With unemployment up, productivity growth slowing and talent thin on the ground, business leaders are searching for the secret to future success. The solution, many believe, lies with HR.

Labour force figures released in January revealed in seasonally adjusted terms the unemployment rate rising from 3.9 per cent to 4.1 per cent. At the same time, the workforce worked 2.5 per cent fewer hours.

These figures could be explained by the fact that numerous sectors are struggling to fill roles, says Charles Ferguson, APAC General Manager of global hiring solutions provider G-P.

Research by G-P finds that 75 per cent of Australian executives have faced difficulty in securing skilled talent and that 82 per cent of businesses are now actively engaged in global recruitment.

The figures point to an opportunity for HR professionals armed with the right skills to help executives and boards lead their businesses into the next stage of success, says Ferguson.

“In the Asia Pacific region, I would suggest we’re at a strategic inflection point in terms of the way we measure productivity, and the way the workforce functions within the economy,” he says.

When we come up with a better way of measuring productivity, he says, it will involve the various tools, such as automation and AI, that each worker can use to do their job more efficiently. That will also be a measure of the success of each organisation’s HR program.

Productivity is in the hands of business

Matt Grudnoff, Senior Economist at The Australia Institute, agrees that the way we measure productivity – the simple measure of output per worker – requires a refresh.

“If you go back 40 years, goods production was the dominant part of the economy,” says Grudnoff. “Now, services are the dominant part. It used to be easy to measure productivity – the number of cars produced by the number of workers. But how can you measure the productivity of a librarian, or a journalist, or an aged care worker?”

Whatever the measure, increasing output per worker is going to be a central responsibility of the role of the HR professional, he says.

“The vast majority of people think productivity is about workers,” he says. “But workers have the least power in terms of improving productivity. All they can do is get educated, and Australian workers are doing that at higher rates than they ever have.”

The government also has some control over productivity, says Grudnoff, but not a great deal. It can introduce policies that encourage innovation, but it can’t enforce them.

The vast majority of power over productivity is held by businesses, he says. 

“Businesses decide how they are structured,” says Grudnoff. “They decide the type of capital and equipment available to workers to make them more efficient. They decide almost everything in terms of output per worker.”

“Overwhelmingly, productivity is about business, and HR people are the ones at the front line of organising a business in a more productive way.”

“It used to be easy to measure productivity – the number of cars produced by the number of workers. But how can you measure the productivity of a librarian, or a journalist, or an aged care worker?” – Matt Grudnoff, Senior Economist, The Australia Institute

A new future requires a new people strategy

There was likely concern for the future of fabric workers during the industrial revolution when their jobs were automated, says Ferguson. Eventually, those workers were retrained into roles required by future-ready businesses. 

That is exactly what is required right now. But in today’s work environment, there is rich reward for businesses that achieve a quick transition.

“This is a seminal moment for the HR function,” says Ferguson. “HR has this unique opportunity to assert themselves, to say, ‘The way we operated pre-pandemic is fundamentally different to how we’re going to operate post pandemic.’”

That includes how and where hires are made. Businesses that don’t utilise the global employment marketplace will naturally have a harder time filling roles, he says. 

It also includes how much flexibility can be offered around where and when people work, what training programs must be in place, where employment investment is made, what can be automated, and more.

“As the people responsible for being the nexus between technology, productivity, automation and human capital management, how do we strategically put those things together to elicit the most impact to the business, shareholders and stakeholders?” says Ferguson.

HR must also be skilled up

Just as workforce designers during the industrial revolution had to look to the future and learn new ways of work before they could reskill the fabric workers, today’s HR professionals also require new knowledge to guide businesses to future success.

“At the moment, I’m not hearing much conversation around what HR needs to be successful,” says Ferguson. “Organisations like the Australian HR Institute have been telling this story for a while, but now the rest of the business world needs that story to be heard. It needs to be brought into the boardroom.”

The HR function should be looking at strategic workforce planning, says Ferguson. It must define future jobs, skills associated with those jobs, which parts of jobs can be automated and how and where talent can be found. 

Do they need to be sourced from the business’s local community, or from across Australia? Or can the job be done by a person with the right skills who lives in Chile, says Ferguson.

“This is a seminal moment for the HR function.” –  Charles Ferguson, APAC General Manager, G-P

In terms of practical outcomes for HR from recent jobs data, Ferguson offers four insights.

1.  “Do the research required to have the conversation with your peer group within the business around how to strategically analyse the workforce planning aspect,” says Ferguson. 
2. “Decide on the methodology to assess the current state of the workforce, to identify the gap between where you are and where you need to be.” 
3.  “Collect relevant, credible data that is relatable to people outside HR. If it isn’t quantifiable, it doesn’t have correlation to the business audience. How does employee satisfaction relate to sales productivity, for example?” 
4.  “Identify which jobs really do need to be done on-site and which can be done anywhere in the world, to help solve the talent challenge.”
   

If we don’t get employment and productivity right, we all end up poorer, says Grudnoff.

“Only three things affect the economy in the long run – population, participation and productivity,” he says. “The first two give us the number of workers, and productivity gives us the output per worker.

“If your output is higher per worker, you’ve got more money per worker, and everybody benefits. The higher the productivity, the more wealthy the country will be.”

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