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Eyeing Future HR Concerns

January 1, 1996
Related Topics: The HR Profession, Featured Article
As a human resources professional, it's your job to live in the future. Although you don't have a crystal ball, you must plan, foresee, premeditate. You must know what's around the bend. You have to look ahead, with a close eye on where your company has been so you aren't surprised when you find yourself at the crossroads of the next millennium-and beyond.

If you're thinking that what's on top of your stack of concerns today will be the same ones 10 years from now, you may be interested in the findings of the 10th annual HR issues survey by the Human Resource Institute (a non-profit research organization) at Eckerd College in St. Petersburg, Florida headed by Jay Jamrog, director of research. This year, Jamrog asked 576 top human resources directors at Fortune 200 firms in the United States to list their top 100 concerns for 1995, and also what they predicted their concerns would be nearly 10 years from now, in 2005. What they said might surprise you. It certainly surprised us.

Although it's interesting to take a peak at what HR professionals say the top issues of 2005 will be, what's more interesting is what's changing in importance between now and then. Think reengineering is a hot topic? It won't be so hot 10 years from now. What about concerns for women? Sorry, it nearly drops off the list of important HR issues in 2005. And if you think the issue of health care will still occupy a prominent spot on your agenda in 10 years, you may be mistaken. And finally, aging of the work force-a somewhat important issue today-will probably skyrocket to prominence in the future.

Why are HR people predicting that today's issues will be so different only 10 years from now? Are their predictions grounded in reality? See what your colleagues and other experts have to say about the changing HR agenda for the year 2005.

Will reengineering and restructuring take a nosedive?
Are companies, and particularly human resources managers, really ready to wave goodbye to reengineering-that ever-popular trend of redesigning work and critical business processes to achieve better business performance?

Although the survey says business-process and business-structure tinkering may be a thing of the past 10 years from now, many HR professionals don't anticipate being ready to give up reengineering and restructuring so fast. The survey says it's the biggest moving issue on the list of concerns-it's tenth on the list today, but drops off the list in 2005.

Is reengineering really going away? Not likely. "It's wishful thinking," says Jamrog, who authored the Eckerd College survey and interviews HR managers throughout the year for more detailed feedback. HR professionals are hoping the structure and process changes will all be over by 2005-mostly because of the tremendous toll downsizing and reorganization have taken on workplaces across the country.

"I think most [HR people] are naively thinking that once they get through this last wave of restructuring, reengineering or downsizing [they'll be done with it]," says Jamrog. "I keep telling them they're in it for at least 10 to 15 years of continuous restructuring, because technology and competition are going to change quickly. There's no model anymore that seems to capture where companies are going-they're going all over the place with reengineering. Reengineering should be a never-ending process, not a one-time deal."

There's a saying that the more things change, the more they remain the same. Many HR people see change as the only constant. "I'm certain we're [always] going to have continuous improvement and have the need to keep up with the rapidly changing technology and marketplace demands," says Jeana Wirtenberg, district manager of HR professionalism for Basking Ridge, New Jersey-based AT&T. AT&T announced in September 1995 that it would be restructuring the organization into three publicly traded, global companies, instead of one conglomerate.

Wirtenberg is responsible for helping design an equitable process to staff the firm's HR contingent-currently more than 6,000 employees-in AT&T's new businesses. Now in the throes of perhaps the biggest restructuring in corporate history, the company's using a brand new tactic for work-force planning. "We're basically designing three new companies from the outside, in-from the marketplace customer end, to the inside staffing needs-based on the skills and competencies required," says Wirtenberg. First, she says, you look at what your customers need, then you design your organizational capacity and systems around it, and populate the company with talent who can deliver what the market needs.

Wirtenberg sees reengineering evolving from its current focus on processes only, to also involving the people decisions and other organizational effectiveness processes. Instead of looking at business processes with flow charts and flip charts with an eye on streamlining what's already there, she foresees businesses starting from ground zero to redesign corporate capacity. "This is the wave of the future," she says.

"That's the direction we see things going. The classical sort of reengineering focused on processes only-I see that declining." Instead, she says, "We have to constantly rethink our strategy, our structure, our organization and our people-and that, absolutely, will be continuous. I wouldn't imagine that's going away in 10 years."

