It’s been difficult for the HR industry to keep pace with the multitude of recent employment law changes alongside the turbulent economic situation in Europe. The UK Government’s forecast of ‘six years of austerity’ is no empty threat, as businesses are continuing to streamline their processes through redundancies, restructuring and redeploying staff. Whilst unemployment rates are rising, talent gaps are still present and applications are soaring. Forecasts from the Office for Budget Responsibility suggest that in 2012, 2.8m people will be unemployed, 200,000 more than forecasts earlier this year, many of whom are between 16 and 24. This is likely to further exacerbate application levels and inundate companies. One reform that has been welcomed by the Confederation of British industry is the Government’s proposed relaxation of employment laws so that companies can lay off workers more easily. The flipside to this legislative coin is that the UK Government has brought in the EU’s controversial law unchanged on equal pay for temporary workers. This has seen a slew of contracts being re-written, asking agency workers to sign away their rights despite the legislation.
2012 brings with it a series of challenges which HR Directors will have to navigate, one being aligning people to the business strategy to accelerate competitiveness and performance. Doing more with less will continue to prevail and staff will need to be motivated and further engaged (which is proven to help business performance) as the economic clouds become gloomier. As the baby boomers start to retire, HRDs must ensure that a leadership pipeline is in place and ensure diversity policies are working to bring in the talent that is most effective for addressing today’s work challenges.
Here at SHL we see four broad trends which will reach a tipping point in 2012:
1. Talent Acquisition +Talent Mobility = Talent success
2012 will be an important year for thinking beyond the traditional ways of acquiring and retaining talent. These programmes should be a strategic alignment to the business, with HR Directors working alongside senior leaders to predict what the future shape of the organisation will look like and the talent the company will need to cope with the market landscape. Talent acquisition will start to be tightly woven with talent mobility helping companies to solve problems in a more integrated way. Some forward-thinking companies have already started to do this. As Bersin & Associates note in their latest report Strategic Human Resources and Talent Management: Predictions for 2012 why would the recruiting team not be tightly integrated with the team which is building career models and performance appraisal tools for internal employees? Bersin is also noticing that many of the talent acquisition disciplines such as pre-hire simulations, video interviewing and social networking are now needed in other areas of talent management.
2. Analytics become the HR director’s strategic weapon
With company budgets tightening, it will become increasingly important for HR directors to use talent analytics to become more strategic and of greater value to the Board. The HR director is now expected to have a much firmer handle on metrics in the same way the CFO has a handle on finance. Using talent analytics for example, allows companies to predict future leadership potential and its capabilities span both recruitment and talent mobility. It can answer questions on whether the company is attracting the right candidates, when a company is losing the best quality candidates and can also provide data examining if the company has the right talent on board to strategically change the direction of the business.
In 2010 the power of analytics was proven: in the report, Analytics: The New Path to Value found that top-performing organisations use analytics five times more than lower performing organisations (according to a survey of nearly 3,000 executives). 2012 will be the year that HR directors put this into practice.
3. The rise of social media
Although social media is on the rise, in 2011, discussions with our clients at SHL suggested that for many, current usage tends to be sporadic and ad hoc, rather than linked to a wider social media strategy, which incorporates recruitment. In 2012, companies will need to ensure that their employer brand and social media strategy are integrated and defined, especially so that the right types of candidates are being attracted. As Josh Bersin comments in his 2012 predictions ‘rather than building an employment funnel, we need to build an employment tunnel’. What he means is that by communicating about the company and its values, a ‘tunnel’ of suitable people are attracted who know who the firm is and consequently want to join the company. Alongside HR, social media and marketing play an important part in communicating and building the employer brand. In 2011, our graduate research found a disconnect between graduates applying for jobs via social media and the channels recruiters were using to attract talent. However, as the job market becomes even more competitive, graduates will start using social media portals effectively to differentiate themselves from the crowd.
4. The need for diversity
The last major trend we see for next year is the growing need for diversity in talent pools not just along gender lines but also age and ethnicity. Gen X and Gen Y bring complementary skillsets which will benefit organisations. Equally in a globalised economy, firms need to ensure their workforce is representative of the markets they are in. On the issue of female representation at board level, Viviane Reding, the EU’s justice commissioner, says she wants European boards to be 30% female by 2015 and 40% by 2020. Currently Europe’s female participation on the board is a paltry 10%. In March 2012, ‘the Commission will assess whether there has been significant progress and whether ‘credible’ self-regulatory initiatives have been developed to increase women’s participation. If not, it will consider proposing EU legislation on the issue.’
Legislation aside, the introduction of more gender-balanced boardrooms is of strategic importance. According to the DBSI and their report ‘Women on Boards’, companies with more women on their boards were found to outperform their rivals with a 42% higher return in sales, 66% higher return on invested capital and 53% higher returns on equity. Diversity creates new ideas, debate and innovation and will be a crucial factor for companies to thrive in 2012 and beyond.