Keywords

Human Resources Management

This section provides a brief overview of human resources management (HRM) to illustrate the history of HRM and its development. Following this, HRM is described as a support function, including how it can support an organization during various stages of development. Despite all efforts to offer such support, HRM still has a credibility issue in many organizations; this will also be discussed in this section. Finally, the professionalization of HRM is described as one possible way to counter credibility issues.

Considering the history of HRM, it is a young discipline, even if, as some authors argue, the evolution of the discipline can be traced back several millennia (Tubey et al. 2015; Rotich 2015). Savaneviciene and Stankeviciute (2013, p. 234) do not look back that far into the past; rather, they state that the concept of HRM originated between 1910 and 1920. Despite differing perspectives on HRM, the overall concept of HRM does not seem to have changed that much since 1942, when it was described by the UK Institute of Personnel Management (IPM 1988, p. 7), one of the leading professional bodies in the field. In the early twentieth century, the wellbeing of workers as individuals had been the main concern of the IPM (earlier the Central Association of Welfare Workers, between 1917 and 1919, the Welfare Workers’ Institute between 1919 and 1924, the Institute of Industrial Welfare Workers between 1924 and 1931, followed by the Institute of Labour Management between 1931 and 1946, before the IPM).

Despite little overall change, it seems as if the employees’ wellbeing is nowadays increasingly the focus of unions, while HRM deals with all other topics. It is trying to become a strategic partner but is often tied to more administrative tasks.

In addition to the various meanings and focuses of various researchers (Armstrong 2006; Johanson 2009; Collings and Wood 2009; Paauwe and Boon 2009; Klerck 2009, as cited in Rotich 2015, p. 58), as well as the definition of the IPM, HRM activities can be placed in two general areas:

  1. 1.

    People as a factor in production and costs, and how to manage the people within the organization to maximize their value and meet organizational goals. Various topics, among them training and development, are mentioned, but business value is the main concern.

  2. 2.

    HRM that is influenced by the philosophy of how to treat people whose position in the organization is weaker than that of the employer.

The perspective and the scope of HRM varies, depending on the organization, the geographic location, and the model that is applied. Providers of private HRM training might have different offerings, based on the model that is used to train participants. Contents might also be influenced by the geographic location of the training provider.

Storey (1987) differentiates between “hard” and “soft” approaches to HRM. This differentiation may be characterized as a paternalistic approach versus the understanding that people are capable of caring for themselves. HRM, like organizations (Radel 2017), seems to be influenced by the zeitgeist, or collective beliefs of how to treat human beings and the distribution of power. Overall, there has been a shift from a short-term focus and directive power relationship (i.e., the worker is a commodity (Guest 1999, p. 6)) toward a long-term cooperative perspective with a shift in power toward the skilled employee. However, as stated by Legge, “[…] [I]n reality, even on the surface, most HRM is ‘hard’” (as cited in Guest 1999, p. 6). This is a fact that the department itself seems to struggle with at times, which can lead to a lack of credibility and acceptance by those departments that are “hard” themselves (e.g., production, finance, sales, marketing).

HRM as a Supportive Department

Looking at the organizational life cycle and the stages of organizational development (Draft 2015, p. 352), it is the task of HRM to support the organization throughout all the stages:

  1. 1.

    Entrepreneurial stage

  2. 2.

    Collectivity stage

  3. 3.

    Formalization stage

  4. 4.

    Elaboration stage

Depending on the stage the organization is in, different tasks become predominant for HRM. In the first phase (entrepreneurial stage) , employee creativity and the definition of the organization’s vision is important. At that stage, the organization is usually quite small and basic HR functions like payroll, contracts, drafting an employee handbook, and recruiting are carried out. At some point during this stage, a crisis might emerge when the organization grows and a greater need for leadership arises. At that point, it can be important for HRM to discuss the role of leadership and support the transition from technical experts to management-oriented functions. During the collectivity stage, HRM can offer support in all matters related to providing clear directions for management and employees, by establishing core standards, by splitting teams, by assigning functions, and by developing a more sophisticated organizational structure. At some point during this stage, the need for delegation and control arises and formalization becomes increasingly important. HR usually supports the organization with the implementation of systems such as time-keeping, performance reviews, eRecruiting, and structured apprenticeship programs. Processes become increasingly standardized, and the HR department grows in number. This formalization can lead to another crisis that HR must address: “too much red tape” (Draft 2015, p. 352). The HR department might discuss whether to reduce the levels of hierarchy again or look for ways to become more flexible and avoid being paralyzed by bureaucracy. As soon as this has been solved, the organization can be described as “elaborated ” and the (high) standard and efficiency are maintained. This stage comes with the risk that innovation and revitalization may be, more or less urgently, required at some point. During this phase, according to Draft (2015), the direction will be set for (a) streamlining and small-company thinking, making the organization innovative, flexible, and adaptable to change; (b) continuing to mature and maintaining the standard; or (c) declining, if it proves incapable of mastering the crisis. At this stage, HRM could offer support with the definition of the corporate strategy. Unfortunately, HRM often remains in the collectivity or formalization phase, while the rest of the organization develops.

