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HR TRANSFORMATION
Rob Briner: Five things HR should start doing

Following on from his article on things HR should stop doing, here's Rob Briner's suggestions of five things HR should start doing

Previously I suggested five things HR should probably stop doing. So what might be things HR should probably start doing more?

1. Start identifying real problems first and only thenlook for solutions. Consider this: you go trotting off for an appointment with your GP and before you’ve even opened your mouth they thrust a prescription in your hand. Bizarre, right? Why hasn’t the GP tried to find out what’s actually wrong with you before giving you drugs? Now think of any HR practice you currently use, such as engagement surveys, management development, or 360-degree appraisal. My guess is that you adopted that practice without first having good evidence for an important or specific problem that practice aims to fix. If so you were behaving no less strangely than your GP. The first and most important questions should be is there a problem (or clear opportunity) here and what, specifically, is it? Once you are sure you have a specific, well-identified and important problem only then should you start searching for possible solutions.

2. Start thinking in terms of likelihoods and multiple possible solutions. Only crosswords and mathematical equations have definitive and single answers. For everything else there are no perfect or guaranteed solutions. Rather, there are just things you can choose to do that have more or less chance of bringing about the effects you want. And for every real problem you identify there are likely to be several possible and partial solutions. So you need to make a judgement – based on the best available evidence gathered from your organisation, your experience, your stakeholders and published research (also known as evidence-based practice). Remember, you’re not trying to solve a puzzle but do what’s most likely to get you closest to the result you want.

3. Start to build information systems that give you the information you need. There is still a lot of mostly over-hyped excitement about big data and data analytics. But don’t be blinded by statistical science. Start simple. Maybe some organisations need the management information system equivalent of a super-computer, but for most of us relevant, valid and basic spreadsheets with some simple analysis are probably fine. The key is to identify the decisions you need to make and therefore what data you need to help you make them. Where is it? How can you get it? In what form and when is it best for you to get it? You are the only person who has the answers to these questions. Information systems need to be designed around your information needs and, quite often, those needs are straightforward.

4. Start paying more attention to the boring but important stuff. Everybody has seen those silly two-by-two tables that so over-simplify the world they stifle critical thinking and analysis. Well here’s another one. Going left to right the columns are ‘exciting’ and ‘boring’. And the bottom row is labelled ‘trivial’ and the top ‘important’. Of course, we all love the stuff in the exciting-important quadrant. The bad news is that there isn’t much in that box that needs doing and, because it is exciting and important, we’ve probably already done it. We really should take a look in the boring and important box as, like it or not, that’s probably where the action is. My hunch is that doing really effective HR is (probably like doing good stuff in many jobs) not a roller-coaster ride of thrills and is an inherently slow process with few quick fixes. Intervening to shape or develop people’s behaviour takes time – and it may be quite a while before effects are seen.

5. Start to boost your levels of healthy scepticism and become a more critical HR consumer. What’s so great about being sceptical? Well for one thing it’s a lot of fun. Yes people get irritated, and yes they hate you for challenging their cherished beliefs. But, in the end, they always appreciate it. Scepticism is great because it makes you a much better and wiser HR consumer. It fine-tunes your BS detector and alerts you to overblown claims and marketing nonsense. When you hear something like 'employee engagement is the number one driver of organisational performance' your BS detector immediately goes off. Is there really a number one driver of performance? What’s the evidence? We should take all claims about the effectiveness of HR practices with a pinch of salt. And if that isn’t working for you, try a shovelful.

Rob Briner is professor of organisational psychology at Bath University's School of Management


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HR TRANSFORMATION
How a “tsunami of change” is shaping the future of HR

While the identity and purpose of HR have sometimes been questioned in the past, the future of HR is currently in the balance as it is currently experiencing a “tsunami of change” like never before, according to an expert in organisational development.

“This time it’s different,” said Ben Whitter, organisation and people development manager for The University of Nottingham in China and CEO of consulting firm Tsunami Leadership.

“There are fundamental shifts taking place in HR. Leading organisations, for example, are quickly moving to people analytics and data-informed HR strategies, which are becoming the essential ingredients of solid HR functions.”

The future of HR is about tuning into how to get the best out of people within the workplace and, as a profession, and he said HR is using data much more widely, carefully and creatively to define, develop and market great workplace experiences and the connected business strategy.

“It’s really all about a much stronger and visible impact on business performance, and progressive HR folks are showing where, how and why people strategy affects the bottom-line in a way traditional HR hasn’t been able to – and its adding massive value,” said Whitter.

Key changes for HR
Employee experience is currently a hot topic for HR (as evidenced by recent developments at Airbnb and Amazon), according to Whitter, who said there is intense attention and debate about the quality of workplaces.

“Some companies are trying to get ahead of the curve by bringing together key internal functions, and not just the typical HR stuff, under the banner of employee experience so that they can be much more focused and connected in ensuring organisational culture drives performance,” he said.

“This shift in expectations of the HR function is also affecting long-standing ‘norms’ within the workplace such as performance management, which has been thrown out of companies like GE, Microsoft, and Accenture.

“It’s still clinging on at companies like Google, but it seems organisations are becoming acutely aware that they need to move to more progressive people operations.”

All this combined means that HR is firmly in the spotlight and has an incredible opportunity to become a core part of the business across sectors in what is becoming a more meaningful economy, he said.

“People are now realising the true potential of HR, and CEOs the world over are looking at their current HR functions with a renewed sense of what could be, while at the same time understanding much more clearly what they’re missing out on by sticking to more traditional HR models.”

Skill sets in the future of HR
The traditional HR career and development path is blurring significantly as organisations are starting to recruit people who have shunned the ‘old’ ways in favour of the new, said Whitter.

“Tesla, for example, wants HR people who absolutely do not believe in the ‘old’ HR. They want ‘HR rockstars’ – people who are fully in tune with the business, but also practitioners who utilise data and know-how effectively within their operations to add significant value,” he said.

“This is about laser-like impact in the right places.”

