As we navigate the fourth industrial revolution, the Human Resources department has never been more important than it is today. With businesses being disrupted by new ways of working and a global talent shortage, people are at the top of all CEO’s agendas. The questions they ask are simple “How do we attract, train and retain talent?” and “How can we ensure we have the right people to grow our business before, during and after digital 4.0?”. This is Human Resources time to deliver.

Strategic not administrative

The biggest shift of Human Resources as we move into the future of work is that it should no longer be an administrative function. The old stereo type of the HR person that arranges payroll, approves annual leave and provides employment contracts should be dead. If we are being honest, this should have been dead almost a decade ago, but a lot of companies still have not differentiated between administration and Human Resources.

Long gone should the days be where HR manages processes and standard operating procedures. Instead they are proactively solving people challenges, devising strategy, systems and programs to help the organisation deliver on the overall business objectives. All the traditional role of a Human Resource professional doing typical HR things can be automated and replaced with technology. There is no reason why you need more than an average of one HR professional per 100-150 employees if you are using technology properly. And less than 10% of their time should be spent on process related issues.

No longer a cost centre

At the heart of this shift in Human Resources will be the increased use of data and analytics to finally demonstrate a tangible dollar value for Human Resources. One of the reasons many businesses are struggling with so many people related challenges is because they cannot see the value of HR. It is seen as a cost centre and not important. The information on how to calculate these facts and figures have been around for a number of years, but they have not yet filtered in to the main stream, this will change.

For example, let us assume a business has an attrition rate of 20% across an employee base of 1000. That means the organisation loses 200 people a year, if you factor in an average salary of say $50,000 for an employee and $100,000 for the manager and a time to hire of say 90 days from vacancy open to the new person starting. Then add on say another 90 days to get the new hire up to speed, the average cost to the business is about $57,000 per employee or $11,400,000 annually for 200 employees leaving a year. Therefore, a strategic HR function that identified root cause issues and solves them reducing attrition to 10% from 20% boosts productivity by $5,700,000 a year. Suddenly the HR department takes on a new level of importance. 

Employee Experience

With this new understanding of the financial impact of people issues, employee experience is going to be the core focus of HR teams moving forward. A large MNC reducing attrition by one or two percentage points is worth tens of millions of dollars to the bottom line, and armed with this new information, ensuring a positive employee experience will take on an increased importance. Businesses whose HR teams are not actively contributing to employee experience are going to be at a significant disadvantage. Research already shows that employers that win employer of choice awards outperform the share price of those who do not by almost 200%.

Every employee touchpoint becomes important. HR teams will be focused on a variety of initiatives that have never really taken hold before. Basics, like ensuring managers are well trained and suitable for the position before becoming managers will be a key starting point. But even small items, like having an employee’s favourite 3pm snack delivered to them on their first day will be important. After all, an employee centric organisation is going to find it easier to attract and keep people, and this will show in better financial results – as a happy workforce is a productive workforce.

Finally, HR and business leaders will also wake up to the reality that all employees are not the same, and so customisation of salary, benefits, career paths and working hours will be the new normal. For example, a single person aged 25 does not need the same life insurance or health insurance package, as a 45-year-old with 2 kids just because they are in the same career grade. Even when logging on to the company intranet, the information presented will be in a format similar to what we see with YouTube or Netflix, as opposed to the one size fits all approach we have now.  

*If you are looking to build an amazing employee experience then you should check out my best selling book – The HR Handbook: A Practical Guide to Employee Experience. You can pick up a copy by clicking here. Alternatively, you can search for the book on any Amazon site including UK, US, Singapore, India, UAE, Japan, Canada, Australia and various others to order a copy. If you are in another location, Amazon will be able to ship globally to you. It is also available as an e-book via Amazon Kindle.