One aspect of supporting the organization is human resources development (HRD), which will be discussed in depth below. HRD, as an organized learning experience (Nadler and Nadler 2011, p. 1), can be regarded as a key factor in facilitating the transformation of an organization into a learning organization (Tseng and McLean 2008) and might be a possible tool for decreasing some of the credibility issues that are briefly discussed next. However, the transformation into a learning organization (LO) also poses new challenges for HRM, and especially HRD, as the concept of a LO becomes increasingly relevant for a number of organizations (Tjepkema et al. 2002b, p. 1).

Credibility Issues

Ritzer and Trice (1969) (as cited in Legge 2005, p. 49) describe the perspective of American managers on HR. They see HRM as reactive, risk-avoiding, noninfluential, defending the status quo, and operating in a vacuum.

The lack of credibility and acceptance, as it is sometimes perceived (Ulrich 1998; Charan 2014; Capelli 2015; Naradran 2016), might be rooted in several aspects, when an HRM department is compared with other departments in an organization. Using the term other subsumes departments besides HRM, as they are described in the value chain framework by Porter (1989), without limiting the term other to the departments he mentioned (e.g., purchasing, production, finance, sales, marketing).

This perception has hardly changed since 1969: “[HR] is often ineffective, incompetent, and costly; in a phrase, it is value sapping” (Ulrich 1998). It seems to come down to the fact that HRM tries to change the behavior of people within the organization, or the organization itself, acting as a change agent; this sometimes leads to or increases defensive behavior (Menzies 1960; Krantz and Gilmore 1990; Bain 1998). Finally, HRM does not – as the name might suggest – manage personnel. It often only provides the structure and frameworks for improving workforce management by others and its influence ends at the doors of its own department. Whenever it creates a concept that is not adapted by the user (management and employees), it is difficult to permeate the whole organization.

It is difficult to define HRM, its tasks, and its role so that the profession becomes accepted as such. One way of supporting this goal is to standardize requirements and certifications. These are frequently offered by private training providers, some of whom are acknowledged by national associations that can define such standards.

One of the first requirements for certification or proof of knowledge in the field of HRM is found in the records of the Chartered Institute of Personnel and Development (CIPD). Here, it is shown that a comprehensive constitution was approved in 1919 and “[…] it was agreed that members ‘must hold a diploma or certificate of training courses approved by the Association’” (IPM 1988, p. 5), even if an escape clause had been added to this agreement, at that time. Decades later, one of the first frameworks for HRM, if not the first, was created in 1981 and published as the Harvard model; the model was inspired, in part, by a potential market “[…] to develop a course at Harvard Business School” (Noon 1992, p. 175).

Since then, professionalization has become increasingly important, so that today, practitioners have an unspoken agreement as to what can be considered HRM; the term, however, still is flexible. HRD is one relevant aspect that can be considered to be an important part of HRM; it is discussed below.

Professionalization in the Field

Despite the efforts to introduce HRM-specific frameworks and courses nearly 40 years ago, HRM is still sometimes not recognized as a profession. According to Hanlon, HR seems to be more a “commercialized profession” (as cited in Gilmore and Williams 2007, p. 409), contrary to legalized professions that are distinguished by licensure. Even the commercialization and certifications are fragmented and scattered over various associations and training providers; in addition, the entry requirements are manifold. Some associations, e.g., the Bundesverband der Personalmanager (BPM, German National Association of Personnel Management), do not even provide a framework, body of knowledge, or certification. The only criterion to become a member is that a person must be employed by a company, a corporation, an institution, a diplomatic representation, or an association as a personnel manager (BPM 2018). Others, such as the Society for Human Resource Management (SHRM), the Association for Talent Development (ATD), and CIPD offer certifications based on a body of competence and knowledge. Overall, training of HR professionals is a popular offering: CIPD runs more than 70 short courses per year. The ATD offered more than 495 programs for HR professionals alone, between March and November 2018.

Despite the criticism of the profession so far, the Cranfield Network (CRANET) study indicates that HRM has gained a reputation in some countries. In 89% of Swedish companies, a member of the HR Department is also a member of the executive board and 81% of the companies have a written HRM strategy. France is in second place: in 88% of companies, a member of HR is a member of the executive board and 66% of the companies have a written HRM strategy. Spain is next, with 85% executive board members and 80% strategy. In Austria, only 50% of companies see the necessity of appointing an HRM executive to the board; in Germany, it is only 49% (Wehner et al. 2017, p. 15).

The HR Professional’s Profile and the Potential for Private Training Providers

The perceived lack of credibility and the notion of a commercialized profession raises the question of who works in HRM; however, data about the professional background of HR professionals is scarce. A bachelor’s degree is the common entry requirement, but formal qualification can be substituted by experience. In addition, certifications are mentioned as an employer requirement.

In the USA, HRM is recognized as a managerial profession and is listed in the Occupational Classification System Manual (OCSM) of the US Bureau of Labor Statistics (2017) (MOG B Executive, Administrative, and Managerial Occupations: numbers B008 – “Personnel and Labor Relations Managers,” B027 “Personnel, Training, and Labor Relations Specialist,” D328 “Personnel Clerks”) or the International Standard Classification of Occupations (ISCO 08 Code 1212 “Human Resource Managers”).

