HR needs to evolve and adapt to changing demographics and tech

Some of Sri Lanka’s leading businessmen and women earlier this week discussing HR’s representation at the boardroom level highlighted the need for the profession to adapt to changing times, especially in terms of technology and shifting demographics. At the CEO Forum titled ‘Taking HR to the Boardroom’ organised by the Association of Human Resource Professionals of Sri Lanka in collaboration with CIMA, CIM and the Great Places to Work Institute, a number of speakers maintained that HR’s presence in the boardroom should be a no-brainer.  

Opening the panel discussion, VirtusaPolaris Executive Vice President and COO Keith Modder said that the more pressing needs for HR were centred around innovation and talent in the face of rapidly changing dynamics of the technology landscape.

Millennials born after the early 1980s, he said, will constitute between 6% to 80% of the workforce in the near future and thus the economic buying power in any country in the world. 

“There’s a difference in terms of their wants and needs than those of traditional employees and customers have been. Companies are grappling with this. The consumers are demanding a level of service that is far more intuitive, predicated on mobile phone and IT savvy,” said Modder.

In this context, the profile of human resources companies are looking for have changed dramatically. HR, therefore, is a harbinger of change and a driver of change.

“Never before has the need for strong talent management and acquisition been more important than in this current context. I think it’s important for all of us to examine what we’re thinking about, what we’re doing about ourselves and how we can ensure that we can change the modus operandi of your organisation to cater to these changing environments,” said Modder. 

Failing to do this, he warned, could result in companies becoming irrelevant.

John Keells Holdings Deputy Chairman Ajith Gunewardene said that HR management as it is known today is becoming redundant. 

“All of us are essentially dinosaurs of today. We’ll all be extinct very soon. We have to accept that reality,” he said. 

In the span of just one generation, said Gunawardene, the world changed underwent an unprecedented transformation, in terms of technological advancement and other areas. 

“Imagine what could happen in the next generation? The pace of change that’s taking place. This is all relevant to HR,” he said.

“The pace of change is accelerating. Is HR ready to come into the boardroom? Most of us don’t see the world through the modern/future lens. We see it through the past, and we’re squinting against the glare, desperately holding on to what we have, hoping that the tsunami of change will pass and that we’ll survive,” he added.

This proverbial tsunami, warned Gunarwardene, will not pass and will likely wash everyone away, unless the industry accepts this reality.

“Get the guys with 20-20 vision to run the show. Get them into the boardroom. It’s not simply handing over to the younger generation – which is what we used to do. It is an entirely new order, essentially the aliens have come and they’re smarter than us. They know more than we do. They see the future in exponential terms, not in incremental terms. We’d better figure out how to gracefully hand over and enjoy the future. This to me is HR management of the future,” said Gunawardene. 

Jetwing Travels Managing Director Shiromal Cooray concurring thoughts shared by Gunawardene and Modder said that HR is perceived more as an adviser rather than a decision maker.

“Because of that the value of HR is perhaps not seen the way it ought to be. Of course it has to get into the boardroom – perhaps not by way of being a director – but if you work closely with the CEO then it’ll come to the boardroom. But as Keith mentioned, it’s evolved from personnel management. HR, as we know it, is a relatively new function but the way Ajith explains it, it’s going to be even more radical,” she said.

Not looking after one’s current employees means that being ready for the next generation is going to be a challenge, said Cooray, adding that a change in mindset is needed to accommodate some of the more unusual changes in demographics, such as millennials showing a preference to come in to work in jeans and t-shirts.

“People need to think differently,” said Cooray.

Companies need to nurture their new recruits and give them the space to grow and help the company they work for.

“I think it’s going to be a futile exercise, because most people need instant answers. They want to be made managers immediately. They don’t have the patience that we had to wait in a company and grow,” she said.

“HR needs to evolve in that sense. They need to understand the importance of the role. And the whole process is changing. Unless that is understood and accepted it’s going to be tough getting into the boardroom,” added Cooray.

DFCC Bank CEO Arjun Fernando meanwhile, said that HR is undergoing a transformation.

“Rather than playing a transitional and administrative role, HR needs to be a real strategic business partner. I see this evolution happening in different organisations at different paces,” he said.

What drives a CEO or a board, said Fernando, is either greed or fear. Functions such as ICT security is getting a lot of prominence and getting their due place in the boardroom due to this fear factor, he explained. The same goes for brand valuation and brand equity.

