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HR TRANSFORMATION
Linking talent to value

Getting the best people into the most important roles does not happen by chance; it requires a disciplined look at where the organization really creates value and how top talent contributes.

To understand how difficult it is for senior leaders to link their companies’ business and talent priorities, consider the blind spot of a CEO we know. When asked to identify the critical roles in his company, the CEO neglected to mention the account manager for a key customer, in part because the position was not prominent in any organization chart. By just about any other criterion, though, this was one of the most important roles in the company, critical to current performance and future growth. The role demanded a high degree of responsibility, a complex set of interpersonal and technical skills, and an ability to respond deftly to the client’s rapidly changing needs.

Yet the CEO was not carefully tracking the position. The company was unaware of the incumbent’s growing dissatisfaction with her job. And there was no succession plan in place for the role. When the incumbent account manager, a very high performer, suddenly took a job at another company, the move stunned her superiors. As performance suffered, they scrambled to cover temporarily, and then to fill, a mission-critical role.

Disconnects such as this between talent and value are risky business—and regrettably common. Gaining a true understanding of who your top talent is and what your most critical roles are is a challenging task. Executives often use hierarchy, relationships, or intuition to make these determinations. They assume (incorrectly, as we will explain) that the most critical roles are always within the “top team” rather than three, or even four, layers below the top. In fact, critical positions and critical people can be found throughout an organization (Exhibit 1).

Roles that drive or enable value can be found across an organization.

Fortunately, there is a better way. Companies can more closely connect their talent and their opportunities to create value by using quantifiable measures to investigate their organizations’ nooks and crannies to find the most critical roles, whether they lie in design, manufacturing, HR, procurement, or any other discipline. They can define those jobs with clarity to ensure that top performers with the appropriate skills fill the roles. And they can put succession plans in place for each one.

The leaders at such companies understand that reallocating talent to the highest-value initiatives is as important as reallocating capital. This is not an annual exercise: it is a never-ending, highest-priority discipline. In a survey of more than 600 respondents, we found the talent-related practice most predictive of winning against competitors was frequent reallocation of high performers to the most critical strategic priorities. In fact, “fast” talent reallocators were 2.2 times more likely to outperform their competitors on total returns to shareholders (TRS) than were slow talent reallocators.1

Those results are consistent with the experience of Sandy Ogg, founder of CEOworks, former chief HR officer (CHRO) at Unilever, and former operating partner at the Blackstone Group. While in the latter role, Ogg began paying attention to which Blackstone investments made moves to match the right talent to the important roles from the start. He observed that 80 percent of those talent-centric portfolio companies hit all their first-year targets and went on to achieve 2.5 times the return on initial investment. Ogg also noted that the 22 most successful portfolio companies out of the 180 he evaluated managed their talent decisions with an eye toward linking critical leadership roles to the value they needed to generate. He recalled using similar value-centric talent-management approaches in his previous roles at Motorola, Unilever, and Blackstone, and he now had even clearer evidence of their impact. In partnership with McKinsey, he set out to codify this approach for linking talent to value.

Real-world examples best describe our learnings. In this article, we describe the journey of a CEO of a consumer-products company, “Company X,” who recently found herself reflecting on how to achieve dramatic revenue growth. The effort would demand reimagining how Company X generated value and then redefining critical roles and the people who filled them.

Define the value agenda

The first step in linking talent to value is to get under the hood of a company’s ambitions and targets. It is not enough just to know the overall numbers—the aspiration should be clearly attributable to specific territories, product areas, and business units. Company X already understood its overriding goal: to grow revenue by 150 percent within the next five years in its highly disrupted industry. When taking a more detailed look, however, the CEO and her team found that some small business units were likely to grow out of proportion to their size, making the value at stake in these businesses greater than in the larger ones. Design and manufacturing innovation would clearly have a positive impact on all business units, but if the two largest ones were to grow, they would also have to take advantage of international opportunities and digitally deliver their products and services.

Disaggregating value in this granular fashion set the table for a strategic discussion about which roles mattered most and about the skills and attributes needed by the talent who would fill those roles and drive future growth. Even at this early stage of the process, it was clear that the company’s future leaders would need to be comfortable in an international environment, leading teams with a high degree of cultural diversity; have experience in cutting-edge design and manufacturing processes; and possess digital fluency. The leaders would also have to be flexible and comfortable adapting to unforeseen disruptions.

Unfortunately, these character traits were not common across Company X’s cadre of leaders at the time. The CEO now understood the serious issue she had to confront—the profiles of Company X’s current top talent did not necessarily match the ideal profiles of its future top talent.

Identify and clarify critical roles

Identifying and quantifying the value of the most important roles in an organization is a central step in matching talent to value. These critical roles generally fall into two categories: value creators and enablers. Value creators directly generate revenue, lower operating costs, and increase capital efficiency. Value enablers, such as leaders of support functions like cybersecurity or risk management, perform indispensable work that enables the creators. These roles are often in counterintuitive places within the organization. Typically, companies that consciously set out to pinpoint them find about 60 percent are two layers below the CEO, and 30 percent are three layers or more below the CEO.

The ability to achieve true role clarity is closely tied to overall organizational performance and health, according to McKinsey research. In the pursuit of such clarity, it is critical to think first about roles rather than people. The initial goal is assessment of where the greatest potential value is and what skills will be necessary to realize that value—not identification of the top performers. This approach allows leaders to think more strategically about matching talent and value rather than merely focusing on an individual’s capabilities.

Each of Company X’s business-unit leaders had defined their value agenda; now they needed to map, in collaboration with their HR teams, the most critical roles. In each unit, leaders addressed the following series of questions:

Then they went into even more detail. They mapped potential financial value to each role using the metric of projected five-year operating margin. Value creators were assigned the full economic value of their business’s operating margin. Value enablers were assigned a percentage of value based on human judgment of their relative contribution to the relevant operating margin combined with an analytic perspective on which value levers those functions influenced.

