The digital transformation of Human Resources (HR) hasn’t fully started yet. Actually, only 9% of all companies are ready for the era of digital HR. But the transformation will eventually happen. And it’ll come with a sweeping force that will certainly revolutionize the HR function.
Many companies are already working at full speed to make the most of the technological revolution’s competitive advantages. Those companies understand that the struggle for relevance and survival is between agile companies that learn and adapt fast using technology and those that don’t.
Unfortunately, some other companies are lagging behind. A study by MIT Sloan and Deloitte suggests that “only 44% of managers and executives believe their company is adequately prepared for digital disruption”. And HR isn’t precisely taking the lead in the digitalization of those companies.
To achieve a new level of technological competitive edge, organizations are getting ready by redesigning themselves. They are focusing resources (money, people and time) on learning extremely fast how to increase productivity, innovation and quality, and maximize opportunities, all with technology. Take one clear example of technological transformation: The Washington Post.
Over the past two years, since The Post was bought by Jeff Bezos, the engineering team has tripled in size. According to Bezos, “The Post’s engineering team rivals any team in Silicon Valley.” In 2015, The Post surpassed the number of online visitors of The New York Times. Today, The Post is still competing with The NYT and online giant BuzzFeed.
As in the case of The Washington Post, a lot of companies are taking full advantage of technology. They are doing so by understanding the impacts and uses of artificial intelligence, virtual and augmented reality, nanotechnology, wearables, the Internet of (Every)Thing, etc. In short, they are transforming their business (operation and corporate) models to fully integrate technology as essence in their core.
Where is HR in the digital revolution?
Unfortunately, I don’t think the Human Resources function is either working at full speed to catch up with the rest of the business units or understanding the full scale of the corporate digital transformation.
HR has been historically slow to understand and respond to business demands. And, although the digital transformation of everything in the world is unstoppable and obvious, HR is not waking up and getting on the bandwagon as quickly as it needs to.
I still believe HR can be a pioneer in the digital era. But it needs to change, and do it soon.
HR, as it is today, isn’t effective and innovative enough for any business that wants to remain relevant and thrive in the technology revolution. Actually, in many companies, HR is preventing important and serious conversations from taking place, just because it is focused on old and defunct practices.
In the book “Effective Human Resource Management: A Global Analysis”, data from 1995 to 2010 shows that HR hasn’t really changed the activities on which it spends its time. Only 15% is dedicated to strategic partnering, whereas the rest is administration of rules and policies. It’s therefore no surprise that HR isn’t really ready for (or even knowledgeable about) the digital disruption knocking on the corporate world’s doors.
In the months to come, the HR function and HR professionals will receive stronger and more unrelenting pressure from the business, shareholders, customers, and money-making corporate areas to respond more quickly and effectively to their needs. HR will need to be shaken up and revolutionized in order to adapt, embrace technology and turn around its practices extremely fast to respond to and meet business and workforce demands.
The digital revolution of HR
It seems pretty obvious that the digital revolution begins and ends with technology. In reality, though, there are several other elements to consider. Many are non-technological factors that are equally, if not more, important than technology itself. Those factors will play a key role in shaping the business and workplace of the future.
These are some of the non-technological elements that will affect the HR function.
According to the Deloitte Human Capital Trends 2016, the number one issue in the mind of corporate and HR leaders is how to redesign their organizations to meet the needs of today.
This is a complex issue. Every business, industry or region is different. There isn’t a one-size-fits-all type of solution. Nevertheless, what’s been a commonplace across the board is that HR is too narrowly focused on traditional organizational structures (hierarchies, functional areas, matrix organizations). And, unfortunately for the business and HR, traditional, heavy and rigid structures don’t respond to the demands of our times anymore.
For example, Zappos, 86th on 2015’s list of the best companies to work for, uses self-managed teams to do its work. I’m not necessarily advocating such an approach in every industry and company. However, self-managed teams result in greater empowerment, authority and motivation for the individuals within the team and therefore for the team itself. Thus, more innovation, productivity and employee engagement.
The ultimate message here is that HR needs to be bolder (revolutionary?) about experimenting with various types of organizational design. And the especial focus should be on functional, networked, engaged and empowered teams. To do that, HR needs to get rid of its old assumptions that traditional structures work better.
If HR embraces a new type of organizational design, several other changes will come along, too. For example, redefining jobs descriptions, technical skills and organizational culture.
HR has been historically more focused on “getting things right” than “getting things done”. It reminds me of the movie “The Pentagon Wars”. Richard Schiff, as Colonel Smith, was trying to design a troop transport vehicle and all the generals kept adding features, changing things and trying to make it a “perfect tank/transport vehicle”. At the end of the process, it was neither a tank nor a transport unit. It was a perfect piece with a little bit of everything, useful for nothing.
Like “The Pentagon Wars”, HR continues to try to deliver perfect software solutions that aren’t really useful or relevant anymore. HR can’t continue to follow the route of trying to make everything perfect.