Those well versed in the development of organisations and businesses are being seen as the key to lead HR functions, according to Whitter.

“This changes the career path completely in that more and more HR leaders are coming from very diverse backgrounds, bringing their unique skillsets into play, which can span across a range of functions, and [this] is decent-size step away from the more traditional career routes the profession has been used to,” he said.

The bottom line is that a wide ranging and diverse CV is becoming much more desirable to potential employers than a traditional, core HR background, according to Whitter.

Other critical elements of new roles involve an integration of skills across marketing, employer branding, training, communications, engagement, PR, and community/partnership roles, and other operational roles, he said.

“This is a very different brand of HR leader and a very different brand of HR.”

Taking the step up
HR leaders can take a number of steps to help develop the capability of their HR function, and Whitter said this starts from “where you are and with what you’ve got”.

“For me this means really going to deep into organisational cultures, getting out into the world, learning from each sector and its people.

“The really great HR people figure out a way to blaze a trail within their existing roles.” Organisations are very unique communities of people to explore, learn from and understand, explained Whitter, who said that in reality the challenges that HR people see may not vary too much, but the solutions usually do.

“What is right in one context rarely translates well in another,” he said.

“Those seeking to move into this new brand of HR leadership role will need to become immersed in the business from the get-go factoring in diverse experiences and cultivating a more progressive profile.

“The employee experience is front and centre within this though and securing a skill-set that includes business, data, people analytics, applied-research techniques, and psychology will become an essential requirement within future HR.”

The biggest, most immediate task for HR functions is to move from traditional HR thinking to employee experience thinking.

“This is critical for HR teams and makes clear HR’s role in partnering with the CEO and top team to lead an organisation’s culture,” said Whitter.

“The implied opportunity within this is that the HR function as a whole can become the consultancy of choice within businesses via an in-context development approach focused on the employee experience.

“This, alongside a more intrapreneurial style, will help HR functions seize the future in a way that breaks this support function mentality that holds the profession back.”

Whitter said the new economy needs leading-edge and progressive HR functions more than ever before, and predicted the new HR will not be a business partner and will not be fighting for a ‘seat at the table’.

“All that will fade away. HR has the opportunity to become so much more – a true business leader, and I challenge all HR professionals to make this so,” he said.


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HR TRANSFORMATION
Top HR Takeaways from Think 2018

Insights into the future of work at the heavy-hitting HR Exchange, intimate Think Tank sessions that challenged and provoked, hands-on access to new HR tech solutions, and fantastic live entertainment all made Think 2018 one for the books. More than 30,000 attendees, including some of the world’s top HR visionaries, gathered in Las Vegas this week to discuss the latest big ideas in talent management, AI, cloud, mobile, security, and more. Here are some of the top HR themes we saw emerge at #Think2018:

Employee experience rules

If there was one common thread throughout almost every HR presentation or discussion, it was that the employee experience is critical. In her keynote, Diane Gherson, IBM’s CHRO, stated: “We have employees that are learning how to operate in a world that is consumer grade.” As HR shifts from global standards to personalization at scale, she said, “one size does not fit all.” This theme was amplified throughout the week, with discussions about how employee experience drives customer experience, examples of how the candidate experience impacts revenue, and an emphasis on the importance of building an experience around career development to retain and grow talent. Jeanne Meister, author and partner at Future Workplace, brought it home with the statement: “Employee experience is not an HR initiative, it’s a business initiative.”

Gary Hill talking about Jeanne Meister presentation at IBM HR Exchange.Andi Britt talking about Tina Marron Partridge presentation at IBM HR Exchange.

Play offense by using AI to empower people

During her keynote address, IBM CEO Ginni Rometty advised companies to go on the offense to win, specifically by leveraging digital platforms, embedding learning in every process, and empowering people with all forms of digital intelligence. While advising attendees to put AI though every process they do at their companies, she called out some of the pervasive places where IBM clients are starting: customer service, risk and compliance, knowledge workers, and HR.

“HR, ironically, to me is one of the greatest processes in a business to start at this,” Ginni stated. “I look at my own HR team and what they’ve done to put cognition in everything. Starting with when a candidate… comes to the website. Because we’re using Watson… we get 3X the applications that any other site out there gets from when people visit it.”

“Predict attrition, predict salary increases, personalize learning,” she continued. “Just last year, just the Watson parts of the improvements in my HR process was over $100 million.”
Dion Hinchcliffe talking about IBM Chairman Ginni Rometty keynote at Think 2018.

In this new era of AI, data is the key to the castle

Richard Hughes, senior vice president and chief of strategy, Human Capital at UnitedHealth Group, shared how his organization brought big data and AI to the talent acquisition process. In a panel on AI and HR transformation, Rich stated, “The future is going to be centered around the employee experience and taking engagement down to the individual level. There is no way we can do that at any scale without applying the best that data science has to offer.” Citing her experience using IBM Watson Recruitment to transform recruiting at H&R Block, Katie Waldo, talent acquisition manager, reiterated the importance of data, emphasizing that “Watson needs data – the right kind of data.”

Quote from Rich Hughes, UnitedHealth Group, at IBM HR Exchange.

Skills, skills, skills

Conversations around skills were almost as prevalent as the importance of the employee experience (and in some ways, inextricably linked). Linda Ginac, CEO of TalentGuard, shared that “95% of CEOs say they don’t have the skills required to compete in their marketplace.” Many presenters highlighted skills shortages driven by the digital age, a need for new types of talent with new skills, and the need for skills and competencies to change as technology changes. Jeanne Meister went so far as to claim that “doing a better job of understanding skills and job roles that impact the business is the next big thing in HR” and asserted the importance of looking at “skills, not schools.”

Narrowing the focus into one specific industry, conversation sparked around the skills shortage in cybersecurity, with Julian Meyrick, VP of Security for IBM Europe, citing that 70% of cybersecurity professionals say that skills shortages negatively impacted their business. One solution is to proactively assess the soft skills required for success in cybersecurity.