The Office for National Statistics in the UK (SOC 2010, p. 33) states that “[t]here are no pre-set entry standards, although entry [for Human Resources Managers and Directors; SOC 1135] is most common with a degree or equivalent qualification.” Something similar is stated for Human Resources and Industrial Relations Officers (SOC 3562, ibid., p. 133): “There are no formal academic requirements although most entrants possess a degree or equivalent qualification and/or relevant experience. Many employers expect staff to gain membership of the Chartered Institute of Personnel Development through study for professional qualifications.”

In Australia and New Zealand, “[m]ost occupations in this unit group [2231 HUMAN RESOURCE PROFESSIONALS] have a level of skill commensurate with a bachelor’s degree or higher qualification. At least 5 years of relevant experience may substitute for the formal qualification.” (ANZSCO 2013).

An overview about the requirements to work in HRM, from the US perspective, are shown in Table 1 below.

Table 1 Required Education Level to fill the given position. Data based on The Occupational Information Network (O*NET)
Full size table

However, the percentages shown above should be interpreted with caution. The recommendations of what to study or whom to hire are based on a very small absolute number of respondents (e.g., 41 incumbent respondents for Human Resources Specialist). Besides incumbents, occupational experts were asked about the requirements. Absolute numbers of respondents were limited here as well (22 respondents for Human Resources Manager).

The inconsistent or broad entry requirements can be seen as negative, due to a lack of focus or orientation. But they can also be positive for the diversity of the profession and as a potential market for private training providers. At the same time, it is necessary to structure the development of skills, in both the HR department and in the organization as a whole.

Human Resources Development

This section provides a brief overview of human resources development (HRD) in an organization, which constitutes a large market for training providers. Vocational education and training (VET) is described as one aspect of HRD, while HRD is considered a conveyor and broker for educational activities for the employees. The effect of a structured and well-functioning HRD, involving stakeholders, on organizational learning and toward a learning organization, will be described. After the introduction, the impact of training efforts as one aspect of HRD and its evaluation will be discussed. One of the main concerns of organizations, besides the return on investment, will be discussed afterwards: the retention of qualified staff. During the last part of this section, problems of automation will be described because they might have a significant effect on internal and external training and developmental needs.

Among the many topics and definitions that are identified in relation to HRM (e.g., Armstrong 2006; Johanson 2009; Collings and Wood 2009; Paauwe and Boon 2009; Klerck 2009, as cited in Rotich 2015, p. 58; IPM 1988, p. 4; Storey 1987; Legge 1995, as cited in Guest 1999, p. 6; Legge 2005, p. 43), the development of the existing personnel in the organization is a relevant, ongoing, yet difficult topic for both organizations and HRD professionals (Sambrook and Stewart 2002).

It is relevant because it can meet employee needs by training them in a way that maintains their employability. At the same time, HRD is highly relevant for the organization, since well-trained employees are beneficial (Bagshaw 1996) and HRD might be attractive for potential candidates, especially those of Generation Y (Gessler and Radel 2015). But it is not only Generation Y that is interested in continuous development. Coates and Edwards (2011, p. 83) note that a substantial number of graduates from the USA, Canada, Europe, and the UK re-enter formal education after finishing their bachelor’s degree. In the UK, it is 57% of graduates, during the first three or 4 years, while in the USA, 40% of “(…) graduates had specifically enrolled in another university-level qualification within 10 years, according to Bradburn et al. (2006)” (2010, p. 83).

HRD is an ongoing topic, because it takes time to learn a new skill or adapt to a new task. Organizations spend significant amounts of money for their annual HRD budget. In 2016 the total training expenditures were 70.65 billion USD (Training 2016, p. 29), with a lot of variation between the average budget for large companies (14.3 million USD), midsize companies (1.4 million USD), and small companies (376,251 USD) (Training 2016, p. 32). Even if the impact of time (Ericsson and Kintsch 1995) and deliberate practice is not as important, as one might assume (McNamara et al. 2014), HRD is time- and cost-intensive. HRD can be a day-long workshop or a degree that is achieved after several years of studying. It can take years to develop an individual, as well as to develop an entire organization toward a learning organization. However, without the ambition to change and develop, neither organizations nor individuals will master the stages or organizational development or maintain their employability. Whenever one side has no ambition, it might make sense to discuss possibilities of separation. Given this fact, all sides are ambitious to develop. Investments must be made, of either money or time (usually both). It is only when those investments are made over time that there is a chance to build capabilities, which might lead to innovationor even invention within the organization. As a last step, assuming that the investments lead to capability building and innovation, the organization might gain value or a return on the investment, as well as the employee. Whenever there is an issue at a preceding step, success is at stake. “[…] [HRD], which is defined as organized learning experiences, provided by employers within a specified period of time to improve performance and/or promote personal growth” (Nadler and Nadler 2011, p. 1) can be or can become a key factor in developing a learning organization (Tseng and McLean 2008), when employees are regarded as internal stakeholders in the HRD process.