How does HR fit into the puzzle? "HR should be in the driving role of doing the analysis and strategy planning at the business table, alongside the business leaders, to figure out how to build the organizational capacity to maximize the potential of the business in the marketplace," says Wirtenberg. From the start of AT&T's recent restructuring planning, HR was present. "HR has held a pivotal role [in this], and will become even more critical as we move forward into the next century," she says.

HR also must ride along on the continuous-improvement bandwagon into the future. For example, Dallas-based Texas Instruments Inc. reengineered its HR processes three years ago. "What the reengineering process did was tell us our systems were antiquated," says Chuck Nielson, vice president HR. "We had 40 different systems, costing a ton of money. We also were just about maxed out in terms of our systems capacity-it was very centralized." TI's HR reengineering effort was a total redesign of its HR systems so that it now has a distributed, decentralized system, rather than a mainframe system, throughout its global operations. Because the HR department was already structured in a decentralized way, with the personnel functions integrated into its businesses, that part of the personnel office stayed as it was. "The reengineering didn't challenge that. It kind of reinforced the idea that's where [HR] ought to be," says Nielson. But the reengineering won't stop there.

The biggest goal for TI's personnel department now-and into the future-is to integrate the company's business processes with its people processes. It's a huge concern for many HR departments today. "Our No. 1 priority is getting our people strategies to where they're business-based-to where business managers don't talk about a business strategy on one hand and a people strategy on the other hand. What they'll talk about is a business strategy that has people components to it-not separate paths, but integrated paths," says Nielson.

Bob Lutz, director of HR planning and information systems for Texaco Inc. in White Plains, New York, agrees HR will continue reengineering itself into a full business partner. "I think reengineering is still going to occur-although we probably won't call it that. Whatever the new buzzword will be, it will occur under the context of a total alignment of all the areas that add value," says Lutz.

He foresees technology as boosting the effort. "It's pretty obvious the new technology's going to add value and will lower the expense of an already low-valued activity like administrivia. HR's biggest job will be to think and act like business people. In fact, they will be integral members of the business rather than adjuncts to it. "The corporate hierarchy of HR will become smaller and more focused in certain areas-administrivia and government regulations-and on processes that are good for the whole organization," says Lutz. "You've got to think in terms of cycle time, in terms of project management, in terms of the competencies that will keep a company competitive in the market."

Will concerns for women in the workplace be solved in 10 years?
Apparently, HR managers think, for the most part, they will be. That's why the survey charts it falling from twenty-third on the list of priorities for 1995, to fifty-third by 2005. Will the struggles that women face in the workplace-such as the lack of promotions to senior management, lack of opportunities to be mentored, pay disparity and lack of corporate concern for family obligations-really be solved only 10 years from now?

Jamrog reveals the thinking behind those who took the survey: "When they fill out the survey, they may not be thinking very deeply about the future. If they've got a program in place, [that issue] tends to drop down even though they know it's a big issue. They figure by 2005, the program ought to be working." In reality, it may not be. At the very least, it may be helping-but probably won't have the problems for women completely solved. "Again, it may be wishful thinking on their part," says Jamrog.

Upon learning of the survey results, one expert in women's issues gasped in disbelief. "One of the things that's most striking and disheartening about a survey like this is it reveals the gap between the thinking by those responsible for implementing policies, and the real needs of the work force," says Ellen Bravo, executive director for 9to5-the National Association of Working Women in Milwaukee-and author of "The Job/Family Challenge." Bravo takes a dim view of HR professionals who place women's issues toward the bottom of the barrel of HR concerns. "When you see this kind of attitude, you have to ask, is it any wonder [women are] still having such a hard time? [The HR people making the policies] don't even see the problem, much less, put it among their priorities," she says.

Her concern about the survey results is based on strong statistics, solid projections and misguided attitudes. Women still were earning only 71% for every dollar that men earned in 1992, the most recent report by the U.S. Department of Commerce, Bureau of the Census states. And it isn't a problem only for lower-wage earners. According to surveys, even women executives are losing ground. In 1982, they earned approximately 68% of male executives' pay. By 1992, their average pay had fallen to 57% of the men's. And the percentage of women working will increase by the year 2005.