Quote from Jim Alvilhiera about sourcing talent for cybersecurity.

AI won’t take our jobs, it will allow us to do our jobs

We’ve all heard the concerns about AI taking our jobs. However, at Think 2018, the message across the board was that AI will allow us to actually do our jobs. With analysts predicting that AI will recover 6.2 billion hours of worker productivity by 2021, John Sumser, principal at HRExaminer, summed it up well by stating, “The work used to be the software. Today, the work is moving away from your desk, doing things, and creating value.” Katie Waldo from H&R Block reiterated: “AI in talent acquisition is not going to replace the recruiter. It is creating a shift for the recruiter to focus on more value-add activities.” Organizations like EY and BuzzFeed showcased examples of AI-powered chatbots and virtual assistants delivering returns for the business and enabling HR professionals to shift their focus from administrative to strategic activities.

Tweet from Nicholas McQuire about EY presentation at Think 2018.

In fact, AI may just make us more human(e)

Resoundingly, the message at Think 2018 was recognition of the immense responsibility we all have as stewards and custodians in this new era of AI. There was also excitement at the opportunity to put the human back in HR. Tina Marron-Partridge, VP, executive partner, and global leader of Talent & Engagement for IBM Global Business Services, summed it up with this simple statement: “AI should help humans flourish, not diminish human value.”

Quote from IBM CHRO Diane Gherson at IBM HR Exchange.IBM HR Exchange panel of John Ferguson, Linda Ginac, Kevin Grossman and Obed D Louissaint.


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HR TRANSFORMATION
Changing HR Operating Models - 'You can't put in what God left out': not everyone can be a strategic HR business partner

In recent years the Ulrich three-box HR model (shared services, centres of excellence and HR business partners) has become the standard delivery model for HR. The model is fundamentally a sound model and has taken HR forward, but in our research we have found a big gap between intention and reality, especially in the role of HR business partners. Why?

Historically a lot of HR work has been about delivering processes to the business, administering payroll, keeping out of tribunals, writing terms and conditions, and so on, so HR has attracted people with the requisite skills and mindset. The HR business partner role is very different. It's about delivering innovative ways of developing organisational and people capability, building on deep data-driven insights into the strategic and commercial direction of the business. This requires a different level of thinking, as the complexity and degree of ambiguity inherent in the role, and in the environment, in which organisations are operating has increased exponentially.

In some cases the issue has been that no one has actually articulated to the newly rebadged business partners how the role is different or the new level it is operating at. In others, no one has helped those with whom they are partnering understand what is on offer and how it differs from the past. In many cases, however, there has been a failure to understand the business partner role and how it differs from the old HR model and then match this to existing HR capability. The simple fact is that the 'ask' has risen faster than the capability of many people in HR to deliver it. As a result, many HR business partners have been unable to deliver what is required in the role or have dumbed down the role to a level they are comfortable with but which doesn't deliver what is required by the business.

One of the causal factors has been that as organisational structures become leaner and ever more matrixed, partner roles become the knot in the bow tie, where they are pivotal in ensuring the whole model functions effectively. Nowhere has this been more prevalent than in HR. This means that it becomes vital that you have a 'big enough' person in the role, which often isn't the case because they are the same person as before the organisational change.

Elliott Jaques1, one of the gurus of organisational psychology, identified the challenge that lies behind this problem. In his research he identified seven levels of work complexity, each defined by increasing ambiguity, longer timeframes for decision-making success and greater delivery breadth. He also identified that people can only engage with complexity up to a level related to their intellectual capability to understand it. As Sam Mussabini said to Harold Abrahams in the film Chariots of Fire, 'You can't put in what God left out.' The essential problem with HR business partnering is that in many cases we are asking level 3 capability people to do work at level 4. The issue isn't about developing them; the issue is that they are simply incapable of operating at the right level, either at that time or potentially at all during the span of their natural careers. In our most recent research we asked what CEOs look for from their HR directors (HRDs) and one of the questions we asked was why they had sacked their HRDs. Three issues came out. One was a lack of integrity, which was the most consistent and most important insight from the whole research. The second was great talk but no delivery. The third was that they either weren't up to the role or had outgrown it:

  • 'When we started we employed an HR admin lady who made sure the payroll worked, but we outgrew her.'
  • 'It was a function of the agenda. The individual didn't have the capability to step up again.'
  • 'We had taken the game up a notch. We had someone who was successful in the old agenda but not in the new. I would give them a reference. They weren't a failure; it depended [on] what we wanted from them.'
  • 'Intellect was the key. They didn't have the ability to make sure my thinking on strategy was matched to their deep knowledge of the capability to deliver it.'
  • 'We are dealing with more complexity on a broader scale. Once we got six variables to think about versus four, they didn't have the capability to think at that level on a broader scale.'

In each case they didn't blame the person. They were good at what they were good at, but the role required them to be good at a different level. In these quotes lies the answer to the conundrum. We shouldn't ask people to operate at a level they simply can't operate at. We need to help people be the best they can be, not try to get everyone to be something they can't be. This has several implications.

Fit the role to the person

Not all HR business partner roles need to operate at a strategic board level. Not all HR business partner roles are the same, so match your level 4 people to level 4 roles and level 3 to level 3. If you have too many roles at the highest levels compared with people who can operate there, match the best people to the roles that have the biggest impact on the bottom line or on patient service or whatever the key value driver is.

A simple test is to list on the left-hand side of the page the business units and how critical and material they are to creating value. On the right, list your HR business partners by their capability. Does the left-hand list match the right? Do your best business partners face off to the most critical business areas? One final point here is don't build the list only on current returns but also on future growth opportunities. It may be you want to match your best HR business partner to the smaller but higher potential and therefore more strategically critical growth opportunities rather than a larger cash cow.

There is a strong organisational design driver here because level 4 is the point at which you have the biggest mismatch between roles featuring work at that complexity level, and the natural incidence of people in the population with the ability to work at that level. This is not an isolated issue within HR, but is true of many roles in many functions. HR just sees it more frequently because I would argue that the ratio of role complexity increase to individual development has been higher than other functions in recent years.

