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07 Aug 2020

Your HR Strategy Pulse Check

Josh Bersin

Time to assess your HR strategy? What are the key areas of your HR strategy that need tweaking? 

Who better to look to than the foremost authority the global trends that are affecting the world of work, Josh Bersin.

In this article, an excerpt from his Talent, Technology, and HR Predictions report, Josh examines the forces that are at play in shaping the workplace and the critical role HR teams are playing in driving progress.

Responsibility and Trust in a Time of Uncertainty

This decade is shaping up to be an important but uncertain one. For the first time in years, economists and business leaders are caught between a growing economy and an increasing sense of doubt and fear. Unemployment remains low and skills are in great demand, yet the stock market is volatile, and issues related to income inequality, trust, and ethics make the news every week.

The Edelman Trust Barometer, a global survey of trust in business and government, shows a continued drop in trust around the world. Seventy percent of respondents were worried about fake news, and their trust in the media dropped by over 10%.

As business leaders and managers, we are now expected to take responsibility. In this same research, 64% of respondents believed the CEO should take the lead on change rather than wait for the government to act, and 56% said they had no respect for CEOs who remain silent on social issues.

And even more importantly, 63% of respondents said they would stop buying a product if the company does not behave in a responsible way. The research identified the five most important criteria for responsibility: safeguarding privacy; driving economic prosperity, investing in jobs, caring for the environment, and ensuring consumer safety.

Digital Business is Reinventing the Workplace

Inside companies, we are witnessing a rapid move to digital business, which is driving transformation of business models, operating models, and almost every job role. Automation is now impacting the workforce at a rapid rate (over 47% of companies are rapidly automating jobs), forcing individuals to not only reskill themselves, but also reinvent their careers. (I call this “catching the wave”)

Unfortunately, almost a quarter of employees feel that they are “on a treadmill going nowhere” so we have to do a better job at giving people career opportunities, which is a major focus on every company I visit.

In this coming year of automation and AI, I believe helping people reinvent themselves may be the number one key to prosperity in your company and in society as a whole. And if we do experience a recession in the future, this focus will be even more important, as people are forced into new roles by the downturn. From an HR standpoint, this means building a culture of learning, incentivising managers to develop and move people, and giving people opportunities to express their personal goals through their work. New software tools that deliver micro-learning, assess adjacent skills, and identify people for the right role through AI are now here to help.

HR’s Role in Championing Fair Wages

While all this reskilling and change is going on, people are working longer hours and asking employers to provide solutions for wellbeing, productivity, stress reduction, and financial support. While the global economy is growing in many countries, there appears to be a hollowness to the growth, as the majority of workers feel that their incomes are not keeping up with inflation.

I believe this is both a government and private sector issue, and one that lands on the laps of HR. Will you argue for wage increases in your company when you hear about standard of living issues among your workers? Or will you treat workers as labor costs that need to be managed down to increase profits?

You, as an HR leader, have an opportunity to weigh in.

I believe we have to rethink our philosophy of wages in the coming years and focus on investment in people rather than reduction in payroll costs as automation takes over. One of the clear changes that takes place as a company goes digital is that every job becomes a service role. Even those of us with internal positions are now serving others in our job.

This means that employee commitment, engagement, and development is fundamental to growth and success. So, we have to pay people fairly and competitively in ways that incentivises them to grow and stay. When you underpay employees, they do not add the extra commitment you need to their work and their loyalty diminishes. The result is lower productivity, higher turnover, and potentially decreased customer satisfaction – all of which actually increase business costs.

Despite the logic of this argument, Deloitte research shows that only 7% of companies believe their compensation is fully aligned with their business strategies. That is why I urge you to do a good review of your compensation strategy and make it more agile, real-time, and current. For more on this, read my article “Why Wages Aren’t Keeping Up: It’s Not the Economy, It’s Management”.

Gig Work and Side Hustles on the Increase

This sense of falling behind is also forcing young workers to do gig work and look constantly for new positions; it is forcing employers to be more lavish and generous with benefits and perks; and it is encouraging HR departments to build programs to enhance the employee experience and improve employee engagement. (Sixty-two percent of millennials believe gig work is a good alternative to full time work, and 18% of Gen Z workers have side hustles to make extra money.)

The workplace itself is also changing rapidly. More than 40% of U.S. workers now work from home or on some type of contingent basis. ADP told me that over the last decade the number of W-2s has been almost flat but the number of 1099s has gone up by over 40%. In fact, the alternative workforce is not alternative anymore. Companies such as WeWork that provide communal workspaces are exploding with growth and almost every coffee shop is filled with people working at their computers.

I believe this trend will accelerate over the next years. It is easier than ever to find gig work through websites such as Upwork, and many younger workers see side jobs as investment protection in case of a recession. If you ask younger workers why they want online learning and lots of developmental projects at work, their number one answer is “to increase my earnings potential and help me get ahead.” They know that doing side hustles is protection against a layoff.

