The Impact of HR Job Declines on HR Departments and Sourcing Strategies

Although the global recession is showing signs of easing a bit and we’re seeing a little uptick in unemployment figures in general, the HR industry continues to suffer in terms of job declines. For example, the May 12, 1009 Monster Employment Index U.K. stated that demand for jobs in the HR sector in the U.K. has now fallen by almost 70 percent year on year (although some experts aren’t convinced the situation is quite as bleak as the Index suggests.) And the U.S. Bureau of Labor Statistics stated that administrative and support functions – the area in which HR jobs likely reside – lost 18,400 jobs between April and May 2009, and an average of 95,400 jobs in the three months prior.

What impacts are and will these HR job declines have on HR departments and sourcing strategies?

HR Departments

•  HR departments, and those retained in the department, are being required to do more with less including managing large redundancy programs

•  Career progression is becoming much more challenging within the HR profession as without hiring there’s simply nowhere to go

•  As it indicates an overall tendency to cut costs within HR, other areas in HR, such as technology refresh and new strategic initiatives, will also likely be affected

•  HR professionals are being required to “skill up” for two reasons: 1) to assume roles that previously would have been hired in but budget cuts preclude doing so; and 2) to take on new responsibilities for managing sourcing relationships that result from the reduced hires

•  HR activities must be viewed as contributing to and benefiting the company’s overall business strategy and bottom line, so HR departments must place greater emphasis on HR metrics to prove their worth to the business

Sourcing Strategies

•  Outsourcing is continuously becoming more about cost and less about employee satisfaction, and while cost reduction is critical in today’s economic climate, this unbalanced emphasis is not a sound going forward strategy for when the economy rebounds

•  There will be substantial increases in the introduction of self-service and Web 2.0 technologies through outsourcing service providers, rather than internal license buying and implementation

•  Senior HR executives attempting to do more with less will increasingly look to outsourcers to try and plug some of the skills gaps. For example, learning services focused on the provision of one domain of learning such as IT skills in a short-term relationship with a third-party provider, or a longer term payroll contract to manage the compliance regulations skills gap in a company with significant European operations

•  Providers must continuously prove their value to their clients to ensure they have sufficient buy-in in existing relationships to guard against their services being cut in an effort to reduce expenses

The upshot? Sourcing strategies haven’t changed forever. However, to move the HR industry as a whole back to a healthy level, HR departments must actively work to re-skill to assume new, expanded roles and responsibilities, and prove their intrinsic and strategic value to their parent organizations.

Until next time, happy sourcing!

Helen Neale, Research Director, Human Resources Outsourcing, NelsonHall

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