Be clear what we are recruiting for

This isn't just about a competency framework; it's about being realistic about the level we are asking people to operate at. It's become unfashionable to use tests of verbal and numeric reasoning skills, but perhaps we should look at more sophisticated and rigorous ways of assessing what level a person can operate at. We are letting our people and the business down if we recruit people to do a job they simply can't do. Levels of work suggest that by far the best predictor of success in higher complexity roles is judgement – but this is rarely assessed.

Match your development spend to what can actually be developed

It is very difficult to send someone on a programme that develops their intellectual capability or their systemic thinking ability. But these capabilities can be more swiftly developed through a broader career-pathing approach which tries to develop perspective (for example across different functions) and hence judgement. But this takes time and our research shows that this kind of development is the least often used by HR.

Equally there are some key hard skills that can be developed: understanding the business strategy and where value is created, data-driven insight development, and so on. We should focus our HR development spend in these areas. What is disturbing is when HR people tend to focus their development on HR-related rather than business-related areas: 'And here's one more slice of telling SHRM data: When HR professionals were asked about the worth of various academic courses toward a "successful career in HR," 83% said that classes in interpersonal communications skills had "extremely high value." Employment law and business ethics followed, at 71% and 66%, respectively. Where was change management? At 35%. Strategic management? 32%. Finance? Um, that was just 2%.'2

It also might be that you don't develop all these skills in every business partner or even within HR. As an example, not everyone needs to be a data scientist, but everyone needs to be comfortable with data. It might be that you access the deep data analytical skills from elsewhere in the business or from contractors who work closely with your HR business partners, but your HR business partners must recognise the value that issue-driven data analytics will bring to HR.

Be willing to throttle back the promise

In a desire to be seen to be responsive and relevant, there is a danger we overpromise and under-deliver. Perhaps we need to be willing to promise a bit less and deliver a little bit more or deliver where it is most critical versus trying to do it everywhere. Many people will say, 'but that will impact our short-term credibility'. Isn't it better to be rigorous about assessing the real capability of the HR function and our HR business partners and match what we promise to the business to what we can actually deliver? Perhaps a dash of realism and humility might serve us better in the long term. As a previous boss once said to me, 'the longest route is often the quickest way to get somewhere.'

References

1. JACQUES, E. (1997) Requisite organisation: total system for effective managerial organisation and managerial leadership for the 21st century. London: Gower.

2. HAMMONDS, K. H. (2005) Why we hate HR. New York: Fast Company.


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HR TRANSFORMATION
The What and How of a Digital Strategy

Companies are struggling to build a digital roadmap for their HR function. But is it a good idea to implement one at all? The answer is: Yes, absolutely. We are in the midst of the 4thindustrial revolution, the world of work is changing faster than ever before, it is a revolution that was anticipated by science fiction authors before economists and business leaders even became aware of it. A digital HR strategy provides the opportunity for HR to shape the future of work for their business and have a clear view on how jobs will be lost and gained. A roadmap sets course and speed for the HR function and for people priorities within the company. Companies with a distinct HR Digital Roadmap endow themselves with a foundation to not only cope with these changes but to influence them to gain competitive advantage.

The conventional way: Digital HR = HR Technology Roadmap

Of course, a digital world does not only require change from people and businesses. It also comes with new technology enhancing the activities and effects of an HR function: Technology being put into the hands of end-users, new digital listening techniques, interpreting vast amounts of social media information to better understand and even predict the wants, needs, and capabilities of people. This opportunity is mirrored by an evolving HR technology market. Gartner sees cloud-based HRIS on the ‘slope of enlightenment’, with Workday, SAP, and Oracle as market leaders, and mainstream adoption happening as we speak. The market is growing by 12% per year. And from our research we know that the average Fortune 500 company spends 10 M USD per annum on new, cloud-based HRIS. Obviously the standard approach to the digital age in HR is a heavy investment in technology that helps to ‘do what HR does, but in a digital way’. This approach often leaves HR teams very busy – and often unnerved by the major efforts, often two years of labor, it takes to implement the new technology.

The better way: Digital HR = Business Value in the New World of Work

Is there a better, more promising alternative to just trotting down the same alley as before, ‘doing what HR does, but in a digital way’? Yes, but HR has to identify the right levers that it can pull to generate business value in a digital world. TI People’s research studied this question and found that HR should set three new priorities: 1/Actively manage the customer’s experience of the function, 2/develop the organization from job-based to skill-based and 3/ provide workforce analytics insights. HR teams should focus on these three levers and not allow ‘the new HRIT system’ to dominate their agenda. And HR teams should not only change the WHAT of the digital agenda but also build new HR capabilities to operate in this new environment – and in that way shape the HOW.

The WHAT: New Areas of Focus

The ‘What’ is about incorporating these three priorities in a three-year HR strategic plan:

The What: (Real) digital HR priorities

 

Customer Experience of HR (CxHR) means running HR while always keeping in mind the perspective of its internal customers. Although the use of term ‘customers’ as applied to HR is debatable, it is nevertheless a helpful shortcut to the fact that employees’ or candidates’ perception of HR at decisive moments – ‘Moments that Matter’ – shape their opinion of the company and impacts their engagement. These ‘Moments that Matter’ are aligned to the employee’s perspective and might overlap with HR service ‘silos’ (as for example in recruitment) or cut across several of them (as in relocation or career change).

CxHR is the key driving force when it comes to the future of the HR function, as we have laid out in this article. It consists of three components: 1/Agile service design – which simplified means to (re-) define HR processes fast, and from the perspective of the customer. 2/Customer Experience Management follows Kaplan’s and Norton’s statement ‘What you can’t measure, you can’t manage’. For HR executives this means: To implement changes from agile service design as a ‘minimum viable’ service, measure its impact on the customer experience of the service, then iterate to continuously improve the experience. In a final step these newly designed services should be supported by 3/ Applification & Machine Intelligence to provide the best possible experience while keeping sufficient scale and holding the cost base down.

