2004's big strategic issues

Accounting in its many forms is looming large on the horizon, says Paul Kearns, and HR needs to be ready to respond to the changes.

I am always very conscious when I write on strategic HR issues that many readers probably switch off immediately. Strategic questions might be a fine topic for discussion on the conference platform, but HR practitioners cannot always see how it might affect their day job. Also, many supposedly big issues prove to be damp squibs (remember the false promise of 'self-managed teams'?). Nevertheless, before you get lulled into a false sense of security, 2004 might just prove to be an exceptional year. It could be the first time ever that HR strategy really attracts some serious attention in the boardroom. Here are some of the reasons why.

Human capital management

Top of the strategic, HR list is the whole subject of human capital management (HCM). This could easily become just another fad, but my guess is it is likely to stick around because it is not being left to the HR function. HCM is being driven by the Government (particularly by the DTI), by city analysts and, increasingly, by business leaders themselves. Moreover, HCM holds out the promise of significant gains in shareholder value and any subject that has big pound signs attached to it tends to generate plenty of interest.

So the big questions for HR directors are 'what do you know about HCM?' and 'what are you planning to do about it in 2004?'. But HCM is a strategic issue not just another operational HR question.

HCM was described in last year's Accounting for People Report as "an approach to people management that treats it as a high-level strategic issue and seeks systematically to analyse, measure and evaluate how people policies and practices create value". This is a new area of HR measurement that involves integrating people measurement systems with conventional financial reporting systems, so a fundamental rethink is required in HR about the data we collect and how we use it.

HR directors in the public sector probably think this does not apply to them because they don't have to worry about shareholders. That might be true, but 2004 is going to present them with even more of a challenge.

HR service delivery

Tony Blair and the Labour Government now have their sights firmly fixed on the next election and one thing they have to demonstrate in the time they have left is some big improvements from all the money they have been pumping into the public sector. The Government now realises that just setting performance targets and producing league tables do not make organisations more effective or produce greater value for money. The only way the public sector will be reformed is through creative people strategies that fully engage employees in the task of reform. Whether much progress will be achieved during 2004 is debatable, but HR directors in government departments and the public services had better be prepared for much greater pressure to deliver.

They also have the additional challenge - shared with all those HR directors supporting partnership arrangements with unions over the past 10 years or so - of having to re-think their employee relations strategies.

The arrival of the 'awkward squad' is a clear signal of a change in mood from the most vociferous and recalcitrant union leaders. Whatever partnerships were meant to achieve, their success, from a strategic HR perspective, is now questionable, and maybe another paradigm shift is urgently needed - possibly requiring a shift in management thinking.

Resourcing

Next on my strategic HR list for 2004 is the question of resourcing.

Transferring thousands of low-skill jobs to India might be no great loss to the UK economy and some economists suggest that this 'offshoring' brings greater benefits to the countries exporting jobs. But this is surely the thin end of a long-term wedge.

Outsourcing/offshoring

Technology really is starting to shrink the globe and resourcing will become more strategic than ever before. Certainly, any board seriously concerned about costs has to look at what outsourcing abroad has to offer and not just in low-skill areas. What about research and development, design, and probably the easiest job in the world to outsource - those accountants who spend all day analysing spreadsheets. I knew there was something to look forward to in 2004.

Paul Kearns is director of HR strategy consultancy PWL. His latest book HR Strategy: Business Focused, Individually Centred is published by Butterworth Heinemann.

How the forum works

The HR Strategy Forum, which is supported by some of the industry's most experienced people (see below), is Personnel Today's major new initiative to help readers become more strategic in their day-to-day operations.

Over the coming months, Personnel Today will give a unique, developmental opportunity to hone your strategic skills using a wide range of HR scenarios submitted by senior HR professionals. Each week, our panel of experienced practitioners and consultants will provide solutions to a typical strategic HR dilemma. You can get involved by sending in your own problems, marked 'strategic dilemmas', to martin.couzins@rbi.co.uk

Duncan Brown, Assistant director general, CIPD

Paul Kearns, Director, PWL

Jim Matthewma,n Worldwide partner, Mercer Human Resource Consulting

Andrew Mayo, Director,MLI

Louise Allen, Director, LAPartners

Penny Davis, Head of HR operations, T-Mobile

Marie Gill, Head of organisational development, Asda

Neil Roden, HR director, Royal Bank of Scotland

Ralph Tribe, Vice-president of HR, Getty Images

Dilys Winn, HR director, Gloucestershire County Council

Margaret Savage, Head of HR strategy, BT