HR Technology a “Tapestry” of Solutions

Productivity, the real measure of employee performance, is not increasing at the rate of inflation, so companies are now heavily focused on organizational design (emphasizing teams not hierarchy), new tools, and analytics to figure out what the most productive people do.

I recently met with Genpact, one of the largest service providers in India. The company used ONA to scientifically identify the true behaviors of the most valued employees and then published and trained others to leverage these tips.

While I have high hopes for new workplace technologies such as Microsoft Office 365, Microsoft Teams, Slack, and G-Suite, we as HR professionals have to work with IT to make sure these technologies integrate with the HR tools we buy.

Cloud-based HR platforms such as Workday, Oracle HCM, and SuccessFactors have not transformed the work experience as we had hoped (Sierra Cedar research shows that user satisfaction is dropping), so we need to build a new tapestry of solutions focused on these systems of productivity. Read more about this topic in “Guess Who’s Looking at the HR Tech Market: Microsoft”)

The HR technology market is in a hurricane of growth (you can read all the details here), as more than 1,400 new vendors have entered the market in the last three years and companies struggle to figure out what to buy. The core cloud systems are growing well, but corporate buyers tell me cloud systems have not delivered on the promise of low cost of ownership or a compelling employee experience. So, a new set of tools is now in the market, focusing solely on the employee experience itself. (Read my report on HR tech for more on this.)

Ethics of Data & Privacy Challenging HR Teams

Some have called data the new “oil” of the digital economy, and given what’s been happening with privacy, maybe data is as dirty as oil. Regardless, data management and security are much more challenging than originally thought. Companies such as Amazon, Facebook and Google, which have become enormous by leveraging our personal data in advertising, are now under attack because consumers don’t trust how their data is being used.

It turns out being a data-powered company is harder than it looks, as credit card and financial services companies know well. All of this is creating a much greater focus on data privacy, governance, and ethics in HR.

AI, the newest buzzword in the industry, is now everywhere. I wouldn’t be surprised to see young people learn the fundamentals of linear algebra in high school, so they can start building neural networks before they even enter college.

The demand for AI experts is incredibly high; LinkedIn says AI jobs are 12 times more in demand than the average positions. One of my associates tells me new graduates in AI can earn $300,000 right out of college.

Empowered Teams Replace Management Hierarchies

The way we manage is changing, too. It’s very clear to me that we have entered a world where responsible capitalism is the theme of the future, and managers themselves have to think about taking care of their people, coaching people in a growth mindset, and acting in the most inclusive ways possible. Yes, many companies are still hard-driving places to work, and this will always be true. But in my experience, when the economy turns down and times get tough, tightening the screws doesn’t always help.

Being honest, responsible, and positive with people is always the best solution.

We are also in the third inning of a long game to redesign our companies to be networks, not hierarchies. The hierarchy of a business will never disappear, but now it is more of a coordination mechanism and less about how orders and directives are carried out. The fastest growing companies of today create highly empowered teams; they promote people based on their expertise and relationships; they experiment and iterate on products and services; and they use top-down leadership as a form of alignment, not a form of control.

This has transformed the leadership development industry, which loves to talk about digital leadership, has given us all a lot of fun work to do building new tools and models for teams.

Annual Reviews Still Widely Used Despite Being “Universally Despised”

The age-old world of performance management continues to evolve. Companies now realize that once-a- year reviews are not enough, and many companies have implemented check-ins, continuous feedback, agile and open goals, OKRs, and development planning that take place on a regular basis. To complement this change, we have an enormous new market of learning experience platforms, virtual reality learning systems, micro-learning tools, and lots of learning “in the flow of work” so we can develop ourselves at any time of the day.

The latest research by Bersin actually shows that 96% of companies still do annual reviews, despite all the talk about continuous feedback, and the process is still “universally despised” with a net promoter score of -60.15 I think we have over-rotated toward technology, believing that new tools would solve the issue of management behavior.

Now we are in an era of truly teaching leaders how to coach, develop, and listen to their people.

Diversity & Inclusion Still Top of Agenda for HR Teams

The topics of diversity and inclusion have now reached the CEO, making HR’s job in this area harder than ever. Every company has built-in bias (by nature, the founders bring their own biases to every business), yet CEOs and HR leaders are now being held accountable for transparent diversity metrics, fair pay, transparent pay by level, and ever-more data about how their metrics compare with their peers. This scrutiny will grow in the next decade, forcing companies to continually to invest in this area.

There are some amazing technologies to help address diversity and inclusion challenges, ranging from software that “de-biases” job descriptions to finding discrimination in interviews and promotions to pointing out pay inequity. But it’s still a tough slog. I believe fairness, diversity, and inclusion should stay at the top of the agenda for all HR organizations this year because of its importance to employees and the business itself.