In the time of the technological revolution, perfection can’t be achieved anymore. Why? Because as soon as a good product or service is released, another company seizes the opportunity to make it better, faster and cheaper. By the time one company releases its “perfect” solution, another company has experimented, tested, iterated and improved, starting with something simpler and incrementally moving to something more complex.
We live in the times when experimentation, iteration, open-mindedness, feedback and incremental change are more important than perfection, rigidity and best practices. Can HR evolve from a “best practice to achieve perfection” approach to a “let’s experiment, test, learn and measure to understand” approach? It’s yet to happen. And it will determine the success rate of the HR of the future.
HR needs to embrace agility and ditch the quest for perfection. Embracing agility means: 1) focus: thinking in terms of smaller project goals that can be designed, delivered and tested faster than bigger ones; 2) experimentation: trying new concepts along the way; 3) learning: from mistakes and failures; 3) simplicity: iterating with simple solutions that can build up to bigger ones, instead of designing bigger solutions to find out at the end that they don’t work.
Perhaps another way to put it is this: HR needs to stop being afraid of making mistakes. Innovation and agility never come from being afraid. They come from being courageous and daring to do things differently. HR needs to evolve from fear to change, to openness to experiment.
3.The digital mindset
I’m going to concede that one of the scariest things about the digital revolution is the lack of technological or digital knowledge. For people who have focused their careers in human science fields (psychology, HR management, etc.), it’s daunting to think that now they might have to learn technical things.
Here’s the good news: you don’t need to be a techy HR person to understand how technology will impact your work. You need to know the basics, remain open-minded and work with people who do know a lot about technology.
What’s interesting about the digital revolution is that the digital mindset it needs doesn’t necessarily imply knowing the nuts and bolts of technological solutions. Instead, it demands that HR people remain open-minded to “what and how” technology can be helpful. HR people don’t have to be AI experts, but they do have to know the benefits of AI and integrate people who understand the technical background.
The World Economic Forum lists the top 10 skills needed for the fourth industrial revolution. None of them is totally technical. They are, rather, a combination of important soft skills relevant for the digital revolution.
That’s what the digital mindset is all about. It’s not only about technology, but about curiosity, creativity, problem-solving, empathy, flexibility, decision-making and judgment, among others. HR needs to redesign itself to foster this digital mindset, both within its own boundaries and across the company units.
4.The digital service provider
HR is ultimately a service provider. As such, it needs to be on top of the way the most competitive and innovative companies in the world provide services to their clients. Today, HR is extremely slow and rigid in managing the processes under its responsibility. And, as I mentioned before, it’s not all because of a lack of technological understanding. It’s simply a matter of mindset.
HR is extremely focused on following rules and policies by the book. And even when exceptions are granted, there isn’t a very transparent rationale behind the exception.
HR needs to be more flexible and customer-oriented. The workforce and the business are HR’s most important clients. And the digital revolution of HR entails a mindset evolution from that of a rigid rule and policy enforcer to a flexible and dynamic service provider.
5. The humble HR
Over the past many years, a lot of companies have lost their competitive edge, not because of their lack of potential, but because of their arrogance. They were too comfortable and safe in their position. Those companies really believed they were invincible and that because of their size and value, they were too powerful to be defeated.
History has proven that while some companies die because their time is just over, very often arrogance has something do with their demise. Well, the time for arrogance is over. The opportunity to remain relevant and thrive lies in the ability to embrace change and accept what’s not working anymore.
I hope HR is not an arrogant function that decides to remain comfortably the same, because it will suffer a lot down that road. HR needs to evolve. And perhaps the digital revolution is the best excuse to change from the core, and not just on the surface.
Perhaps a lot of people in the HR world would disagree with my prediction about the digital revolution of HR. I wish I was wrong. But I truly don’t linger too much on the “good old times” of what once worked. I look forward to the future of HR with more passion than I have for HR today. I really believe the future of HR is promising, but only if it adapts and changes.
The digital revolution’s main call to action is for unlearning the way HR used to do things and relearning new approaches. For example, one particular idea is how to make HR a faster learner and a more agile function. This means that HR will need to stop its approach of delivering fully-developed, almost-perfect and unbreakable solutions to people’s problems and develop a flexible and agile approach where iteration, learning and experimentation are more important than long-term strategies and goals.
Sadly, I know of a lot of HR professionals who continue to think and believe that the HR function will be able to operate as “business as usual”. They are too blind, too conformist, too naïve or too stubborn to see that digitalization will transform the way HR operates, whether we want it or not, today or tomorrow. And, unfortunately, blindness to the digitalization of HR won’t protect anybody from it.
If entire industries can be disrupted and swept away by technologically friendly and savvy competitors, the HR function can and will be too.
I’m passionate about the intersection of HR and technology. In particular, I’m extremely interested in discussions about the design and creation of the workplace of the future.
That’s why I’m putting together an event called “Hacking HR”. The end goal is to build a community of like-minded people interested in discussing HR and tech and ideas about how to create the workplace of the future.
The first Hacking HR event will be in Washington, DC, on September 28, 2017.
Now Enrique is an HR Specialist at Inter-American Development Bank.