Although HR has been involved with change management for the past several years, its role is now really taking shape. We take a look at what is happening in companies today.

HR needs to take a broader perspective than in the past

Historically, change management has centred on activity related to mergers and acquisitions, says David Kompare, a senior consultant with Hewitt Associates’ Corporate Restructuring and Change Group. More recently however, change management has also come to include spin-offs or divestitures, as well as global sourcing initiatives. In addition, change management can be the result of centralisation, business relocation, and outsourcing, he explains.

Regardless of the catalyst of change, HR is likely to be affected. "Change events have a fairly broad impact from an HR standpoint," Kompare says.

Opportunities for involvement

HR is involved with benefits, compensation, employment contracts, retention, and employee engagement, Kompare tells Expatica.

But because any kind of restructuring can have a significant impact on the employee population, HR is also involved in other areas, he says.

With regard to loss of jobs, for example, HR assumes a number of different roles, including but not limited to that of administrator and communicator. If a company is setting up operations in a new country where it has never done business before, there are likewise responsibilities for HR. Similarly, if functions are to be outsourced, whether HR functions or those of other departments, HR will be involved in some capacity.

Then versus now

Many of these responsibilities are new for HR.

As recently as four or five years ago, HR tended to be an administrator or an implementer of change, Kompare explains. Then, it was assumed that HR would be involved in benefits and similar areas related to staffing. This was largely HR's role.

"As the HR function has evolved over time, it has become strategic," says Kompare. He explains that now, rather than focusing on head count reduction with a directive to HR to implement it, a company takes a more holistic approach and often has HR help drive, if not entirely drive, the process.

With this in mind, HR looks at how decisions not only impact employees who are out of a job, but also employees who remain with the organisation.

Changing business climate

HR approaches change management more broadly, in part because more is going on in organisations today.

"Historically, I've had clients who were very focused on growing. Change meant growth through acquisition," says Kompare.

He points out that today change also means thinking about divesture when parts of the business are no longer core. Outsourcing, while different from either acquisition or divesture, raises many of the same issues for employees, particularly with regard to benefits and compensation.

 

"Change is definitely more comprehensive than in the past," Kompare says.

What is required

As a result, HR also has to change.

"HR needs to take a somewhat broader perspective than they did in the past," Kompare says.

In the past, the focus was on logistical aspects, he explains, citing such responsibilities as notice to employees and determination of severance.

Now, HR has to look at the impact on the broader organisation and how the organisation needs to respond.

According to Kompare, one of the key questions HR, and the organisation, should ask is, "Are we setting the context for employees as to what are the implications of this change?"

To illustrate the importance of addressing this issue, Kompare tells Expatica of a Hewitt client’s dilemma: Employees brought in through acquisition were not as engaged as the organisation’s other employees.

Kompare explains: "They asked, what can we do to improve this? Our response was, I think HR has to take the lead in approaching the change. You can't rely on the real estate department or the finance function."

Strategic leader

When organisations question who is going to coordinate the broad, strategic thinking, the answer, it seems, is HR.

What's more, it doesn't stop there. HR must take a leadership role with regard to implementation aspects as well. "It's up to HR to get the other relevant parties to work off the same playbook," Kompare explains.

In addition to mapping strategies, this requires HR to communicate well with other members of the leadership team.

Today's climate

HR is more frequently assuming a strategic role in change management. This is evidenced by where HR reports, Kompare tells Expatica.

Another indicator is the greater presence of HR outsourcing, he says. Most HR functions that are outsourced are administrative. The retained HR function is strategic. "That's one sign," Kompare says.

For an example of an organisation where HR is a strategic partner, Kompare points to GE. "They are recognised for doing acquisitions well," he says.

Yet, even though HR can be highly successful as a strategic partner managing change, the role is not an easy one.

"I think managing change possesses unique challenges," Kompare says. "Managing change is coordinating resources and getting everyone working in the same direction."

In today's global operating environment, a greater degree of coordination is required. Kompare cites how five or 10 years ago acquisitions were within one country. Now organisations are integrating operations in different countries where there is overlap, he says.

Managing change

At Panasonic, the emphasis isn't on acquisitions. Instead, like a lot of manufacturers, the electronics giant is dealing with an increasingly competitive marketplace. In some instances, this has meant shifting production from Western Europe to Easter Europe or China, primarily because of labour costs, says Danny Kalman, HR director for Panasonic Europe.

Technology too, has dictated change with regard to manufacturing. Kalman gives the example of how the basic colour television set has been replaced by plasma and LCD units.

Change is at the forefront of Panasonic. So much so that at the company's recent conference of HR professionals one of the main themes was the challenges of change and how HR should respond.

Traditionally HR has been reactive, picking up things from a welfare point of view and from an individual needs’ perspective, Kalman explains. The biggest change with regard to HR's role is that it must now be at the centre of the business interests. "HR has to be a resource for management," Kalman says.

He tells Expatica this means making sure everyone in the company is fully informed. Because people tend to resist change, it also involves approaching communication with a level of understanding. It then involves making sure people in the company are retrained or repositioned. The goal is to get people to embrace change, rather than be fearful of it, Kalman says.

"This kind of role for HR is critical," he tells Expatica.

Communication is key

Kalman points out that communication is essential to the process.

And he says that communication isn't a one-shot issue. "It's more a question to make sure it’s a continuous communications strategy," Kalman says.

This means HR must explain why the changes are necessary. In order to do this, it's helpful to provide an overview of the marketplace, information about competition, and how technology is a factor. It's about putting a strategy forward, Kalman says.

It also requires explaining the various department roles, people's role, how technology will be impacted, and how locations might be affected. The goal is to get employees to understand the implications and the impact, and to help them get over their fears and concerns, Kalman says.

But HR shouldn’t be taking on this responsibility alone. It's important to recognise the role of line managers, says Kalman, and advise and then support them with regard to a communications strategy.

By the same token, HR should advise top management as to how to handle communications related to change. HR plays a key role in providing tools and processes, Kalman says.

HR’s other responsibility

But HR shouldn't only be focusing on the organisation it serves. It should also look at its own growth and change.

"HR must continue developing themselves," says Kalman, who has 20 years experience in HR. This means learning about new legislation, new technology, new strategies, and developing an awareness of both internal and external activities.

In addition, he recommends that HR benchmark itself against other organisations' best practices. Kalman also advocates attending conferences and joining professional organisations. "It's so important not to be insular," he says.

Although Kalman acknowledges that HR is often pressed for time, he says involvement with others is essential to acquiring the information and skills necessary to manage change. It helps HR better serve the organisation, he says.

December 2005

Paula Santonocito is a freelance writer specialising in workforce management issues. She is the author of more than 500 articles on a wide range of topics.

Subject: Change management, global HR management