Issues related to harassment and mistreatment of employees also continue to surface. Not only do women suffer from poor treatment, but many companies also inadvertently discriminate against older people, people of different cultures, and many other groups. In the old days, this was accepted practice; today harassment and discrimination are being inspected through the microscopic lens of the internet. I believe companies that learn to harness the talents of a multigenerational, multi-cultural workforce will far outperform those that don’t, especially if the economy turns south.

In my travels over the last year, I came across dozens and dozens of amazing organizations that are addressing all these workforce challenges. Companies such as Salesforce, Genentech, Schneider Electric, Kone, Citibank, Nestle, and Microsoft are reinventing themselves on a regular basis. They are dealing with all these issues at once; they work hard to make their employee experience better every day; and they honor, respect, and invest in HR.

Doing Well by Doing Good: A Powerful Branding Move

The theme of “doing well by doing good” should be high on every HR organizations’s strategy. The new Just 100 list from Forbes and the 2018 Companies that Care from Great Places to Work provide great models to follow.

Every HR executive should spend time with leadership mapping the company’s mission statement against the sustainable development goals from the UN to see how well it lines up. This exercise can be both empowering and transformational for your leadership, because it provides a true sense of purpose, which can drive success like almost nothing else.

What About HR Itself?

Almost every week I hear predictions that the HR department is going away or that AI and software will replace the need for HR managers.

I could not disagree more.

In today’s uncertain environment, HR has become one of the most important parts of business. If a business is growing, how does it compete for the best talent that aligns with its culture? If a company is restructuring, how does it move people into the right roles, redesign the organization, and inspire people to reinvent themselves as the business goes through change? When a company downsizes, how does it shift to alternative work or reduce people’s hours without losing its mojo and culture? And when products go digital or a company shifts to a new value chain, how does it train people to operate in a new way, take on more hybrid roles, and learn new skills?

It all comes down to HR, the real heroes behind the scenes.

Yes, HR itself has to adapt. We need to upskill our teams and be more agile, we need to integrate the silos of HR, and we need to modernize the service delivery function. These are all going to be topics I’ll talk more about in the coming year.

Final Point: Being Responsible

The final point I want to make is about culture, mission, and purpose. We are now in a world where trust and purpose are almost more important than profit. Companies such as Facebook and Volkswagen, which put financial results over trust, find themselves in difficult positions over time. A tarnished brand is hard to repair, especially today as we expect business leaders to set an example.

This expectation crosses workforce generations. Those of us who are baby boomers grew up in sound economic times. We built good careers and learned through experience that profitable companies were good places to work. Millennials, Gen-X, and Gen-Z workers see the world a bit differently. While they have seen good economic growth, they also witnessed the 2008 meltdown and a breakdown of political dialogue. Additionally, they have serious concerns about global warming, income inequality, and trust. While these employees do want great careers, they also want to help make the world better.

On the other side of the workforce spectrum are those people in their 50s and 60s who need or want to work for another 20 years or so. In fact, the over-50 workforce is the single fastest growing segment of the U.S. workforce. These employees are also mission-driven, largely by the nature of age and place in life.

Organizations and HR teams must consider these generational issues in 2019. Are we building an inclusive multi-generational culture? Are we giving older workers the opportunity to mentor younger people? Are we addressing the societal and citizenship concerns of these populations? Are we updating our leadership models to accommodate a much longer lifespan?

Are we giving young people leadership opportunities early enough? Are older employees rewarded to “step aside” and let young people take over, while they still get to work and meaningfully contribute?

My career in HR, which happened by accident, has given me insight into a profession I adore, respect, and admire. HR professionals are among the most passionate and creative people I have ever worked with, and in the next decade, I think we will be tested again. Let’s look at this uncertain year as an opportunity to step up our game and reinvent ourselves to be more agile, more responsible, more data-driven, and more business aligned than ever.

Download the full Talent, Technology, and HR Predictions report to read more!

About the Author

Josh Bersin

Josh Bersin is an internationally recognized analyst, educator, and thought leader focusing on the global talent market and the challenges impacting business workforces around the world. He studies the world of work, HR and leadership practices, and the broad talent technology market.

He founded Bersin & Associates in 2001 to provide research and advisory services focused on corporate learning. Over the next ten years, he expanded the company’s coverage to encompass HR, talent management, talent acquisition, and leadership. He sold the company to Deloitte in 2012, when it became known as Bersin™ by Deloitte. Bersin left Deloitte in June 2018, but he continues to serve as a senior advisor and contributes to major research initiatives. He also sits on the board of UC Berkeley Executive Education.

Bersin is frequently featured in talent and business publications such as Forbes, Harvard Business Review, HR Executive, FastCompany, The Wall Street Journal, and CLO Magazine. He is a regular keynote speaker at industry events around the world and a popular blogger with more than 700,000 followers on LinkedIn.


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