"The issues of how to integrate and promote women in the workplace, and how to make workplaces women-friendly, are urgent."

More families than ever are dependent upon women's incomes to survive today. According to a 1993 U.S. Department of Labor, Bureau of Labor Statistics report, 42% of all families are dual-income earners. And the number is rising. In addition, the number of single working mothers with small children (under the age of six) is rising dramatically. And while women have made inroads into the executive suite over the past several years, we're far from having achieved parity. "The glass ceiling remains as impermeable as ever. Only 5% or fewer of top managers are female," says Bravo.

And although family issues aren't issues of concern just for women, they do pose huge challenges for women who work. "We've seen resistance to changing work-and-family policies insofar as they affect the advancement of women," says Bravo. "And in many companies, the culture or the policies, make it very difficult for people to be both good workers and good parents-or good children of elderly parents."

Bravo is an appointed member of the U.S. Commission on Leave, established by the Family and Medical Leave Act provisions. She says the organization's most recent survey shows that only 43% of women are covered by the law. Fifty-seven percent of U.S. women aren't eligible for a 12-week family leave because they either haven't worked at their current jobs for 12 months or more by the time they need to take the leave, or they don't work 25 hours a week or more. The study also discovered that 64% of women who said they needed to take a leave, couldn't-because they couldn't afford to take it without pay. And, one in nine women who are on leave, support themselves by turning to public assistance because the leave is unpaid.

"We're at a critical time when the issues of how to integrate and promote women in the workplace, and how to make workplaces women-friendly, are urgent questions," says Bravo. "When two-thirds of new entrants into the future work force are going to be women, how could anyone say this is fifty-third on the list?"

It's a good question. Perhaps the answer to solving women's issues depends on how an organization values diversity in its broadest sense. For example, Texas Instrument's Nielson says that the third most important issue for his organization today is diversity, not just for women, but diversity in its many contexts-racial, cultural, religious and so on. TI has had a diversity awareness program since 1987. The awareness effort started with top managers and has since spread throughout the global company's work force of 56,000 people. Now the company has 20 different grass-roots initiative groups from women's groups to groups for Hispanics and African Americans. "The initiatives have institutionalized diversity," says Nielson.

The organization is used to listening to the concerns of all its diverse constituencies, and doesn't plan to stop anytime soon. "We aren't going to be successful if we don't become more creative and more innovative. And we won't be more creative and innovative if everybody is alike. It's absolutely essential to us in the future that we capitalize on our differences. To get that, we've got to have diversity," says Nielson.

Texaco's Lutz agrees. "It's not a perfect world, but I think the companies that survive in the future will value diversity," he says. "I'm absolutely convinced that it's not just the right thing to do; it's a competitive necessity. Those who don't address it are going to suffer."

According to "The Future at Work," a newsletter published by Coates & Jarratt Inc. in Washington, D.C., companies should continually examine three areas to see if they're on the right track with women's issues:

  1. Ask women what they want and what they need. You may have to create a forum, or a survey, that gives women the opportunity to speak frankly. Then listen to what's said, and act on it.
  2. Look carefully at what your most successful women managers do differently from their male counterparts. Do they have a style of management your organization should support and perhaps teach to others?
  3. Explore what your work force's wishes and desires are with respect to integrating work and family. For one example, you could demonstrate your commitment by organizing a company-sponsored computer camp for parents and children-and use it to help communicate the message that management recognizes work life and family life are inextricably connected and interwoven.

Health care will still be a problem in 2005.
For the past several years, health care has topped the list of HR concerns. The Eckerd College survey, however, reveals that HR professionals think it will drop from their third most important concern today, to 18th in 2005.

Why are HR professionals saying the health-care issue is going to tumble in importance? Because organizations have, for the most part, been successful in lowering the percentage of health-care premium increases to single digits or to the low double digits. "They're thinking more in terms of the current [state of health care], rather than looking into the future," says Jamrog.