Skill-based organization of work is the major value contribution that HR can bring to business. Following the research of McKinsey Global Institute, work and employee matching can be improved significantly by using techniques of online talent marketplaces, applied within companies and externally. These techniques will enable networking and collaboration. They require a new version of skill management, including prediction of future skill demands, detection of current skills of people in real time, and effective mechanisms to match skills and tasks. Additionally, they require a new network leadership culture, a culture in which trust and indirect management and feedback – continuously, effortlessly – is the norm.

Workforce analytics is the third key pillar supporting a HR digital roadmap. Using workforce analytics, companies will provide insights to their managers for better people decisions and talent outcomes. To do so, they need a comprehensive definition of analytics, consisting of descriptive analytics (including reporting as well!), the – pretty sexy – predictive analytics and a modern, less cumbersome and more skill-focused version of workforce planning.

The HOW: HR Innovation Culture

When executing these ‘What’-priorities, companies often face a disconnect between their own HR capabilities and the requirements to execute against the HR strategic plan. Bridging this gap and developing these capabilities is the ‘How’: Creating a new HR culture defined by a new set of behaviors, skills, technology tools, KPIs, and communities of practice:

The HOW – Establishing an innovation culture in HR

From the HR leadership team’s point of view, this model can be specified like this:

Behaviors: As HR professionals we know our stuff. And we are the guardians of compliance with employment law, equal pay, diversity and inclusion rules. But we feel the need to be innovators as well, to act and think in new ways that cross HR silo boundaries and simultaneously support business strategies.

Skills: Our classic HR skillset centers around HR operations and talent management. A modern skillset adds design thinking and analytics. Design thinking will help us create innovative services for better customer experience fast and enable us to be adaptive to the speed of the business. Analytics will help us generate fact based insights for better people decisions by business leaders.

Technology Tools: Our traditional tools in HR have been first and foremost designed to automate our existing tasks, implementing new tasks having never been their main objective. That is about to change: We need a set of tools that establishes new innovative behaviors by the HR team and fosters further innovation over time. Exemplary, this could mean to measure and benchmark customer experience of HR services at touchpoint level (and in real time) to feed continuous service improvement.

KPIs: Traditionally we have measured HR by engagement and cost. As engagement is a less actionable KPI for the function, most decisions are being taken based on cost/budget allocation considerations, hence defining HR as a cost-driven function. In a digital world, we can measure our real performance – by analyzing the customer experience we provide to our employees, managers, candidates, freelancers and alumni. And by looking closely at the new KPIs describing the agility of the organization, meaning, for example, the portion of work organized by skills vs. by jobs.

Community: In a digital world, the group of people we should establish networks with is about to change as well. So far, HR employees mostly surrounded themselves with other HR specialists. In this age, we need to build a new community of like-minded peers that embark on the same digital journey; it should include out-of-the-box-thinkers and practitioners with innovation backgrounds (product design, marketing, etc.) both inside and outside our company. This will reinforce our commitment to HR innovation and inspire us to tackle the digital challenges ahead.

A Balanced Digital HR Strategy

For a successful digital HR strategy, HR executives should focus at first on balancing both, the What and the How. In collaboration with some 40 global companies, TI People has developed a template for a balanced digital HR strategy – which is already fit to be put in place. While continuing to work with these companies, this template will be updated accordingly and enriched with new components. One example of a specific application of the What and the How in a digital HR company could look like this:

The What & How Wheel for a balanced digital HR strategy

3 The What & How Wheel for a balanced digital HR strategy

 

Set & adjust digital HR strategy: A vital step for two major reasons: Taking it means identifying the few digital HR priorities with the highest business impact and gather the entire HR leadership team behind these priorities. A typical first step of a digital HR company is a structured, yet pragmatic look at the current digital HR maturity – ideally assessed relative to peer benchmarks, strategic goals of the company and to the company’s risk profile. In an innovation workshop attended by the HR leadership team these results will be translated into action items. Finally, a roadmap (18-36 months) for digital HR activities is going to be defined.

Manage HR by customer experience: We already identified the importance of the HR customer’s (managers, employees, candidates, freelancers, alumni) experience with HR services as the driving force of digital HR. For a useful and profitable implementation, digital HR companies usually set out on a threefold journey: First, they train HR in design thinking to establish a common ground when it comes to discussing customer centricity and agile design of HR services. Second, they rede­sign ‘Moments-that-Matter’ for employees or managers or candidates. It has proven extremely helpful to do this in the framework of a design thin­king workshop. In this workshop ‘personas’ of HR customer groups and owners of ‘touch­points’ and ‘channels’ of a service should serve as sparring partners for the HR team. And third, companies measure the experience of their customers at the touchpoint level in almost real time (using digital listening techniques).

Maximize HRIS returns: In 8 out of 10 large organizations, the implementation, the rollout or the selec­tion of new HR technology is a major focus topic. For each new technology in HR it is important to under­stand the interdependency between the ROI of a new system and its end-customer adoption. Digital HR companies analyze this interdependency and – given its relevance – assess best practices of other companies to improve end-user adoption.

Build an HR innovation culture: An innovative culture requires constant influx of innovation into the daily routines of HR leaders in digital HR companies. As a foundation and as a starting point, digital HR companies attend meetings with innovation leaders of other companies (conferences will not do the trick – real interaction is needed!). They encourage their teams and put them under obligation to attend webinars for innovation topics. And they provide smart e-learning options to their teams to ensure a common level of understanding digital HR. Beyond these foundational activities, digital HR companies are open to creating digital HR solutions together with other companies. Breaking the silos is important – and co-creating ‘the next moment that matters’ (for example onboarding) with a handful of like-minded people from other innovative companies will make a big and decisive difference.

