ever more deeply into the organisation and creating much better linkage between their international mobility and global talent management functions.”
However, Sparrow cautioned that the recent uncertainty in global politics and the continued business risks mean that global HR directors will be facing some difficult challenges in the coming few years. “Their functions are still not as globally integrated as many of the other functions so they shall continue to globalise more and more of their people management processes. Paradoxically, they will be doing this at the same time that the world is to varying degrees, de-globalising. As the public mood begins to shift, there is increased scrutiny being placed on the sourcing and shoring strategies of many multinationals and on their ability to regulate and manage their global supply chains. Transparency is becoming the order of the day.”
Sparrow believes that there will be much more focus on local responsiveness. “There will be much more political pressure on HR directors to show that their organisation does a lot of localisation, transferring more skills and operations into host country operations.”
Attracting the top talent remains a continual challenges for HR directors in 2017, reflects Isaac Getz, professor at ESCP Europe Business School and co-author of the book ‘Freedom Inc’. “This is not new of course but what is new are the ways some companies are starting to tackle these challenges. The old ways such as signing bonuses and incentives work less and less in a VUCA world. Are we going to see companies offering fresh and free fish to its employees at the end of the day to outdo its competitors in attractiveness as one Silicon Valley tech firm does?”
Automation will also have an impact on certain job sectors and roles. According to an Oxford University study, administrative jobs topped the list of jobs most at risk of automation while health sector occupations such as nursing had a less than one percent chance of being replaced by robot labour. Companies and in turn HR departments face a unique challenge with automation, warns Brian Kropp, HR practice leader at CEB.
“But we need to step back and take a broader view of the environment that companies operate in. Right now there is more attention than ever on ‘reputation’ in companies in terms of their role in society and what they are doing to support their employees. The challenge that companies are facing with automation is that they have the opportunity to decrease cost and improve the customer experience with automation, but to do that companies will likely decrease headcount. In fact, one financial services company we spoke with said that with automation, they could reduce headcount by up to 35% without impacting the customer experience.”
Kropp argues that with the potential for such significant decreases in headcount poses a question for organisations. “Should they reduce headcount and achieve the cost savings and then hire new people as the need arises? Or, should they invest significant resources in up-skilling their employees that will have their jobs eliminated with automation and prepare them for their next, different-in-kind role? In the past the decision was almost always the former, but with the increased attention that companies are playing in society and the additional scrutiny they are facing, they are actively debating if they should do the later instead.
Another trend that is impacting organisations is the increasing emergence of the Gig economy. Some reports estimate that by 2020 as much as 40% of the American workforce will be contingent workers or independent contractors, remarks Ellie Filler, managing partner, human resources practice, Europe, Middle-east and Africa at Korn Ferry. “There are two key drivers for the rise of what is now being called ‘the gig economy’. From the workers’ perspective, there is a demand for diversity and flexibility in their roles and the ability to showcase their unique skill sets. For organisations, there’s a shift in strategy from ‘I need to hire a person’ to ‘I need to complete a task.’”
Filler argues that the ability for HR departments to work with predictive analytics around skills need, resource requirements and sourcing strategies, as well as compensation and legal governance while at the same time move quickly will be in ever greater demand if HR is to remain relevant.
A recent Korn Ferry executive study found that nearly three-quarters of respondents reported that culture was core to the success of organisational financial performance. “This means that in 2017, employers will need to focus on and invest in their employer brand to help candidates understand the company culture and motivations within the workplace,” comments Filler.
The new Gig economy alongside agile working and mobile talent will mean that companies must focus on building inclusive leaders, warns Charlotte Sweeney, founder of Charlotte Sweeney Associates. “Inclusive leadership is a key enabler to creating more diverse and inclusive workplaces and should be a keystone within the leadership cadre. Move away from ‘initiatives’ and create a sustainable leadership mentality of getting the best out of all colleagues and being agile enough to deal with day-to-day business challenges.”
A new way of working will be one of the new trends facing multinationals in 2017, comments Dominique Jones, chief people officer at Halogen Software. “We know the workforce is changing and becoming more spread out across different countries. This is shifting how companies manage employee performance. This has understandably left many HR and business leaders wondering how they can adopt these types of activities and be successful in the transition. In the end, it’s about educating staff on a new way of working and adopting a new set of behaviours and expectations for how managers and employees operate on a day-to-day basis where employees come into to work each day motivated to do their best.”
Karen Higginbottom writes about the junction between being human and the workplace. This article was posted on Forbes.com.