Challenges for HR – now and in the future

Culture, compensation, succession planning, engagement and productivity are some of the top concerns for 5 HR professionals we talked to across the country
|Canadian HR Reporter|Last Updated: 11/17/2012

Chris McNelly, executive director of human resources,
Travel Alberta

The Calgary-based tourism marketing agency of the government of Alberta has about 100 employees

While Alberta certainly has a stronger economy than much of the rest of Canada, along with other parts of the world, it has its challenges when it comes to human resources, according to Chris McNelly, executive director of human resources at Travel Alberta in Calgary.

Managing a competitive and sustainable compensation structure is one challenge, he says. When business is good and revenues are growing, employers have a tendency to quickly enrich compensation plans by setting salary ranges above the 50 per cent mark, implementing lucrative incentives and at-risk pay, boosting pension contribution rates and improving benefits options, says McNelly.

“However, once any compensation increase is implemented, the proverbial comp-ball starts rolling and it can become very difficult to slow down and virtually impossible to stop without causing dire consequences to the organization,” he says. “Organizations need to take a holistic approach to designing a compensation package that takes into consideration the business strategy, corporate culture, industry benchmarks, market competitiveness and economic outlook.”

This is especially true in Alberta, where inflation is typically higher than the Canadian average and compensation rates increase mainly due to the pressures of the oil and gas industry, which really affects regional costs around health, benefits and pensions, says McNelly.

As a result, 100-employee Travel Alberta engaged Hay Group to conduct a customized compensation survey which culminated in a comprehensive redesign of the compensation package and a philosophy with specific parameters to ensure sustainability.

“We ended up redesigning the entire package to align better not only with our strategy but to remain competitive within the marketplace, because while we don’t necessarily directly compete with the oil and gas industry, we compete for people,” he says.

Engagement is another big challenge for employers, says McNelly, and while many organizations are in the habit of surveying employees, all too often these surveys fail to ask appropriate questions to accurately identify the key drivers of engagement that are relevant to corporate culture.

“That’s the struggle I’ve had more as an HR professional with these out-of-the-box engagement surveys in that they ask questions that really have nothing to do with the culture or the organization or the strategy and, even if they get the answer, they can’t do anything with it anyways,” he says.

After Travel Alberta merged with heritage organizations in 2009, the engagement score was 64 per cent. So HR went back and dissected the 2010 employee survey. It looked at why particular questions were being asked, and pared the questions down from 80 to 45, focusing on key drivers that related to affiliation, teamwork, leadership, empowerment, rewards and recognition, contribution, learning development and communication.

And with the new survey, the engagement score increased to 79 per cent.

“We knew intuitively we had a very high-performing, strong team, loyal team, so the score itself (of 64) didn’t really make much sense,” says McNelly. “Ultimately, it came down to there were questions that didn’t make sense, (that) we couldn’t really do anything about, so we just focused on those questions that are the real levers of those key drivers.”

Demanding workloads are another issue to deal with as organizations face increasing pressure to do more with less.

“Heightened competition, escalating labour costs and a sluggish economy will translate into shrinking margins, causing organizations to drive higher levels of productivity with fewer resources,” says McNelly. “As workloads become more demanding due to higher performance expectations, organizations become more susceptible to absenteeism, work-related stress, errors, decreased productivity and disengagement.”

Workload is an individualized perspective, so one person may struggle with her workload while another doesn’t have a problem with it. To deal with this, Travel Alberta ensures it updates all of its position descriptions annually, along with job evaluations and analysis, he says.

“That way ensures we’re reflecting on the proper classification of the role, and while the work volume in itself is not a key factor in the evaluation, we look at it more from a mental demand perspective. So all of these components roll up into: ‘Is the workload manageable for a competent individual that would be in that role?’” he says. “It really is looking at analysis of that job, breaking it down, what ways can we find efficiency and if there isn’t, we take a step back and re-evaluate the role itself and say, ‘Do we need to maybe redistribute workload to make it more manageable?’”

Work-life balance is not just about only working 40 hours, it’s about understanding there are life pressures that affect a person’s work and work pressures that affect their lives, says McNelly. So HR can look at how to address those pressures and help support each individual.

“It’s an important, burning, evolving issue in HR,” he says. “Your life and your work are inextricably linked and if one starts to crack, the other’s going to crack, so this is where HR can provide that added value and support to help.”

