Cuatrecasas International Institute for Legal Strategy on Human Resources

In 2009, due to the lack of forums on strategic innovation in human resources in Spain, particularly for those social and labor matters that shape company development against a backdrop of constant digital transformation and globalization, the Cuatrecasas International Institute for Legal Strategy on Human Resources (“the Institute”) was established. 

Innovation forum

The Institute is an innovation forum for reflecting on strategic issues relating to the development of the human resources regulatory framework, and focuses on aspects of organizational relevance in companies’ strategic policies. In carrying out its activity, the Institute channels its ideas in reports, debates and proposals, seeking a balance between essential and strategic issues with immediate effects and other issues, also of a strategic nature, that will be more relevant and increase in relevance in the mid and long term, while contributing to the decision making of leading Spanish and international companies and of other labor market operators.

The Institute provides a proactive arena in the quest for innovation when planning what is considered to be, and will be, a differentiating factor in company competitiveness: human resources. 

Activities

The Institute's activities are based and structured on strategic pillars, details of which we will provide below, that drive the role of the Institute as an agent at the forefront of people management. These structured pillars are strategic because they express what we consider to be mega trends in the mid and long term in people management policies and their regulatory framework, but also because they can be identified and are already rooted in companies’ current reality. These strategic pillars are also dynamic, in that, although the majority of them have guided the Institute’s activity since its foundation in 2009, we have incorporated other pillars thanks to the contributions of the Institute’s members, which have gradually become decisive in the development of the system of human resources and labor regulation, such as is the case of sustainability. We have even had to redefine and innovate on the content of the pillars we identified at the Institute’s foundation, as we observed many changes, including substantial ones, e.g., in relation to corporate policies, to the legal importance of diversity, equality, inclusion and belonging (“DEIB”), and to the disruptive technologies due to the central role of artificial intelligence (“AI”) systems. This dynamic nature of our strategic pillars leads us to confirm that these pillars are “open,” meaning that, in periods such as the current ones of transition and background changes, we must constantly revise the content of the pillars with our Institute members, while always considering the incorporation of new pillars. In this revision, we have incorporated a sixth pillar, based on the important changes arising for people management as a result of the corporate structural and organizational changes companies are experiencing and will experience in this period of neo-technological transition. 

Six strategic pillars

The essential content of the six strategic pillars that guide the Institute’s activity is as follows: 

