The New HR Agenda

It's a big statement about a big change: The fundamental way HR consulting is conceived, designed and delivered is transforming. But Ashford is hardly alone in his thinking. Annmarie Neal, founder of the Center for Leadership Innovation, notes that HR consulting faces a "strategic inflection." Joanne Dahm, Co-President, Performance, Reward, & Talent, Aon Hewitt, would agree. "It's becoming harder and harder to compete on the traditional expertise model, where the consultant's position is, 'I'm the smartest guy in the room and I'm $500 an hour,'" says Dahm, president of Aon Hewitt Consulting's Performance, Reward and Talent Practice. "I think that's going away."

Exactly what will replace the traditional HR consulting model remains to be seen, but it's a safe bet that the offerings will be much more integrated on several counts: more integrated in terms of advisory, technology and data analytics; more integrated in terms of solutions that extend beyond HR into other corporate functions; and even more integrated in terms of how consulting firms and client companies bleed into each other.

The CHRO's sleepless nights still concern HR consultants, and the primary source of that restlessness relates to talent management's many facets. That said, HR consulting leaders can expect to pull more all-nighters themselves as they chart a new course for their practices, firms and profession.

TALENT IS JOB 1—AND 2 AND 3…
Talent, according to HR consultants, represents the first, second and third source of CHRO—and CEO—sleeplessness right now. "It is an exciting time to be a chief human resources officer," notes Thomas Gaissmaier, a Partner and HR topic expert with The Boston Consulting Group (BCG). "Talent is the No. 1 priority for many CEOs. Most companies spend more on people costs than on capital costs, and 'people companies' evidently outperform their peers in value creation." As a result, Gaissmaier adds, "we are observing a fundamental step change in the role that HR functions and Chief HR Officers play today."

Ashford agrees. "When I meet with CHROs, we spend a lot of time talking about scarcity of talent," he says. So much time that these discussions inspired Ashford to write his first book: Talentism: Unlocking the Power of the New Human Ecosystem (Mercer, 2014), which was published in June.

Scott Olsen, a PwC Principal and U.S. leader of the firm's human resource services practice, also identifies talent as a top and comprehensive HR challenge. He describes "sourcing, developing, retaining, and rewarding the talent necessary to achieve their broader business goals," as a top CHRO concern. "Another key element of this concern is making sure this talent is available in the territories where businesses are growing," Olsen adds.

That point highlights the fact that the talent challenge is multi-faceted in addition to being pervasive. Making the most of the organization's talent investment, Olsen notes, means addressing several major questions including:

• What are the reward and development programs most valued by the workforce?
• How does the company make the most of current reward and development programs?
• What program changes will most impact sourcing and retention of key talent?
• What is the future of delivering healthcare benefits post-Affordable Care Act?

But that's not all. Leadership development, succession planning and knowledge management/transfer loom as major challenges as more baby boomers leave the workforce. "As we're seeing those baby boomers walking out, we need to figure out new ways of keeping that knowledge, harvesting that knowledge and keeping the new generation interested in that type of work," says Mary Murphy, a Principal with Capgemini.

Employee interest, more broadly defined, represents another increasingly important—and rapidly evolving—talent management challenge. "Engagement is particularly important in this post-recession economy," notes Juan-Luis Goujon, president and CEO of BPI Group. Engagement levels decreased during the downturn as employees took on more work, often without much, if any, bump in pay, as their co-workers were laid off. "We're seeing the impact today in employees being burnt-out and ready to jump ship as the market improves," Goujon explains, noting that more CHROs view engagement—"done the right way"—as a central part of their companies' retention strategy.

The way engagement is managed, measured and analyzed (including its links to corporate performance) is changing. Dahm reports that many companies have moved on from simply conducting engagement surveys and scores to developing action plans for improving engagement and executing those plans.