Through this fact-based process, leaders identified more than 100 critical roles across all business units and corporate functions. In line with our experience, 20 percent were three layers or more below the CEO, often in counterintuitive places. More than 10 percent of the critical roles focused on digital priorities, advanced analytics, and other capabilities in very short supply in the current organization. About 5 percent focused on cross-functional integration. And at least 20 percent were entirely new or greatly evolved in scope.

The CEO, CHRO, and CFO sifted through the list to identify the 50 highest-value roles (for more on collaboration opportunities for these three executives, see “An agenda for the talent-first CEO”). The choice of 50 was not because it is a nice, round number. It is hard for a CEO to have clear visibility into more than about 50 roles. Also, in our experience, the top 25 to 50 roles can typically orchestrate the bulk of a company’s potential value. The hiring, retention, performance management, and succession planning in these critical roles should all be of personal interest to the CEO.

The company’s top managers then worked with business-unit leaders to create unique “role cards” for these top positions. Each card specified the role’s mission; a list of jobs to be done, with a checklist of what was needed to capture the role’s outsized share of value; and key performance indicators (KPIs). The KPIs were quite detailed. For instance, the KPIs assigned to the role of the general manager for one site were percent of on-time delivery, product- and account-specific earnings, percent share of spot volume, and share of volume from new customers. Creating such specific KPIs allowed leaders to articulate objectively the role’s requirements, such as extensive sales and negotiation experience, demonstrated financial acumen, proven results as a strong team leader, experience in a corporate staff function, and a history of profit-and-loss ownership in a manufacturing setting. This objective articulation of requirements enabled both a fact-based assessment of incumbents in the role and a clear set of criteria against which to select new general managers.

Role identification and clarification is a process that works with any kind of organizational structure, including those based on agile principles. In fact, the potential rewards of value-based role clarity might even be greater in agile organizations, because flatter organizations build themselves around the principle that empowered talent in the right roles is the key to unlocking value. Pinpointing where a critical role sits in an organization chart is not important. What matters is knowing the potential outcomes of any given role, anywhere in the organization.

Match talent to roles

Business leaders at Company X next turned to the job of finding the right people for the more clearly defined critical roles. Their search process was more efficient and effective than those associated with traditional “high potential” talent reviews thanks to two types of benefits that generally emerge from taking a more rigorous approach.

First, the articulation of value and roles for Company X allowed for objective comparisons between candidates across a variety of specific dimensions rather than relying on subjective hunches or a perfunctory succession plan. When a company uses such an approach, the talent-selection process becomes an evaluation of specific evidence. The CFO of a business unit that aims to increase value through a strategy of acquisitions, for example, should have a different background and experience base from the CFO of an organization that aims to increase value through aggressive cost reduction.

Second, the specificity of role requirements for Company X encouraged a more objective view of incumbent managers. Rigorously assessing incumbents against value-linked role requirements typically leads a company to realize that 20 to 30 percent of those in critical roles are not well matched. The data-driven process makes it hard to ignore the uncomfortable realizations that some incumbents might not be up to the future demands of the job and that leaving them in place would put a significant amount of value at risk.

Over time, some organizations come up against a happy problem: unexpected value that was not part of the strategic plan starts emerging. For instance, a product might enjoy a serendipitous viral uptake or a new service might enable the delivery of breakthrough customer experiences that shake up the competitive balance. Fortuitous, big moves such as these, which both reflect and necessitate strategic flexibility, also reinforce the power of linking talent to value (for more on what it takes to make breakout moves, see “Eight shifts that will take your strategy into high gear”).

How so? For starters, once a new source of value becomes clear, the company’s understanding of its value agenda can shift to mine the potential of this new source—a move accompanied by a corresponding shift in the company’s talent priorities. For example, a senior vice president of supply chain might have been reliable for years, but can he or she quickly activate the new set of reliable suppliers needed to get that unexpectedly hot product from R&D into the market as soon as possible? The discipline of understanding the requirements of key roles throughout a company helps give the CEO the agility to respond to such questions with alacrity.

The concept of matching talent to value is often a precursor to breakthroughs. These innovations commonly occur in contexts deliberately set up to enable them. Consider Tesla’s effort to create a culture of fast-moving innovation, Apple’s obsessive user-experience focus, and Corning’s goal of easing “barriers to creativity and serendipitous advances.” These cultural priorities are at the core of these companies’ value agendas. The roles created to turn such priorities into value are often related to R&D (such as the chief technical officer, chief design officer, and chief technologist) and filled with talented, creative people, such as Apple’s Jony Ive, who thrive in the freedom of those particular roles.

The linking-talent-to-value process at Company X did more than just put the best people in critical roles. As the CEO tried to match the company’s existing talent to these roles, she and other leaders realized that the company needed to retool its leadership development. Future leaders would have to develop the expertise (such as global line management or cross-functional collaboration) that would be high priorities in the new roles. Furthermore, these new leaders would need the mind-set and determination to accelerate breakthrough innovation. As often happens, the rigorous effort to match talent to value led the company’s top executives to a deeper understanding of their business.

Operationalize and mobilize

Linking talent to value is not a process that stops when roles are identified and matched to the appropriate top talent. To garner the expected value, leaders must manage these roles as assiduously as they do capital investments and use real-time critical metrics. An HR-leadership team might meet monthly to identify trends across business units—for example, the lag of certain role-specific KPIs, such as digital fluency. Working alongside business leaders, the team might also assess changes in the performance of individuals in critical roles, asking questions such as, “Is this individual delivering the value expected? What interventions (for instance, coaching or better-aligned incentives) can support this individual?” The leadership team might even meet daily or weekly to manage real-time talent crises, such as a moment when people-analytics software identifies an immediate risk of attrition in a critical role.

