HR Evolution: Adapting to the Shifting Landscape

This week’s post was inspired by an insightful RBL group webinar titled ‘Harnessing the past to drive future value of human capability’. The webinar was educational, but a part of it struck a chord with me. It describes the evolution of human resources (HR), and I wondered whether we (human resource professionals) experience our work through the identified evolutions and reflect on what skill set we need to ensure that we deliver value to our organisations. Undoubtedly, the dawn of the 4th industrial revolution has propelled organisations into a dynamic era, reshaping the work landscape and necessitating a paradigm shift in (HR) practices. From traditional personnel management to human resource management to the current focus on human capital and the emerging concept of human capability, HR professionals are navigating a complex evolution.

Personnel to Human Resources:
The evolution from personnel to human resources marked a transition from transactional and administrative tasks to a more strategic approach. HR professionals began focusing on employee well-being, compliance, and organisational effectiveness through operational excellence. Skills such as effective communication, understanding employment/labour laws, and basic interpersonal skills became crucial during this phase. No doubt, the majority of us have moved beyond this phase.

Human Resources to Human Capital:
The human resources phase moved personnel management to a more strategic and employee-central approach. A vital feature of this phase was the call by HR professionals to have a seat at the table to influence business strategy with HR practices that deliver functional and operational excellence. The budding concept of Talent Management, learning organisations, and HR analytics gained started to gain prominence. 

Human capital is an umbrella term for a positive resource, representing capabilities, intellect and relationships for the organisation in which it is located, and human capital strategy represents the traction organisations make in aligning their people to achieve optimal and sustainable business value. The shift to human capital emphasised viewing employees as valuable assets contributing to organisational success, particularly aligning talent with strategy and business model. Talent management became a focal point, encompassing practices like talent acquisition, development, performance management, and succession planning. This also marked the age of increasing employee expectations from work. Employees expect engaging work, ethical standards, and transparency from their employers. The relationship between finance and HR functions was also seen as crucial for creating a competitive advantage. I read in a CIPD report that accounting bodies have proposed a new definition of an asset, which includes an organisation's existing workforce and companies that disclose more information relating to their people enjoy lower costs of equity capital, suggesting human capital reporting has financial material considerations.

HR professionals needed to embrace technology and data analytics and understand the implications of the 4th industrial revolution. Skills in data interpretation and reporting (both financial and people analytics), contextual business knowledge, talent acquisition with or without AI, employee value proposition, employer brand, and adapting to flexible work arrangements became imperative.

Human Capital to Human Capability:
According to Dave Ulrich, the latest evolution, from human capital to human capability, is all about value add. It is about ensuring that the organisation survives the VUCA business landscape by examining people practice through the lens of leadership, talent, human resources and organisational capability. To do that, understanding what stakeholders need from the business informs the HR approach. Dave advocates what he calls an outside-in approach by using the ‘so that’ phase. Using his examples in his blog.

• Manage our culture so that our external brand identity with customers and communities is consistent with internal organisation practices.
• Help employees have a better experience so that customer experience improves.
• Report on human capability effort so that we can demonstrate return on investment.

The use of the so that phase originates from principles of effective communication and decision making, and it serves the purpose of clarifying intent, goal alignment, critical thinking and justified decision making. The human capability concept is new to me, so I will recommend Dave Ulrich's work on this; however, I have learned a few lessons from the idea. It is a holistic approach to maximising value. In addition to the skills identified through the various evolution, the human skill of curiosity to understand what all stakeholders want/need is vital, as well as the curiosity to be an eclectic HR professional drawing knowledge and lessons from different schools of thought/sectors to inform our HR practices. For example, the phase from effective communication or design thinking in change management (Design Thinking Meets Kotter: Human Centric Change Management. - HR Unplugged). Industry awareness, learning agility and developing your networks are essential during this phase.
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As the HR evolution continues, professionals must embrace change, prioritise value add, and navigate the complexities of the modern workplace. The journey from personnel to human capability requires a versatile skill set that combines traditional HR practices with innovative approaches to meet the challenges of the future of work.
 
Sources
(8) Why and How to Move HR to an Outside-In Approach | LinkedIn
Managing the value of your talent - Research Portal | Lancaster University (lancs.ac.uk)
Harnessing the Past to Drive Future Value of Human Capability (rbl.net)

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