Deloitte report calls for business-driven HR evolution

Human resources must embrace expanded role as business world goes global.

Human resources departments need to develop new strategies to stay relevant in a rapidly changing global business environment, according to Deloitte.

In a 140-page report titled “Global Business Driven HR Transformation: The Journey Continues,” Jason Geller and Arthur H. Mazor of Deloitte Consulting LLP argue that the “world’s social and economic center of gravity is steadily shifting from west to east.”

While economies in North America and Europe are beset by economic uncertainty, stubbornly high unemployment, serious debt issues and stagnant customer demand, China and India are seeing a growing middle class emerge in each of their huge and expanding populations. This trend is creating large groups of consumers and workers who are poised to transform the marketplace and workplace worldwide, the Deloitte report says.

How big are the forces reshaping the world landscape? Growth in India and China is expected to account for much of an anticipated 50% increase in the world’s population by 2050, according to the report, which was released in December.

On the other hand, 70% of the world’s corporate management is based in Europe and North America, which means that Western countries have an opportunity to expand their sales and operations eastward. HR departments are poised to play a key role in this movement, but only if they evolve from a group that supports the business’ strategy to one that enables it, the report contends.

For example, the report says, HR departments can enable business growth by creating new staffing models that accommodate a modern workforce built on offshore talent, contingent workers and global mobility.

The report outlines 18 steps HR departments can take to enable their businesses to succeed in the new environment. The steps come in response to major economic and social trends. For example, to ready their businesses to thrive in emerging markets, HR leaders must develop the ability to build and manage a global workforce. Policies and procedures should be established to create an operating environment that allows virtual and global employees to thrive. HR also needs to create standardised and repeatable processes and systems for entering new markets. In addition, new staffing models should leverage outsourcing, contingent workers and strategic partnerships to make the business more flexible and scalable. Other areas that HR can address include:

• Cost pressure: HR should help businesses deal with the pressure to cut expenses by moving beyond just improving internal items. HR professionals should look to specialise in people-related costs, such as health care and pensions, that lie outside of the HR budget. HR also can lower the “cost of work” by implementing programmes that improve worker productivity.

• Talent: Jobs are moving from mature markets in the West to emerging markets where businesses can find more talent for less money. HR should help businesses by creating ways to manage a global supply chain for talent much in the same way manufacturing companies learned how to manage a global supply chain for products.

• Innovation: Companies no longer can rely on a small group of innovators. HR needs to be at the centre of developing ways for employees to connect with one another and to cultivate a culture of creativity that draws upon the strength of the entire organisation.

HR also can enable business success by helping companies make the most of new technologies such as cloud computing, social media and mobile devices. In addition, HR must continue to play its essential role in ensuring that business comply with local labour laws and other workplace regulations. As the marketplace for workers expands, so will the challenge for HR departments to keep companies from running afoul of the law.

How will HR evolve to meet all of these new responsibilities? The Deloitte report bases its 18-step path on the guiding principles that HR’s actions should be business-driven, scalable, repeatable and standardised.