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By Staff Report
Feb. 7, 2002
The editors of Workforce have looked into their 2002 crystal ball and identified what they think are the major issues affecting HR management today. Then they examined the impact of these issues on individual HR functions.
What’s happening in your company that contradicts or confirms these trends?
Major Trends Affecting Human Resources Management in 2002
Trend #1: Significant HR issues are intertwined with the current economic climate.
The economic climate has significant HR implications, and conversely, some HR issues are affecting the economic climate.
For instance, there is an ongoing labor shortage, obscured, in part by the current – but temporary – economic cycle. This labor shortage will have long-term effects on businesses’ ability to compete in the world marketplace. Therefore, HR must manage to that labor shortage, despite contrary evidence.
Trend #2: Tough times require continued cost-cutting beyond layoffs.
It looks as if the 9/11 events may have helped to delay the country’s economic recovery. Thus, many companies will continue to look for ways to cut costs.
In 2001, layoffs targeted less-skilled and marginal performers. In many organizations, only key employees are left. Additional staff cuts could hurt current business and hinder future economic recovery.
Companies cannot over estimate the importance of key employees to an organization and the continuing need to retain the best and the brightest.
As a result, HR will need to look at both trimming expenses and fulfilling HR’s demand to keep and attract the best employees.
Trend #3: “Re-engineering” – or its next iteration – will become an important way to cut costs.
Since downsizing won’t achieve the necessary cost-cuts, companies and HR departments will have to re-engineer their processes and do what they now do faster, cheaper, and smarter.
HR will have two roles:
First, it will have to look at its own department and make HR more efficient, more cost effective, and a greater contributor to bottom-line stability.
Secondly, HR will work with executive and line management to support their re-engineering efforts.
Trend #4: The pending economic recovery will lag unless there are qualified employees in place to make it happen.
Sustained economic recovery is in the hands of the intellectual capital of an organization – its remaining employees.
Because those employees are vital to long-term corporate success, HR is responsible for maintaining their commitment, well being, skill sets and continued employment.
Therefore, HR will use all of its traditional tools to develop and maintain a competitive workforce.
How These Trends Affect Recruitment & Staffing
Ongoing Labor Shortage
Between the 9/11 events and the recession, the threat of a sustained, critical and business-threatening labor shortage now seems to be a remote possibility.
But the U.S. actually faces a number of factors that could soon create a shortage of qualified workers, including the retirement of substantial numbers of Baby Boomers, increased immigration restrictions, and a declining birthrate.
Clamp Down on Immigration
The tightening of immigration practices and work visas in the wake of 9/11 affects the availability of qualified job seekers at both ends of the salary spectrum.
There could be a significant shortage of both skilled, technical workers and thousands of non-skilled, manual laborers who support service industries, agriculture, and manufacturing.
Companies Are Still Hiring Talented People
Competitive companies are still hiring, but in fewer numbers. They are looking for those key employees who could mean the difference between a company’s success or its failure.
Finding the right people isn’t easy. Recruiting budgets are tight and widespread layoffs mean there are more candidates to screen. It’s critical for companies to hire right — the first time.
More Candidates Means Better Screening
Given the business survival issues at stake, there is less margin for error in hiring. A bad hire is too costly, in terms of money, time, and lost business. Better screening makes for better hires.
Pressure for Cost-Effective Recruitment Practices
Despite all these pressures, there are fewer corporate recruiters and less money to spend. HR professionals will need to use cost-effective recruitment and staffing vendors to manage recruitment costs.
Pressure for the Right Staff
Sustained economic recovery is in the hands of the intellectual capital of an organization — its employees. It’s HR’s responsibility to make sure that the right people are in place at the right time.
HR will need to make quality hires, make the right hire the first time, control expenses, and do it with limited HR staff.
Global Security Issues Impact Global Relocation
When Americans are targets and the country is at war, global relocation will likely decrease. Some executives in dangerous locations will be brought home, even before their tour of duty is over.
U.S. companies will hire more local nationals, but will be concerned about their backgrounds, and will call for extensive screening and checking.
How These Trends Affect the Demand for Recruitment & Staffing Services
Background Screening: New security issues will lead to increased background checking and screening for all new hires.
It will require processes and systems to screen the existing workforce, particularly in sensitive industries ranging from transportation to food industries to nuclear power plants.
In addition, global organizations will extend their background/security checks to their new hires outside the US.
Skills Testing & Assessment Services: Because there are more candidates, short-staffed recruiters will need third-party screening services and assessment tools to sift out the dregs and find the most qualified applicants.
Media & Advertising Agencies: Corporate recruiters have gone from just getting any résumé to getting the right résumé.
They want recruitment sources — from media to staffing agencies — to provide the right people, not just warm bodies.
And to make the most of media expenditures, recruiters can use the help of recruitment ad agencies to provide sharp, clear recruitment messages.
Applicant Tracking Systems: The pressure to keep costs under control will require corporate recruiters and HR pros to do detailed cost analyses by source, time to hire, retention, and any factor that can help identify the return on investment.
Although there are fewer candidates to track, there is more detail. It will be necessary to track and capture screening and assessment results.
And to accomplish cost-effective recruiting, HR will need the data and analysis capabilities of applicant tracking systems.
Contingent Staffing: As the recovery starts, many companies will be hesitant to make the employment commitments, so they will look to contingent staffing agencies for talented workers.
Also, they will be more interested in the “temp-to-hire” process, because it gives them a test drive, and reduces the risk of a bad hire. What will be different are better contingent management tools for HR, relying both on new agency contracts and third-party management software.
Online Recruitment: Now that the online recruitment market has consolidated, there are fewer choices for employers.
In response, the remaining online suppliers will provide more choices themselves, particularly for target, niche recruitment markets.
Source: Margaret Magnus, Publisher, and The Workforce Editors, January 2002.
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