I’ve recently joined the CIPD to lead our engagement with senior HR leaders, and have had the luxury of spending my first few months meeting HR leaders around the country. Despite the range of different organisations these individuals serve, from FTSE 100 firms to local authorities, tech start-ups to high street brands, they face common challenges.
With more than 70 coffees, lunches and wines under my (increasingly tighter) belt, here are some of the key issues keeping your HR director awake at night.
For listed organisations, people-related governance requirements have never been more stringent. Take recent changes to the corporate governance code that require PLCs to provide information on employee engagement and how they are capturing employee voice. For non-listed organisations, reporting requirements are also on the increase, with gender pay gap reporting and incoming pay ratio reporting (arriving in 2020), plus expected ethnicity pay gap reporting on the horizon.
Some of the tools may be blunt (looking at you, gender pay gap calculation), but the best HR directors see this increasing interest in people issues as an opportunity for HR to add more value, rather than as a burden or tick-box exercise. As one FTSE 250 HR leader said: “Corporate governance issues mean it’s a great time to work in HR.”
There’s a sense of frustration the dial on D&I just isn’t shifting, and inclusion remains top of mind. As well as gender, the focus is widening to include race, disability and socio-economic status. Transparency is a challenge, with many concerned they won’t have the data they need to report their ethnicity pay gap, or wrangling with how to capture socio-economic data. One HR director shared how adding in questions over free school meals backfired, which brings home how much of this is a question of trust – do employees understand why you want this information and trust you to use it wisely and ethically? If not, inclusion is the least of your problems.
Cultures of inclusion and belonging are also connected to the ongoing impact of the #MeToo movement. It has led to some uncomfortable discussions about, and personal reflections on, power imbalances in the workplace, as well as HR’s bravery and ability to challenge leaders, which is central to inclusion in all its forms.
You’d have to work pretty hard to find an organisation that isn’t going through a digital transformation right now, but is HR really able to help? There's a concern the function isn’t digitally savvy enough to contribute effectively. As one HR director said: “I worry we are holding back the digital transformation we are supposed to be enabling, because we don’t have the right mindset.” With technological change having a huge impact on people and an ethical dimension, HR needs to have a point of view here. But as our recent report People and Machines: From Hype to Reality found, the function risks being locked out of the process as automation increases. To add value, HR professionals need to up their game in this space.
It’s no surprise that for certain sectors, the labour implications of Brexit and worries over migration policy are the stuff of nightmares. HR directors in hospitality are working hard to retain their EU staff, with some even sending recruitment teams to Europe to persuade talent there that the UK is still a great place to work. See also the NHS, for which Brexit is a real burning platform. “Supply in a tough job market is a real issue: how do we compete?” sighed one NHS people chief.
HR capability and function
The world of work is changing fast, and HR needs to change with it. So the form and function of their HR department is on the minds of many HR leaders. Some businesses are centralising all support functions (HR, finance, IT), enabled by automation. This means HR needs to move up the value chain, and fast, with a deep understanding of commercial and strategy. One FTSE 100 HR director speculated that the HR leader of the future either needs to spend time working out in the business, or lead a large HR operation (efficiency is king to CEOs), to give the breadth of experience to lead whatever tomorrow’s people function looks like. Others predict project-based teams with broader skillsets coming together to problem solve, with a small, mainly automated, HR operations function.
Katie Jacobs is senior stakeholder lead at the CIPD