Structural Unemployment in HR

Did you see this week’s In The Know v1.32? The links are all about aspects of structural unemployment. There’s a debate raging about whether or not sustained high unemployment is the result of a seismic shift in the economy or as simple as a lack of demand.

If you think things have profoundly changed, that some jobs and occupations have disappeared and are not coming back, you hold the structural view. If you believe that the problem is simply that the economy is not growing, you think the problem is cyclical.

Pretty obviously, the national employment picture is a combination of the two. Construction is down because no one has the money for construction projects. As the economy recovers, more construction projects will be initiated. Broad swaths of the auto industry, however, are unlikely to return. Higher quality for a lower price is available elsewhere. In a global market, higher quality at a lower price is a trump card.

The interesting thing about the basic idea of structural unemployment is that is a regional phenomenon. While the national unemployment picture is an aggregate, the essence of the problem is different based on geography. In some geographies, structural unemployment means a training deficit (like Detroit) following the demise of an industry. In other places, it means deep changes in the hiring process (like Silicon Valley). What is rarely considered is the creeping impact of technology on standard functions across the economy.

HR is a perfect example.

While the primary education and trade associations of the HR Industry have continued to focus on industrial era competencies, cutting edge technologies, outsourcing and massive data flows are changing the working reality for HR Pros. Today’s effective HR Department is considering the use of predictive analytics, increased vendor usage and the integration of more automation. That means that each member of the much smaller HR operation is responsible for getting much more done.

Not everyone makes the transition gracefully. Many people don’t make it at all.

Consider the members of the payroll team. Unless there is a surprising and unique value delivered by the in house payroll team, the function has been or will shortly be outsourced. Of the original team members, one or two will be left to manage the vendor. What happens to the other people?

It’s unlikely that they’ll survive ‘upskilling’ to other HR functions. Training, Recruiting, OD and Analytics all require specialized skills. In the first three cases, being a gregarious extrovert gets you part of the way there. The rest of the required skills include the use of influence, the ability to disseminate information in digestible packages and a project orientation. The folks in payroll are process oriented and often introverts.

HR is getting concentrated and the functions that are left in house will either be managerial (involving contracts and project administration) or pure-play value adders. The folks who fall out of the HR shop will have a hard time finding places in which to apply their now outdated skills.

The market will face a dichotomy: a surplus of people with HR resumes and a shortage of people with the right skills. This is how structural employment looks within a single discipline.

For individual workers, the answer is to never stand still. Always look for assignments outside of your area of expertise. For companies, there is real hardship in having to let people go because their skills are no longer useful.

It would be interesting to see SHRM or HCI address the problem and offer solutions. From here, it looks like 30% or 40% of the industry’s workers are likely to come up short as skills requirements continue to evolve.