Designing HR for Agility in the Digital Age
YES, my dear friends the digital age is here! And interestingly it is not only about TECHNOLOGY! It is fundamentally about the way customer and employee behaviors are changing in response to the rapidly evolving technologies. On the other hand for businesses it is about leveraging technology to provide superior customer experience and unlocking the hidden potential of value creation. What amazes me is the rate at which this digital revolution is taking over the world. It was only 15 years back that I got my first mobile phone with only calling and messaging features, and what’s happening now is truly breath taking. Usage of advanced technologies like Artificial Intelligence (AI), Machine Learning (ML), Internet of Things (IoT) and Robotics is actually rewriting the rules of customers and employees engagement. On-demand economy, personalization and connectedness are some of its key manifestations.
If change is the new constant in the digital age, what does it mean for the organizations? Gone are the days when organizations could predict what’s coming their way and prepare much in advance. Long term scheduling has given way to short term planning, rigid organizational boundaries have given way to fluid structures, process efficiency has given way to relentless innovation, big bang product launches have given way to iterative and incremental product development, longer customer feedback loops have given way to shorter and frequent customer feedback loops, and finally isolated usage of technology has given way to more holistic and integrated usage of technology across the value chain. Organizations need to be fundamentally AGILE to embrace and cut through these changes and many more unforeseen changes to come. Which in simple words means that organizations should be able to course correct and pivot multiple times in a short duration based on the changes in the external and internal environment. This can only happen when people in the organization can truly develop the mindset of agility and are governed by agile people management practices.
HR will have to closely partner with the business leaders to design the organization and people practices for agility. The extent of this agility will act as a source of competitive advantage for organizations in the digital age. HR has to step out of its traditional mindset and be at the forefront of this transformation. Ironically till now HR has been responsible to put in place rigid structures, process and systems to bring in more standardization and efficiency, however now the same HR will be responsible to break those very structures, processes and systems to bring in more agility and flexibility. The task is not likely to be easy for HR.
So what is it that HR can do to make its people practices more agile? Learn from the companies which have effectively climbed up the digital curve. These companies are the leaders in their respective domain and are the torch bearer of the agile movement. These companies seem to have cracked the code of agility – whether in business, organization design or people management. As a pattern, these companies have dovetailed the following principles of agility in the way they design their people practices.
Principle-1: Working in Short Loops
Traditionally most of the people practices have been working in annual or bi-annual loops. For example goals setting in most companies happen at the start of the year with employees getting the feedback on these goals during mid-year and end-year. In the digital age the goals which are set at the start of the year may no longer remain valid at the mid-year or end-year because of multiple unforeseen changes which may happen during the year. Similarly the training needs which are identified at the start of the year may no longer remain valid after few months. Thus there is a need to continuously pivot these people practices multiple times during the year.
Principle-2: Relentless Employee Centricity
Traditionally first love of HR has been processes and systems. This was justified at the time when process efficiency and standardization where the key success metrics for HR, but in the digital age the focus has shifted to innovation, informal collaboration and speed. Many of the existing HR processes and systems tend to add unnecessary inertia and inhibit the free flow of ideas and speed of decision making. HR will have to make this shift from keeping process efficiency at its core to keeping employee motivation at its core. All decision making in HR has to revolve around making employees more motivated and productive.
Traditionally HR has been slightly apprehensive of sharing critical people decisions with employees or the methodologies which are used to take these decisions with employees. For example in many companies high potential employees are still not told that they are high potentials fearing that those who are not might get offended. While this was still fine in the age when employees worked in tight hierarchies and where used to partial information reaching them, in the current digital age employees work in flat hierarchies and understand the big picture perspective, also they are more connected than ever before. Lack of transparency always erodes trust, and trust is the basic ingredient required for informal collaboration and employee motivation.
Principle-4: Regular Feedback & Retrospectives
Like the way there is a risk of business deliverables becoming obsolete if they do not fit the requirements of the requirements of the external market, similarly there is always a risk of HR deliverables becoming obsolete if they do not fit the requirements of the business and the employees. Especially in the digital age when the things are changing so fast it is often advisable for HR to check this fitment. Imagine a system where we create a very basic version of the HR product, test it with employees (and business leaders), incorporate their feedback, work to create the next version, test it with employees, incorporate their feedback till the point there is HR product – employee fit. This will drastically improve the acceptability of the HR product. Interestingly Google also tests its HR products first with 1% of the employee population before making a company-wide release. This can be done for anything and everything that we CREATE for employees within the HR function, such as training programs, reward philosophies, PMS, talent management, engagement framework etc.
Principle-5: Working in Cross-Functional Teams
Traditionally HR is used to working as an independent function. With the functional boundaries getting blurred in the digital age, HR will be expected to work more and more on cross-functional projects with people from diverse areas such as Marketing, Sales, Product Management, Technology etc. Each team will be empowered to solve a particular problem for the organization. Some of these problems can be business related such as creating a due diligence framework for M&As, while some of these problems can be more people related such as designing a learning strategy for the technology function. In either case a cross functional team of subject matter experts is most suited to solve these problems. Gone are the days when the HR only team used to solve people problems for the organization, and business only team used to solve business problems for the organizations. In the digital age, HR is business and business is HR.
Principle-6: Loosely Coupled HR Operating Model
HR operating model is the way the HR function delivers value to its employees. Broadly speaking there are 4 typologies of the HR operating model. First is the in-house model where all the HR related tasks are carried out by the HR function; second is the outsourcing model where portion of the HR related tasks are carried out by an external vendor; third is the employee self-service model where portion of the HR related tasks are carried out by employee themselves; and fourth is the shared service model where multiple business units leverage common/shared HR services. Each of these typologies is supported by the right type of HR technology platform, and this is where the maximum scope of innovation lies. Confluence of technologies such as Social, Mobile, Analytics and Cloud can work wonders for HR. More often than not most of the organizations use combination of these typologies, however more agile HR functions are skewed towards outsourcing model and employee self-service models which can support rapid scale-up and scale down of HR services as is the need in the digital age.
All of the above principles, if applied effectively and simultaneously, can make HR more agile. Agility in people practices is the fundamental pre-requisite to make an agile organization and an agile business.