By Anthony Kaylin, courtesy of SBAM Approved Partner ASE
HR is being thrusted into the limelight. With COVID, a new normal is developing. Unless the job requires being onsite, flexibility is becoming the key. COVID will become endemic, meaning it will be around like the flu and common cold, but with possibly worse outcomes. How will this impact the future of organizations that can be positively controlled?
First, HR has to become financially astute given the large investment in fixed assets by the organization. These offices may never come back to normal, and employers are paying rent. Further, online collaboration tools need greater investment, with the understanding that long-term relationships will become more the pen pal type than the “hey let’s do lunch” type. In other words, HR has to create a socially beneficial culture and environment given the financial constraints down the road.
Going to a virtual environment in a permanent way takes time, training, and consistent messaging by leadership to get managers onboard. Today’s world is thought to be a temporary arrangement. As COVID is becoming endemic, the office for many may be a thing for the past, simply a collaboration hub when necessary. Therefore, an office footprint may be necessary, but what size and shape remains at question. It could take years to work out a culture that both employees and managers thrive in. It’s not an overnight thing.
This new office environment leads to a management issue. What are core hours, and what flexibility will employers provide the offsite workers? For example, will employees be able to drop off or pick up children in the middle of the day or take care of older parents when they call? Studies have shown that employees working at home tend to work longer hours. So, the issue HR will have to deal with is whether hours worked is a good measure for productivity or is something else a better measure, for example, project completion in a timely manner. HR will have to have hard conversations with leadership and management to determine a better way to have performance management measures.
Which then leads to another issue, what are employers paying employees for? Does hourly pay make sense, especially in a time of worker shortage, which is not going away anytime soon. HR has to develop a new paradigm for pay, within the constraints of archaic wage and hour laws. And compensation will be an issue. Employer sales of goods and services will be tempered by pricing the market can bear. Therefore, actual salary increases (or out-of-pocket) for workers will have to be coordinated again, even if inflation continues at its current pace, with the likely higher increases in healthcare costs similar to the double digit increases in the 2000s. Like those who have pre-existing and/or chronic conditions which were previously driving costs, yet were less than 10% of the workforce, COVID treatment, along with chronic care, be a major headache for HR benefit planning.
These costs impact any offerings of additional benefits, but more importantly, impacts the major tools to recruit and retain employees. Employee cost is generally number one or two of an organization’s cost. Higher these costs without corresponding increases in pricing of products could lead to a fixed cost approach to labor. In other words, organizations large and small may outsource its workforce to get a handle on cashflow and productivity, likely leading to greater automation.
HR cannot work in a vacuum. Whether a large or small organization, shareholders want their profits, and especially in large public organizations which retirement funds are invested, they want their cashflow as well. HR has to be part of the solution for this new paradigm relationship of shareholders and employers, otherwise the value of HR will be of firefighters putting out fires instead of strategists preventing them. Regardless of what people may think, HR in this scenario can be easily outsourced.
Although it appears a doom and gloom scenario is being painted, it is far from the truth. HR has the opportunity to lead an organization to greater profitability in a new environment. The time is now for HR to become the future CEO candidates. Technical people can work as COOs or CTOs. The CEO in the future will have to juggle people and set the stage for more collaboration of senior levels to determine the future path of an organization. It’s actually a very exciting time for HR.