People Management In the Cloud

People management in the cloud? So what’s that all about then I hear you ask. Well it’s not a reference to managers who sit at their desks day-dreaming, or jet-setting execs carrying out a 1-2-1 review across the aisle of a 747 at 30,000 feet (it’s happened). Instead I’m talking about the impact of cloud-based computing on HR and people management in organisations.

The likelihood is that cloud-computing is going to have a big impact on the way that organisations operate in the next decade and it’s something that those responsible for people management and HR strategies need to be aware of and planning for.

So what is ‘cloud-based computing’, (sometimes referred to ‘Software-as-a-Service’ (SaaS) or ‘on-demand')? The terms refer to the use of computing resources (i.e. software, storage, hardware) that are based out in the internet (“the cloud”) and typically managed by a third party and accessed by users via the web on a subscription or ‘pay-as-you-go’ basis. This is an evolution from the traditional computing model where companies pay big upfront sums to buy all of the hardware, software and networks themselves and then have all the associated costs and hassle of owning, managing and supporting that infrastructure.

Cloud-based computing is generally agreed to have many advantages, including lower costs of ownership, faster deployment of new services and increased flexibility. As a result it’s becoming an increasingly important part of the IT landscape.

According to research firm, Gartner, “Adoption of the on-demand delivery model has grown for nearly a decade, but its popularity has increased significantly within the last five years... As SaaS business and computing models have matured, adoption has become much more widespread.” Gartner also predicts that by 2012 20% of all businesses will own no IT infrastructure whatsoever.

Cloud-based services are already beginning to have an impact on HR (even if they may not recognise the term). A 2009 survey of large enterprises found that 44% were using cloud services in some part of their HR processes, most commonly in recruitment management.

Most of the debate about cloud-computing to date has focused on the IT benefits, however it is likely to have much wider implications for businesses, which in turn will impact many aspects of people management and HR strategy.

These impacts, and the questions they pose for HR, can be grouped under five main headings:

1) Improved knowledge sharing and collaboration within the enterprise
Cloud-based software makes it easier to open up access to valuable information and thereby dismantle the information silos that often create inefficiencies in organisations. So for example cloud-based services make it easier to give managers and employees direct access to information that was previously only accessible to the HR team – whether that’s employee data or guidance on relevant legislation.

This has many potential benefits – empowering people to be more effective, enabling time-consuming, manual processes to be automated and reducing the admin burden on the HR team. However it also presents new questions that need to be considered: What is the appropriate split of responsibilities between HR and business managers if access to knowledge isn’t an issue? Who should be allowed access to what information? How does the organisation ensure it’s meeting its data protection responsibilities?

Companies are also starting to use social media like Facebook to allow improved collaboration and communication internally. Again, this has many potential benefits – improved sharing of knowledge should enable increased productivity and improved customer service as well as encouraging more ground-up innovation. But information flows no longer follow predictable routes based on hierarchy or org structure. So how do you ensure employees are hearing the ‘important stuff’? How do you empower people to collaborate and innovate without creating anarchy?

2) Increased collaboration with other businesses
One of the implications of the cloud is that it becomes easier to share valuable data outside of the corporate network, which makes it easier for different companies to collaborate with each other on new ventures and initiatives. Some tie-ups may be long-term and strategic, others more tactical to address a single, specific opportunity. All have implications from a people management perspective.

More flexible organisational structures and resourcing policies will be required. Cross-company teams organised around specific projectswill be more common. On occasion employees may be working into a manager in a different company. How do you effectively manage employee performance and development in this environment? How should reward schemes be organised? What are the contractual implications – how do you ensure company IP is protected? Working in partnership will often require different skill-sets and behaviours – how do you ensure that you have the right competencies internally?

3) Greater use of outsourcing and a rise in the number of virtual organisations
For the same reasons that the cloud enables easier collaboration between companies, it will also make it easier to outsource a wide variety of activities, whether it’s heavy-duty transaction processing or more specialist knowledge worker type activities. The cloud is likely to further blur the already smudgy boundaries around an organisation.

The virtual organisation is not a new concept but the cloud will facilitate a business model where all but the most core activities are outsourced. A recent survey by the Chartered Management Institute found that 77% of business leaders questioned believe virtual organisations will become commonplace over the next decade.

In this type of environment how do you create and sustain a sense of corporate identity? What do company policies mean and who do they apply to? How does an organisation decide which are its strategic resources and maintain control over its core competencies?

4) Accelerated timescales to launch new products and enter new markets
With most businesses being technology-driven these days, the biggest constraint when launching a new product or service is often the time taken to get the IT in place. With a ‘utility’ based computing model where new applications or additional seats can be purchased and deployed in days rather than months, companies can respond far more quickly to emerging business opportunities. This will force a faster rate of change on all companies as only the agile and fleet of foot will survive.

This has significant implications for human resources strategy. If HR is not to replace the IT Department as the limiting factor then more flexible resourcing strategies are required so that new teams can be identified and put in place quickly. Having mobile workers with transferable skills will be even more important. The organisation will need to ensure it is recruiting and developing the right generic competencies.

Companies are also more likely to find themselves operating in overseas markets, either directly or with partners, which will require new approaches to cope with different legislative environments, business cultures and languages.

5) An increase in flexible and remote working
As more IT resource is located in the cloud it becomes easier for people to work remotely from their company’s offices, whether at home, at a client site, or on the road. Studies show two-thirds of knowledge work today already takes place outside company facilities.

Most HR teams will already be aware of the formal implications of remote working – around health & safety, taxation, equipment, insurance etc – but some of the deeper issues remain unaddressed. How do you create the right line-manager/ employee relationship when they may only meet face-to-face once every couple of months? The good practices that are traditionally taught on management development courses may no longer be sufficient or feasible. How do you ensure that the employee is fully engaged when they are not party to traditional information sharing (the proverbial water cooler)? What new support mechanisms are needed? Some of the answers are likely to relate to the social media techniques mentioned in point 2 above.


We can't yet predict all of the ways that cloud computing will impact organisations and this article only begins to scratch the surface of the likely changes. Nonetheless its safe to say that the changes will be significant. This will present all sorts of new challenges for HR and the sooner that they start considering the questions, the more likely it is that they’ll find the appropriate answers.

I’ll be picking up on some of the question raised in this article in future posts. In the meantime for information on solutions that can help you realise the benefits of cloud-computing please check out http://www.youmanage.co.uk/.

Phil Brown
Youmanage - the online HR toolkit for managers