Do HR Business Partners Need to Understand Economics Better?

Tom Haak, Director of the HR Trend Institute, recently said in a video that one of the HR trends for 2021 is saying, “Goodbye HR Business Partner.” In this video, Haak criticizes most HRBP models as being too operational and not getting to the core of the original intention of the HRBP role- talent strategy.

Haak predicts the future of this function will be larger centers of excellence focusing on the operations of HR and fewer HR Business Partners who focus deeply on talent strategy.

If Haak’s prediction is true, Business Partners can say goodbye to all of the administrative work they currently do in addition to any employee relations, compensation, benefits, project management, and compliance work they currently do. Their focus will primarily be on coaching leaders to be better people leaders and predicting HR and people trends to better strategize their business.

So, this begs the question- do HR Business Partners need to brush up on their economics? If we unpack the most impactful events that have affected people strategy over the past 18 months, there is undoubtedly an economic catalyst that kicked it off. Obviously, the COVID pandemic is one economic crisis that impacted everyone’s lives. But beyond the obvious event of COVID, let’s look at a few more.

The Suez Canal accounts for ~12% of global trade movement per year. When a container ship became stuck in the canal creating an impassable obstruction, it halted supply chains around the world and impacted billions of dollars in of global trade. This ended up impacting how goods got to consumers, thus impacting sales, ultimately impacting workforce strategies for some companies.

In 2010, the Affordable Care Act was signed into law which revamped how most companies in the US dealt with medical benefits. This new policy resulted in organizations with a heavy part-time and full-time mix of employees to revamp how they used talent.

During the 2008 Recession, millions of jobs were lost and the US economy entered some of its most troubling economic times since the Great Depression. This catastrophe fundamentally changed how people sought out jobs.

A New Era
Klaus Schwab, founder of the World Economic Forum, speaks of a Fourth Industrial Revolution that we are entering, where digital, physical, and biological means merge to fuel technology and growth. This is being driven by advancements in AI and the use of digital technology being infused into a variety of different platforms for end users.

As the world enters this new era, it forces certain competencies and skills to reign above other, older, more conventional behaviors. This shift in competency importance means that hiring leaders need to shift their focus in how they assess and manage performance. What were once important qualities to have no longer reign supreme.

All of the above economic events over the past 13 years have had a varying degree of impact on people strategy. If Haak’s prediction is accurate and the role of the HRBP is being rebranded, then HR Business Partners and strategists need to tap into the economic climate, not only to understand current events, but to help leaders understand how this has downstream effects on their teams and their business. The events listed above are only a few examples of how HR Business Partners have needed to pivot and support organizations in a different way.

Even in today’s outdated and criticized Business Partner model, HR sees the impact of these economic events. The need to hire causes increased recruiting and interviewing. Downturn in the economy means more layoffs. Recruiting, interviewing, and offboarding are operational tasks; things that can be done strategically but by themselves don’t make up a talent strategy.

No longer can HR just be “the people people.” There is a necessary evolution that needs to take place with how HR interacts with the business. The primary face of HR to business leaders (HRBPs) can no longer be bogged down with administrative tasks like opening requisitions, data entry and granting system access. While some companies have already actualized this movement into the future, there are more companies that unfortunately still operate HR under a decades-old methodology.

When Companies Get It
There are a few key examples of companies who have understood economic trends and reacted appropriately. Let’s take the Walt Disney Company. In 2018, they announced Disney Aspire, a very generous tuition program that paid for college tuition (and books) for its cast members. While an amazing benefit, it wasn’t just implemented so they could expand their perks offering. It was done as a result of what Disney saw happening in the external market.

First, they identified that the skills of the future were not the skills of today and they needed their workforce to upskill themselves in order to evolve with the changing climate. The second reason came from Disney forecasting the talent market (which is indicative of what we are seeing today) and understanding that a shortage of talent was looming. The introduction of Disney Aspire gave team members with no college degree a viable path to grow their careers, thus making them an attractive employer.

A second example of economics influencing people strategy happened just this year. In 2021, Walmart announced that they would provide over 700,000 of their store employees with cell phones- for both personal and professional use. This massive investment came as a result of Walmart recognizing the change in how their employees interact with communication from the company, a need in their current employee base, as well as a need to provide employees with the tools necessary to do the job while on the clock.

The Walmart and Disney examples may be small examples of how economics plays a role in people strategy, but it’s the start of a necessary trend that HR will need to undergo should the HRBP role want to stay relevant.

To be clear, the suggestion isn’t for: (1) HRBPs to be the next forefront of economic strategists nor is it for (2) HR to lose their emotional intelligence and people skills. However, business partners do need to develop some skills to identify, plan for, and react to economic trends in a more strategic fashion.

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