Speeding ahead - HR’s past, present and future

Take any HR manager of today, find a working time machine, and set the dials to April 2002 – they’ll find themselves in a whole new (or old) world. Tucked into an office corner, a typical HR day could involve browsing through hundreds of paper files, sifting the necessary from the trash. Relationships are different too – the door says “personnel manager” but there’s rarely a chance to meet the CEO. Indeed, the only people coming are there to lodge complaints. Sandwiched between the employees and the employer, it can be difficult to ascertain which group should be represented, or why both seem to dislike the function.

Head back to 2010, and things have changed dramatically – for the better. The personnel manager is now a fully-fledged HR professional, with a key role in writing and executing business strategy. If not already part of the highest decision-making levels, there is at least access and communication with C-Suite helm. And employers acknowledge the significant contribution of best practice recruiting, talent development, performance management, employee relations and compensation strategy. Moreover, these functions are fast becoming a blueprint for survival. “Most Singapore companies have come to recognise that effectively harnessing HR is a matter of corporate survival,” Caroline Lim, Global Head of HR and Corporate Affairs, PSA, says. “It is no longer discretionary but compulsory for companies to embrace the strategic role of HR.”

HR-watchers can expect just as dramatic a shift in the profession over the next eight years as well. With technology changing every day, and the talent crunch forcing employers to get the most out of each and every staff member, the focus on HR is set to continue. Even without a time machine, it’s clear HR’s role will move ever-closer to the very heart of business.

Plugging the talent gaps

This is not to say there are no challenges facing HR in the present day, far from it. At the top of the critical list on Singapore’s business landscape is the impending talent shortage that is set to hit organisations of all shapes and sizes. Elizabeth Martin-Chua, local HR expert and author, says businesses are again having to chase talent. Previously, the situation was the much more ideal reverse – with job candidates pulling out all stops to find work in their favoured organisations.

Now, with the baby boom generation set to move into retirement with only smaller-sized age groups available to replace them, the talent crunch is set to move into a more permanent fixture. That means renewed importance will be placed on those HR roles directly related to employee numbers. “The ability to attract, grow and retain talent is now the most critical HR competence,” Martin-Chua says.

While Singapore has seen talent crunches before, there are a number of differences with the present challenge. As well as the likely permanent nature, this shortage may be exacerbated by what is now a global market place for talent.

Today, good hires can come from anywhere in the world. But on the flip side of this geographically-free reign to hire, there is the free range to roam. PSA’s Lim says this makes the attraction and retention of talent a constant challenge. “Quite paradoxically, we could say that talent has become global and yet scarce,” she says.

A foreign question

Over the past eight years, Singapore’s open door policy to foreign employment has drawn top talent from all over the globe. It’s typically a win-win situation, with the country and local business enjoying the skills and learning opportunities that such staff provide, while expatriates take advantage of the enriching lifestyle available. Research shows Singapore is one of the most attractive economies to foreign high-skilled professionals, as well as lower-paid foreign workers.

However, the most recent recession caused some irreparable damage to this understanding. During the last two crisis-hit years in 2008 and 2009, economic growth declined to 1.1% and 2.1% respectively. This was a noticeable slump from the four decades of average real growth of more than 8% annually. A review of Singapore’s economy by the government-appointed Economic Strategies Committee (ESC) accepted an idea that many Singaporeans had argued for some time – that it was no longer sustainable to grow the economy by expanding the foreign workforce.

This had been the basic strategy since 1990 – when only 16% of the then 1.5 million people in the Singapore labour force called another country home. Fast forward to today, and the ratio has climbed to just over one third of five million. The ESC concluded that this figure is close to the peak feasible proportion.

“We cannot increase the number of foreign workers as liberally as we did over the last decade, or else we will run up against real physical and social limits,” it said.

Prime Minister Lee Hsien Loong clarified the notion further. “We cannot expect to continue booming as we have done up to 2007”, he said toward the end of the financial crisis. “The world economy has changed and it will be quite some time before it picks up like this again.

“We already have almost a million foreigners working here and we cannot imagine simply expanding year after year. We just do not have the space for that.”

That will mean extra pressure for talent managers looking ahead at the next eight years and beyond. No longer will they be able to rely solely on overseas skills and talent for their leadership and specialist needs – the local workforce will also need to be involved and developed. Fortunately, that has already begun happening – with many organisations taking advantage of foreign talent to help upskill their local workforces over the past decade.

Changing demographics

As revealed above, Singapore’s workforce – both local and foreign – is now undergoing a significant change in demographics. Low Peck Kem, divisional director, National HR, Ministry of Manpower, says this has meant that differentiating between generations and tailoring HR policies more closely to the individual have become a high priority for HR. “We need to create an inclusive environment which continuously motivates and challenges the workforce to contribute and work as one,” she tells HRM. “The need to groom a new generation of leaders has put the focus on developing the leadership pipeline from the new generation.”

As the baby boom generation begins to retire, many organisations have responded by giving new challenges to their youngest staff. But Martin-Chua says early development of junior leaders can also backfire. “They (employers) have not taken into account that the younger leaders have certain gaps that experience can only fill – (they) may make mistakes that are not obvious in the short run,” she says. “The ability to use older leaders as mentors and coaches and have younger leaders in the driving seat is a smart move.”

So too is keeping staff on for as long as possible when they close in on that retirement date, or perhaps even surpass it. This is particularly true in light of new reemployment laws that will come into effect in Singapore from 2012. From then, local employers will be required to offer reemployment to workers who have reached the current statutory retirement age of 62.