Involvement of Internal Stakeholders in the HRD Process

Besides HRM, where HRD activity can be nested (Nadler and Nadler 2011, p. 1), other stakeholders in the organization can play an important role in facilitating the development process. Employees play an important role in learning, not only for themselves, but the “[…] ability to learn is [also] embodied in its employees” (Tjepkema et al. 2002b, p. 9). In particular, graduates or inexperienced employees as well as those in more senior positions can identify specific development needs while working on a team. Nadler and Nadler, who are considered to be very influential and somewhat polemic in the field of HRD, develop the above-mentioned activities from the perspective of adult education (Watkins 1991, p. 248):

  1. 1.

    Training

  2. 2.

    Educational activities

  3. 3.

    Development

Training aims to improve the current performance of employees. It can be supported by direct managers, who provide ongoing feedback about the individual performance and the fit to the current position. Direct managers and employees together can also serve as a primary source to identify gaps in performance and person-position fit, which can result in specific HRD actions that are coordinated with HRM.

Educational activities that have a long-term focus are also subject to the identification between employee and more senior manager. Both might discover the potential to develop the employee into a more senior role in the future. Based on these development possibilities, from an employee’s perspective, HRD activities can be carried out to prepare the employee for a future position. From an organizational perspective, the identification of future development needs is closely linked to the strategy of the organization, which can create a need for skills that are not yet available in the organization. The HR and HRD strategies are influenced by the corporate strategy, and senior managers can identify potential candidates for specific development.

Broadly speaking, educational activities, and therefore HRD, include vocational education and training (VET) (Mulder 2012; Garavan et al. 2000, p. 72; Holton and Trott 1996; Kuchinke 2002); at the very least, VET and HRD are similar concepts (Tomé and Goyal 2015, p. 588). As Mulder (2012) describes, boundaries between initial VET, continuing vocational education and training, which is part of lifelong learning, and HRD in an organization are becoming blurred or even fading completely.

Alagaraja et al. (2014) suggest that the link between HRD and technical vocational and educational training should be increased, even stating that there is an increasing overlap between workforce development, social development, and economic development strategies, broadening the perspective from viewing an organization toward national HRD (Alagaraja et al., p. 270).

While the permeability between VET and higher education, outside of organizations, might still be a problematic issue (Spöttl 2013), HRM in an organization might benefit from the inclusive view suggested by Mulder (2012). Unfortunately, VET systems seem to be more structured than HRD and their development in the past (e.g., Gessler and Howe 2013) is far more deeply rooted in society than HRD. Due to this, skill and workforce development (see Warhurst et al. 2017) are becoming increasingly important.

Development, according to Nadler and Nadler, of a non-job-related activity (2011, p. 1) might be an important task for the individual that develops over the period of his or her professional life. Employees might have an interest in ensuring person-role fit as well as ensuring employability. From an organizational perspective, mentoring can be an HRD activity that is carried out between recent graduates or young professionals and senior managers. However, vocational mentoring is only one aspect and probably more related to training, as described above. The other aspect is psychosocial mentoring (personal development). Mullen (1998) investigates the combination of both aspects; her findings suggest that more senior employees should initiate the developmental relationship and are more successful in developing others when they recognize their own value for the organization. The relationship between junior and senior employees is also influenced by the time spent with each other and when the more experienced employee allows the more junior one to influence himself as well (p. 327 f.)

The last aspect, mutual development, might lead to a learning organization in the broadest sense. Providing different definitions for the term, Hee Kim and Callahan (2013) also differentiate between the learning organization and organizational learning (p. 185) and consider “[…] organizational learning [.] a prerequisite to the learning organization (Sun and Scott 2003) because it fosters the collective learning process at the individual, team, and organizational levels to evolve into a learning organization (Marsick and Watkins 2003).” Both authors state that leadership plays an important role in developing a learning organization. At the same time, leadership development becomes equally significant (Hee Kim and Callahan 2013, p. 196).

Finally, the capacity of the organization’s employees impacts the ability of HRD to build a learning organization. Questions regarding these capacities are raised by Tjepkema et al. (2002b, p. 11):

  1. 1.

    Are the employees capable to create or acquire new knowledge that is relevant for the organization?

  2. 2.

    Does successful dissemination of useful knowledge to others take place?

  3. 3.

    Can this new knowledge be used to improve work practices, products, or services, leading to a benefit for the organization?

  4. 4.

    As a fourth addition to the employees capacity, Schier (2016, p. 339) raises the question whether the employees are capable and willing to take personal responsibility for the learning process.

HRD as a Conveyor of Organizational Development

While the previous chapter described various possibilities for stakeholder involvement and the impact of stakeholders on HRD activities, the next section focuses on HRD as a conveyor of organizational development, trying to design HRD activities at various levels of the organization. As such a conveyor, HRD serves as a broker for internal and external training, as well as preparing and maintaining the basis for private training markets with various demands for programs. Compared to private training providers in the EU, organizations as employers themselves provided 33.9% of nonformal education and training in 2016 (Eurostat 2018a), while nonformal education and training institutions accounted for 17.7% in the same year (Eurostat 2018a) – the same percentage as in 2011. Compared to companies, this number seems to be small; however, when other training providers are added, the overall number of private training providers is 40% and constantly rising, since 2007 (Table 2).

