3 Key Predictions For the Human Resources Department of 2020

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First of two parts

The human resources department is doomed.

There is no viable future for the HR function, and HR professionals will inevitably be replaced by software. At least that’s what some are saying.

They’re wrong.

Without a doubt, software is changing how HR functions. But rather than spell the end of human resources, the nine experts I interviewed predict these changes will provide growth opportunities for HR professionals.

Here are three predictions about what will change and why, as well as how HR professionals can prepare. I’ll have three more predictions tomorrow.

1. In-house HR will downsize, outsourcing will increase

This prediction may seem somewhat, well, predictable. But the reasons our experts give for the change might surprise you.

Industry analyst Brian Sommer, the founder of TechVentive, claims a shift to smaller HR departments will be caused by new technologies and increased employee participation in HR processes. As he claims, “Many businesses are going to get a lot of capability done by better technology, more self-service and the employee doing a lot on their own.” For instance, employees will increasingly input their own data into self-service systems.

In addition, many transaction-heavy HR jobs will be outsourced entirely to HR agencies or specialists. Dr. Janice Presser, CEO of The Gabriel Institute, goes so far as to say, “Entry-level HR jobs, as they currently exist, will all but disappear as transactional tasks are consigned to outsourced services.”

Elizabeth Brashears, the director of Human Capital Consulting at TriNet HR, as well as Scot Marcotte, Barry Hall and Steve Coco of Buck Consultants, believe benefits administration will be particularly impacted as a result of increasing regulations and a globalized workforce. Brashears says, “As regulations surrounding employment, and particularly benefits, become more and more complex, I believe that companies will turn to field experts to help navigate through the landscape.”

Elaborating on this point, the experts at Buck Consultants say, “With employees taking on increasing responsibility for their benefits, we’ll see not only the administration of benefit programs but the entire benefits department become outsourced. Service firms will offer ‘benefit-in-a-box’ models that will offer cost-effective, bundled health and welfare, wellness and retirement plans to organizations.”

Nonetheless, the internal HR function will survive.

As Chip Luman, the COO of HireVue, explains, “Given the ongoing regulatory environment, the need to pay, provide benefits, manage employee relations issues, and process information will go on.”

2. Strategic thinking will be HR’s new core competence

The leaner version of HR that remains will need to reposition itself as a strategic partner within the business. In fact, the trend toward smaller, more strategy-focused HR departments was predicted 11 years ago in SHRM’s 2002 report, The Future of the HR Profession.

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More recently, an Economist Intelligence Unit report stressed the need for C-suite executives to partner with HR to drive growth. In support of that, over half the experts I interviewed mentioned that HR needs to increase its strategic value to the business – or else.

Dr. Presser says, “This includes the ability to make accurate projections based on understanding the goals of the business and using metrics that describe more than lagging indicators, such as how long it takes to fill a job or the per-employee training spend.”

This strategy role cannot be outsourced. As Dr. Presser says, “Strategic planning requires in-house expertise.”

In fact, Brashears predicts the trend toward a more strategic HR function may even drive the creation of new job titles. As she explains, “HR Professionals will likely transition into HR Business Professionals who not only understand HR implications but also business operations and strategy.”

3. The pendulum will swing back to the specialist

Janine Truitt, Chief Innovations Officer of Talent Think Innovations, observes a cyclical shift in the HR field. As she explains, “Every decade or so we fluctuate back and forth from the paradigm of the independent contributor/specialist to the generalist practitioner. We were in a ‘generalist’ mode and now I think the pendulum may be swinging back toward the specialist.”

Luman puts it more bluntly: “HR generalists as we know them will disappear.”

Brashears agrees, noting that “There will be more specialized roles. I believe this to be the case as the employment landscape becomes more complex with changing regulations around employment law and benefit compliance with the Affordable Care Act.”

Tomorrow: Analytics & Big Data, managing remote workers, and how HR will become more like Marketing.

This was originally published on Software Advice’s The New Talent Times blog.


