Brave new world - HRM online

A growing number of Australians work in small organisations. According to ABS figures from June 2012, 61 per cent of all businesses in Australia did not employ anyone other than the proprietor. Moreover, 67 per cent of new businesses created in 2011-2012 were ‘non-employing’.

The facts

Of Australia’s more than 2 million businesses, 96 per cent employ fewer than 20 people, and some 43 per cent of Australia’s workforce works in organisations that employ fewer than 20 people.
At the big-business end of the scale, in June 2012 less than 1 per cent of businesses in Australia employed 200 people or more.
Moreover, at that time only 6 per cent of Australian businesses had a turnover in excess of $2 million per annum.

The bottom line is that more than half of Australia’s human resources are working to add value in small organisations that do not specifically feature in AHRI’s view of the future for the professions of ‘human resources managers’ or ‘people managers’. This may not be an issue for AHRI if its vision is restricted to ‘Shaping the future of the [HR] profession’, because the HR profession currently exists in relatively large organisations.

AHRI’s 2012 survey

47 per cent of AHRI’s members work in organisations that employ more than 500 permanent staff.
28 per cent work in organisations with 100-499 permanent employees.
Only 15.6 per cent of AHRI members work in organisations that employ fewer than 50 people.

From a national perspective, I am concerned that half the workforce may be missing out on access to advice, assistance and advocacy that could optimise their contribution to national competitiveness, income and prosperity.

When we read the literature on HR, or when we look at the topics presented at AHRI conferences (and also by its sister organisations overseas), the tendency is to think of the term ‘human resources’ as referring to the permanent employees of some core organisation.

The Age of Unreason

More than 20 years ago, business professor and ex-Shell executive Charles Handy noted in his book, The Age of Unreason, that in many industries more than 80 per cent of the value was created by people who are not employed by the core organisation.
It is created by a “contractual fringe” that forms a network of separate business units cooperating to produce the final product or service that the end consumer purchased.
Networks, or “supply chains” as they are more commonly known – many of which are global in nature – have proliferated since Handy wrote his book and are involved in the production of most of the products we consume today.

Indeed, the strategic decision as to what to keep in the core organisation and what to outsource to business partners or even to customers themselves (for example, online banking and retailing) determines whether work is done by our human resources or by “outsiders”.

By focusing on human resources employed directly by the core organisation, the HR profession is concentrating on a minor percentage of the people who are working to add (or subtract) value from the core organisation’s overall operations.

Some of the knowledge and expertise needed to manage relationships with members of the total productive network (or supply chain) already exists within core organisations, but is fragmented across a range of business units that typically do not see a need to work closely together and share what they know about managing parts of the network.

Relationship management division

I can imagine that in the future at least some CEOs will decide to create a ‘relationship management division’. This division would manage the organisation’s relationships within the network, comprising its key stakeholders.
It will bring together and further develop all of the organisation’s expertise in forming, managing and terminating relationships with individuals and groups that contribute to its corporate objectives.
It will combine the insights of legal, supply and joint ventures in writing mutually beneficial contracts.
It will draw on insights from marketing and public relations on influencing the behaviour of people over whom one has no hard power. And it will use insights from HR and IR to design useful roles for contributors to organisational goals, measuring their performance in those roles and maximising contributions from them.

The future for HRM is likely to be either very exciting or very frightening depending on how future-proof you have endeavoured to make yourself.

The facts

Of Australia’s more than 2 million businesses, 96 per cent employ fewer than 20 people, and some 43 per cent of Australia’s workforce works in organisations that employ fewer than 20 people.

At the big-business end of the scale, in June 2012 less than 1 per cent of businesses in Australia employed 200 people or more.

Moreover, at that time only 6 per cent of Australian businesses had a turnover in excess of $2 million per annum.

AHRI’s 2012 survey

47 per cent of AHRI’s members work in organisations that employ more than 500 permanent staff.

28 per cent work in organisations with 100-499 permanent employees.

Only 15.6 per cent of AHRI members work in organisations that employ fewer than 50 people.

The Age of Unreason

More than 20 years ago, business professor and ex-Shell executive Charles Handy noted in his book, The Age of Unreason, that in many industries more than 80 per cent of the value was created by people who are not employed by the core organisation.

It is created by a “contractual fringe” that forms a network of separate business units cooperating to produce the final product or service that the end consumer purchased.

Networks, or “supply chains” as they are more commonly known – many of which are global in nature – have proliferated since Handy wrote his book and are involved in the production of most of the products we consume today.

Relationship management division

I can imagine that in the future at least some CEOs will decide to create a ‘relationship management division’. This division would manage the organisation’s relationships within the network, comprising its key stakeholders.

It will bring together and further develop all of the organisation’s expertise in forming, managing and terminating relationships with individuals and groups that contribute to its corporate objectives.

It will combine the insights of legal, supply and joint ventures in writing mutually beneficial contracts.

It will draw on insights from marketing and public relations on influencing the behaviour of people over whom one has no hard power. And it will use insights from HR and IR to design useful roles for contributors to organisational goals, measuring their performance in those roles and maximising contributions from them.

The future for HRM is likely to be either very exciting or very frightening depending on how future-proof you have endeavoured to make yourself.