How HR has changed over the years

HR has been around for about 80 years, and in that time has changed dramatically yet still kept its core function: to manage people.

“A brief history of HR: How the profession has evolved over time” by AHRI discussed the evolution of HR and how there have been three distinct phases for the function, with the fourth now approaching.

The first wave, according to former AHRI chair Peter Wilson, occurred during the 1940s–1960s, when authoritarian leadership reigned. “Personnel were the bureaucrats and policemen of workplace rules. The theory was that you listened to the alpha dog and did what you were told,” said Mr Wilson.

Next was the second phase, occurring in the 1970s and early 1980s, which was about learning how to be more adaptive. “There were lots of courses on innovation and entrepreneurship for HR, but we didn’t quite move all the way out of that ‘workplace policeman’ bubble,” Mr Wilson explained.

The late 1990s and early 2000s was the third wave, which was heavily influenced by behavioural scientists and positive psychologists. “Employers started thinking more holistically about employee wellbeing and motivation,” Mr Wilson outlined.

And finally, is the fourth phase, which Mr Wilson said is what we’re now approaching. “The fourth phase, which HR is currently navigating, calls for a diverse skill set that spans the financial, technological and strategic sides of a business,” he said.

Within these distinct periods, the landscape of HR changed, reflecting the state of the workforce at the time.

1940s–1950s: The beginning

HR emerged in the ’40s, said AHRI, as the Second World War generated a lot of jobs to help keep up with production. This was also the period when female workers were introduced to many industries, adding to this sudden boom.

The losses of workers in the war created labour shortages and high turnover, meaning employers had to adapt to retain staff.

“[Employers] had to start thinking, ‘What are we going to do besides just giving people a job and paying them? What kind of incentives can we provide to retain staff?’” said Dr Justine Ferrer, senior lecturer at Deakin Business School.

“Recruitment challenges, turnover and incentivisation were really influential [in the 1940s]. It was argued at the time that these were a passing trend and things would soon go back to ‘the way things were’, but they never did. It just kept evolving,” said Dr Ferrer.

1960s–1970s: Women at work

The women’s movement of the ’60s and ’70s paved the way for female participation in the workplace. By 1974–75, the equal employment opportunity movement was roaring.

Meanwhile, employers saw the potential of hiring from outside the business to fill positions, making the job interview more common and rising from the bottom to the top less of a possibility.

1980s–1990s: Tech boom

AHRI highlights that the 1980s was huge for globalisation, which brought tech from all parts of the world together, and businesses fought for knowledge workers to implement it.

Meanwhile, the union movement in Australia started to pick up, giving employees greater power. These changes reportedly brought more productivity and engagement to the workforce.

This resulted in many organisations increasingly taking advantage of HR functions, such as recruitment, training, and performance management.

2000s–2010s: GFC hits

The global financial crisis was the big event that hit the world hard in the 2000s. In the years after, businesses struggled to attract and retain talent, and skills shortages hit hard.

“Platforms like Glassdoor were introduced, and employees started sharing their experiences of working for companies and, as a result, staff started voting with their feet,” said Mr Wilson.

“A crisis, whether it’s a war, a depression, major job losses, strikes or a pandemic, is often a turning point for the economy and how the workplace functions.”

The need for better employee engagement and the struggles of skills shortages prompted HR to become a more strategic function within businesses.

2020s: Pandemic offset

Today, as we reel from the effects of the pandemic, the workforce has experienced another shift. HR has now become a crucial aspect of business, with AHRI believing COVID-19 brought us 10 to 15 years into the future.

Now that HR has a seat at the table, it’s important the influence remains, said RMIT University Professor of HR Analytics Timothy Bartram.

“We need to shift towards a more neo-pluralist approach whereby there’s more emphasis on mutual gains between employers and employees. Employees should share in the stake of the business,” he said

“They’ve typically shied away from data. The ability to collect, analyse and interpret data is critical to making strategic business decisions. There are plenty of people who are comfortable managing data, but by and large, it’s a growing education opportunity for HR.”