As we enter 2012, we are faced with the continuation of the starkest economic crisis to face industry for decades. The fate of the Euro hangs in balance, the Arab spring continues into the New Year and a raft of new legislative measures are being introduced, intended to bring ethics and balance back into corporate pay and the financial services sector. As we peer into the 2012 ‘people agenda crystal ball’ we see a diverse set of challenges coming our way that require rapid action from businesses everywhere:

Organisation mergers and separations:  2011 saw a significant increase in the number of organisations going into administration or looking for ways to streamline their business models. 2012 sees the implementation of the Vickers  recommendations in the banking sector which proposes the separation of retail and investment business units. RBS will be the first of many banks changing structures in line with this. Both these trends will drive a sharp increase in merger and separation activity  resulting in a changing shape of companies and the marketplace.

Workforce rebalancing to drive costs and ready for the upturn: In light of structural changes and the pressure on operating cost, planning future workforce requirements gains centre stage in Q1 2012. However, building on lessons learned during the last downturn, business leaders are now understanding their business requirements in terms of people and focussing on the skills required to compete in the upturn. They need to be  building strategies to handle the people retention risk in order to ensure that they not only cut hard but cut smart.

Capability sourcing delivering organisation efficiencies: The flip side of the workforce balancing coin is of course the continuous search for economical and effective models of delivering support services; this means due consideration to  functional outsourcing in the Finance, HR, Procurement and to building and working with vendor networks. This will be a double edged challenge for HR Directors. They will need to focus on delivering HR more efficiently (and the consolidation of vendors in the HR space does mean that multi-tower HR service provider platforms are now common place in the market), whilst at the same time, HR will need to provide more support to the functional areas and business units as they adopt alternate delivery models.  

The war for talent is still on:  While unemployment levels in the UK hit a 17 year high at 8.1%, there remains a shortage of talented people, especially leaders, in key roles and the race for acquiring talent with proven track records in varying economic climates is heating up.  We are seeing this as a steady trend at middle and senior management levels. Our hypothesis is that companies with leadership teams inexperienced in tough economic climates are investing in people who have ‘got the t-shirt’ in order to drive their upturn strategy.

People risk is increasing: In  recent times we have seen some great leaders of industry, experience ethical failures and  some fall prey to stress, perhaps resulting from pressure of public scrutiny. Managing the risk generated through the actions or intent of our employees has never been more critical. This has as a result placed the spotlight on putting in place policy and legislative measures to ensure the assessment and management of these.

Digitising the workforce builds smarter-working: The CTO is faced with three basic challenges in 2012, each of which impacts  technology choices being made;

  • reducing capital investment budgets,
  • the need for pace and flexibility in technology implementation – despite a surge in global platforms, and
  • the rapid adoption of social media and remote working tools which have a significant impact on ways of working and  also the governance and controls around data and interaction.

One that is quite specific to the functional communities including HR is the fact that SAP 4.7 will be out of support in March 2013 implying that all organisations on this platform will need to upgrade to ECC6.0 providing an opportunity for change. All of the above has prompted a general movement towards HR technology providers building SaaS solutions impacting the line manager and employee experience at the workplace.

Reflecting on the above, 2012 is a year when the people agenda will never be off the radar and the HR community will need to think on its feet and work with the business to provide innovative solutions for the interesting times that we all live in.