Experts say there are a lot of issues personnel professionals aren't taking into consideration about what may affect health-care costs in 2005. "There are a combination of things outside the control of the government and corporations that are going to cause health-care costs to go through the roof in the twenty-first century," says Jamrog. "In other words, I think their current control over health-care dollars is just a blip. The costs are going to continue to rise."

A recent survey by Washington, D.C.-based Watson Wyatt Worldwide supports this viewpoint. In October 1995, Watson Wyatt polled approximately 135 alumni of The Wharton School of the University of Pennsylvania's MBA program in health-care management. Those health-care professionals predict three trends for the year 2000 and beyond:

  • The continued growth of medical costs
  • The expansion of managed care (coupled with a decline in service quality and a consumer backlash against restrictions and limits on care)
  • Difficulties associated with the aging of the baby-boom generation.

David D. Friend, a medical doctor and global director of health-care consulting for Watson Wyatt, says he has heard many employers voicing opinions similar to the HR professionals who took the Eckerd College survey. "Most people think managed care has solved the problem," says Friend. "I think they're dead wrong."

Of course, health care needs to be managed to control costs now and in the future. However, Friend says that managed-care companies for the most part have been in control of the decisions about what care they will and won't pay for, instead of the companies who hire them. Employers need to take a more active role in those decisions, because although they may be happy they're saving dollars now, they may be unhappy about paying more later for problems that weren't taken care of sooner.

For example, Friend says many managed-care organizations refuse to pay for emergency-room admissions. If there's a suicidal employee needing care in an emergency room, and the managed-care company is asking, "How suicidal is he or she?" you may have a health-care partner who isn't sharing your health-care goals. Indeed, how suicidal must one be before a health-care provider OKs the care?

"That's how the managed-care companies save costs-they ration care," says Friend. Meanwhile, the employer is paying the premium, and the employee isn't treated correctly. "[Managed-care companies] have done an awful lot of cost shifting and shadow pricing of indemnity care," says Friend. "We really need to be looking at outcomes and what's the best way to get the desired outcomes. It's really a huge paradigm shift-from how to skimp on treatments to encouraging prevention of health problems in the first place."

Another big problem in the future will be the cost of retiree health care, especially as the ranks of the baby-boomer generation grow. And, as the retiree population lives longer, its former employers will be spending more on health care. "Because health care is a pay-as-you-go deal, you're constantly dependent on your active work force to bear the costs," says Friend. "It's like a pension for which you put money aside." As the number of active employees stays the same or shrinks, and the number of retired employees increases, companies will have huge medical costs. "As people age, they get sicker and use more health care than younger people," Friend says. For example, a 55-year-old employee generally uses four times more health care than a 25-year-old employee. "The burden on each active person potentially just may skyrocket," he adds.

Another factor that drives the costs up is that as more new treatments are available for various health problems, employees may not want to settle for yesterday's cure. They'll want the newest whiz-bang techniques on the road to recovery. These cost big bucks. Employers will have to ask what their obligation is to their employees, and set their policies accordingly. "It gets to the social contract between employers and employees," adds Friend. "A lot of companies won't be able to pay for the promises they've made. If that's not an HR issue, I don't know what is."

Aging of the work force: an age-old challenge takes a new turn.
In 1995, the issue of the aging of the work force rates only 18th on the list of HR concerns. By 2005, however, HR professionals say it will be up to fourth on the list.

Aging of the work force refers mostly to the large cadre of aging baby boomers who will be middle-aged or older by the year 2005. Since World War II, the United States has employed a primarily young work force with approximately 50% of workers between the ages of 16 and 34. Today, half our workers are between 35 and 54. By the year 2000, 51% will be in that age group. By 2030, 20% of the work force will be 65 years old.

"In the HR function, we've built up a lot of policies, programs and so forth, for a young work force-not an older one," says Jamrog. Much has been defined in terms of entry-level workers coming into the work force and progressing with their careers; but that strategy no longer fits. "For the next 10 years, we're saddled with a middle-aged work force whose members are supposed to be in their most productive years-the 45 to 54 age range," says Jamrog. "Yet, there are a lot of things preventing the middle-aged work force from reaching high productivity."