For good reason, notes Towers Watson Managing Director, The Americas, Carl Hess. He reports that there generally is a greater recognition that "human capital is an incredibly important asset to most organizations." This recognition, Hess continues, stems from growing evidence—as demonstrated by metrics such as Towers Watson's "sustainable engagement"—that "the difference between firms that get the most out of their people and firms that don't is pretty darn substantial."

SOCIAL, GLOBAL AND OTHER OPPORTUNITIES
HR's growing use of hard metrics, which ultimately can help CHROs identify the function's—and the company's—value, represent a major source of opportunity. Ashford describes this trend, which requires the application of data analytics and related technology, as evidence-based HR. Gaissmaier calls it the "value-based approach to human resource management." And most HR consulting leaders appear to agree that this approach plays a central role in most HR-related consulting opportunities that exist, including the following areas:

GOING BIG ON DATA ANALYTICS
Big data and sophisticated HR analytics tools can improve HR functions' strategic workforce planning capabilities. Predictive analytics can create incredibly precise and accurate success profiles for specific jobs. "Most HR organizations appreciate the value of big data," Neal reports, "but have not cracked the code as to how they can be more innovative in how they collect and leverage data in ways that drive improved levels of engagement and performance in their organizations— globally." Data analytics and other technology "will play a bigger and bigger role in the ways that organizations identify and assess talent," says Ashford. Mercer recently created a gamification solution that helps oil and gas companies identify engineering talent. The game simulates the role of a petroleum engineer; by playing the game engineers in other fields can determine the extent to which they possess the competencies necessary to thrive as a petroleum engineer.

GETTING SOCIAL
New technology applications can trawl various social media platforms, collecting data that current (and potentially future) job candidates have deposited in the social realm – and then use predictive analytics to determine the degree to which these candidates match a company's desired talent profiles. This type of social media application holds great promise and significant risks; leveraging these opportunities in a risk savvy manner requires social media expertise—something that relatively few HR functions possess, according to new Capgemini research. "As HR consultants we have a great opportunity to help HR embrace social media in ways that help them find, recruit, develop and retain talent," Murphy says.

GOING 'GLOCAL'
As more companies become more global in their operations and thinking, they also face a need to meet local needs in the geographies in which they operate. "As a result, HR consulting firms need to be global and have a strong local presence while also going deep on industry knowledge," notes Jason Geller, national managing director for Deloitte Consulting LLP's U.S. human capital consulting. "This provides opportunities for HR consultants to work around the world solving complex challenges." Neal reports that there are "huge opportunities in helping large and mid-market organizations to become smarter about how they find, develop and deploy manager/leader capabilities in emerging markets."

SERVING 'ACTIVIST CHROS'
In BCG's parlance, "activist chief HR officers" take a strategic view on people and organization issues such as the shape of the organization or the talent pipeline, according to Gaissmaier. "They are action oriented—spending less time debating the difference between capabilities and competencies and more time energizing the people agenda," he continues. "They are sophisticated—applying state-of-the-art analytics and evidence-based approaches to maximize the value of human capital." And they are hungry for outside expertise. There are numerous other HR-consulting opportunities, including many related to traditional HR activities. These include helping clients understand the impact of different benefits-delivery options, managing cultural diversity and integration, succession planning and post-merger integration.

CONSULTING DISRUPTIONS ERUPT
Delivering on these opportunities can be difficult because many of the same dynamics enacting on HR functions also pose challenges to HR consulting firms and practices."Just as HR is being pushed to be more evidence-based in the work that it does," Ashford says, "consulting firms that support HR are being pushed to be more evidence-based in defining the impact of the services that they deliver to clients."

Just as HR functions need to integrate new cultures into increasingly global organizations, HR consulting firms are challenged to "successfully integrate new cultures—whether that means people of another nationality, people of another generation or people with a different approach—into their own businesses," notes Goujon, who describes a "cobbler's son has no shoes" dynamic in the profession. "HR firms tend to have laser focus when executing client projects and strategies, but sometimes neglect to address their own internal challenges," he continues. "It is important for firms to occasionally take a step back and treat their own organization like a client—strategizing, aligning, evaluating and improving. Taking the time to address your own organization will ensure you are in the best position possible to deliver results for clients."