Table 2 Training providers for nonformal education and training in the EU, except employers (based on Eurostat 2018a)
Full size table

Another indicator for the potential of HRD activities, continuous vocational education and training (CVET), and private training markets is the participation rate of adults who receive formal or nonformal education and training. An overview of participation in career-related adult education in the USA is shown in Table 3.

Table 3 Participation of employed persons, 17 years and older, in career-related adult education during the previous 12 months, by selected characteristics of participants 2005. Adapted from the National Center for Education Statistics (NCES 2005, Table 507.30)
Full size table

Other than in the USA as a whole, a large divide between countries in the EU existed in 2017: while adults (aged 25–64) in Switzerland (31.2%), Sweden (30.4%), Finland (27.4%), and Denmark (26.8%) received a comparably high amount of education and training within the 4 weeks preceding the survey, the numbers in Slovakia (3.4%), Bulgaria (2.3%), Croatia (2.3%), and Romania (1.1%) were significantly lower (Eurostat 2018b). Because the European Union’s target for 2020 is that at least 15% of adults (aged 25–64) should participate in lifelong learning activities (Kotzeva 2017, p. 73), the potential for training providers is huge – positively speaking. On the other hand, a lot of work lies ahead for HRD-related activities; however, in some countries, organizations still fail to offer intensive HRD activities for their employees.

Based on the numbers above, the perspective for private training providers is positive; at the same time, however, the large numbers of providers and training opportunities (and needs) are also making it more difficult to decide what kind of training might be the most suitable one in a given situation. Due to this, the selection of individual courses and the design of larger programs becomes a challenge where HRD can become a mediator, a broker, and in the end, a designer of learning architectures.

Lepak and Snell (1999, p. 37) propose an HR architecture with four quadrants, to structure and plan all HRD related activities: HR and HRD must decide whether to (1) develop (make) human resources internally. The advantage here is that firm-specific skills can be developed, providing high value to the organization because of a high task–skill fit. Another benefit is nontransferability of specific skills, which will make a human capital loss less likely (Lepak and Snell 1999, p. 36). Acquiring (2) human capital and the knowledge needed is the second option, which is possible if the knowledge is available on the job market and is not too specific. Because it is valuable for the organization, Hamel and Prahalad (1994) say organizations might also consider internalizing this knowledge (as cited in Lepak and Snell 1999, p. 38). Contracting (3) is a way to benefit from knowledge that is available outside of the organization – while options 1 and 2 focus on internalizing employees and their knowledge. Like option 2, the knowledge can be purchased quite easily on the labor market “…and, therefore, can be treated essentially as a commodity” (Lepak and Snell 1999, p. 39). Creating an alliance (4) seems to be the most beneficial option, when the human capital that is needed “…is unique in some way but not directly instrumental for creating customer value” (Lepak and Snell 1999, p. 39).

Besides the aspects of the architecture above, several other questions might be taken into consideration when HRD serves as a conveyor for learning:

  1. 1.

    Should the learning be intentional or incidental; should the learning be formalized, or is informal learning desired (Bruce et al. 1998; Marsick and Watkins 2001; Eraut 2004)?

  2. 2.

    How deep will the learning impact the individual or the organization? A program for personal development (e.g., questioning values, ethics, or shared values) might be more carefully designed and followed than a technical skill training where the outcomes can be assessed immediately and the impact on the person is not as deep, as in the first example.

  3. 3.

    How long should the duration be to maximize the learning outcome and balance the investment of the learning and the potential outcome (see section on “Evaluation” below).

  4. 4.

    Is it necessary for HRD activities to be directly related to the current position and help the employee to adapt? Is the learning focused on the qualification for a possible future role/task? Or is it not job-related, supporting the “growth” of the employee?

  5. 5.

    Does the activity focus on the level of individuals, teams, intergroup relations, or the organization as a whole (Hayes 2018, p. 432)?

  6. 6.

    Within this level, does the activity focus on the area of human processes, a techno-structural area, human resources, or strategy (Hayes 2018, p. 433)?

  7. 7.

    Regardless of whether it is a tailor-made program or a general one, should it be rigidly structured, or leave room for flexibility?

  8. 8.

    Can development take place (formally or informally, structured or unstructured) on the job (Loon and Casimir 2008; Berings et al. 2005), off the job (Schellschmidt 2016, p. 351ff.), near the job (Schier 2016, p. 337ff.), along the job, or even out of the job (Conradi 1983, p. 22ff., in: Schier 2016, p. 340)? This leads to the question of whether it should be offered internally or externally.

Several of the aspects above can be connected and influence each other, which might make the design of a learning architecture a challenging task. The framework proposed by Hayes (2018, p. 433), which comes from organizational design and the area of change management, might be a useful way to structure the portfolio of HRD activities. But as mentioned above, HRM and HRD as a part of HRM can support the organization and its individuals by keeping the aspects above in mind.