Companies must also examine whether the HR team is up to the task of managing talent as rigorously as the finance team deploys financial capital. The following questions can help make this determination:

At one company that exemplifies the necessary rigor for matching talent to value, the HR team plans to develop semiautomated data dashboards that track the most important metrics for critical roles. Each critical role will have a customized dashboard to trace progress on relevant operational and financial KPIs (for example, segmented earnings before interest, taxes, depreciation, and amortization) against development activities (for instance, an instructional course). The metrics will tie to back-end organizational data, resulting in a mixture of automated and manual updating. The HR leadership team is learning how to use these dashboards to engage business leaders in regular talent reviews. Such a data-driven and technologically enabled review should ensure that the HR group provides targeted support through value-centered talent management.

Company X’s CEO knows that her job is not complete. Talent and overall strategic planning must have a tighter link. Talent evaluation must be constant rather than sporadic. Her organization must learn to flex its new muscle linking talent to value continuously. At her company and every company, the set of critical roles is dynamic rather than a “one and done” process—it must be reevaluated each time strategic imperatives change. Talent management must become a frequent, agile process in which the CEO and executive-leadership team participate as actively as they do in financial-investment decisions. In the survey mentioned earlier of more than 600 respondents, we found that in a majority of companies identified as fast talent allocators, top business leaders met at least quarterly to review talent placement (Exhibit 2).

About half of the companies identied as fast talent allocators review talent placement at least quarterly.

Even though its talent-to-value effort is a work in progress, Company X is better positioned than ever to achieve aggressive growth aspirations. Its ambitious plans have a much better chance of succeeding now that the company’s leaders have done the difficult work of identifying where future value is at risk and mitigating that risk through more value-centric talent management. They are augmenting their strategic vision with a clear understanding of the kinds of leaders they will need to meet their goals. This kind of proactive linkage of talent to value must be the new normal for business leaders.


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HR TRANSFORMATION
On Becoming A Scientific HR Function – Learning From Amazon And Google

Did you know that “becoming scientific” is a strategic goal that is shared by the HR functions of two of the top three most valuable firms in the world? Yes, Amazon’s goal is to “Become the most scientific HR organization in the world,” and Google’s goal is to become as scientific as their engineering functions by bringing “The same level of rigor to people-decisions that we do to engineering decisions.”

Other business functions have already shifted to the scientific model 

Sadly, HR must play a game of catch-up because all other business functions including production, marketing, finance and supply chain long ago shifted to a scientific model. It’s almost impossible to find a global firm with an HR function with the goal of “becoming scientific.” The real news may be that these two stellar performing firms (Amazon and Google) starkly stand alone as striving to make their HR function totally scientific, data-driven and precise.

Technology and AI have finally begun to drive HR. Our leaders must now start to realize that no HR department will ever be able to make the transition into a digital, AI and technology driven HR function until they first commit to make all HR decision-making as precise and scientific as engineering decisions. In my view, that means that the dated argument over whether HR management is a science or an art is now over. The remaining 99% of HR functions (including your firm) will soon be forced to adopt this data-driven “scientific HR” approach.

Highlighting the differences between “Scientific HR” and traditional HR

Traditionally, all HR functions have relied heavily on the use of past practices. And although these practices probably once reflected the most effective approach, they are probably still used even though the business environment, the technology and even the workforce assumptions under which they were created may have changed dramatically. In contrast, “Scientific HR” assumes continuous change, so it uses data and facts to shift towards the latest, most effective HR approaches continually. So, if you are considering following the lead of Amazon and Google to become a scientific HR function, here are 9 defining characteristics that are the foundation of that model (the most impactful ones first).

HR directly impacts business results. As Amazon puts it, “We manage HR as a business.” So, rather than simply “aligning with business goals,” the scientific model focuses on HR actions and resources so that they produce the maximum direct, measurable impact on business results.

The two primary areas where HR can traditionally produce the highest business impacts include increasing the productivity of the workforce and improving the volume and speed of product and process innovation. Under this scientific approach, HR focuses on solving broad strategic business problems (e.g., decreased sales, product development or missed deadlines) rather than tactical HR problems. And finally, under this model, HR problems and results are converted to their dollar impact on revenue (e.g., the retention efforts on salespeople allowed us to maintain $2.5 million in sales revenue). Reporting results in revenue impact dollars allow executives to quickly compare HR’s dollar impacts to those from other business functions.

HR relies on data-driven decision-making rather than relying on past practices or intuition. Under the scientific model important people management decisions are made based on performance data. Decisions on the most effective approaches for hiring, retention, development and incentives are based on the latest available data. Data and objective criteria are also used to determine when needed work should be done by employees, outsourced labor or using technology. Other organizations that have made significant strides in data-driven decision-making include Sodexo, UPS and the U.S. Army.

HR emphasizes hypothesis testing and experimentation — Perhaps the most prominent difference between traditional and scientific HR is the emphasis on experimentation to test more effective approaches. For example, a split-sample experiment could prove or disprove the hypothesis: “Diverse interviewers select more diverse candidates” (They don’t).

Google HR has long been a supporter of hypothesis testing, especially covering the factors that actually predict new-hire success. Amazon includes its focus on hypothesis testing in one of its HR Tenets, “We form hypotheses about the best talent acquisition, talent retention, and talent development techniques and then set out to prove or disprove them with experiments and careful data collection.”

HR requires continuous learning and improvement — In a fast-changing world, continuous improvement is an absolute necessity. As a result, the scientific approach to HR emphasizes the continuous collection and the reporting of performance data for human decision-making. Machine learning and automatic feedback are also critical for identifying key learnings across broad but interrelated areas that might be missed by humans.

