12 HR Trends for 2012: The Strategist-People Matters Study
Managing talent in times of economic turbulence is a challenge and organisations will need to identify what that means in their context
A new class of analytics and predictive modeling will be the need of the hour which can help HR understand and appropriately respond
2012 will herald a new era of innovation which will see talent managers focus on the use of web & cloud technology, social media, coaching, talent analytics and outsourcing of recruitment processes. People Matters spoke with industry veterans to explore trends that will confront talent managers in 2012
As the world enters an unprecedented era in 2012, the governing equations for businesses are going to be paradoxical and at the same time equally challenging. The global economic outlook at the moment is quite gloomy, and there are risks of sliding into a double dip recession. And at the same time, businesses across verticals are entering an era of unparalleled talent scarcity, which, if left unaddressed, will put a brake on economic growth, leave alone business growth, and will fundamentally change the way workforce challenges are addressed.
In the Indian context, the dwindling economic indicators also paint a gloomy outlook. Despite 13 consecutive rate cuts by the Reserve Bank of India and maintaining status quo in the last credit policy meet, it has not been able to infuse the much needed enthusiasm amongst investors. The depreciation of the Indian currency by over 20 percent in the last four months (the exchange rate is currently pegged at Rs 53.42 per dollar) is a cause of concern for an economy which imports commodities like crude oil. The industry output has recorded a two year low and in comparison to corresponding period last year, has recorded a de-growth of 5.1 percent. While food inflation is gradually decreasing, overall inflation still remains much above the government’s and central bank’s comfort zone. Despite efforts by the government, it has not been able to contain fiscal deficit, which is expected to breach the 4.6 percent target and reach 5.5 percent. The rate of growth of GDP too has been on a decline and in the second quarter of the current fiscal dipped down to 6.9 percent, the slowest in last 2 years. Amidst all these and thanks to the Eurozone crisis, Sensex - the economic barometer too is pegged below the 16,000 mark. The fear of a slowdown is clearly looming large. The uncertain economic outlook and challenges associated with turbulent economy will force organizations to reflect an appropriate balance between investment in the workforce and return on that investment in terms of performance and productivity. Issues of employee engagement, talent acquisition and retention, compensation and benefits, leadership pipeline, come to the fore; in 2012 some of these same issues will continue to demand attention but perhaps in new ways.
People Matters in conversation with over 60 industry veterans, compiled a list of trends that will keep organizations on tenterhooks as far as talent management is concerned. Leveraging technology, empowering people, embracing new social media, emergence of recruitment process outsourcing and diversity & inclusion are clear trends for the year ahead. The changing pace of workplace and workforce dynamics will ensure that optimization of resources plays a key role in planning for human capital resources and strategies for 2012. As part of this story, People Matters and The Strategist also conducted a study to involve the professional community in sharing their views on the future of the HR function, its trends and prospects for 2012.
1. Managing talent in a rightsizing environment
In the global context, 2011 has been a year that has witnessed layoffs in large numbers especially in the BFSI sector. The Indian subsidiaries of these very organizations have not been spared either. With slowdown looming large, talent management practices across the board are bound to be impacted across verticals. Managing talent in times of economic turbulence is a challenge and organizations will need to redefine what that means in their context.
While organizations will handle rightsizing sensitively, a number of them will put together an integrated strategy taking a long term perspective that will stand the company in good stead. A creatively crafted talent management strategy will be resorted to, which can differentiate the organization and separate good performers from the ordinary. Organizations will also leverage the slowdown to emphasize on reassessment of internal priorities and throw up opportunities for talent managers to be innovative and show their value from a business perspective.
Howsoever much layoff may be the last resort in times of slowdown, organizations will take measures to lift employee morale with stretch assignments and non-financial incentives and differentiate themselves in the talent marketplace. There will be an increasing use of analytics wherein employee data from traditional approaches will be used to identify the business acumen potential of existing employees so as to re-deploy them to suitable roles. Organizations may also focus on introducing the concept of ownership and the financial outcomes of their actions and decisions.
Also, new trends will emerge from this new equation, for example, fear of unionization of white collared employees. Such unwarranted fears further scale up the degree of challenges in terms of talent management.