For one thing, the 76 million baby boomers now in the work force originally entered the work world thinking they would always rise up the corporate ladder. A whirlwind of downsizing and restructuring, however, has created flatter organizations where advancement opportunities aren't as possible as they once were. "Baby boomers are going to overwhelm middle and top management in the future," says Jamrog. "And they'll be career plateaued or career derailed."

Companies will have to figure out how to keep them productive and satisfied with fewer promotional opportunities. In addition, they'll have to deal with the conflicts created by the Generation Xers who will be squeezed out of opportunities below them. "So there's a lot of stress and a lot of anger out there," says Jamrog. "And you can see it in the loyalty and commitment that's lacking [throughout Corporate America]."

And to top it off, baby boomers are caught between priorities outside of work. Generation S, the sandwich generation, isn't just having to take care of their parents and their children at the same time, they're worried about being able to afford that, and saving for their own retirement. It's more of a financial sandwiching than an emotional one. Problem is, baby boomers aren't very good at saving money.

Will they be able to afford to retire? Will retirement mean simply going from a high-stress job to a lower-stress job? That may be entirely possible in the work world of the future. "When we think about longer lives, traditionally we've thought about a longer period of being in old age-a frail, sick, not active state of being," says Catherine D. Fyock, president of Innovative Management Concepts in Prospect, Kentucky and author of "America's Work Force is Coming of Age: What Every Business Needs to Know to Recruit, Train, Manage and Retain an Aging Work Force" and "UnRetirement: A Career Guide for the Retired, the Soon-to-Be Retired and the Never-Want-to-Be Retired." Fyock says the period we now call middle age will be extended well into our 60s and maybe even into our 70s. "Something we're going to see is a whole transitioning of our thought process about what is old, what it means to be ready to retire and just thinking about work in new ways," she says. People may choose to work longer either for personal satisfaction or out of sheer economic need.

The demographic shift will force a change in the way HR thinks about staffing. Supervisors and recruiters will have to learn how to interview older workers without a youth bias. Companies will need to make training available and understandable to older workers. "What happens is if older adults don't have the training or the retraining needed, they may feel they have to retire because they're not up to speed with technology or whatever the newest skill is," says Fyock. "It becomes a self-fulfilling prophecy. If you withhold training because they're close to retirement, they may have to retire because they don't have the right skills."

Organizations will need to address some of the issues and concerns of older workers to keep them working in a state of high productivity. Honeywell Inc. was compelled to start seriously thinking about the older worker issue back in 1985. "There were a number of perceived issues, be they real or imagined, that our older workers thought needed to be addressed," says Curtis White, vice president corporate diversity for Honeywell, based in Minneapolis. Many older employees were worried about the perceived disproportionate number of older workers represented in downsizing activities. They wanted to know more about productive aging and they were worried about benefits as they grew older.

The Older Workers' League (OWL) was formed by employees and includes members who are 50 years or older. OWL helps Honeywell employees deal with the issues of being a productive older worker. They learn about preretirement planning and how to be productive as they age. The human resources department assists with financial issues, retirement planning and benefits.

It's imperative to help employees think about retirement issues early. For example, the National Library of Australia in Canberra, Australia, employs 500 workers. An analysis of its work force recently showed that 10% of the staff will be eligible to retire within the next five years. "And with the baby boomers moving through, this figure is likely to increase," says Murray Willmott, assistant director, HRM policy. "If you accept that people should start planning for their retirement at least five to 10 years beforehand, then I would say that the aging work force is already a concern since many people should be addressing their futures now."

Beginning early this year, the organization will offer a retirement orientation program for its staff. It will help employees address such issues as: Why plan for retirement? How to live with your spouse/ partner full time. Are you healthy enough to retire? Are you really fit enough to play golf every day? Where should you live? Will your retirement funds be sufficient? Willmott adds: "Employers who believe they have a responsibility to the community will take this on."

Just as it's good to help employees plan for the future, HR professionals might do well to plan for their own. Although you can never know exactly what concerns will grab your attention until they're in your face, it doesn't hurt to look ahead. While you always need to be careful to read the writing on the wall-it also doesn't hurt to read between the lines.

Personnel Journal, January 1996, Vol. 75, No. 1, pp. 28-37.

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