Carving out time for self-reflection can be difficult. "The pace of change and disruption creates huge obstacles," Geller notes. "HR consulting firms need to constantly reinvent their skills and capabilities to effectively deliver for clients. The speed of change requires that HR consulting firms invest heavily in developing and growing skills and capabilities at all levels with more than just incidental training. Instead, HR consulting firms need to take a systematic approach to keep on top of changes in the market and promptly translate that into services and capabilities."
This systemic approach includes a combination of the following:

TRAINING
HR consulting firms and practices are ramping up training offerings, especially in the area of technology, data analytics and social media. Today's HR consultants, Olsen says, need a blend of HR, and analytic skills to help CHROs' interactions with CFOs; an understanding of the interdependencies among different HR disciplines (e.g., total rewards optimization); and the ability to analyze multiple internal and external data sources to "triangulate" findings in the context of their clients' businesses.

HR consultants also need to learn how to become more collaborative in crafting client solutions. "This idea of the consulting firm being the sole owner of every best thought is changing," Ashford says. "It's really about collaborative discovery. Consultants have points of view because they work with multiple clients. The clients also have valuable points of view and good ideas to put to the middle of the table where you work through ideas together to come up with solutions that have the biggest impact."

ACQUISITIONS
Although there remains significant consolidation in a still highly fragmented (overall) market, several HR consulting leaders expect that pace to intensify. Large consulting firms are buying smaller niche firms in order to broaden their innovation platforms, Neal reports, and executive search firms and HR-technology companies are launching advisory offerings. Additionally, she points to new entrants with innovative social and digital application that are disrupting providers of traditional performance management, mentoring and coaching services. Goujon says BPI Groups is "taking a hard look at our business and determining what we need to do to continue our growth in North America—whether that's making strategic acquisitions in particular geographies or areas of expertise, or fine-tuning our own employee engagement program to support our hiring and retention goals."

VALUE
As several HR consulting leaders note, the traditional on-site, time and materials HR-consulting model is being challenged. "The HR consultant of the future will need to know how to leverage technology to work and team remotely in ways and at a scale that they have not done in the past," Geller explains. "The move from 'time and material'" to 'business impact and value' will [represent] a dramatic shift and change for HR consultants to positively impact conversations with clients."

That move is already underway. Mercer's self-reflection inspired new ways to work with a large client company in Latin America. While Ashford was chatting with an executive at the client company, the idea of a new type of collaboration cropped: HR professionals from the client company will do a rotational stint within Mercer, and Mercer consultants would work for a stretch within the client company's HR function. "It's an interesting win-win," Ashford adds. "We are already in client-service relationship, but this will accelerate the impact for both of us. We're now in the process in planning an exchange program."

 
• CAREERS—"HR consulting may not be a career in the traditional sense," notes Jason Geller, national managing director for Deloitte Consulting's U.S. Human Capital Consulting Practice, "but instead [it would be] a series of assignments as the consultant ebbs and flows between consulting and working as an employee or contractor with clients."

 

• CLIENTS—Scott Olsen, a PwC Principal and U.S. leader of the firm's human resource services practice, expects HR consultants to expand their reach by targeting buyers beyond the HR function, including C-suite occupants, business unit executives and corporate finance executives.

 

• BEHAVIOR—Towers Watson Managing Director, The Americas Carl Hess believes that many of the principles of behavioral finance will be applied to HR as the function develops behavioral models that more accurately identify the qualities, characteristics and offerings within a culture that will attract, inspire and retain top talent.

 

• ETHICS—"Some of the emerging technology I've seen are intriguing and bordering on scary," says Orlando Ashford, president of Mercer's talent business. One example: facial recognition data that predicts job fit and engagement levels. HR functions and consulting firms "are going to have to wrestle with the legal and ethical ramifications of these technologies."