“Similarly, HR needs to create that value. An area in which doesn’t get that value creation is the culture of an organisation,” said Fernando.

Organisations don’t have a culture of accounting for their internal culture in their balance sheets or financial disclosures.

“If we are to really drive the HR function to the next level, I believe we need to create that value. A lot of CEOs like numbers, so quantify that value in terms of the HR role,” he said.

Touching on the role HR plays when it comes to employing millennials, Fernando said that the CEO must take the initiative in driving change.

“In my organisation, 70% of the staff are millennials. We’re now trying to understand how to drive that. I must admit that when we look at some of our HR practices that does not cater to the millennials. This change has to be driven by the CEO,” he said.

Fonterra Brands Managing Director, Sri Lanka and India subcontinent Sunil Sethi said that the only key performance indicator (KPI) that matters to any CEO is whether or not a certain function or individual is going to be more top line or bottom line or sustained capability to drive the top line and bottom line.

“HR has for long been focused on input measures and not been able to connect it to the output measures and proven to the CEOs as to how is it what HR does contributes to either the top line and bottom line or building sustained capabilities,” said Sethi. 

“Every organisation talks about how the consumer is at the heart of everything, building brands that deliver what the consumer wants, and spending money on advertising and research on consumer needs. But if you were to actually look at how much money is spent on getting insights about people, it’s very little compared to what we spend on researching the consumer relating to a commercial opportunity,” he added. 

To handle all the changes taking place in the field of HR, companies need to discover the intrinsic motivation of their employees, which can then be leveraged to alter their beliefs and behaviours and drive actions the business needs in order to deliver results.

HR’s job is to discover intrinsic motivations, reiterated Sethi, adding that admin part of HR is something that can be outsourced.  

“Look at what the individual wants and what the organisation wants. How can you marry those two?” he said. 

MAS Holdings Chief Growth Officer Nathan Sivagananathan said that not all good decisions get made in the boardroom.

“I don’t know why HR is trying to get into the boardroom, because all of us are trying to get out,” he said, in a lighter vein.

All good decisions don’t get made in the boardroom. They get made in the corridors or coffee shops. Some decisions have to be at the board level, but mostly what we find is that a lot of good decisions get made in very unusual places, added Sivagananathan.

HR, he said, is at the forefront of that change brought about by the advent of millennials and technological advancements. His company has a successfully implemented flexi-hours system that encourages employees to come back to work. The amount of diversity at MAS was also a key factor, he said. 

“I’m proud to say that 60% of my leadership team is female. They do a better job than the guys,” said Sivagananathan. 

A demographic that’s often forgotten when talking about diversity, said Sivagananathan, is the aging population of workers – those who are not ready to retire.

“They have so much input and knowledge that needs to be harnessed and utilised in different places. While managing the millennials on one side, we can’t forget about the aged population on the other side. HR has a role to play in that,” he said. 

HR also is more than clocking in and clocking out. Some employees prefer to work from home, or out of a coffee shop, and HR needs to encourage that environment to that people are comfortable in the way that they want to work, he said. 

“We’ve always had an HR director on our board. And we found it extremely useful because the understanding of the business, where the business is going, where the strategy is going, why we are trying to get the right skill – the skill set for the future is something different to the skill set of tomorrow. It’s not about replacing someone, but rather understating what needs to be replaced, in a futuristic sense,” said Sivagananathan.

The agility and flexibility in having that is important, he added.

Innovations in technology in areas such as robotics and artificial intelligence, said Sivagananathan, could also play a part. 

“Machine learning is going to be a key part. The ability to deal with people and utilise their skills in other areas is going to be very important from an HR point of view,” he said. 

“We feel that innovation would be a key driver in most of these areas. And we have to have people in organisations – whether they be HR or not – understanding technology and moving with that technology. Having monthly, quarterly or yearly reviews are things of the past. Performance appraisals are I would say a thing of the past. We’re moving away from those,” he further said. 

The ability to think through and think for what each individual needs has to come in there as well and, thus, HR at the board level is very important. This, said Sivagananathan is because consumer understanding, business understanding and people understanding is going to be a key part going forward. 

Then there is the matter of compensation. HR needs to look at innovative ways to compensate recruits for the work that they do. 

“One of the guys at (my company) doesn’t want a bigger salary. He wants an iPhone 7. He’s a guy motivated by a new iPhone rather than a salary increment. How does HR think through that, curate that?” said Sivagananathan.

Pix by Lasantha Kumara