Future of Human Capital Management (HCM)

By Sunita Cherian, SVP – HR, Wipro


Sunita Cherian, SVP – HR, Wipro

Human Capital Management (HCM) has been deeply studied for many decades. Several advances in human resource theory and practice have enhanced our understanding of this subject. The past few years have seen rapid technology changes with emergence of new disruptive business models at rates never seen before. These changes pose important questions for HCM leaders. Past models/frameworks may no longer be effective in the new world. Through this article I have tried to share a perspective on the key trends that I believe would shape HCM in the future.

The past few years have seen unprecedented changes at the workplace. As new technology driven business models take center stage, the nature of work itself is changing. Hyper automation and Artificial Intelligence (AI) have made many jobs redundant and shall continue to do so. Millennials joining the workforce has introduced an additional complexity. Their expectations and ideas of work are quite radical and differ from that of other workforce constituents. Probably for the first time in the history of the modern industrial world we have four to five generations working together. This in itself is an interesting and complex challenge for HCM.

‘People are our greatest assets’, is an oft quoted statement by leaders. However today, HR departments across the board are dealing with manpower rationalization issues, budget cuts etc. Large companies today are grappling with issues on incubating a ‘Start–Up’ culture that encourages agility, decisiveness and speed while Start-Ups themselves aim to grow bigger and larger while retaining their cultural DNA. Today and in future HCM will have to deal with all these seeming paradoxes.

I see these four as the key trends that shall shape Human Capital Management

1. Technology: Disruption is already here. User experience is being redefined by technology and the experience can no longer be neglected when it comes to designing internal systems. For instance if an employee today has access to world class social media applications on her laptop and phone why should she settle for a poorly designed user interface in case of internal company applications. Human centered design along with technology will be key in redefining the HCM landscape.

2. Changing workforce composition: Millennials are here but so are Gen X, baby boomers and the rest. Multiple generations and their specific requirements would redefine how traditional HCM systems are viewed. Millennials place greater emphasis on challenging work apart from growth whereas previous generations place a higher premium on growth. Increasingly there will be a need to craft an employee experience which is customized for the individual. For instance a single process for performance appraisal may not work, multiple workforce constituents may express their preference for different interfaces or even processes. And all this would be made possible with the convergence of technology, human centered design and analytics.

3. Changing organization design: Newer organization designs are emerging as a response to business requirements. For instance Agile project delivery requires a different organization structure than traditional delivery structures. Such design changes have far reaching effects on multiple organization systems such as compensation, career progression, and performance management. Organizations of the future would increasingly work with virtual teams and efficient structures. In earlier times employees were committed to one organization. With the explosion of technology, this is no longer the case. It has made alternate work arrangements possible and has changed employee preferences. Today not only are organizational boundaries blurring but the notion of organization as a physical space is also changing. Organizations and HCM experts would need to think about who now constitutes human capital and how to optimally engage and utilize them. For instance, IT organizations use crowdsourcing for generating solutions. The challenge for IT organizations is how they can continuously engage with this workforce that is not part of the organization. Similarly large organizations that incubate new businesses need to recognize that practices required in a Digital business are quite different from those for a more conventional business. In fact within the same business, dichotomies would coexist driving different sets of practices. HCM of the future would have to balance both.

4. Analytics: Evidence based decision making would drive HCM. Today technology gives us access to tools that can organize and make sense of a large amount of data. HR systems have matured to a stage where it can take advantage of the voluminous people data that is generated. Analytics will impact HCM at two levels.

a. Building a foundation of HR metrics that would drive business decisions by measuring HCM metrics at frequent intervals (eg Human Capital Return on Investment)

b. Using people data to redefine employee experience (eg using social media presence to make hiring decisions)

These are interesting times and probably for the first time, there is such a strong focus on integration of technology for enriching HCM practices. It is my firm belief that Human Capital Management would increasingly focus on creating a rich employee experience. Traditionally HR has been the driving force in HCM practices however as these changes set in, HR and other organizational leaders would have to quickly take advantage of these trends to remain on top of the talent game! 

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