It adds the assumption of HR obsolescence –– Amazon calls it “Learn and Be Curious.”Because in a rapidly evolving world it makes sense to assume that every new and existing process, tool or approach will slowly become less effective and eventually obsolete. And it is a required assumption to simultaneously presume that there are new and more effective approaches that are continually being developed in HR and in other functions that can be adapted by your HR. These assumptions drive the collection of performance data and implementation of experimentation/hypothesis testing for the complete replacement of even new processes and approaches in as little as 18 months.

Everything in HR must be digital – Another Amazon HR goal is “We seek to be the most technically proficient HR organization in the world,” so technology must be a prime driver of HR change. Everything in HR must be digitalized so that all information can be instantly electronically shared among people, processes and machines. Being digital also forces every input and output to be quantified in numbers.

HR prepares for the future – Almost all of HR metrics have been historically focused, while scientific HR focuses on forward-looking predictive analytics. This is because HR can have a much greater business impact if it is future-focused so that there is time to take advantage of opportunities and to mitigate upcoming problems.

Prioritization replaces equal treatment – The use of data eventually reveals that not all people management problems have the same level of business impacts. And as a result, scientific HR requires the function to focus most of its resources on the problems and the solutions that have the highest measurable impact on business results. Business units, employees, jobs and performance are also prioritized.

HR adds an external focus – In addition to HR’s traditional internal tactical focus, HR must also monitor and adapt to the external environment. And that means building a competitive advantage in both HR processes and results over your competitors. The changing external environment also requires HR to build agility into every HR process so that it can rapidly adapt and scale up/down whenever the business environment changes dramatically.

Final thoughts

Many phrases have been used over the years to describe the emerging future of HR. Some have called it digital HR, evidence-based HR or technology driven HR. However, in my view, Amazon’s “Scientific HR” is the most accurate moniker to use. Its basic foundation is to treat people management decision-making as a science rather than an intuitive art. This approach in the short term emphasizes using data for continuous improvement. And in the longer term, it assumes obsolescence because of the continuous and dramatic changes in business and technology. HR leaders should also note that in addition to a significant improvement in business results, becoming more scientific also dramatically improves the credibility of HR leaders among executives.

So, my recommendation is to follow the lead of the amazing firms of Amazon and Google and add “becoming scientific” to your strategic HR goals.

Author’s note: If this article stimulated your thinking and provided you with actionable tips. Please take a minute to follow or connect with Dr. Sullivan on LinkedIn and subscribe to TLNT Daily.


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HR TRANSFORMATION
The Future Of Work: Three New HR Roles In The Age Of Artificial Intelligence

What will "the new normal" look like for our HR leaders as we approach 2020? It's been nine years since McKinsey & Company coined the phrase, ‘the new normal,” referring to the fundamental changes in the business landscape following the Great Recession of 2008.

We are witnessing revolutionary, not just incremental change. As Paul Daugherty said in his bestselling book, Human + Machine: Re-imagining Work in the Age of AI, the workplace experience is changing in profound ways. According to research conducted by Accenture and the World Economic Forum, 87% of workers polled believe new technologies like artificial intelligence will improve their work experience and they are willing to invest their free time over the next few years to learn new skills to supplement their current ones. This emphasis on learning new skills in the age of AI is reinforced by the most recent report on the future of work from McKinsey which suggests that as many as 375 million workers around the world may need to switch occupational categories and learn new skills because approximately 60% of jobs will have least one-third of their work activities able to be automated.

For companies from IBM to Kraft Heinz and SunTrust, I am seeing this an interest an interest in creating new HR roles as companies leverage artificial intelligence in the workplace.  Three new job roles in HR provide a lens into how much HR is being disrupted.

Three New HR Roles To Create Compelling Employee Experiences

These new HR roles include:

IBM: Vice-President, Data, AI & Offering Strategy, HR

IBM has taken a leadership role in creating new positions in HR aligned with Chief HR Officer Diane Gherson's vision of "Optimizing HR for speed, personalization, and democratization to deliver irresistible employee experiences." Executing on this vision has created a host of new innovations and job roles in HR. Some of the most interesting innovations in HR include the ability to use data to proactively retain IBMers by examining factors such as an employee's location, pay, skills, and job type. At IBM this is known as Proactive Retention and leading this effort is Anshul Sheopuri, IBM’s vice-president, data, AI & offering strategy, HR. Anshul leads a team of data scientists, people analytics practitioners, and engineers who use data to transform the employee experience. Sheopuri was instrumental in developing the patent for Proactive Retention which uses analytics and machine learning to calculate the relative importance of retention risk factors, while maintaining employee privacy. The end result is a decision support tool for managers to proactively retain IBMers. The retention risk program has now saved IBM about $300 million, as measured by the avoiding the inevitable costs of hiring and training replacements.

The next innovation, Blue Matching, is devoted to enhancing career mobility for IBMers with personalized job alerts by inferring their skills. This helps to boost their ability to find new internal positions, some of which they may not even know could be a fit. Recent projections from CEB Global indicate that employees are staying in their roles 30% longer today. This lack of internal movement means employees are failing to get the broad experience they need to further their advancement. And furthermore,  this lack of career growth is the number one reason employees leave their employer, surpassing compensation and the individual manager. IBM Blue Matching has provided more than 1,000 IBMers with the opportunity to grow their skills and land a new role within IBM.

These new IBM HR initiatives are made possible not just by deploying artificial intelligence but by also adopting a new mindset within the HR professional, moving from focusing on HR processes to adapting a consumer grade lens to people practices and delivering outcome-oriented solutions which personalize the employee experience at scale. 

What's next in this journey? Sheopuri believes that HR at IBM will include more end-to-end roles responsible for what we might think of at consumer product companies as the product manager. In HR at IBM, this role is called offering manager and operates much like a product manager, responsible for the launch of new HR solutions from inception through to pilot and commercialization. This introduction of the product management discipline into HR will continue to grow in importance as current and prospective employees demand a connected, mobile, and personalized employee experience mirroring their last best consumer experience.