2. Social Media: Blurring the line between real and virtual
Today, social media transcends beyond just being a space for virtual socializing, which has made life easier to maintain relationships with future, present and past co-workers. Social media sites such as Facebook and LinkedIn have emerged as new recruitment avenues and transforming the landscape of employer branding and lead generation of candidates. Managers and talent management leaders are exploring how teamwork, learning, development, recruiting, and best practice sharing can be improved using collaborative platforms. This increasing inclusion of social media will change the rules of the game in terms of recruitment, engagement, performance management, rewards etc. The social media savvy younger generation joining the workforce will change the industry landscape, forcing companies to make social media mainstream. As social media becomes an active instrument in administering talent applications, companies will see the line between real and virtual life blurring fast, and this will require organizations to revisit its talent strategy to address the same. Apart from the traditional practices of using social media to create talent communities for engagement, employer brand and attraction of talent, performance management, peer-to-peer feedback and recognition etc; there will be an increasing use of social media to empower employees to voice their opinions and create their internal networks.
3. Talent analytics and predictive modeling
Organizations are moving from ‘value added’ to ‘value delivered’ wherein the emphasis is more on the tangible deliverables which can be quantified in terms of revenue, cost savings etc., rather than the intangible value that may have been added to the business. Organizations are increasingly looking at evidence based and scientifically researched tools that are effective in talent programs which can help make more informed decisions that impact organizational effectiveness, productivity and ultimately competitive positioning.
A new class of analytics and predictive modeling will be the need of the hour which can help HR understand and appropriately respond to trends and future events. For example, predictive analytics can help organizations identify high-risk employees, build profiles of those most likely to stay/quit and understand how risk is distributed throughout the organization. Analytics will invariably help organizations measure critical parameters like turnover, understand its cause and design programs to control the same. Organizations can effectively use analytics to suitably forecast capabilities which will enable managers to accurately plan headcount and skills, spot trends and determine optimal combination of resources with a given set of constraints.
Going forward, talent data/metrics/analytics will be the focus area as it will help in operational efficiency as well as cost reductions. Organizations will increasingly make use of sophisticated analytics and will lay emphasis on predictive analytics model that will launch HR into the strategy orbit which is currently more controlled by the marketing and finance department. Organizations which understand how to analyze and use analytics will ultimately outperform those that do not have these skills.
4. Coaching will define talent management
The growth phase and increasing economic uncertainty has put companies in different doldrums where CEOs are faced with unique business challenges every day, and businesses are faced with a constant challenge to find talent to drive its business growth. Amidst such milieu, companies will increasingly opt to seek respite in adopting coaching as a business critical activity to address both concerns. Increasing instability in the business scenario will continue to raise complex challenges for CEOs and necessitate organizational leaders to strategize, think and act in entirely new ways for growth and sustenance in the Indian as well as the global market.
The complexity and shortened business cycles will push CEOs and business leaders to take refuge in a sounding board – an external coach who is a trusted friend, philosopher and guide. With top companies prefering coaching and mentoring for customized learning opportunity for top leaders; organizations will focus on the need for coaching to be more fully integrated with talent management and other leadership development initiatives. As companies go global to increase market share, a key problem they will face is the lack of capable leaders who can drive these new businesses. This in turn will further the need for a well-defined coaching initiative within the organization for focused leadership development. The industry of coaching which is currently estimated to be to the tune of Rs. 250 crores is expected to grow at 50 percent per annum and become worth Rs 800 crore by 2014.
5. Web software & cloud computing, changing HR technology landscape
There is a steady and accelerating replacement of old HRMS systems with the SaaS (software as a service) enabled HRMS software. The shift from either in-house developed systems or a licensing and maintenance fee-based system, to a leasing fee system is primarily because of the expense involved in maintaining old HRMS systems and the issues related to legacy systems. There is an increasing shift towards the use of web-based technology and cloud computing in place of high end technology. These new accessible technologies will greatly reduce the overall cost, they will be easier to use and will provide a greater degree of integrated set of data for decision making.
