Human resources professionals lack business acumen. They are, more or less, competent providers of essential services. Need to make a hire? Conduct a performance review? HR has a solid process. But if you are counting on your organization’s HR leaders to contribute to the development of business strategy, to drive progressive change in your organization based on hard metrics and marketplace intelligence, forget it.

The fact that this opinion is neither fair nor accurate is beside the point. It is conventional wisdom. It is what people who don’t pay attention to HR think of HR. Those people are wrong, of course. The HR profession is undergoing a remarkable transformation. In some of the world’s top organizations, this emergence of real HR leadership is having a positive impact on the success of the business. More broadly, it is now understood that HR issues have become more central to the success or failure of corporate Canada than ever before.

This is demonstrated by the number of employers that have documented employer-of-choice status as a strategic priority. A recent Sun Life Financial-sponsored study found that 62% of Canadian benefit and pension plan sponsors have made this move. Among larger employers(i.e., organizations with 1,000 or more employees), 68% have done the same.

The HR era is upon us and human resources issues are at the top of the business agenda.

WHY NOW?
The move into the HR era is driven partly by demographics. A report by The Conference Board of Canada predicts that more than 20% of our population will be over 65 by 2025. Today, there are roughly five working-age Canadians for every one aged 65 or older. By 2025, that ratio will drop to three-to-one. At the same time, the average retirement age is dropping, from 64.9 in 1976 to 61.4 in 2005.

But your employees’ birthdates are only part of this story. Their expectations of you as an employer—and as a provider of access to healthcare and retirement savings—have been radically reshaped, in large part due to information technology.

It is no surprise that the HR era follows closely on the heels of the online job search. The Web has reversed the informational disadvantage employees suffered with historically. Perhaps better than ever, Canadian workers understand how your offer of employment stacks up against the competition’s. More than that, exploring opportunities outside your industry is easier than in the past.

We tend to take these changes for granted because Internet technology became so pervasive so quickly. But in this case, new efficiencies built into the job search process have had a profound impact on employee mobility.

What may be most remarkable about the Internet’s influence on employeremployee relations is that it has barely begun. Statistics Canada reported last summer that 61% of Canadian households are connected to the Internet. That’s roughly the same as television ownership rates during the 1950s.

We all understand how TV influenced our culture in those early days, much like the Internet does today. But when we think about how TV’s effect intensified in the decades that followed, we have to allow for the idea that the Internet has only just begun to exert its influence.

Canadian employers should prepare themselves for the idea that in 2025, when about seven million Canadians are over 65, the workforce will be made up of employees whose expectations of their HR department have been shaped by an Internet we can’t even imagine. Attracting and retaining this talent will be the difference between success and failure.

TRANSFORMING HR
Those organizations that have not begun to transform their HR function may be behind the curve, but they can benefit from a review of established best practices. Reports published by some of the world’s top consulting houses provide valuable direction:(It’s the Journey That Matters, The Conference Board of Canada(2006); Next-Generation Talent Management, Hewitt Associates(2005); and Winning Strategies for a Global Workforce, Towers Perrin(2006). Four recommendations in particular can be considered fundamental to your efforts to attract and retain talent.

1. Become more strategic, proactive and metric-driven
“The scarce, global and empowered workforce of the next generation will require that organizations embrace predictive workforce monitoring and strategic talent decisionmaking,” reports Hewitt Associates. This demands a proactive focus. Metrics must be rigorous, but more than that they must help organizations predict the HR requirements of future business strategy.

The collection and analysis of hard data will make HR leaders meaningful contributors to, and enablers of, business strategy. It also sets them apart as uniquely well informed about the organization’s direction in relation to its human resources. HR leaders are thus empowered to influence change proactively and positively, rather than manage change coming from the so-called top down.

For some, this represents a significant departure from the status quo. “In their new roles of strategic partner, change leader and administrative expert, HR managers will have to be able to meet the measurement requirement if they want to earn executive support,” reports The Conference Board of Canada.

But in recognizing the competitive environment in which their organization operates, and then identifying and fulfilling the human resources it will need to remain competitive, HR leaders will meet the most sophisticated expectations of executive management.

2. Attract a more diverse workforce
A transformed HR department understands that in order to meet tomorrow’s talent needs, it will be necessary to attract workers it hasn’t attracted in large numbers before. There has been much debate about older workers—that’s only the start of it. The economic reality of the HR era will do more to promote diversity in the workplace than the collective impact of every social program that came before.

Labour force growth in the developed world is expected to drop well below 1% over the next two decades, according to The Conference Board of Canada. A report by the New Zealand Department of Labour says that when the ratio of workers to retirees hits bottom, countries that belong to the Organization for Economic Cooperation and Development (OECD)will see a drop in the aggregate working-age population of 65 million people. They’re also seeing a drop in the average retirement age. So if HR departments are looking to tap into the global workforce, they will have to look further than just the OECD countries.