But it’s important to have a ratio of one to 50 or one to 65 when it comes to the ratio of HR to employees, says McNelly. Traditionally it’s been one to 100 or 200, depending on the industry, but a lower ratio means a true strategic HR business partner working with the organization, focused on areas such as learning development, teamwork, performance and engagement, and rewards and recognition.

“To me, that’s the next step in HR’s evolution is showing that HR’s coming from an overhead perspective to a value-added strategic business partner that organizations need to be able to go forward.”

Lewisa Anciano, vice-president, people, Coast Capital Savings Credit Union
The Vancouver-based credit union has 1,900 employees

These days, human resources is about cultural transformation, according to Lewisa Anciano, vice-president of people at Coast Capital Savings Credit Union in Vancouver, which has 1,900 employees and more than 475,000 members in British Columbia.

“Every organization needs to reinvent itself given the economic crisis of 2007-2008, so the strategic questions being asked about are ‘How does HR add value?’ ‘How does HR impact and influence a high-performance culture?’” says Anciano, who has been at the credit union since January 2011.

Compared to the rest of the developing world, Canadians have lower levels of productivity, so it’s about “How do we get more juice and get more productivity out of employees?” she says, and that means using HR leaders in areas such as performance management, recruitment, succession planning and learning to drive that.

“That’s the big challenge moving forward, and the opportunity,” says Anciano. “It’s a great opportunity because it allows HR to be much more strategic and much more impactful to the business, and not just seen as a cost centre but somebody that’s going to look at the revenue side of the business.”

To deal with these challenges, Coast Capital has put a lot of infrastructure around the employee life cycle, with a “managing the employee life cycle” (MEL) portal. Still being built, it will provide tools and templates for managers to better manage employees, to build a high-performance culture, with HR supporting them on the back-end, she says.

Years ago, managers called on the personnel department for everything, but now there are self-serve tools that can help, says Anciano.

“The HR group can move up the food chain to help managers with more strategic things like workplace planning and performance management, that sort of stuff, because all the little tactical things are being dealt with,” she says. “We are making sure that we find efficiencies to try, so that we can take away that unproductive task work for managers so they can focus on people management.”

Also a challenge is the retention of top talent — that 20 per cent of the workforce who excel, says Anciano.

“The banking industry is a commoditized industry, so we always have to develop pipelines of talent, especially for high potentials,” she says. “There’s only so much money, so you have to be very targeted.”

The same is true when it comes to recruitment, as top people can go anywhere, says Anciano. But having been named as one of Canada’s 10 Most Admired Corporate Cultures in 2011 by Waterstone Human Capital, Coast Capital already offers a great culture, great employee brand and great place to work, so it’s able to differentiate, she says.

Heather Claridge, vice-president of human resources, Omicron
The integrated development, design construction firm has 200 employees and is based in Vancouver

Dealing with an uncertain economy can be incredibly challenging, with clients being more reserved about investments and making significant commitments, says Heather Claridge, vice-president of human resources at Omicron in Vancouver.

There’s also been the arrival of different players in the marketplace and new markets opening up, she says.

“What that’s meant for us is that we have to remain very, very flexible and adaptable and very lean; we have to be really lean and quick to move. And we just can’t take our eye off what’s going on externally.”

With only 200 people, the integrated design and construction firm has the ability to be that adaptable, she says.

“But it’s very top of mind because there’s an unpredictability out there that makes it challenging to forecast more than 18 months ahead,” says Claridge.

“That is our new normal and we have to be able to accept that uncertainty and adapt our approach to keep moving forward with our strategy, keep going where our clients are taking us, but recognize that we have to be able to shift and change when the need arises.”

When it comes to particular areas of HR that are a trial right now, staffing tops the list, she says, particularly as Omicron has a billable, project-based environment that requires a balancing of short- and long-term staffing requirements.

“(It’s about) the whole workforce planning issue and having something that will meet our needs going forward, but is flexible enough to adapt to the fluctuating needs of our project-based environment.”

Recruitment is always a challenge for Omicron because it works in different markets that require somewhat different skill sets, says Claridge, adding the company has a highly technical group of people that includes architects, interior designers, and mechanical and structural engineers.

“We have to maintain those skills sets, but we have to be able to move them around and align with different projects.”

And it’s always difficult to find the best, says Claridge, who has been at the company for three-and-a-half years. Unlike other firms in the industry, Omicron brings together its various talent under one roof, for a total building solution, unlike an engineering firm or architectural firm.