Conclusion

HR needs a digital HR agenda that focuses on the few activities that generate the biggest business value in the new world of work (the WHAT). And it needs to change the way the function works – an emphasis of innovation focus is the new HOW. Both, the WHAT and the HOW, have to be an integral part of the digital HR agenda. If not, HR is doomed to simply translate ‘digital HR’ as ‘a new HRIS’ – which is a high-risk undertaking, missing out on the great digital opportunities already on the table.


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HR TRANSFORMATION
The Rise of the Social Enterprise: A New Paradigm for Business

After a year of research and another enormous survey of business and HR leaders around the world, we just released the Deloitte Human Capital Trends 2018, entitled “The Rise of the Social Enterprise.”

What we found, after detailed analysis of the data and many interviews with business leaders, is that business today is entering a whole new paradigm for management: one which considers a business less of a “company” and more of an “institution,” integrated into the social fabric of society.

I know that sounds a bit high-level, but the detailed trends make it clear and real.  Consider just a few statistics we found.

  • 65% of companies surveyed now rate “inclusive growth” as one of their top three goals, eclipsing strategies like “growing market share” or “being the category leader.”
  • “Citizenship and social impact” were rated critical or important by 77% of our respondents, and this topic was rated the “least ready” issue among the executives we surveyed
  • The need to create 21st century careers, improve the relevance of reward systems, focus on employee well-being, and address the issue longevity in the workforce all rated as top 10 issues in the human capital agenda.

The trends we found, which are listed below, are topics one would have considered “soft” or “nice to do” in a prior age. Today, because of the power of each individual in the world of work, they are urgent.

One of the trends we identified is that companies today must be “social” in a truly external sense. Customers, stakeholders, communities, business partners, and employees all have an enormous impact on a company’s brand, growth, and profitability. Being a “social enterprise” means going beyond a focus on revenue and profit and clearly understanding that we operate in an ecosystem, and all these relationships are equally important.

Interestingly, the biggest challenge we found in this research is that C-suite executives are not operating or organized effectively to deal with this new world. If you think about the trends we highlight in the study, each cannot be addressed without an enterprise-wide, cross-functional approach. So the idea of having a C-Suite executive who owns various functional areas alone simply does not work.

In fact what our research found was that a new model, which we call the “Symphonic C-Suite,” is key, and companies should take on these issues as a team, creating a model we call “teams leading teams,” instead of the siloed functional ownership we see in the C-Suite today.

For me personally this work is always among the most exciting things I do here at Deloitte, and this year’s report speaks to the need to find mission, trust, and value in our lives. We are living in a world of tremendous economic growth, technology revolution, yet also one of income inequality, contentious debate about nationalism, and lots of concerns about diversity, inclusion, fairness, and equity at work. I think our research shows that all these topics are now coming together, and business leaders must address them in an integrated and strategic way.

One more point of introduction. As you read these trends and think about how they impact your organization (whether you are in HR or line leadership), I think you’ll find that there are two real dimensions of transformation taking place.

Fig 1:  The Two Dimensions of the Social Enterprise Paradigm

First is the horizontal axis – moving from an organization which operates as functional groups to one that operates as a “network of teams.”  I’ve written about this extensively before (last year it was discussed in detail in the 2017 trends) and this trend has accelerated.  This year I’ve met with banks, manufacturers, insurance companies, and healthcare providers who are all moving toward a “networked organization” model.

Second is the vertical axis – where every part of the company (sales, marketing, product strategy, engineering, HR, and finance) looks at the impact of external factors on the company and the company’s footprint in the external world. As one of our clients put it (a consumer goods company), customers now do business with companies who are local, companies who do good things in the community, and companies that do good things for society. This goes far beyond “corporate responsibility” into really being a good citizen, and redefining value propositions in this way.  And this means doing a much better job of managing data, by the way, an issue that has become “front page” around the world.

(One only has to read the news to see how today even the technology industry is impacted by this trend.)

Highlight of the Ten Trends

Let me briefly highlight the trends here (in order of urgency from the research), and I encourage you to read the whole report, download the app, and attend one of our webinars highlighting the research.

#1 The Symphonic C-Suite

As I discussed above, the most urgent trend we identified was the need for C-Suite executives to operate in a more integrated way (we call that “Symphonic”). Today it’s as if each C-suite exec (CEO, COO, CFO, CMO, CHRO, CTO, etc.) is leading their own set of instruments, playing the music they think will contribute best to the overall orchestral performance. Of course in the symphony this would be a disaster, and the analogy plays out well in business as well.

Consider the issues of gender pay equity or data privacy, for example. No one C-Suite executive can “own” this problem, because it impacts every part of the company. Ditto for problems like “improving well-being” or “reducing attrition” or “improving our employment brand.” The latest survey from The Conference Board found that “attracting and developing talent” is now the #1 topic on the minds of CEO’s – that issue, along with the others I mentioned, cannot be owned by the CHRO alone.

#2. People Data:  How Far Is Too Far?

We are all bombarded with news about AI, autonomous vehicles, and a never-ending discussion of the potential role of computer intelligence in our lives. What our research found is that this enormous issue – that of taking better responsibility for our data – is high on the minds of business leaders.

As I was writing this trend I had the opportunity to interview the head of research for one of the largest technology companies in the world. He told me that we still don’t really know how to make AI “safe,” because all this data we are collecting can predict and recommend actions that might be biased, single-minded, or ultimately just dangerous. Of course tools that predict attrition or recommend new learning programs are useful, but what happens when systems “recommend a salary” or “recommend a performance rating?”  That kind of software can change our human behavior and clearly changes our perceptions of an individual.

With the GDPR (General Data Protection Regulation, a new EU regulation) now becoming law, companies must do a much better job of managing, stewarding, and securing data about people. Too many stories have come out about data leaking into the wrong hands, and often the ramifications of this release are not initially known. While the HR profession is very excited about the opportunity to finally use analytics to make better decisions, this year our research shows a need to focus on privacy, security, governance, and “auditing” of these systems in a much bigger way.