It is expected that Tablets will become the virtual classroom, and an emerging class of tools such as social recruiting tools, career management tools, advanced analytics tools and mobile solutions will let employees manage almost every aspect of their professional life digitally. Talent management leaders will need to invest heavily to support execution of talent management initiatives across mobile.
6. Boundaryless engagement
The internal and external challenges faced by businesses are re-shaping an organization’s approach to employee engagement. Organizations are revisiting their employee value propositions and focusing on defining their employer brand to create a differentiated way to attract retain and engage talent. According to The Strategist - People Matters study, 18 percent of the participating organizations believed that they would be making big investments in building their employer brand and the employee value proposition. 63 percent of the organizations indicated that they would invest in building their employer brand and the employee value proposition, mainly through the non-advertising route. Engagement is not for employees alone, companies will engage more strongly with potential candidates and also engage with its alumnus. This engagement is not limited to the four walls of the organization.
Organizations will use social media to enhance employer branding by engaging the current workforce, alumni, new talent pools and reaching out to the extended referrals of their current employees and their alumnus. Organizations will increasingly put forth the question as to whether or not, employer brand is a priority for them and whether they are assessing the role of employer brand equity in the new evolving business environment.
7. Employee as volunteers
In what could be termed as a paradigm shift, employees are increasingly treating themselves as volunteers who join an organization because of their alignment with the objectives of the organization. They would prefer to work with the organization as long as they can relate to the cause and are satisfied with their contribution, and move on when they feel the objectives have collided. Given this setting of new culture of workforce, the traditional approach to rewards and recognition can no longer work. In fact for an organization ‘people promise’ need to go beyond compensation and benefits, and include benefits like work-life balance, challenging assignment and opportunities, larger purpose and alignment to values and principles beyond profits.
A well-planned rewards and recognition program keeping this radical shift would be the way to keep the ‘volunteer’ engaged. The role of managers in the entire process of engagement will be critical as rewards are no longer tangible. Given that employees consider themselves more as a volunteer, they are more likely to embrace the organization’s corporate goal when they see that their contributions are being perceived as important, valued and recognized. At a time when employee poaching is on the rise, in order to retain talent, organizations will increasingly come up with benefits and reward and recognition structures that are perceived by employees as fair, consistent and transparent. More importantly, when employees are volunteers who are purpose driven, keeping them engaged is perhaps a good tool to reward them.
8. Career direction
The new reality is that the new generation starts valuing themselves more at a very early stage in their career. The Gen Y employees proactively take command over their career destiny and in turn, aim for greater ownership of their professional lives. Seeing this change, the onus of employee development is due to move from being the organization’s prerogative to becoming an individual’s choice. The new year will see a change in terms of passing the career development and enhancement baton to the employees where they will be increasingly empowered to own their careers, while the organization will play the role of being a facilitator.
This will increasingly see organizations moving away from the traditional command-and-control management styles to coach-and-collaborate schemes that harbor empowerment. Given the dynamics of ownership of career, there will be a gradual gravitation of the ownership of career from the employer to the employee. Also going forward, HR will need to reward leaders who empower employees as well as train and incentivize managers to empower the rank below.
9. Owning the talent supply chain
Researches from industry bodies and think tanks amply make it clear that there exists a huge talent gap especially when it comes to industry-ready recruits. True, that the NASSCOM-McKinsey report which states that, “only 25 percent of engineering graduates in India have the skills to be employed in IT jobs without prior training” needs to be revised, however the fact that talent building remains a key challenge for Indian firms cannot be ruled out. While, ideally quality education should happen in schools and colleges, but given the fact that a gap does exist, organizations cannot wait for the government to put in place an industry-recruit ready education system that caters to their needs. Thus in the face of such an inescapable situation, it only makes sense to develop talent internally.
So, be it through campus connect program, investing in building a corporate university, or tying up with NSDC to promote skills development by providing gap funding and equity investment to build scalable, for profit vocational training initiatives; investment in talent development will ensure a sustainable pool of highly skilled resources. While campus connect, more so an industry-academia convergence, has been much in vogue and helps bridge the skill gap, it is increased investments into starting up a corporate university and tying up with NSDC and NGOs that will be the focus of organizations in 2012. This will not only help an individual organization meet is talent demand requirement, but in a way will also have skilled talent pool ready for the industry at large.
