One of the most common criticisms levelled against HR is that it can be too inward focused: not only does HR not understand the business, but it doesn’t understand the wider market and, by association, the business world at large.
That’s simply not true of the best HR professionals out there. Socio-political, economic and technological megatrends have shifted HR’s focus, with the most forward-thinking HR directors realising their function needs to become more externally focused to help their organisations survive and thrive.
Here are four ways in which we believe HR can change the world.
Making workplaces better
“Work is the defining species characteristic,” says London Business School’s Gareth Jones. “Good work makes good societies. If people find work alienating, you get dysfunction.”
Making workplaces better, and creating what Jones calls “authentic organisations” where people feel they can bring their whole selves to work, is an imperative.
That’s certainly the belief of Neil Morrison, group HR director, UK and International Companies, at Penguin Random House. “Most of us spend a significant part of our lives in work,” he says. “Our experiences in work form our experiences of life. How we feel about work affects our day, our family life, our health and wellbeing. If work is such a major factor in people’s existence and we can make it better, then we can make their lives better, the families’ lives better and the world a better place. It’s simple: we have the power to make the world happier.”
As mission statements go, that’s a pretty profound and inspiring one to grab hold of.
At a fifth lower than the G7 average, the UK’s productivity is nothing to shout about. As CIPD chief economist Mark Beatson told HR magazine in July: “The UK has had a productivity problem for decades.” And while no one business function can hold the key to improving national productivity, HR could certainly help.
For a start, effective people management makes all the difference. According to research from McKinsey: “Well-managed firms have higher productivity, market value, and growth, as well as a greater ability to survive adverse conditions.”
In a knowledge- and service-based economy, the value added by people makes all the difference, which makes the management, development and motivation of those people absolutely critical. Embracing an increasing focus on working smarter, rather than simply working harder, should have a knock-on positive impact on the whole nation’s productivity.
Tackling labour polarity
The UK labour market is becoming increasingly polarised – an hourglass shape with highly skilled, highly paid jobs at the top and low-skilled, low-paid jobs at the bottom, and little room for manoeuvre.
“A divided labour market poses significant risks for global security,” warns Morrison. “We are seeing growing separation between those that have and those that have not. Why should [those at the lower end] be active participants in society, when society offers such injustice, insecurity and inequity?”
HR has a role to play in tackling this by focusing on creating good-quality jobs and thinking carefully about how the future of work will impact employees at all levels. It also has a crucial role in improving social mobility, by becoming involved with the education system at an early stage and championing inclusive cultures. “The possibility for extremist organisations of all sorts to appeal to disenfranchised sectors of society is well documented,” adds Morrison. “By facing the challenges of society, by helping to shape the future of work, by making work better, we can help to maintain global stability.”
Shifting the corporate paradigm
That we have a problem with short-termism in business is not a particularly shocking statement. In the words of Ian Cheshire, former CEO of Kingfisher: “Business should strive to be more than efficient and be a force for good.”
Shifting the corporate paradigm means judging value creation on more than short-term financial gains. And this is where corporate reporting and relationships with investors, and other stakeholders, comes in.
“All organisational issues can be tracked back to people issues,” says Paul Kearns, chair of the Maturity Institute. “If we don’t report on how they are connected, none of the issues will be resolved.”
HR has an opportunity to make a difference to how business value is measured, thanks to its understanding of people issues. “HR has a choice,” says Stuart Woollard, partner at Organisational Maturity Services. “It can either proactively embrace value-oriented human capital reporting or wait to be asked by the C-suite.”