“We are competing for talent with specialist firms, so our need is always to be able to maintain — if not be better than — that level of talent. In that case, recruiting will always be a challenge for the good people. But we also offer a different kind of environment that allows people to see a project from end-to-end, which is also very attractive from a career growth and development point of view.”

Looking further down the road, the company is focused on maintaining its culture as it evolves, says Claridge.

“What we do in our industry is not unique. But why and how we do it, in terms of integrated and all under one roof, is unique and it’s a differentiator for us,” she says.

“And that really forms the underpinning of our culture because it requires a lot of collaboration and integration and thinking about the bigger picture and the influence of other disciplines.

“I don’t know if it’s a pure challenge but it’s always top of mind for us because as you grow, as you shift, as you restructure, as you acquire, things like that, that creates the potential of diluting your culture and we’re very committed to maintaining it.”

That focus also means taking a strong inside-out approach to ensure the culture is aligned with the brand.

“Really, your brand comes to life through the culture and way people interact with that brand,” says Claridge.

“It’s very behaviourally based so that really drives the need for ensuring how people show up, how they work, how they’re recognized for not just what they do but how they do it, is so critical to our HR practices. So marketing and HR here at Omicron work very closely.”

While it can be challenging to come up with a business case, it’s easier if Claridge starts by looking at what’s needed to deliver on strategy, she says.

“One of our key issues is succession, which has a strong dependency on leadership development and building leadership bench strength, so when we really look at the business case of succession and the impact of not having certain expertise in the organization by a particular time, the ability to design and implement a leadership development initiative that grows those skills in the context, as much as possible, of on-the-job is another key initiative that we’re working on,” says Claridge.

“It’s not an HR issue, it’s a critical business need.”

As a business leader first and an HR leader second, a person can look at the execution and what’s needed in terms of team members’ skills and capabilities, she says.

“I don’t think it has to be more complex, I think it has to be presented and positioned in the right way.

“Yes, you have to have some tangible metrics — it’s the few but mighty that will help let you know if you’re on track and it’s continued to be monitored.”

Omicron’s cultural metric, for example, has three dimensions: a client satisfaction impact survey, a culture survey and core operational metrics.

“You can’t draw a direct causal impact necessarily because there’s a lot of other variables, particularly around the operational metrics, but you can certainly, once you weave together client perspective, employee perspective and business impact, you start to see the story come together more systemically,” she says.

Lydia Bowie, vice-president of HR, Halifax International Airport Authority
The not-for-share capital organization has 183 employees

In her ninth year at the Halifax International Airport Authority, Lydia Bowie has plenty of challenges on her plate. For one, succession planning is in the forefront because of the age and demographic profile of the organization.

“I’d call us a mature workforce and with that succession planning, the concern — particularly in an industry like an airport authority — is where there is a lot of specialized knowledge that needs to be transferred from one person to another, or one division to another,” says Bowie, who is vice-president of HR at the 183-employee organization.

The airport authority’s workforce is also very diverse, ranging from firefighters to tradespeople and maintenance workers. And at more than 50 years old, the airport has a lot of old files and records that are dependent on individuals having specific knowledge.

“The challenge for us is to make sure that we paper that knowledge, as opposed to decades ago where it was just one person telling another person and away you go. So papering the memory and the knowledge is something that we’re really focused on right now, and it will continue to be an emphasis for us for years to come,” she says.

There are also some unique, one-off positions that cannot be easily filled should the incumbent fall sick, such as a bird and wildlife control officer. So under the succession planning umbrella, a big focus is on on-the-job training, says Bowie.

Years ago, after someone retired, a new person was brought in to replace her the next day.

“Now, depending on the skill, we’re taking a good look at ‘Is it six months? Is it three months? What’s the appropriate time length to bring people in?’ Because costs are always front of mind. But the transfer of knowledge trumps the cost, so that’s always something that we’re struggling with on a day-to-day basis,” she says.

As part of a new five-year strategic plan, training and knowledge transfer has been put front and centre with a commitment of two per cent of gross payroll, says Bowie.

“That is quite a commitment from the organization. And particularly in the volatile industry we’re in right now, where everything we do depends on the number of passengers we get — if the passengers go down, our revenues go down.”

Employee retention is also a challenge, particularly with people heading out West to the booming oil and gas industries. The airport has a need for critical trade skills, says Bowie.