Skilling, training, mentoring amongst others will help organizations in capability building and in turn, will help employees not only be better skilled but will help them better handle the psychological pressures at workplace with employment uncertainties gearing up. Capability building will move from being a sole responsibility of the HR department, to be a responsibility that is shared between both business and HR, requiring active engagement, commitment and accountability from the line managers.
10. Emergence of RPOs
The recruitment space is changing fast and organizations are relying on outsourcing of their recruitment processes. In this context of RPOs, there will be two clear trends; the first is the emergence of RPOs specific to industry verticals like IT, pharmaceuticals and BFSI while the second will be that of a generic RPO, cutting across sectors and will cater to specific roles like sales and customer care across verticals.
The emergence of RPOs across industry verticals will change the dynamics of the HR structure when it comes to the recruitment team. Recruitment teams will focus more on recruitment trends, strategy and innovation on sources of talent, rather than delivering recruitment.
Additionally, RPO will affect the cost structure of recruitment becoming more variable. Finally, RPOs will move recruitment itself to the next level with the introduction of cutting edge technologies and analytics.
In 2012, RPOs will impact the recruitment industry and its current structure and practices. Mom and pop outlets will become vendors to the bigger providers and they will have no direct contact with the client organization. Further unethical practices in the system will get eliminated and there will be new benchmarks of transparency in recruitment.
11. Exclusive inclusion
Organizations across verticals have realized the importance of diversity and inclusion at workplace. This will help increase the available talent pool and seek to reap benefits that diversity brings to business. Managing these diverse talent pools will imply that one shoe does not fit all. As corporate India innovates, grows and evolves into a global brand, diversity and inclusion policies and practices have begun to grow in importance and in their scope. As competition for recruiting and retaining the best talent intensifies, companies across the board - financial, IT services and engineering - have begun to realize the importance of having an inclusive and welcoming work environment for all employees - irrespective of ethnic or cultural background, gender or physical abilities. Recruiting, retaining, and promoting diverse employees have nevertheless become critical to an organization’s success.
With diversity of workforce comes the challenge of meeting the expectations of individual groups whose needs differ from each other, thereby suggesting that ‘one rule for all’ cannot hold true. What is essential is that today’s ecosystem is looked as a ‘workforce of one’ rather than a monolithic entity. ‘Workforce of one’ is an approach to talent management that helps tailor people practices and policies to individuals and groups of employees throughout the organization, with the goal of improving individual and organizational effectiveness. It is herein that the marketing concept of ‘segmentation’ will have to be applied in order to meet the varied expectations of the workforce. In the days to come, organizations will opt for either segmenting the workforce wherein the different talent management practices will be designed and deployed to cater to the different talent segments; or will offer modular choices; or will define broad and simple rules with clear boundaries which can be interpreted; or will opt for fostering employees with defined personalization wherein HR will support an individual employee to define his/her own personalized people practice. These can be opted in silos or in combination of two or more options.
12. HR transformation
The increasing fear of unavailability of the right talent to execute their companies’ strategies is leading CEOs to discuss people challenges more and more at the boardrooms. 73 percent CEOs in India today spend more than one-fourth of their time directly on talent-related activities, and the focus is deemed to increase further next year (CEO as the Chief Talent Officer, People Matters - Monster.com Study 2011). This in turn will see a change in the way HR will operate in 2012 and onwards.
As HR begins to work closely with the CEO, the HR team will be faced with new expectations. The time and focus of the HR teams will transform drastically to move away from the traditional recruitment, training & development, and performance management roles, and move towards analytics and metrics to actually measure how HR’s contribution can affect business outcomes. From growth to globalization, cost pressure reduction to talent attraction, risk management to merger and acquisition support; HR will invariably transform itself to enable organizations to address today’s business imperatives and prepare for tomorrow’s. HR teams will become leaner as most transactional activities of HR will be outsourced for more effective business delivery. The focus of these leaner team will be on enabling the organization achieve its business strategy more closely than ever before. Therefore, 2012 will see HR teams striving towards equipping themselves with new competencies such as vendor management, and understanding of metrics and analytics.