#3. From Careers to Experience: New Pathways

This trend, which has accelerated in importance each year over the last four years, is the one I personally think is most important. Everyone in the working world is now concerned about the future of their career in a world of AI, robotics, and ever-changing technologies and jobs.

I’ve done many presentations on the Future of Work in the last 18 months, and in every case I find people astounded about the way new jobs are being created at a faster rate than we have seen in decades. Today the jobs of “machine learning engineer” (which didn’t exist three years ago), “social media curator,” or “robotic system trainer” are growing at astounding rates, while all our traditional roles in sales, marketing, finance, and HR are changing as well.

What we found in this research is that companies now understand that their “upward path” career models are often very limiting, so they want to create models for “facilitated talent mobility” – models that give people hope, new skills, and continuous development in areas the company needs. But this is turning out to be harder than they thought, and the tools and systems to make this an institutional process are not quite ready.

The L&D market is going through a revolution and new tools for continuous learning are arriving this year, so this trend will be one you want to read.  I would put it on the top of your list of issues to address this year.

#4. Well-being:  A Strategy and a Responsibility

I was at a recent meeting of HR executives and one of the vendors cited a statistic that blew my mind: one in six Americans now take a psychiatric drug to help with depression, anxiety, or sleep[1]. In today’s digital world of work, there’s a new level of stress in the workplace, which in turn creates a variety of issues with sleep and well-being, which in turn creates medical conditions (heart disease, diabetes, overweight, etc.) that reduce our health.

The trend is not that healthcare is an important benefit for employers: rather the trend is that this is now a strategic issue that impacts workforce productivity, profitability, and employment brand. As I’ve surveyed this market and talked with many companies about this issue, I think we’ve reached a point where “employee engagement” is almost a meaningless phrase if it does not embrace the need to “make work healthy” and help people bring their “best selves” to work every day.

I won’t cite all the statistics here, but as you read this trend you’ll see that well-being is now a key corporate strategy and one that must be measured through performance and productivity metrics, not simply those that reduce the cost of insurance.

I think this topic also crosses the boundary into citizenship and responsibility – if you are not building an organization that helps people stay healthy and happy you are not fulfilling your responsibility as an employer, and that impacts your customer brand.

The leading practices for well-being at work are all being invented now, as our organizations become more “real-time” and demanding by the day. I think you should read this trend as a wakeup call and think hard about whether you are putting the right level of focus and energy into this topic.

#5. The Hyperconnected Workplace: Will Productivity Reign?

As a professional in my early 60s, who grew up in companies that had no voicemail, no email, and no electronic communications at all (except fax machines), I am particularly sensitive to this trend. Today, whether we like it or not, we are all “over-instrumented” and “overloaded” by messages, communication tools, and more intelligent systems telling us what to do.

At this point in time, based on the research we’ve done (and many of my own studies), I believe we work in an environment where technology is ahead of our ability to adapt. As we talked about in last year’s trends, economic productivity has not kept up with economic growth (or salary increases for that matter), and this is a funny paradox when you consider how many successful technology providers there are.

As we discovered in this trend, almost every company now has multiple systems for messaging and communication, we are all implementing internal social networks at work, yet we have very few rules, models, or practices to help people figure out how to use all this “stuff” without wasting their time.

I met with a vendor last week who has developed algorithms to monitor your email traffic and office calendar, and immediately give you recommendations on when to “push out a meeting” or “not respond to a message” in order to give you more thinking time to be productive. Our latest L&D research found that employees have only 24 minutes a week to “learn” on the job, so a new breed of micro-learning tools are emerging to help us time-slice our development.

As we discuss in this trend, this is a problem yet to be solved. I certainly hope that AI and analytics tools will give us smarter suggestions about what to ignore and what to do, but unfortunately we are all human and we often respond to things in ways we cannot fully understand.  (Look at how easy it is to create “clickbait” on social networks).  Let’s not let our companies turn into “clickbait” factories for our people, and in this trend we tried to give you some examples of how to deal with this issue.

#6. New Rewards:  Personalized, Agile, and Holistic

This trend is one I’ve been wanting to write about for some time, and I think the time has come. As a global business and HR community, there has been a lot done to make jobs more flexible, make careers more agile, and help managers become better coaches and mentors to our people. But what we have not yet done is figure out how to pay, reward, and recognize people in a way that is similarly modern and “digital,” in this new world of work.

I’m not saying people aren’t paid enough – the trend in compensation is upward and companies are now working very hard to improve fairness, transparency, and completeness in the compensation world. What is missing is a new design for agile, personalized, and holistic rewards, one that is relevant to each individual and gives organizations the flexibility to offer just what is needed at the right point in time.

The compensation and rewards industry is massive, and in most companies salary and benefits are the single biggest expense. But when we asked companies if their compensation strategies aligned to the company’s business priorities, we were shocked to see that only 20% of companies answered yes. This has to change.

Today, as we discuss in the trend, organizations need to do a much better job of paying people in ways that matter to them, creating more transparency in the process, and giving people more information about why compensation decisions are made the way they are. Everyone feels personally invested in their pay, bonus, and benefits, so in many ways this is the most powerful lever we have as leaders.

Just to give you a sense of the disruption ahead in this area. One of the larger payroll providers told me in the last few months that they see a trend toward “instant pay” – people getting paid every day for the work they did that day. Bersin recently started providing services for “conjoint analysis” of various pay and benefits programs (letting employees value how much they truly mean to them, rather than evaluate them based on the cost), and found that different segments of employees have vastly different desires for how they want to be rewarded.

These are important issues, along with the topic of fairness, gender pay equity, and generational pay equity, that have to be addressed now –and they fall into the category of “being a good citizen” and “focusing on the employee experience,” not just “being competitive in the market.”

#7. Citizenship and Social Impact: Society Holds the Mirror

This topic, which was rated important by 77% of companies around the world, is the one where companies feel the most behind (51% feel unready to deal with this issue). Why? Because it’s quite confusing and often unclear what to do.

