HR in the 21st Century - A High Level Summary By Richard Nelson

The Development Context

The future of HR is closely related to the current/future needs of organisations. HR will need to contribute more directly to improving the performance of organisations if it is to play a core role in the businesses of the future. HR will need to focus on delivering outcomes. It will be important for HR to be defined by what it delivers rather than what it does.

Some of the drivers of change in the competitive environment are:

• Globalisation, including the increasing number of competitors entering a firm’s domestic markets and the need to service a variety of international markets with different characteristics.


• People as customers are expecting more in terms of quality and service, competitive action is raising the stakes. This links with globalisation to increase complexity and diversity.


• The need for profitability from innovation and growth. The recent past has seen many initiatives around improving efficiencies and reducing costs. The scope for continuing to seek advantage in these ways is becoming limited, so executives will look increasingly to gain new sources of revenue from raising the effectiveness of the organisation.


• Technology offers more capability to organisations. But increasingly the management of data in relation to the needs of the business for the right information and knowledge will be part of the challenge of developing organisational effectiveness.


• People as employees and the sources of ideas and intellectual capital will need to be increasingly aligned to the purpose and strategy of the business. The expectations of people for good management will figure in how organisations seek success.


• Change itself will become a constant as organisations aim to gain advantage over their competitors.

• To become a partner in assisting the implementation of strategy. This will involve becoming expert in organisation development and design. Adopting a framework that will enable analysing current reality in terms of structure, processes and systems, people and culture in relation to the needs of the business’s strategic aspirations will be an essential first step.


• Being able to use the output of such an analysis to formulate development actions to improve organisational alignment and effectiveness will provide HR with much of its operating agenda.


• Raising administrative efficiency in its own service areas to improve performance in traditional activities will be important. Actions such as this will enhance HR’s own credibility. Introducing measures into human resource management activities can contribute to being more efficient and being able to demonstrate effectiveness.


• Representing people and ‘people management values’ will become a more pressing management consideration. Work is now more demanding than ever with employees being asked to do more with less. The traditional employment contract has changed. Employees can no longer rely upon the long-term security and ‘job for life’ arrangements of the past. The typical response by employees has been to become more transactional. HR needs to address this issue by helping other managers become better leaders in order to engage people, stimulate motivation and maintain high levels of morale. Unclear direction, vague objectives and ‘woolly’ measures damage morale as well as inadequate resources.


• HR will have to become an agent of change. As a constant of organisational life in the 21st century, the understanding of change and its impact on people and business will be critical. HR needs to find ways to help the organisation and its people adapt, learn and act fast to embrace and drive change. This means supporting the realignment of the organisation behind new strategic directions in a holistic way. The challenge of reshaping culture must be addressed as well as changing structures, processes and systems and knowledge/skills.

• Business acumen - an appreciation of serious strategy formulation and the major financial drivers such as profitability and shareholder value; an understanding of the external forces that drive change such as economies, social trends, demographic change etc.


• Organisational development knowledge and capability - this will include structural design, process management and project management as well as a range of skills with respect to facilitating learning and change.


• Consulting skills - to support the resolution of the organisational development within and without HR. Consulting skills that will enhance personal credibility and engage line management colleagues will be crucial. Flexibility in being able to apply them to both macro and micro issues will also be important.


• Keeping current with ‘cutting edge’ HR learning and practice, especially in relation to organisational change and people will also be necessary.

• Analysing current reality in the organisation in order to determine the priorities for change in relation to the business’s desired competitive position.


• Determining the capability gaps in the HR community based on the assumption that HR will support the business executives in leading the implementation of a new strategy to realise the desired competitive position.


• Recruit the top executives to help HR transform by emphasising that leadership, effective change management, high morale and commitment are critical for business success. Also have them define the results HR should produce and hold HR accountable.


• Create a programme of knowledge/competency development for HR people that will address the points above. Be prepared to bring in new business-oriented people into the HR function.