Employers will have to redouble their efforts to attract immigrants, women returning to the workplace after raising children, native Canadians, the disabled, the long-term unemployed, workers outside Canada, workers from outside the discipline they are looking within, former employees of their own organization and more.

Attracting these workers will require employers to segment, in the same way a marketer segments customers and prospects. Understand what each of these segments wants from a commitment to work for you, then communicate your ability to deliver on those needs. Workers are your customers and prospects. Create a corporate culture that welcomes all of them.

Of course, attraction is just half of the equation. Talent retention requires the same kind of employee segmentation. “People want different things from their company at different stages of their employment lifecycle,” reports Towers Perrin. This runs contrary to traditional organization-wide HR practices and for some will require a real commitment to change. It goes beyond choices within the context of benefit and retirement savings plans, although those will continue to be well received. This includes, for example, segmenting your employee population in terms of its importance to the organization’s future and building total rewards offerings(i.e., favourable pay, benefits and organizational culture)that keep each individual fully engaged.

3. Get past the stereotypes
It’s unfortunate that discussions about employee loyalty often conclude that young workers are somehow less dependable than their predecessors, as if they lack a kind of loyalty gene. Ask yourself, are young people that different or have they simply adapted to today’s standard employer-employee relationship, one in which loyalty is neither expected nor necessarily rewarded?

This is surprisingly challenging for some HR professionals. In preparation for an HR association conference last summer, the host distributed a pre-event survey to participants. The entire questionnaire was predicated on the idea that the workforce is best understood in three categories—elders, boomers and generation-Xers(people born between 1963 and 1978).

The results of the poll brought up all the usual suspect ideas: elders crave security and good pay; elders don’t care about worker rights; boomers are strong employee rights advocates; boomers are most likely to be workaholics and least likely to take their vacations; generation- Xers are eager, full of ideas, will work long hours but are much less loyal to their employer; and generation-Xers do not live to work, and they will not compromise on principles or work-life balance. Leading organizations are seeing past these stereotypes.

4. Benefit and pension plans matter
They’re not simply cost centres. Last year’s sanofi-aventis Healthcare Survey asked Canadian benefit plan members if they would rather have an extra $15,000 in cash per year or their employee health benefit plan. Only 36% chose the cash, despite the fact that a very small minority would ever rack up healthcare expenses anywhere near that amount on an annual basis.

The lesson for organizations positioning themselves as employers of choice is that health benefits are a valuable lever—these plans are not inexpensive, but the return on your investment is extraordinary.

There will be pressure to manage drug and other benefit plan costs, particularly as your workforce ages. Leading organizations will resist this pressure and will utilize their benefit plans as a tool to gain a competitive talent advantage. They’ll even go so far as to maintain solid health coverage for retirees.

On the pension side, phased retirement is a must. This presents a challenge to employers, the labour movement and governments. But it has to be met. Mandatory retirement is history.

There is an opportunity for capital accumulation plan sponsors to provide financial advice. This advice can be about much more than just investment selections. It’s about ensuring the employee takes full advantage of the plan, in terms of employer matches and so forth, and about developing a holistic financial plan that incorporates the employer-sponsored plan or plans.

Employee expectations, driven by both demographics and information technology, have risen to unheard of levels. Unheard of, but not unreasonable. Workers recognize their value and are behaving accordingly. The good news is that the HR profession is adapting to this remarkable shift. More than that, its leaders have ensured that HR issues have become a priority among senior corporate and finance executives. The HR era is upon us.

 

PROGRESSIVE HR

The HR era will demand a new level of commitment to total rewards. This will not be inexpensive, but it will be necessary in order to compete. Leading employers are focusing on progressive compensation, benefits and corporate culture policies.

  • Allow for flexible work arrangements—flex hours, part-time arrangements, short weeks, contract work and telecommuting.
  • Provide employee benefit and retirement savings programs for contract and part-time workers.
  • Build more flexibility into your benefits and pensions so they are more appealing to workers within all of the segments you have attracted.
  • Develop programs that promote cultural sensitivity, discourage ageism, etc. Write policies.
  • Provide quality daycare.
  • Let your employees use their sick days to care for children and/or parents.
  • Provide language training for recent immigrants.
  • Help immigrants with their residency applications.
  • Invest in training, mentoring and executive grooming. Resist cuts in these areas.
  • Provide financial support for continuing education outside the workplace—for workers of all ages.
  • Create mentoring programs that leverage the institutional knowledge of older workers and invest in the young.
  • Ensure that you have workers of different generations working closely together. All will benefit.
  • Focus on succession planning and the transferring of knowledge to tomorrow’s leaders.
  • Spend money on labour-saving solutions and reduce physical strain for older workers.
  • Provide better work/life balance. it is now understood that HR issues have be come more central to the success or failure of corporate Canada than ever before.

Kevin Press is director, market development, with Sun Life Financial in Toronto. kevin.press@sunlife.com

For a PDF version of this article, click here.

 

 

Copyright © 2018 Transcontinental Media G.P. This article first appeared in Benefits Canada.

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