Kraft Heinz: Senior Vice-President, Global HR, Performance and IT 

It's not just IBM that is adding job titles in HR to focus on using intelligent technologies to create a compelling employee experience. Kraft Heinz, the fifth largest food and beverage company in the world, is using artificial intelligence and crafting new HR roles in people analytics and data analysis, traditionally found in IT. Melissa Werneck, senior VP, global HR, performance, and IT is re-examining the entire employee experience from recruiting to exiting the organization. Says Werneck, "At Kraft Heinz, we believe that in order to create a true consumer experience for our employees, we must integrate all the areas that touch an employee from our people practices, from recruiting, learning & development, performance management, and total rewards. Having a combined responsibility for the people and IT functions allows us to compliment the people function with activities that are traditionally exclusive to IT – like leveraging machine learning techniques and using sophisticated algorithms to automate work.

To do this, Kraft Heinz has expanded the scope of Global Rewards to include a dedicated director of people analytics who will direct a team of data scientists and people analytics managers on how to use machine learning in HR. The initiatives underway include using data to predict employee retention and using the same data to suggest actions that can be taken to address possible outliers, including an algorithm that can suggest which employees in the company are likely deserving of recognition through a merit increase. This data driven approach to decision making espouses a core value at Kraft Heinz, of ensuring people decisions are based on meritocracy.

Shirley Weinstein, head of global rewards, believes this new emphasis on using data to create an enhanced employee experience is being driven by the growing importance in recruiting, developing, and retaining top talent. And recent research reinforces this point of view. A 2018 Conference Board survey of the global C-suite revealed that talent and skills are now the number one hot button issue for C-level executives surpassing cyber security, healthcare, and threats to global trade. Similarly, the Deloitte Talent Report suggests the phrase Learning Organization no longer refers to just the training department but is now a goal for the entire organization. At Kraft Heinz the HR team used predictive analytics to identify areas of potential attrition risk within the company. They are now formulating strategies to address the root causes, and, using machine learning, they are identifying future interventions. Says Weinstein, "I am seeing a premium on speed and personalization, and both can be delivered leveraging sophisticated data science techniques in the workplace. At Kraft Heinz we pride ourselves on being data driven as a company. We see no reason for the people function to be any different.”

SunTrust: Senior Vice-President, Employee Well-Being & Benefits 

In addition to creating new technical roles in people analytics and data science, companies like SunTrust are developing new roles in HR to address a new employee benefit: financial well-being. Outstanding student loans currently have hit $1.5 trillion and exceed auto loan debt ($1.1 trillion) and credit card debt ($977 billion) And women hold two thirds of all student debt in the USA according the American Association of University Women.

SunTrust is a purpose-driven company committed to enhancing the financial well-being of its teammates (SunTrust employees), clients, and the communities the company serves. To better understand the magnitude of the financial wellness issue, SunTrust partnered with Martiz and introduced a Financial Confidence Index this year – derived from a national, ongoing quarterly survey of 2,500 Americans, representative of the U.S. adult population. Individuals rate their actions on five core behaviors of financial confidence: budgeting, debt management, savings, maximizing income, and retirement planning. The results?  The index shows 50% of Americans do not have $2,000 saved for an emergency, one third have nothing saved for retirement, and a full two thirds report feeling financial stress and this keeps them up at night!

SunTrust decided to be part of the solution and started by surveying their own teammates. Many were struggling with financial stress. So they set out to help teammates take steps toward building financial confidence bydeveloping and launching a financial wellness program, known as Momentum onUp for Teammates. This program has the express purpose of increasing SunTrust teammates’ financial confidence by providing SunTrust teammates with online and face to face training in how to pay down loans, apply for a mortgage, and improve one's credit score.

This new focus on financial well-being led the SunTrust HR team to create a new role in HR focused on employee well-being and benefits. Reporting to the SVP, this role is focused entirely on financial wellbeing, bringing a deep expertise in adult learning, data analytics and financial services to the role. Think of the Financial Well-Being Program Lead as an ambassador for SunTrust’s financial well-being movement. And the results are impressive, with 79% of SunTrust teammates participating to date, and with the Bank contributing $1,000 to SunTrust teammates who complete the program. So far, SunTrust has invested more than $13 million in teammates’ savings accounts through the program.

Additionally, SunTrust HR uncovered those who complete the program are twice as likely to stay with SunTrust after 18 months and according to a SunTrust survey of participants, more than 80% of respondents said afterward that they now feel more in control of their finances.

What do these three roles have in common? All have been created in the last three years and acknowledge the growing importance of a company's commitment to create a compelling employee experience by using data, research, and predictive analytics to better serve the needs of employees. In each case, the employee assuming the new role also brought a new set of skills and capabilities into HR. And importantly, the new roles created in HR address a common vision: create a compelling employee experience that mirrors a company's customer experience.

What are the new roles you are creating in HR? Share them here and let's start a conversation on this important topic.

I am a partner with Future Workplace, an HR Advisory and Research firm dedicated to providing insights on the future of learning and working. Future Workplace has created the first online course to train HR leaders in how to use artificial intelligence for HR, called Using A...

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Jeanne is Partner, Future Workplace, co-author of The Future Workplace Experience, and created Using AI 4 HR, the first online course for HR leaders to use AI. To read future posts sign up here.


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HR TRANSFORMATION
HR In The Flow Of Work: A New Paradigm Has Arrived

I’m at the US HR Technology Conference this week (over 9,000 attendees) and spending time with dozens of technology providers and HR leaders and I want to highlight the theme of my keynote on Thursday: HR in the Flow of Work.