While the investment in the learning capacities of employees has become increasingly important and can lead to a more vital organization that can adapt to the changing demands of the environment, the question might be raised toward HRD, whether the money is well spent or not – be it internally or externally for private training providers.

Organizations have recognized that investment in learning is vital; money, accordingly, is being provided. As mentioned above, in a survey of training magazines among 126,403 companies, employers spent about 70.6 billion USD in training their employees (Training 2016, p. 29), with an average budget of 376,251 USD (small companies between 100 and 999 employees) and 14.3 million USD (large companies with more than 10,000 employees) (Training 2016, p. 32), breaking down to an annual average of 814 USD and 42.8 h per learner in 2016 (p. 31), while the Association for Talent Development (ATD 2017) reports slightly different numbers ($1252 and 34.1 h per employee).

To assess whether there is a return on investment of the expenses, HRD efforts might be evaluated. At least the research on the spending for Research and Development (R&D) and patents suggests that there is a positive correlation (Artz et al. 2010). For HRD, it is difficult to define a point of reference to say what has to be spent at least and “whether” more means “better,” even if Artz et al. (2010, p. 725) describe “…the finding of increasing returns to scale to R&D spending.”

The topic might be described as difficult for other reasons as well:

  1. 1.

    It is difficult to evaluate and measure the impact on business of HRD, especially if there is a lack of available data.

  2. 2.

    Even if time and money are being invested, they might be invested for the competition, when skilled employees leave, which makes retention a more pressing issue.

  3. 3.

    The irony of automation, which will be explained later in more detail, leads to the problem of employees losing their skills as tasks becoming automated and skilled employees are not needed that often or even at all. At the same time, when a specific skill is needed, for example, in case of system failure, the needed skills are usually very high. For HRD, it is a challenge to maintain employees’ skills for such an event without the possibility to practice a lot, due to a high level of automation.

Evaluation

Given the significant amounts of the annual budget that are devoted to HRD, the wish to analyze the business impact seems reasonable. There are several approaches to and models for evaluation (see Radel 2010, pp. 110ff. for a comprehensive overview), ranging from barely structured approaches (Lawrence-Lightfood and Hoffmann Davis 2002; Scriven 1983) up to extremely structured approaches (e.g., Beywl 2002; Kirkpatrick and Kirkpatrick 2006; Phillips and Schirmer 2005). Besides this, there are two general lines of thought:

  1. 1.

    Process-orientation (e.g., Stufflebeam 2003)

  2. 2.

    Outcome-orientation (Phillips and Schirmer 2005; Kellner 2005; Tuchscherer and Hilsberg 2007)

In HRD, the outcome is usually of the utmost interest for organizations. However, the results are seldom measured in a structured way. Most of the time, “happy sheets,” the first level of the Kirkpatrick model, are used. Results, the highest level in the model (also known as return on investment or ROI), are seldom evaluated. Especially in Germany, the number of organizations that evaluate their programs at this level is very low (10%), compared to the UK (38%), USA (26%), or Belgium (25%) (Wehner et al. 2017, p. 17). Such a low number, compared to the first level of evaluation, can be criticized, but the evaluation of the ROI itself could be criticized as well.

Niemiec et al. (1992, p. 52) state “[…] it seems dubious that any one week training event, no matter how carefully designed and implemented, can produce the skills necessary for sales personnel to actually double their effectiveness”. In addition, there is a strong survival bias in the selection of case studies that are presented (e.g., Phillips 1994; Phillips 1997), when the ROI is described. There may be some self-interest involved in presenting a positive ROI (Radel 2010, p. 120), so it might make sense to evaluate it with the goal of reflecting the program in a very structured way. The discussion about and the development in Talent Analytics (Levenson 2011) might be a positive development toward more profound evaluation of programs and could be a way to assess the impact of certain programs. This would be beneficial for training providers because they would be able to adapt their programs for HRD, buying and assessing the impact of their training investments.

Retention and Return-on-Investment (ROI)

Retention might be positively influenced by the offer of higher compensation after training (Anis et al. 2011). However, it is unlikely that most companies adjust compensation following training initiatives, contrary to longer HRD approaches that end with an apprentice occupation (Helper et al. 2016), a formal degree (Coates and Edwards 2011), or an MBA program (Baruch and Leeming 2001), where participants might see substantial salary raises (Coates and Edwards 2011, p. 86f).

One group of employees in whom companies must invest a great deal are apprentices, who often enter the company as minors with a high school diploma or equivalent and are trained for up to 4 years (Helper et al. 2016, p. 1), depending on the country and occupation. An apprenticeship (VET) program can be seen as a very structured HRD program, as mentioned above, with a clear goal and benefit for the organization, the individual, and the profession. Like a trainee, the apprentice must spend time working in different departments of an organization to gain the knowledge necessary for the target position/role that will be filled after the program. In addition to the practical day-to-day experience, the apprentice is trained off-site, usually in a vocational school, to gain technical knowledge; this is similar to training that is offered during a trainee program or a developmental program.

The benefit for the individual is clear, even given the argument that an earlier, lower apprentice income versus a later, higher student’s income provides the best financial benefit. The benefit for the profession is also reasonable, considering that a well-educated workforce is available due to HRD efforts. It is the benefit for the organization, however, that would probably influence the decision of whether to invest in HRD activities or not.