The issue we write about here is the need for CEOs and business leaders in general to take a stronger position on their responsible role in society. While business leaders are not “elected” like politicians, in many ways they are “elected” by their boards and employees, so they must think about everyone in the ecosystem in the interest of the company.

Companies themselves, as Larry Fink from BlackRock and Marc Benioff from Salesforce have stated often, are valued based on their responsibility to society, so even CEOs who don’t want to deal with this issue are being asked to be more active in public issues. A recent articledescribes the conundrum “activist CEOs” face in their jobs and points out that while any position you take on social issues is likely to alienate someone, your employees and shareholders now want you to say something. So it’s not a topic that can be ignored any more.

I won’t go much further here but let me cite one more interesting fact. A recent study of product buyers was asked to qualify their buying preferences for vendors that had CEOs that took strong positions on social issues vs. those that did not. They found that random customers were 40% more likely to buy from companies who’s CEOs took positions they felt good about than those who did not, so the power of dealing with this issue is high.

#8. AI Robotics and Automation:  Humans in the Loop

This is a trend we all see every day:  companies are now waking up to the fact that nearly every job (including HR) is being impacted by AI and automation, and there are a wide variety of new jobs being created. As I like to describe it, AI does not “eliminate jobs” it “eliminates routine work” which in turn creates new jobs.  And as economists have found, only about 6% of the jobs in the world are focused on “building machines” (ie. Software engineers) so 94% of us have to learn to “use the machines,” again changing how we do what we do.

In this trend we highlight how quickly companies have awakened to this trend and how well they understand the topic. What they do not yet know is how to redesign jobs, how to redesign work, and how to build the new skills that are needed. And in the realm of HR, AI and cognitive tools are radically changing the landscape.

One of the issues we raise in this trend is the need for business and HR leaders to understand that AI is a technology, not a solution. It may create smarter decisions and higher quality outputs, but it has to be monitored and trained. And AI is dependent on data, so in order for companies to have great cognitive solutions for customers or internal operations there has to be a strong focus on quality data.

I believe we are in the first inning of a lot of job and organizational redesign driven by automation and AI, and this trend highlights some of the issues to consider.

#9. The Longevity Dividend: Work in an era of 100 year lives

This trend is a fascinating one, and opens up a topic that most of us understand and will live through in our lives. We are living longer, we are working longer, yet all our talent models, pay practices, and cultural values have not yet adapted to the change.

Let me highlight this issue with a few facts.  In most developed economies the birth rate is below replacement. This means that in order for the economy to grow, we are going to need more people – so the economic incentive for people to work longer is here.

At the same time, we still live in a world that highly values youth. We are just coming out of a decade of research on Millennials and now the Gen-Z workers are here. This cohort is similarly skilled and ambitious and there is a tendency for business and HR leaders to leverage these groups. I was at a meeting with 200 of the top execs from a large client and the CEO looked around the room and said “there are almost no Millennials in here, we need to fix this.”

I absolutely agree. It’s important to build companies that promote, develop, and challenge young people and companies that do this find themselves filled with new ideas, new work practices, and lots of excitement and growth.

At the same time, the baby boomer population is almost as big as the Millennial cohort and as baby boomers work into their 70s, 80s, and beyond, they make up a similarly important segment of the workforce. Today I believe we are “negatively biased” against age (the Deloitte Human Capital Trends 2018 study found that 41% of companies believe “age is a competitive disadvantage” in their organization). Yes, older people might make more money and older people may have older skills, but believe me (spoken as a 62 year old “young person”), we are just as anxious to learn, contribute, and grow as anyone else.

As we discuss in the report, there are some innovative programs and ideas out there, but generally speaking most corporate talent models do not understand or incorporate this “seasoned workforce” well. I won’t try to solve the problem in this article, but let me simply leave you with the thought that this will become an increasingly urgent problem and the sooner you think about it the better.

#10. The Workforce Ecosystem: Managing Beyond the Enterprise

The last trend, but by no means an unimportant one, is the recognition that the “workforce” of today is not a set of full-time, salaried people. We live in a world where contingent, gig, and crowd-based workers make up a significant percentage of the workforce and these “alternative work arrangements” are now the fastest growing segment.

Our research found, as we have seen in prior years, that companies are not yet ready to deal with this new world and while some embrace these alternative work arrangements well, most are nervous about how to manage this ecosystem well. Companies are concerned about legal issues, intellectual property, proprietary work practices, and a variety of cultural challenges.

As we have all seen in the ride-sharing and home-sharing industry, these are problems that can be solved. Once you come to the conclusion that your workforce won’t all be full time salaried people, it’s simply time to sit down and decide how you want to manage this new part of the ecosystem. There aren’t quite enough HR tools and systems to do this easily yet, but as you’ll see from the research the market is moving fast.

My research shows that most of us still do like to be part of a “team” or organization in our careers, but there are periods of time and many individuals who prefer to work as contractors, agents, or specialists. Thanks to technology this is easier than ever, and our research shows that companies that learn how to manage this ecosystem can create a new, more flexible balance sheet and often move faster, gain deeper skills, and grow at a much faster rate.

Bottom Line:  A New Paradigm for Business is Here

As I look back on all we’ve studied for this report and the ten trends we highlight, I am left with the conclusion that “being a social enterprise” is a paradigm shift in management. Not only must we deal with the ten trends above, but we have to recognize that business today cannot operate by only considering employees and customers. We now need a set of strategies, investments, and values that reflect the broader role businesses play in our society.

We are not trying to say that every company has to become an activist organization in their industry. But our research does show that over time, companies do have to “do good” in order to “do well.”

In the short run, you can make lots of decisions that optimize revenue, profits, and growth. But over time, as your business grows and the influence of society impacts you more, you will run into the pressures of “being social” and we believe it’s better to understand this issue earlier rather than later.

I hope our study gives you the insights and perspectives needed to help you understand the “rise of the social enterprise” as well as some new ideas, strategies, and solutions to make your organization thrive.