  1. Impact of disruptive technologies, particularly of AI, on new work organization and people management methods: The continuous technological innovation, largely guided by the extensive progress made in AI systems, is having an enormous impact—and will have even more impact in the immediate future—on all areas of companies, including people management and, therefore, on the application of the corresponding regulatory framework, as shown by the EU regulation on AI, the EU Platform Work Directive and the possibility of an International Labour Organization convention on this subject in an immediate future. We are facing a historical digital transformation that requires all the Institute’s attention, as can be seen in the TECHNOS PROJECT, which the Institute has been developing since 2016, and whose main mission has been to identify the changes that technologies such as IoT, robotics, and particularly AI are generating and will generate for corporate organizational structures and how they are substantially altering both the labor market—with significant consequences for employment and for the required qualifications—and people management and the implications for the corresponding regulatory framework. An analysis of advances in AI will have an important role in a new phase of the TECHNOS PROJECT, not only regarding “general use systems,” but also, and even taking on greater importance in the short and mid term, in the specific important applications of what are known as AI agents. It is also important to identify and analyze the most significant changes that those systems and AI agents represent for decision-making processes (automated) affecting people management and their working conditions.
  2. Reforms of labor relations regulatory framework and impact on people management: This pillar refers to the rules and principles governing and controlling the essential legal components of the labor relations system, including the employment contract; conditions precedent and subsequent; working time; the remuneration of the service provision, with particular reference to the compensation and benefits systems based on meeting objectives; professional classification; collective bargaining; and collective disputes and their solution. Based on this framework, we carry out a regular organizational and legal assessment of the application of the regular labor reforms, particularly of the more general ones implemented in 2012 and 2021, but also of the more individualized reforms that have significant impacts for people management, such as conciliation measures and measures aimed at reducing absenteeism. We must extend this assessment to the rise of non-labor laws with a labor law reach that have emerged in recent years and which, although having a more generalist purpose and subject matter, have a significant impact on labor relations, such as those governing equality and non-discrimination based on gender, identity or sexual orientation; those referring to the protection of whistleblowers and to the integration of labor compliance; and those referring to corporate legal, ethical and social behavior and to corporate social responsibility (“CSR”) as a crosscutting element in regulatory adaptation and in labor relations management. This ongoing assessment enables us to identify and promote the changes to be introduced into this regulatory framework to correct any shortcomings detected in those labor reforms that limit and prevent effective people management in companies. Also, as a consequence of this ongoing revision and assessment of the regulatory framework, we promote new legal reforms that ensure the framework is continuously adapted to the transformations occurring in corporate people management policies arising from the technological and organizational changes ongoing in companies and in the social, economic and political systems.
  3. Globalization and effects of geopolitical and geoeconomic changes on transnational strategy of workforces and on the  international regulatory framework (international labor standards and international framework agreements): Many Spanish companies have implemented an international expansion process that has obliged them to implement global strategies in their human resources policies. This means more than only considering the different regulatory frameworks of the different countries: it means also considering the many internal corporate policies of a transnational nature—international framework agreements, codes of conduct and compliance policies—as well as the application of the increasingly numerous and incisive international regulations that establish minimum conditions to be observed by all multinationals in their employment contracts (international labor standards). Therefore, an international legal framework—to which the international framework agreements of important multinationals must be added—is progressively being consolidated, which will increasingly determine the transnational strategies for managing people, as is the case of the Due Diligence Directive, which has an important impact on human rights of particular relevance in the labor field. In addition, there is a trend in the commercial regulations of certain countries and of the EU to impose on companies the obligation to ensure that the international supply chain respects certain labor, social security and occupational health standards, particularly regarding the minimum standards according to the ILO and the EU. At the Institute, we are aware of the new dimension that globalization brings to the business ecosystem: we are in an era characterized by massive and global access to data leading to new business models, unlimited capacity to provide ideas and to innovate, and the creation of global markets where, traditionally, the focus was local. The new cost structure of international data-based communications and transactions, processed with the help of advanced AI systems, generates new business opportunities, digitalizing the globalization process, which leads us to analyze its impact on people management and on the applicable regulatory framework. Currently, and in the near future, the transnational mobility of people and the international supply chains are experiencing, and will be subject to, the pressures and changes arising from those profound geopolitical and geoeconomic changes—especially due to the increasingly more significant rivalry to determine world leadership and areas of influence—, and which will be decisive for multinational companies’ strategies, including their employee and labor policies. In this context, and essentially since the COVID-19 pandemic, it has become clear how important it is to update and reinforce internal global crisis management policies and their relation to and consequences for people management. 
  4. Demographic changes, labor market and development of policies on diversity, equality, inclusion and belonging harmonized with the consolidation of companies’ cultures of common values: An essential pillar of action for the Institute is the analysis of the impact of the demographic and social changes in current society on the business models and on people management strategies: population aging, the coexistence of different generations at organizational level, the diversity of personal traits, the occurrence of major migration processes and the urgent changes arising from disruptive technologies causing a shift in skills and qualifications and making other skills obsolete, are realities that companies have to handle to ensure competitiveness levels aligned with the pillars mentioned earlier. In this transition, adaptation of educational and vocational training policies will be key to ensure minimum harmonization between demand and offer in the labor market—an increasingly more diverse market—and in which corporate DEIB policies pose important challenges to their application, due to the accumulation of different generations in companies and to the need to simultaneously establish (i) suitable ways of hiring and retaining young people in jobs, (ii) and legal and social mechanisms for the transition of older (increasingly older) workers towards different types of retirement. Work-life balance measures are gradually gaining in importance; these measures both result from and foster that diversity, particularly in relation to gender, and tend towards greater equality between men and women. In this context of diversity, one of the greatest organizational challenges is the creation of a “glocal company culture,” i.e., combining the local and global features making up these diverse groups in a series of common values and which lead to a minimum internal cohesion of staff that is necessary for a competitive and efficient functioning of the business project.   
  5. Environmental sustainability policies in companies and their impact on people management and on labor relations: Another strategic pillar that must guide the Institute's activities, of undeniable current and future importance for corporate social responsibility policies and people management, refers to the measures required due to climate change and environmental management with the aim of ensuring digitalized business models that are sustainable, responsible and environmentally friendly. The gradual and very necessary acceleration of these sustainability and climate-change mitigation measures must not only be compatible with, but must also be necessary and be drivers of an economic development and a valid green energy transition, while also promoting the positioning and contribution of workers in the company, who are increasingly more aware and committed to environmental protection. As progressively observed in internal corporate policies and in collective bargaining, those measures must find a clear example in labor relations, where the organization of aspects such as mobility towards, in and from the workplace, with less demanding schedules with energy consumption or with more environmentally friendly services and company benefits, can contribute significantly to sustainability. Consequently, it is necessary to drive, from the labor and people management perspective, a suitable corporate social responsibility policy that has a positive impact on the company’s reputation, on its capacity to attract and retain talent and on the awareness of its human capital, promoting a regulatory framework that is aligned with the same viability as the ecosystem. 
  6. Structural and organizational changes in the neo-technological company of the future with strong repercussions for people management and labor policies: Although it is difficult to predict exactly what companies will be like in a few decades, and while companies continue with their economic and social prominence, we expect major changes in their corporate and organizational structures, and we could predict some features based on trends currently identified and which will, undoubtedly, have a decisive influence on the future management of people. Therefore, and without prejudice to the importance of the “human factor” in the company,  the neo-technological company of the future will be defined by its technological focus, particularly by the use of AI systems to manage and define all its activities and strategies, releasing people from the more routine tasks and enabling them to manage more important ones. These systems will also lead to a paradoxical combination of a centralized structure favored by greater technical means of control and supervision, like a decentralized structure with more empowerment of most of the workforce, resulting from a flattening and dismantling of hierarchies which will require greater levels of autonomy, flexibility and influence on the corporate decision-making processes. In turn, in the case of people management, this will require greater trust in the delegation of duties together with greater transparency and information, particularly regarding the influence of those AI systems on the automated determination of their working conditions and on other corporate aspects relevant to employees, such as diversity and sustainability policies.  

Future companies

The “neo-technological” company of the future will be a very different “employer” to the current employer in terms of essential aspects and as a result of the profound changes mentioned; however, it will certainly maintain social values and responsibilities currently developed in the management of their employees. With the ongoing analysis of these strategic pillars, the Institute aims to collaborate with and help its members with the transition underway in that management and in its regulatory framework. We must aim for labor relations of a different kind that are even more positive for all stakeholders.

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