The ROI, as briefly presented above, has been discussed in several publications (Muehlemann and Wolter 2014; Asghar et al. 2016; Helper et al. 2016), each of which has come to a different conclusion. Muehlemann and Wolter (2014) conclude that “[e]mpirical evidence shows that in a well-functioning apprenticeship training system, a large share of training firms can recoup their training investments by the end of the training period” (p. 1), while Asghar et al. (2016) are more skeptical (p. 81f).

The positive findings of Muehlemann and Wolter are supported by a study in the US construction industry, where it was estimated that “[…] employers earn a return of between $1.30 and $3.00 for every $1.00 invested in craft training due to improved safety, increased worker productivity, and reduction of rework, absenteeism, and turnover.” (Helper et al. 2016, p. 15). Another number that emerged from the analysis was an internal rate of return of approximately 8% at Siemens (p. 83). Their overall perception was that an apprenticeship program is positive, so it might be worthwhile to invest in the training and development of internal staff, with a clear occupation in mind. Unfortunately, this clear focus can seldom be found in regular HRD activities. It is assumed that the program must be well-functioning and that apprentices will stay with the company; however, this is not often the case, especially in small- and medium-sized companies. At least in Germany, an average of 73.15% of first-year students between 1990 and 2012 are former apprentices (BMBF, Bundesministerium für Bildung und Forschung/Federal Ministry of Education and Research n.d.).

Ironies of Automation

Besides the risks mentioned above, not investing in HRD is not a good option. People and organizations must develop. While the supply of a qualified workforce has been more or less sufficient for decades, this has increasingly become a constraint in recent years even though researchers, politicians, and international organizations are engaged in a discussion as to whether there is a skill shortage. Most agree that it will become an issue in the years to come and already exists in some sectors (health care), occupations (manufacturing, technical occupations), or regions (construction workers in the USA), while other sectors (leisure and hospitality, natural resource extraction, agriculture) show no sign of a skill gap (Stephens 2017). Especially in China, the skill gap is considered to be dramatic (Morgan 2016) and burdens Chinese employers (Hays 2018).

The challenge for HRD, however, is a concept that has been described as the ironies of automation (Bainbridge 1983). As information technology permeates more and more areas of work and the employee is supported – or made redundant – his skills become even more important when they are needed. Bainbridge uses the example of an operator and “[…] suggests that the increased interest in human factors among engineers reflects the irony that the more advanced a control system is, so the more crucial may be the contribution of the human operator” (p. 775). One problem is that we have to be skilled and trained to be able to solve issues that might arise in the event an automated system fails. But skill and training are lost in most areas when they are not practiced. One solution, which is practiced regularly in the airline industry, is to train operators (in this case, pilots) on a simulator.

Contrary to the notion that a skilled workforce is a necessity, thereby increasing the importance of HRD, it is also possible that fewer employees are needed due to automation. In this case, HRD and HRM must analyze the implications for the overall HR strategy and define actions for training and staffing accordingly.

Challenges for HRM and HRD

Following the discussion of HRM and HRD in the previous sections, focusing on some aspects of both areas, HRM and HRD are brought together here and the manifold challenges for both areas are described. Additionally, a brief look is given of additional topics within HRM and HRD, which were not all covered in this chapter, to illustrate the complexity of the work of HRM and HRD. It will be argued that HR must take a new, streamlined, and future oriented direction to remain relevant in a changing environment.

Given the descriptions above, there are several challenges for both HRM and HRD. HR must still convince a majority of other professions in the organization of its value: “Whilst the specialist rhetoric propagated by occupational spokespersons argues for the importance of the personnel function to business performance, typically via the business partner relationship between personnel and strategic and line management, the realization of that ‘offer’ is frequently circumscribed by structural and reputational constraints that have long-standing histories (Legge 1978; Caldwell 2003; Guest and King 2004).” (Gilmore and Williams 2007, p. 399). Legge even “[…] points to an issue that has dogged personnel specialists throughout their history. We might call it an obsession with their credibility” (2005, p. 50).

One way for HRM to gain credibility can be the projection of what skills will be needed in the future and then establishment of HRD structures to deliver qualified personnel when needed. To enable this, it is important for HRM to understand the business and the direction the business might take in the future. HR should therefore be in regular contact with senior management, which decides on the strategy of the organization. Based on these decisions, the HR and HRD strategy must be developed and adapted, including the associated activities in VET. A need assessment (Moore and Dutton 1978; Goldstein and Ford 2002; Ment 2011) might be a suitable tool to support such analysis; however, as the strategy of an organization becomes increasingly difficult to define in the long term (Teece et al. 1997, p. 15), it will become more important for HRM to create a projection and close the skill gap in a shorter period of time. It can be argued that only the subjective perception of the industry dynamics changes (Hauschild et al. 2011, p. 418 f.). But regardless of whether the increased dynamic is objective or subjective, the tools that were described can be a very valuable support for the HRM and HRD planning process. Another very valuable perspective that is discussed in the context of Big Data is talent or workforce analytics to support decision making in HRM and HRD (Della Torre et al. 2018; Schiemann et al. 2017; Minbaeva 2017). To enable this, the skills of HR and HRD professionals might also have to develop toward a more analytically skilled profile.