I believe this concept, which I’ll explain in this article, defines the role of HR for years ahead. Let me explain with five basic observations.

1. Today, Businesses and Employees are Overwhelmed.

I met with a global CHRO recently and asked him why he was pushing a wellbeing program. His answer? “Our people are exhausted.” Everyone is working extra hours, we’re all getting too many emails, and productivity is just not going up. He told me they are now starting management meetings at 9 am so people can go to the gym every morning. (8 am meetings themselves force people to lose sleep).

Most of you have seen the data on productivity: it is one of the biggest differentiators of high performing companies. Today people feel stressed (94% of US and UK workers report high levels of workplace stress) they work on weekends (over 1/3 work weekends), and young people (Gen Z and Gen Y) are saying “enough.” They cannot work any more hours and our electronic work environment is just too relentless and unyielding to keep us happy.

Now there are many reasons for this, and we can’t only blame technology. Management must help people stay focused, we need to encourage people to spend face-time with each other, and we must design a work environment that’s meaningful and enjoyable. (All this is HR’s role by the way.) But despite our best efforts (open offices, closed offices), we have to accept that work itself has become very hard on people.

I was at a very hot startup a few weeks ago and all 50 people are in one large room. It’s noisy, exciting, and busy – but the CEO told me people were getting stressed out. He went out and spend $5000 to buy a “soundproof room” to let people get away. This is not the way work should be.

2. The Pace of Work is Accelerating.

I don’t need to tell you about the economy, it’s in every newspaper every day. We are living in (perhaps suffering through) the longest economic growth in my lifetime. And it’s hard. Yes, the stock market is high and we all feel wealthier, but look at the cost of housing, food, education, and healthcare. Actual standards of living in the US have not really improved for 30 years. We’re on a treadmill and it feels like we have to work harder and harder to keep up.

I have been through many of these upswings and I remember how much I dislike this part of the business cycle. Traffic is horrible, people are bragging about how much money they made in the stock market, and businesses get greedy. Companies are hoarding billions of dollars of cash and wages are hardly keeping up. We have homeless people all over the San Francisco Bay Area, despite wages higher than ever.  Read more in my article on the Ugly Side to a Low Unemployment Rate to learn more.

What this means for our people is that they feel like they’re on a treadmill. “Our company is growing, but the cost of living is going up, so I as an employee need to work harder, get promoted, and make sure I’m staying even.”

The latest research in the WSJ shows that the #1 topic on the minds of GenZ workers is “financial security.” The newest generation of workers wants job security and they’re even willing to do gig work to make some extra bucks. (Deloitte’s 2018 Millennial Surveydiscovered that more than 40% of Gen Z workers are engaged in “side-hustles” to make extra income.)

And the big undercurrent is the rapid re-engineering of businesses to become more digital, grow in China and India and other developing economies, and revolutionize products to become more digital, more AI-driven, more responsible, and more transparent. Companies from Facebook to Google to Schneider Electric to Nissan to GE to Genentech are all going through this. And this puts even more pressure on business leaders and individual employees.

3. Individuals Are Way Too Busy

On a personal level, we are now negotiating with an electronic boss every minute: our phone. These devices are interrupting us, notifying us, and nudging us to look at them, talk to them, and use them. It keeps us very busy.

How often, during the day, do you really stop and think? Look at people walking down the street, they hardely even look up.

The enormous explosion of Yoga, mindfulness classes, and psychological counseling services are a response to this environment. (Yoga is a $27 billion industry which grew at 87% over the last three years.)

We found that the average employee has 24 minutes per week to learn. In the 1980s I used to sit down and read technical manuals in the office, spending an hour at a time. How often do you do this at work today? I’d guess not very often.

So when an HR program comes out, and it may involve a class, a workshop, a new tool, or system to engage with, people’s first reaction is “when will I make time for this?”

Of course if it’s mandatory or CEO-driven, people will look at it. But as the Cedar-Crestone research has discovered, more than 2/3 of all HR technology investments are vastly under-used.

And it’s getting a bit worse. Today we use real-time messaging systems. Slack, Workplace by Facebook, Microsoft Teams, Google Hangouts, Zoom, HipChat, and other tools because they respond to this always-on need. We need our HR tools to integrate and manifest themselves into these environment, not force us to spend time going somewhere else.

As I mentioned in my speech at HR Tech, this week, there will be a “holy war” for the employee in the HR tech market. And the HR system will lose. We’re already spending time in our workplace communication and productivity tools – HR solutions have to go be there.

There will be a “holy war” among vendors for the employee experience in the years ahead.

4. AI is Making HR Systems Conversational

The fourth reason “HR in the Flow of Work” is so relevant is that we now have technology designed for this.

Chatbots, nudges, messages on our phones, and tools like augmented analytics (the system does the analytics for you) are here to make our technology more conversational. It turns out that conversations are easier to have than systems we click on – so this new interface fits into our work. (CognitionX, a research firm, believes there are more than 1,000 chatbot vendors today.)

I have now seen quite a few tools that do this well. The folks at Mya, for example (a pioneer in chat-based AI for recruiting), told me their customers are saving $400-600 per hire with an AI-based chat that helps candidates find the right jobs. Their customers now even use Mya to reach out to passive candidates, and 40% of them respond!

Some of the conversational AI is still young and immature, so some of the conversations and messages are kind of “silly” – but they’re getting smarter every day. So we can expect more and more of our online systems to feel more like “suggestions” from Siri or Alexa and less like “websites” we click through to read.

Look at modern performance and learning systems for example. Vendors are building nudge-based systems that suggest behaviors to improve your performance, and these tools are already being integrated into the flow of work.

