HR Will Play a Strategic Role As Companies Transition to E-commerce Models

By Christine Woolsey

Human resource professionals who are struggling to get a permanent spot at the strategic planning level of their organizations may find an opening as their companies begin to embrace electronic commerce.

Many employers admit they have yet to create a blueprint to attract, retain, motivate, organize and reward employees who will be critical to their e-business success, according to a recent survey from Towers Perrin. Locating that talent -- and training existing staff -- will be critical in coming months as the global economy begins to shift away from old business practices.

And corporate HR will definitely play a role.

As traditional companies move to create e-business opportunities, they will uproot current organizational structures. The first wave of this phenomenon took place among so-called "dot coms" and new start-ups, but will soon be felt by "large multinationals who are still the engines of the new economy," said Peter Bresler, director of Towers Perrin's Organization Performance Practice for North America.

"Traditional companies are about to create the second great wave of e-business as they move forward to implement their e-business strategies," Bresler said. "The reality of the new economy is that new fundamentals for success take the best of the old but deal with the realities and challenges of the new."

According to Towers Perrin "Internetworked Organization Survey," the vast majority of survey respondents are planning to keep e-commerce operations integrated within their main business; no obvious home exists into which e-commerce operations report. Results also show that most organizations are determined to keep control and not outsource the components of customer relationships, such as order taking/tracking, order fulfillment, customer service and billing.

"This runs counter to much of the organizational theory circulating among consultants and academics, as well as to the business models employed by many start-ups and dot coms," noted Bresler. However, it illustrates the need for HR departments to work closely with line management in determining the best people strategies as traditional companies shift to an e-commerce model.

"The people who are doing it right are getting a balance of perspectives from the HR community, the line community and the IT community," Bresler said. "Companies that are successful have really taken the leap to make people and organizational issues top of mind for the entire executive management team."

While HR may have been an uninvited -- or unwelcome-- guest during past strategic planning meetings, they are increasingly being viewed as one of the keys to a company's overall success in the new economy.

"Line executives are really recognizing that organizational and people issues are, in fact, material success factors," Bresler said. "In the past, maybe they talked the talk, but didn't walk the walk. Now there is more sincere recognition of the importance" of HR's role.

"Companies are entering the world of e-commerce mainly to increase brand equity, or deepen customer relationships," Bresler added. "But they face a huge challenge. Fundamental change lies ahead in how work and the people doing it are organized and managed, yet many employees lack the skills and capabilities to make e-commerce happen."

The Towers Perrin survey found that, for many employers, staffing -- not strategy or technology -- is their biggest corporate concern. While many companies have already made a large investment in e-business strategies and technology, most are unclear about how their organizations will evolve to leverage these investments.

"HR people are facing the same challenges a chief of procurement is having in converting organizations and processes to leverage opportunities in the new economy," Bresler said. "In terms of recruiting, job postings and employee benefits, we are seeing a need for both institutional change in terms of processes and also a need for personal change."

For example, he said, the notion of cycle times and risk tolerance is changing rapidly in new economy. "So, if you take hiring, it used to be a multi-week or multi-month process. But in new economy the cycle time is shorted to hours if not days."

That new reality requires change at the personal level. "Rather than doing 15 interviews and seven background checks, maybe you do three interviews and make sure the person isn't a felon. HR people need to believe this new world requires new behaviors."

These changes will require new recruitment and retention strategies as well. "A whole new relationship with the employee is developing, where money is not the most significant factor in attraction and retention of talent," said Brad Ivie, a Towers Perrin consultant also involved with the survey design

"Regardless of the company's e-commerce experience, a top respondent concern was that too few key managers are clear about their e-strategies," noted Ivie. "Eighty-seven percent agreed that too few key managers have e-commerce skills and insights, while 66 percent admitted that their organizations were struggling to attract the best people to take advantage of e-commerce opportunities."

HR professionals can play a big role in developing the right mix of skills for e-commerce operations. However, they must recognize that many traditional training programs are outmoded or inappropriate.

"There is a recognition that not only the content of the training but the delivery mechanism is outdated," Bresler said. "Companies can't necessarily rely on those programs to develop in-house talent as quickly as they need to."

Many employers are facing a "make" vs. "buy" decision in terms of acquiring talent, and HR professionals can play role working with line management to help make those decisions, he added.

The Towers Perrin survey also noted that existing infrastructures of traditional businesses are also impediments to effective employee behavior in the new economy. Seventy-four percent of respondents said organizational structure tended to inhibit the pace of decision making, while 59 percent believe their corporate cultures present a barrier to getting things done.

Copies of the "Internetworked Organization Survey" are available by calling 1-800-525-6741; or, outside the United States, by contacting the nearest Towers Perrin office.