After the planning process, HRM must decide between make (HRD) or buy (recruit) to close the organization’s skill gap as well as its own (as in the above example). These decisions trigger different actions and have differing effects on organizational performance. Here, HRD might serve as a conveyor and broker for learning in the organization. The lack of skilled staff might be solved by automation and process optimization, so that fewer people are needed to handle the tasks. Organizations simply become more efficient at what they do. But even if this is the case, work profiles will change and employees must adapt to these changes, with support by the organization. The current structures and approaches to HRD, which are sometimes fragmented, might not be suitable to provide this support, when digitalization and redundancy of administrative tasks increase the ironies of automation, as described above. This leads to the challenge of HRD to train people such that the knowledge can be accessed when needed; however, it is not yet clear that this is the case. In addition, less qualified employees could be left behind if they are neither capable of adapting nor supported.

Conclusion

The HR profession as a whole is still struggling with its professional identity and role in the organization. HRM depends on the worldview of those who create the frameworks and training in and for the field. “The present millennium is witnessing human resources (HR) at its biggest crossroad where world-renowned HR professionals are clearly indicating the warning bell […].” (Narendran 2016, p. 98). If HR cannot professionalize even more, build credibility, and show its value within the organizational context, there is a risk the HRM tasks will be removed from HR and distributed in the organization or outsourced.

The professionalization is mostly driven by two large associations (SHRM and CIPD) and several fragmented groups. Besides associations, the debate is dominated by “gurus” such as Dave Ulrich (1998) and Ram Charan (2014). Both provide answers as to how HRM must change and what this change should look like. But even they disagree to some extent (Charan 2014; Ulrich 2014). Whatever the best way might be, one conclusion that can be drawn is that HRM should be promoted from the top level of the organization. If senior management does not full-heartedly support HRM as an important contribution to organizational success, even if it cannot be measured at all times, HRM will struggle. HRD will struggle as well, which will affect the quality of the workforce in the long run and increase fluctuation of the best talent.

Recommendations and a Further Outlook

Breaking these recommendations down to the areas of HRM, as they are defined by the IPM (1988, p. 7), nearly all tasks that are currently conducted by HR can either be internally transferred, very often to the union – which might be a concern for many companies – or outsourced. HRM can be dramatically downsized, streamlined, and focused – a proposal to which many HR managers might heavily object, either because they fear becoming redundant or because they fear the inability to carry out new tasks, as described above. On the other hand, the proposals given here should be carefully considered. Shared service centers, or the business partner framework, for example, have not been as successful as some companies had hoped.

Recruitment and selection can be supported or even completely carried out by algorithms. The same might be true for employee service. Usually, employee requests are limited to a very small number of issues. To provide employee service, chat bots can be used to cover most, if not all, standard requests.

Training and education will be defined between the direct manager and the individual employee, supported by HRD as an internal learning facilitator, not necessarily a training provider who delivers services to the organization. Learning becomes a shared responsibility (Tjepkema et al. 2002a, p. 15). Necessary skills are either acquired or a separation culture must be implemented when one side is neither capable nor willing to support the other side. Especially in smaller companies, an in-house training department may not be economically feasible; it might make more sense to purchase training. In a rapidly changing market with shifting skills and training demands, this is becoming increasingly reasonable, while the HRD professional focuses on the support of a learning organization. The proper employment, working conditions, and terms of employment of personnel are usually regulated and must be adapted to national law, where a lawyer or the compliance department can offer support. Unions are also a great partner to ensure proper employment and discuss the implementation of amenities. They can also offer support with aspects like joint consultation between employers and employees and between their representatives, and settlement of disputes. Terms can be unified, with the risk of losing potential talent. The same is true for methods and standards of remuneration. Remuneration or compensation and benefits – the payroll – can be transferred to the finance department. One major concern with this is that remuneration is a confidential matter. Taking into consideration what other figures the finance department deals with on a daily basis, this should not be too much of a concern. The effective use of facilities can be transferred to facility management or be supported by personnel analytics to calculate the amount of office space that is needed and for a variety of other optimizations with regard to team performance, social interactions, and team behavior. Wherever an apprenticeship/VET program is in place, it can be coordinated from the HR department but carried out by the technical departments themselves. To be able to do this, a responsible person in each relevant department must be designated. The necessity of specific apprenticeship programs might be reassessed in the future. However, moving away from apprenticeship might become an issue for the future development of the workforce and a violation of the “ethos” of apprenticeship (Asghar et al. 2016, p. 81). In addition to this ethos, changing a system that is successful in many countries should be carefully considered, keeping in mind that VET can be a vital, integral part of HRD.

After transferring or outsourcing most tasks, HR will have the opportunity to focus on the support of the organization and its individuals during the stages of organizational development by coaching the management and leadership teams as promotors of HRM-related tasks. Following this proposal, unions will take on a more powerful role and the direct manager and his or her employee become the most important talent developer and HR manager in the organization.