In systems like Reflektive or BetterWorks you can comment on a goal, give someone feedback, or rate a conversation with a peer from within Office 365 or most of these messaging tools. Products like WalkMe, Skillsoft, and Edcast have plugins and embedded apps that find learning appropriate to your need, while you do your work. And the new AI being developed is actually sharing this learning across thousands of customers, so your “recommendations” will be informed by data from many other companies.

And this interface is coming to every domain in HR. Tools like Mya, LeadX, Jane.ai, Watson, Disco, Zugata, and Compass all send intelligent messages to job candidates, employees seeking HR assistance, people who need coaching, and much more. There are dozens of vendors building intelligent systems that give people suggestions, nudges, and answers to questions about all aspects of their work life. IBM has an application called Watson Assistant for Workday that answers Workday-specific questions in easy to understand answers.

5. Design Thinking Is Here To Help

How do we as an HR profession actually “design” solutions that fit in the flow of work? We now have an approach: design thinking.

In the past we used to “design solutions on a whiteboard,” then “roll them out to employees.” The domain of change management was designed to help us “push” things to people, “teach them” to use our systems, and “communicate” why they had to do what we had designed for them.

Design thinking reverses this process. Rather than develop an intervention that requires change management, let’s study what people are doing at work, study their daily activities, and redesign the work environment for success. Focus on productivity, better decision-making, quality, and empowerment. So now our HR “program” is more like a work-related intervention rather than a work interruption.

Make HR a work-related improvement, not a work interruption.

Consider performance management, for example. Should it be a year-end review or a series of weekly or monthly check-ins? Can we design a solution that makes teams operate faster and in a more productive way? Can we implement a tool with change with built-in recommendations and coaching, aided by the system? Yes – a new generation of tools now makes this possible.

When a manager sits down to discuss an employee’s career, we can give them real-time career advice. When it’s time to review salaries, we can give them AI-based salary recommendations based on external market data and internal demand for skills. When an employee feels stressed out, we can give them real-time coaching and assessment and behavioral change tools to help. And the list goes on and on.

All this is happening before our eyes, and I think we just need to name it and formalize it.

How Does This Impact HR and Roles? What Should We Do?

How do we deal with this new world? How do we implement HR in the Flow of Work?

The answer is becoming clear. As you think about the “employee experience” (the new buzzword of the year), you have to think about how to stop interrupting people and think about how to make their work easier, more productive, and more meaningful.

We need to stop thinking about HR programs as a “destination” and think about them as a “journey” or an “intervention” or a “conversation.”

Tonight I was asked a big question: in a world where HR technology is more intelligent and responsive, what will be the future role of HR?

As I discuss in the article “AI in HR: A New Killer App“, our new job is to train the AI software. Teach it what to say, what rules to follow, and what processes, practices, and systems people should use. This takes time, effort, and ongoing support.

Diane Gherson, the CHRO of IBM, told me that their HR service teams now monitor the questions coming in through Watson, look at the answers, and continuously update and improve the answers. As people start using their HR systems in the flow of work, HR teams must make time to monitor what’s going on and make sure the systems are continuously getting smarter and more up to date. (Often called “training the systems.”)

A few weeks ago I spent the afternoon with the engineering lead of Facebook’s advertising engine. He told me that this system has more than 10,000 “rules” embedded into its algorithms. To continuously train the system, there are now teams of people watching the system’s behavior to improve its targeting, remove bias, and look for bad behavior. This will be a new career and role in HR: making sure our systems continue to work better over time.

I’ll be writing much more on this topic soon – stay tuned for more information coming soon. Are you delivering solutions that fit “in the flow of work? If you are, I bet they’re some of the most powerful and important solutions you’ve ever delivered.


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HR TRANSFORMATION
The HR function of the future (Part 1 in series)

The urgent call came on a Friday night. Our CHRO client learned the agenda for their company’s executive offsite that Monday had shifted from business as usual to how the organization would transform in light of automation. Each leader must be prepared to answer the question: “How do see your function changing to address the new realities of work?” The CHRO called us for help. Essentially, what follows is the perspective we shared with him.

Emerging workplace realities

Workplace automation is nearly doubling in the next three years, resulting in the need for breakthrough approaches in Human Resources. To keep pace, HR will need to meet the challenges of changing skill requirements and an increasingly diverse workforce, composed of permanent talent as well as contingent and freelance. In other words, HR will be at the center of workforce productivity.

Where HR once partnered with the business on talent and reward plans to engage an employee base that was benchmarked year-over-year, what’s since emerged are agile teams with temporary assignments and personalized rewards. Traditional benchmarks become less important when career paths are evolving into portfolios of broad and nonlinear work experiences.

HR will increasingly need to weigh in on the optimal combinations of human talent and automation, and the implications of these new combinations from a risk, productivity and talent experience perspective if the function hopes to remain relevant and vital to the organization.

What’s clear is the work of HR is changing. Just as work found in other occupations is being transformed, so too will the work of HR shift:

From…To…
Partnering with the businessIntegrating work and talent experiences
Engaging high labor intensity, low skill premiumsEngaging lower labor intensity, high skill premiums
Designing talent and rewards solutionsApplying talent science to optimize total rewards
Delivering on the employee value propositionDelivering on the talent value proposition for employees as well as contingent workers
Leveraging HR enterprise platforms with basic workflowLeveraging AI-enabled HR for actionable insights

3 new HR imperatives

This means HR will need to re-think work and talent management, redefine the talent experience, and re-envision HR solutions. It also means HR will be doing less work in terms of broad-based planning around the workforce and instead actively match skills and talent to priority work. Finally, it means
HR will have to delve more deeply into data to draw meaningful insights around talent.

To that end, data analytics has become real talent science, as machine learning can uncover relevant linkages to optimize talent, reward and well-being strategies for workforce segments. For example, one bank applied more than 70 attributes (e.g. performance, skills, attendance, absence, engagement data, demographic and personality data) of its workforce to determine the strongest linkages for success in its sales work. They found the combination of some sales experience, completion of onboarding programs prior to full-field sales activity and candidates without graduate degrees were more successful within their first year in the role.