“We need immigration in this country and if we don’t band together and put the pressure on the regulatory authorities, or people who have the ability to make this happen, we’re all going to be challenged, not just the airport here. So that’s something we’re very concerned about.”

To help with retention, HR runs employee opinion surveys every two years and benchmarks against the baseline year. The action plans are built not only into the five-year strategic plan but the annual business plan, says Bowie.

And being 85 per cent unionized, the airport authority is constantly working to build a strong union-management relationship, she says. That can ease the collective bargaining process, as evidenced by the last round which took only nine days.

The airport is also highly regulated and safety and security regulations can change very quickly, as when a security situation develops, says Bowie.

Sometimes it’s simply a matter of changing signs and communicating but other times, being regulated by Transport Canada, it’s a matter of training every employee underneath that system.

“We have to be able to train people and to get the message out very effectively.”

And because the airline industry can be so turbulent, where one incident can drop passenger levels dramatically, the airport authority is looking to diversify.

“We can’t just make more widgets, we’ve got to figure out other things to do. So one of the focuses that we have in order to (last) the turbulent times is ‘How do we create more revenue that is not dependent on airlines?’ And where HR comes into that is not only part of strategy, but finding the right people to help us develop in that area.”

Sooky Lee, vice-president of human resources, ADP
The Toronto-based HR and payroll services company has 1,800 employees

HR’s continuing transition from being a transactional partner to a strategic one is a challenge facing many HR departments, driven alongside the trends around growth and globalization, and having to do a lot more with less, according to Sooky Lee, vice-president of human resources at ADP in Toronto.

“From an HR perspective, you have to keep the lights running and do the day-to-day activities but, as businesses are driving in different directions, (it’s about) trying to figure out how to be at the table to help businesses drive that in a proactive way and, rather than being a recipient, really being more proactive.”

That’s not only more fun but more impactful, she says.

“That’s the part where, if you’re able to influence, it certainly builds the credibility that most HR people are looking for,” says Lee.

“This is one of the most exciting times for HR. There’s a huge window of opportunity right now, with lots of available tools that the HR professional can leverage to drive the shift to really being at the table. And so, it’s a matter of going out and seizing that opportunity. I don’t think that that’s existed in the same way previously, and that will enable us to really shift how we’re viewed and how we’re played in the business going forward.”

As part of trying to help drive innovation and deal with globalization, it’s about managing diverse workforces, remote workforces, having leaders manage employees at different locations, helping develop capabilities around that and shifting work culture, says Lee.

The financial crisis in the United States in the early 2000s really had an impact because suddenly everyone was cutting staff while at the same time trying to drive growth, so there was that dichotomy. And HR faces that both from a business standpoint and as an HR function, she says.

Technology can help, with the whole trend around cloud computing influencing HR systems and data, enabling people to not only look at how their business is performing but becoming more predictive.

“That’s the trend in HR around HR metrics, so you can become much more proactive, you can identify trends ahead of time, and now you’re going to the business with, ‘Here’s what’s coming’ versus the business coming to you with problems.”

HR now has data in new spaces such as talent, skill sets and career pathing, says Lee, along with employee self-service and manager self-service, enabling HR to do a lot more with less.

“That, in turn, creates other expectations, because people are looking to make faster decisioning,” she says. “Employees today are much more savvy because they have access to information directly.”

It’s also a unique time in history where four different generations are in the workplace and they all have different expectations around issues such as managing their careers and loyalty to their companies.

“Different things motivate all of those generations, so how do you motivate and engage everybody when they’re all there simultaneously and how do you look at careers when they’re all there simultaneously? That whole concept of career ladders doesn’t really work anymore,” says Lee.

“You’re hearing a lot of things today about the concept of career lattice — it’s not about just straight up anymore, it’s about getting different experiences that work with what your priorities are, and that can be a career path — horizontal options.”

Companies are also starting to think about the broader package, so it’s not just about cash when it comes to attracting and retaining the different generations. Younger employees, for example, might prefer flexible hours and flexible benefits, she says.

Employers are also being much more stringent in terms of who they bring on board, so that means more thorough background checks and really understanding people’s careers and what motivates them — making sure they’re a good fit for the organization, says Lee.

“Now, it’s this whole shift to ‘OK, what are their capabilities, and is this person going to help me get to a future state that we have and help drive the organization forward?’ So it’s almost not just skill sets for today but for the future.”

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