19 Comments on “3 Key Predictions For the Human Resources Department of 2020

  1. Hi Erin:

    I appreciate the ping back on my article on why HR Is Doomed, and appreciate you’re insistence that I’m wrong. As a content marketer, you should know sensationalism sells – but so too does the agenda of “experts” who you interviewed. Of course none of them are going to bite the hand that feeds them – each has a business that’s either predicated on selling HR products or services, but interestingly, none is an actual practitioner or frontline talent management leader. You likely would have a hard time finding those to feature, though, because their jobs are busy being outsourced, offshored and made ‘duplicative.’


  2. All of the sources you quote are consultants and while I am sure they are very good at what they do —- they have a vested interest in this subject. And if you look at the date of the report generated by SHRM it is 2002 —- 11 years ago. And their assessments of what needs to be done is no further along than when they wrote it.
    The subject of the future of HR has been discusssed ad nauseum for 20 years and nothing much changes.
    Related topic. I would suggest — and have suggested many times — that HR start talking to CEOs, CFOs, etc. and stop talking to HR consultants and HR practioners.
    It’s a little bit like asking horses if they think the automobile should be created. Like it or not (and most of us vote for “not”) HR is part of a company — and business dictates what is needed. So that’s why I suggest talking to the C-suite. Their needs must be addressed. And HR as a profession will have no credibility until/unless we do.
    As for as tomorrow’s post —- recruiting should have been in Marketing instead of HR from its inception.

  3. Erin – The question isn’t what the HR function needs to look like in 2020; it’s whether the HR function will be able to meet those requirements. None of these ‘predictions’ are particularly earth shaking, with movement towards outsourcing, the need for strategic HR support, and the increasing complexity of health insurance (or whatever it will be called), are already pretty well established.

    Technology advances are already gobbling up most of the transactional stuff, although systems integration is going to be the key. The challenge for HR weenies there is understanding what that integration needs to look like enterprise wide, and being astute enough to articulate their requirements in the context of a systems approach.

    The notion of increased HR specialization is wrong, at least in my view. Outsourcing buys you the expert specialization needed. HR executives need to see the organizational needs from both 30,000 feet and at ground level, in order to competently do their job. Too much ‘specialization’ narrows their focus and detracts from their effectiveness.

    Jacque is exactly right about SHRM’s prognostication abilities, and the fact that little has changed. That lack of progress is a real problem for HR, because as the 21st Century gets underway the speed of change is going to exponentially increase, and the C suite club isn’t going to wait around and hope that their HR team will figure it out; if HR doesn’t get it they will get rolled over and tossed aside.

    1. I see it quite differently. In fact the PEO model of up selling and high pressure will give way to an ASO model which espouses mutual benefit and cooperation.

      The lack of transparency by the PEO’s and their bundled approach will pave the way for smaller boutique firms which focus on customer services.

  4. I find it hard to see how the HR function will change to purely a strategic business partner on the board.

    However, I completely understand the need for outsourcing HR as the function has in fact gone through a deskilling over the last decade and even though HR professionals are often called HR Business Partners they often know little about the business and rely on other people to deliver the HR. This will mean that HR Business Partners will be challenged to prove their worth to the business from an HR perspective first and then, only if they have business experience, can they add value to any business decisions.

    A lot of HR Business Partners have no operational experience which is a significant gap in their skill set. This is a particular challenge that HR professionals will experience and it will stop their progression.

    Organisations are always going to need an HR function and I predict that a lot more face to face HR interventions on performance, training and organisation structuring will be required to bring the true value of a business approach to HR.

  5. Infact the changes are in offing. HR Departments are becoming leaner and many of the HR functions are being/ or have been outsourced.

    A good guide for the younger generations so that they are able to refocus

  6. Good article. Downsizing HR is limited based on a company’s budget to invest in technology platforms such as self services. At the end of the day its all baout people taking care of people.

  7. I believe what will also happen or rather it has already started is the industry / sector specialization of HR. Till now HR professionals have enjoyed getting opportunity to move across different Industries / sectors, this may not be the thing of the future. More and more companies will not insist on HR specialization withing the same industry / sector.