HR also needs to further focus on change and collaboration with a broader array of stakeholders, including those in risk management, IT and information security to create a savvy cyber IQ in the organization. As automation takes over work deemed dangerous today, HR will be critical in defining how the nature of human work is changing, working closely with the risk management on how the risk profile is shifting and impacting the requisite insurance levels.

Quite frankly, in most organizations, the HR function needs to be overhauled. Why?

In most companies:

  • Change is actually occurring more frequently inside their organizations than outside of it (as shifts from legacy to new and mixed combinations compound the total amount of change)
  • Winning the race for talent is all about speed to the talent, which may include both permanent and non-permanent (such as part-time, contingent, freelance and organization alliances)
  • Jobs as we once knew them will be far more dynamic, with shorter assignments and more or less skills being required for the work
  • Programs must be constantly calibrated and iterated so they are relevant to dynamic circumstances

A new HR model

HR needs a new model, one that’s designed around work and talent — not just jobs. A model that will enable and influence change in the organization, and will integrate a broader array of stakeholders and contributors to the organization.

What will that model look like? We’ll discuss in our next post.


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HR TRANSFORMATION
A new model for the HR function of the future (Part 2 in series)

In our last post, we discussed why breakthrough approaches are necessary for Human Resources to meet today’s changing workforce needs. Here, we discuss a new model that goes beyond traditional job constructs to integrate a broader array of stakeholders and contributors so that work and talent can be designed for this new reality. The model balances architecting for the new ways in which we work, and how work will get done.

Matching talent to skills

On a more frequent and dynamic basis, HR needs to match talent with the skills needed to do the work. As automation and work change, leading and engaging around the new ways of working will require different communication, new types of performance support and a new level of openness around alternative approaches to the work.

HR will not just be the glue that keeps personalized programs together; it will also need to influence how the work experience and organization’s culture is preserved or needs to change. With this plurality happening in work, risk will shift. In some cases, work may become less dangerous as automation takes over; in other cases, work may become more stressful as routine parts of a job are automated, leaving only the more demanding aspects. The risk for these workers and associated obligations or benefits take on new characteristics that should be managed proactively.

HR can create the capacity and capability it needs by focusing on these three areas and their related responsibilities:

Table 1: What are the focus areas?

 

Work ArchitectCoachIntegrator
Work Design: Deconstruct and reconstruct jobs based on automation, work and skillsPerformance Coaching: Targeted to leaders, managers and talentPeople & Risk: Collaboration and oversight of the changing risk profile for work
Wellbeing: Management of modernized benefitsExperience & Culture: Action leads who activate experience and cultureSourcing: Identifying, screening and arranging/contracting with talent and organizations
Talent Science: Applied artificial intelligence to HR’s workInclusion & Diversity: Action leads who activate alternative approachesShared services: Delivery of the HR people experience

The Work Architect includes data scientists and Talent and Rewards specialists focused on creating the most successful combinations of human capital and work. These combinations may come in the form of full-time jobs, with the best-identified attributes for performance and productivity, supported by personalized talent and reward solutions. Another combination may be a temporary team comprised of talent on loan from another organization, coupled with contingent talent and the organization’s full-time team leader. The architects in this area proactively solve for the business performance objective and outcome through the powerful alchemy of data science, work analysis and talent and reward optimization.

The Coach activates important activities that foster, reinforce, develop and sustain leader/manager and pivotal talent performance, as well as Inclusion and Diversity, experience and culture. Features of performance coaching may include administering psychometric testing and 1:1 coaching and then using the results to recommend changes to work behavior that support a worker’s development.

Resources dedicated to Experience & Culture collaborate with Talent Science and Shared Services to shape, define and deploy strategies that will improve the work experience for talent and reinforce cultural values. For example, let’s say being a learning organization is key to the talent experience and culture. This role may identify market alliances to bring in more learning resources and accessible experiences.

The Inclusion and Diversity focus area, in particular, activates strategies that will advance this objective. This may include collaborating with the Work Architects to ensure a temporary assignment team is comprised of a diverse mix of talent to support diversity of thought and creativity, and to challenge the norm.

The Integrator has some familiar ingredients to today’s HR function but has some additional areas of focus, most notably the sourcing of talent and risk. Shared Services is an important leverage model that will provide the modern HR unit with the opportunity to leverage and apply leading point solution technologies, such as chatbots for talent care and online concierge, with seamless processing of work changes (e.g., transitions to work areas, line of sight into next assignments).

As the work of HR also takes advantage of more automation, having a centralized role oversee both the “technology” and “experience” architecture will be beneficial. Sourcing talent will be both an art and a science as technology and solutions can be applied to expedite and improve the identification and matching of talent to work, but, as work requires different emerging skills, creativity will be required to source these unique skillsets. This role will require ingenuity, trial and error, and strong oversight.

As the “Internet of Things” becomes more common to business models, or digitalization permeates the divisions in your organization, data and information security is increasingly a people problem. HR has a role to play in collaborating and working with IT and cybersecurity to measure and address workplace behaviors (e.g., lack of awareness around phishing schemes) that can increase the organization’s cyber risk. The degree to which automation will impact risk levels in work will also be an emerging focus; if work is becoming safer, then levels of insurance and liability may change. Proactively addressing the nature of work will fall squarely on HR’s shoulders.

Final thoughts

HR now stands at the long-predicted crossroads. Will it move forward as a strategic business partner or retrench as a support function? The opportunity to lead the business into the future will fail if it’s tied to old roles and a model designed to solve for an out-of-date and legacy workplace. It’s time for HR to redirect its skills and capabilities toward truly transforming the organization.