2019 will be a challenging year for HR

Analysts generally have a poor track record in forecasting economic outcomes; ask five analysts a question and you’ll likely get at least six answers. However, there does seem to be a growing consensus around a few things that will affect us all in 2019:

• The Russian economy will continue to grow in size and global influence, but that this may falter as we approach 2020;
• The growth in the Chinese economy could slow down and even trigger a new global financial crisis;
• The oft projected growth in the African economy will continue to be inhibited by political and military instability, despite massive investments from China in particular;
• The Indian economy will continue to grow, probably in excess of 7 percent and expectations that it could enter into the top three economies are now viewed as realistic.

So, what challenges does India itself face in 2019?

• Growth in the economy has still not led to enhanced living standards. Substantial population growth is sustaining high levels of poverty, malnutrition, and inequality in general. 
• Dependency on highly polluting power generation is having an adverse environmental impact;
• Risk that rising inflation, which may have to be controlled using interest rates, could have an adverse impact on economic growth;
• Rapid population growth and economic expansion is testing the infrastructure in all its forms;
• Many public and corporate sectors have yet to raise their standards of compliance, making trade and trade regulation difficult, even more so for international trade;
• High levels of unemployment are holding down wages and sustaining inequalities;
• High levels of illiteracy are hindering social mobility;
• Low utilization of contemporary technology, partly due to relatively low levels of capital investment, is hindering productivity improvement.

There are government plans to address these but those will take time to have an impact. In the meantime, population and business growth are likely to continue unabated. Significant trade increases are expected with the USA but these could also be matched with significant loss of top talent to the USA where highly educated business people, especially those in the technology sector, are still welcomed and awarded appropriate work visas. The growth in service industries is also likely to continue and to pull workers from the rural areas into urban centers, further straining the infrastructure. This latter trend will continue to be fuelled by low wage rates, compared to those in competitive countries, and high levels of proficiency in English, the most common business language for international trade.

What are the implications for HR?

A global truth is that, “The caliber of management and leadership is the most significant differentiator of sustainably successful organizations.” In a sustainably successful organization, leadership creates the organization’s vision, brings it alive, and secures the commitment and resources to deliver it. Management optimizes the use of resources to deliver the vision; translates the vision, mission, values and strategy into practical plans, and then gets those implemented – it makes things happen.

Therefore, the most pressing challenge for HR will be to get the right people into management and leadership roles. Whilst high unemployment means that there will be plenty of people applying for jobs, there may be a shortage of those sufficiently educated and skilled in managing people and organizations. 

Some tough decisions may need to be made and HR will face its common challenge — persuading line-management to adopt the longer-term view rather than the simplest short-term solution. Building a cadre of excellent managers and leaders takes time, persistence, and resilience. 

The demand for excellence in management will be exacerbated by the side effects of the country’s challenges — socio-economic pressures and the wide availability of social media will undoubtedly create or fuel increasing employee demands for:

More and better jobs. Current high unemployment rates may be suppressing staff movement. However, that is likely to be temporary. Skilled employees will start to understand their value and become more demanding. Competitors will seek to steal top talent, understanding that this can be cheaper than attempting to develop from within.

Better working conditions. Global emphasis on environmental issues and public sharing of work experiences through social media will lead to employee demands for enhanced working conditions.

Increased corporate responsibility. The dramatic increase in global attention to environmentally damaging factors such as global warming, plastic waste, use of pesticides and herbicides etc. will impact organizations through employee pressure. Global media attention to executive malpractices will also drive demands for improved corporate ethics and governance.

Enhanced remuneration. Population growth and high levels of unemployment have kept wages low. However, this can only be sustained for so long. Eventually, pressures will grow and wages will have to increase unless there is another global financial crisis!

Increased investment in employee development. Development is not only needed for management and leadership but also to enable a transformation in productivity. Employee development will be needed to increase productivity and to achieve an increase in the use of technology as an enabler.

HR will be caught between investors and other stakeholders on one side, all seeking enhanced productivity and profitability, and employees on the other side, seeking enhanced wages, job security, improved working conditions, development, and evidence of corporate governance and environmental responsibility.

HR will need to focus on delivering four critical contributions to the organization it serves:

Increased productivity with prevailing capability. This will come primarily through more effective processes for triggering, sustaining, and enhancing individual, team and organizational performance. It may also come from enhanced use of technology and from improved management/leadership capability.

Increased capability. This will come primarily through more effective processes for triggering, sustaining, and enhancing individual, team and organizational learning and development.

A sustainable talent pipeline. This will come primarily through more effective processes for attracting, selecting, on-boarding, engaging, developing, deploying, retaining, and exiting appropriate talent.

Regulatory and statutory compliance. This will come primarily through more effective communications, training, and compliance monitoring as well as enhanced management capability with the organization.

HR will, therefore, need to focus sharply on three processes:

• Performance management – how the organization optimizes its productivity and thus the return on its investment in people;
• Development management – how the organization ensures that each employee realizes their true potential;
• Talent management – how the organization ensures that it has the talent to meet its longer-term needs, not merely its short-term demands.

And, as I said earlier, all that can only be achieved if HR succeeds in ensuring excellence in management and leadership, selecting and promoting the right people into those roles as “The caliber of management and leadership is the most significant differentiator of sustainably successful organizations.” To achieve that, each HR professional will need courage and a higher degree of personal effectiveness. 2019 will be a challenging but exciting year.