  8. I trhink we need to define “specialization”. In my mind outsourcing should be limited to transactional work. That frees up HR to concentrate on strategic areas. To me “specialization” means anything that pertains to the specific needs/strategy of the business — the company. That would include staffing at least for senior individual contributor roles, management. It would also include benefit/compensation design. Also training/development, succession planning. In other words, areas that are specifically geared to your specific company needs should stay inhouse.
    There is no way that an outside firm can ever know your company to the extent that you do (or should). And in my personal opinion it would a mistake to go outside for “specialist” work. Let’s face it —- outsourcing buys you “off the shelf” products that may or may not meet your company’s needs.
    My advice is don’t outsource the special work. Being business partners is very important — but so is the design of plans/programs that meet very specific needs of your company. “Best practices” are fine — you should always know what your competitors are doing — but don’t be a lemming and assume that best practices are best for your company. And 90% of outsourcers will give you “best practices”.
    My 2 cents.

  9. Nobody dissapears from the HR scene, so the employment and human resource management is cyclical in nature. Companies will focus on being leaner and specialized but once things pick up, they will have no other choice but to hire generalists.

  10. I’d add a #4: HR becomes the catalyst to improve the environment of the organization and to increase engagement of individuals, teams and leaders.
    Effective HR Depts. of the future must grow into a “catalyst” for increasing positive engagement at all levels. Much of the HR transactional aspects can be outsourced which provides more strategic thinking time to work on the important human capital development tasks.
    Essentially top tier HR Depts. will move up to more sophisticated levels of contribution which will likely require engaging third parties who see the blind spots that develop over time and hold organizations back. Note HR is the “catalyst” which doesn’t mean they have to do it all – they simply need to set expectations of where do we want to go with our company culture and then engage appropriate resources to make the important move forward in the face of constant urgency and noise. These initiatives become true investments into Human Capital which generate significant ROI.

  11. This is an interesting read, and has me questioning the direction of American corporations. I understand that budgets are constrained, and that off-setting HR costs by utilizing all-in-one companies is a fiscal strategy, but where does this leave the “human” in human resources? I want to know, where is the humanity in self-service, or automated service or employee driven benefits research? Additionally, I want to know how this affects the general psyche of the collective workforce….How many of us have felt lost or abandoned by our company because we are unable to have our HR questions answered? How many of us feel barcoded, treated like an item number, or disposable? I’ve lost count on how many times I’ve been trapped in an automated help-desk situation, trying to contact a real human being, to have them answer my mounting HR questions. I know the frustration of not getting clear answers or being transferred multiple times, as if my needs are something to off-load on to someone else’s desk. This is not to say that I am discrediting the services of institutions, such as TriNet. I just want to know why major Fortune 500 companies feel they can just outsource, downsize, minimize the one branch of the company that has the potential to support their labor force.

    On a personal note, I find this article interesting in terms of my own education. I had been considering an MBA program with an HR emphasis. This article actually has me reconsidering my education strategy.

  12. 15 years ago when I started an ASO model HR outsourcing firm the major resistance came from people who said the HR function couldn’t be outsourced at all. Now the question from many clients and potential clients is how much can I outsource.

    I would add one core HR responsibility – vendor management. Someone needs to select and manage all of the outsourced functions.

  13. I agree with Audrey. I just want to know why major Fortune 500 companies feel they can just outsource, downsize, minimize the one branch of the company that has the potential to support their labor force. This is actually a big question to all.

  14. Great blog. I think the your key prediction of HR outsourcing will increase is absolutely right. The company don’t want his time to be waste. With
    the suitable HR management services one can reduce labor costs, increase
    business productivity, save money and time. It also satisfies employees because
    it accurately estimates the time and wages.

    Online HR software in Dubai

  15. I agree with the first part of the first point but not the second. Software will eventually become so intuitive that everything can be managed in-house be it payroll or benefit administration.

    What do you think?

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