HR is going to play a much more strategic role in organisations in the next five years, according to chief economist and editorial director at the Economist Intelligence Unit.

Speaking on Tuesday at The Economist’s Talent Management Conference ‘Raising great leaders’, Robin Bew (pictured) told the audience of HR directors, talent managers and business leaders that there would be a “workforce reduction versus investment” in business argument.

The business landscape over the next five years would mean that HR is going to have to add value “through performance management and leadership development — training, mentoring and performance evaluation of leaders”, he said.

Despite financial weakness remaining, particularly in the euro zone, and governments still borrowing vast amounts of money, Bew said that the recovery is real. “Firms are stabilising and thinking about expansion after slashing their costs.”

However, he continued: “Fiscal consolidation is required, which will slow growth, which particularly applies to private sector companies working within the public sector.”

The emerging markets of Brazil, Russia, India and China (BRIC), and most Asian countries, are becoming significant players and showing robust growth compared to those of the Western economies, he added.

He also predicted that in the next five or six years, more and more Chinese firms would be investing in Europe and so would be a “much greater force in the labour market”.

“So what does all this mean for HR?” he asked. “You’re here, so you’ve made it, but you’ve probably had to cut costs to the bone and had no opportunity for strategic thinking.”

The business environment which existed before the recession has gone, he explained. “Before, investment in the emerging world was attractive but risky. Now, it’s essential to your business.” He continued saying that the robust growth of these countries were going to be extremely influential to future business.

Bew added that among the implications for HR is that good people were still hard to find, despite the growth in emerging markets; businesses would have to think about a “geographic refocusing”; and companies would have to do more with less.