Staying fair

Demographics may change, but Singapore has always been a naturally cosmopolitan and multicultural society. With such variety in race, religion and age, fair employment ideals are a must for organisations looking to grow.

But while most employers do now operate a purely merit-based selection regime, the benefits did need to be highlighted, a practice that is still ongoing today. Since its inception in 2006, The Tripartite Alliance for Fair Employment Practices (TAFEP) has worked to promote fair employment in Singapore. The organisation claims significant success – with more than 40% of employers now aware of its official guidelines. More importantly, they are learning the direct advantages that fair employment practices can offer.

“A company that is known to treat its workers fairly will have a better chance of attracting and retaining them in our highly competitive labour market,” Deputy Prime Minister Teo Chee Hean says. “The outcome can be a more motivated and productive workforce, translating to lower turnover rates, which can result in real savings for the company.”

Since TAFEP revamped the Tripartite Guidelines to Non-Descriminatory Job Advertisements in 2006, the rate of offending notices has fallen from 19.7% to just 1% last year.

Halimah Yacob, co-chairperson of TAFEP, says new initiatives over the next eight years are likely to centre on further educating the public and co-workers on their roles for enshrining fair employment practices. “The responsibility for fair employment falls on all parties,” she says. “Besides encouraging and enabling employers to adopt fair employment, we will continue to increase broad-based awareness amongst the public as part of a holistic approach.”

Taking care of business

No one could have guessed that airplanes would fly into two of the USA’s tallest buildings in September, 2001, nor did anyone have an idea that seemingly harmless chickens and ducks could cause $15 billion damage to Asian economies in March, 2003. But those things did happen – and the one lesson that businesses and organisations have learned is to be prepared for the unexpected.

From the September 11, 2001 terrorist attacks to the Severe Acute Respirtory Syndrome pandemic to the Indian Ocean tsunami to more recent Avian flu fears, the past decade has seen a rising demand for structured business continuity planning. And it has been up to HR to advocate and implement these vital strategies.

Peck Kem, says HR in Singapore is certainly well-practiced in this area now. “HR has been forced to actively explore initiatives like telecommuting and remote access,” she says. “This has made HR better understand the workforce composition and aggressively explore alternative manpower supply and workplace alternatives.”

Creative compensation

One of the starkest areas of change since the first issue of HRM landed on desks eight years ago has been centred on compensation and benefits. In essence, this is now being handled with significantly more creativity and attention to detail.

From the traditional fixed and variable components of compensation, HR has introduced more flexible benefits, flexible work arrangements and both monetary as well as non-monetary benefits over the years. There has also been an added emphasis on equity rewards – shares and stock options – for senior staff. This aims to increase the sense of ownership and accountability that executives offer. But it does also mean greater variability in overall pay for many workers.

More companies are also structuring their benefits more flexibly to meet the needs of employees from various age groups and profiles. For example, PSA introduced the “Flex-Points” system a few years ago. This allows employees to use “earned” points towards a whole host of benefits, “ala carte style”, Lim says.

The innovation is set to continue over the next eight years as well. As the youngest generation becomes more entrenched in the workforce, so too should its particular demand for flexible work arrangements and tailored compensation become a common practice for organisations looking to recruit and retain the best talent.

Peck Kem says the ability to tailor compensation and benefit packages to the individual employee will increasingly become a major part of an organisation’s employer brand. This should be a high consideration when contemplating that change.

Technology evolution

If compensation has been one of the biggest changes affecting HR over the last eight years, then technology can only be a close second. HR information systems (HRIS) have become increasingly sophisticated in that time. By 2002, such systems were able to give managers an overview of areas like recruitment, compensation and benefits, expense reporting and training. Self-service applications built on data stored in these systems enabled employees to manage their own personal records and payroll details.

This evolution in HR technology is transforming the HR professional’s role from that functional process to a more strategic one. Talent management software now provides an overview of the talent pool and helps management identify and retain top performers. It can also help organisations keep track of who is next-in-line for a promotion and aid succession planning. Research from the International Data Corporation  predicts that the worldwide market for talent management software will reach $2.55 billion by 2012.

Social networking has also come into being – to both the pleasure and dismay of HR. While some see networks such as LinkedIn and Facebook as the world’s greatest timewasters, others are seeing a unique advantage in the groups of like minds that naturally form on these sites. Setting up an account on LinkedIn or Facebook requires few resources but greatly increases a company’s visibility, opening up a whole new market of potential candidates. Some HR management software today offer features that enable recruiters to set up their own forums and chat groups.

Moving ahead, advances in web technology are set to make applications even more intelligent, Ari Kopoulos, National Sales and Marketing Manager, Employee Connect says. “While Web 2.0 enables you to publish a position on a recruitment job board, Web 3.0 will take your recruitment request and intelligently match you with the perfect candidate, becoming more accurate as you use it,” he says.

Research firm Garner predicts that the HR technology outsourcing market will be worth $1.1 billion worldwide by 2012. This could very well mean that outsourcing companies will provide the majority of HRIS processes and management in the future.

Future trends

While the last eight years has certainly been a time of significant change for HR professionals and those in the “talent” game, there is certainly more yet to come. Industry insiders predict that the next decade will be equally tumultuous – with both challenges and opportunities for HR professionals in Singapore and the wider Asia region.

But at the same time however, employers will also see greater growth constraints than they have had in the past, in particular, because of a slower-growing workforce. And with both greater opportunities and greater constraints in play, HR will continue to play a large role in building organisational cultures that can cope. Industry professionals will continue to add value and help get the most out of every situation.