“To compete in the maelstrom of todayâ€™s markets, established technology companies must transform. Now. And swiftly. As one chief human resources officer (CHRO) told us, â€œItâ€™s insane to think that you have 18 months to make a transformation stick.â€
If transformation is urgent, so is the realization that itâ€™s not only about strategy and processes. Itâ€™s about the most crucial asset technology companies have: people. And the impacts of change in the industry on people and the organization are enormous.
The implications of these changes and the challenges they pose for HR organizations are equally enormous. From talent needs to organization structure, the pressures to transform the role of the CHROâ€”and the entire HR functionâ€”are escalating. Yet in all too many technology companies, HR struggles to meet these challenges. Itâ€™s time for technology companies to formulate a new view of HR and forge a deeper partnership between HR and the business. Doing so will require a fundamental change in HR strategy and operations.”
The Economic Imperative: Driving Growth While Preserving Margins. Although overall industry growth is a modest 3 percent, certain spheres are growing briskly: notably, public cloud services (projected compound annual growth rate from 2013 through 2018: 17 percent) and mobile-enterprise security (projected CAGR from 2012 through 2017: 23 percent). However, core businesses (such as on-premises applications and hardware) increasingly face commoditization.
The Emergence of Hybrid Business Models. Managing the core (legacy) business alongside new growth areas requires maintaining two different operating models: one (legacy) optimized for efficiency and one (growth) optimized for speed to market.
The Need to Collaborate Across Boundaries. Many well-established technology companies have grown on the back of a single flagship product. Today, companies are competing across product categories, and with the rise in integrated solutions, silos are merging. Employees must be able to easily navigate functional and product boundaries to achieve the collaboration needed to deliver these more holistic solutions.
The Need for New Ways of Working. Agile development and solution-based selling are forcing the development of new processes and new operating models. Core business processesâ€”such as product developmentâ€”are following new rhythms, creating new handoff points, and dictating new deliverables.
As Exhibit 1 shows, HRâ€™s expanded role involves more than a linear change. Each step requires a deepening of capabilities. For example, increasing cost pressures require greater efficiencies in providing services. HR must also fortify its functional expertise so that it can serve the business more effectively.
The HR organization needs its finger on the pulse of the dynamics of both the company and the industry. It needs its eye on the future. And it needs the ability to anticipate and adapt to change.
HR is the ignition for the innovation engine,
HRâ€™s Engagement with the Business. To keep pace with the many changes in the business, HR will need to be more proactive, responsive, and flexible. HR must be integrally linked to the business at higher levels.
HRâ€™s Own Way of Working. HR organizations are just as silo afflicted as the line businesses. Worse, each client-facing group tends to serve its silo at the expense of working in concert with the larger HR organization to leverage HRâ€™s efforts
HRâ€™s Own Talent. The traditional skill set of HR professionals can leave them unprepared for the more strategic challenges they face. Theyâ€™ll need more high-performance skills and behaviors, such as the ability to counsel business leaders as partners and the capacity to manage the people elements of any business change,
The Use of Analytics, Measurement Systems, and Related Tools. Itâ€™s time for HR organizations to get â€œreligiousâ€ about data.
Organization Design. Frequent product and strategy shifts will call for regular modification of the organization structure. Line business leaders, together with HR, should decide how the organization needs to change.
Employee Engagement and Culture. Establishing a high-performance culture is crucial for aligning people with the strategy and securing employee engagement, as well as for attracting and retaining the best talent. HR must ensure that the companyâ€™s cultural identity includes such critical attributes as customer focus, the willingness to take risks, collaboration, and agility
Talent Acquisition and Retention. Acquiring talent will require new, unconventional, and more far-reaching pipelines and strategies. Among them: recruiting college freshmen and sophomores with the aim of securing talent earlier and implementing programs that seed the supply of science, technology, engineering, and mathematics talent for the future.
Learning and Development. Companies have to either invest in learning and development or form a strategy that can support perpetual personnel churn. More important, companies need to abandon the traditional notion that learning and development equal training.
Compensation and Performance Management. These areas require a complete overhaul. New incentive models are needed to promote new growth businesses and solution selling
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