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Tomorrow’s HR department will look radically different part 2

In a previous blog, I stated a new paradigm for HR had arrived:

HR’s prime goal in life is to enrich and optimise the network in terms of talent and output.

Let’s start with defining network. Companies today are no longer the sum of their employees, managers, executive committee and board, working with suppliers and customers. They are much more. They are citizens of a global village, competitors in a hyper-connected world, impacting economies and humanity alike. The symbiotic relationship between businesses, digital and daily life is transforming our environment in its broadest sense into a networked future. The traditional dividing lines like countries, industry-sectors, legal frameworks, cultures, languages, time-zones, scale, speed and so many others too numerous to mention, are fading. Companies will succumb and adapt to an interwoven network of opportunity and threat, where a competitor is a partner and vice versa at the same time. The network will set the company’s agenda and strategy, replacing the traditional stakeholders.

This is happening as you read. You might argue this is old news. The world of business has always followed Darwin’s laws and will continue to do so. Adapt, mutate or be extinct. All I’m saying is that the business biosphere is continuously transforming and that fight or flight not really an option is anymore. There’s only fight. There’s nowhere to hide in the global village.

Defining talent in this paradigm has become more complex: talents are masters of networks. Talent turns the network into a competitive advantage for the company and themselves. Today’s global talent is self-conscious and will only work for a company if there is a strong return on investment. Alignment between these 2 objectives is paramount. Loyalty to one company from the employee perspective may equal missing out on reaching one’s full potential. It also threatens to leave the employee condemned to an ever-diminishing market value. Talents however stay loyal to networks. And this is where talent acquisition needs to play.

This vital business function needs to acquire masters of the network who share the company’s objectives, culture and values. This requires an in-depth industry and business knowledge together with professional assessment capabilities. Understanding where and how to find the talent in the network, coupled with assessing current skills and potential is what most professional talent acquisition teams today aspire to do. Together with the hiring manager, potentially the HR business partner and why not a consulting third-party, they form a comprehensive team.

But this is not enough. The real challenge is to become an integral part of the industry talent network in order to pro-actively influence this network and benefit from the network. Not only will the acquisition team need to find the adaptive, innovative, fast-decision making industry leaders with a network of equally talented associates, it will also need to dominate the network. Recruiters will not just hire 1 person for 1 job, but select, groom and grow a rich and multi-layered professional network to continue to recruit from. The war for talent has become a war for the network.

Let’s take mobile payments for example. Total mobile online retail payments are expected to grow from $75.8 billion to $217.4 billion at a 23 percent compounded annual growth rate between 2014 and 2019, according to Javelin’s Mobile Online Retail Payments Forecast. These numbers are up for debate but what’s certain is that only the companies dominating the mobile payments talent network will potentially capture this market and achieve the predicted growth. Companies with a traditional talent acquisition approach will be outpaced and lose out.

 

The lunacy of today’s performance management process

The chance is high that you are working for a company which has an annual performance management cycle trying at best to achieve 2 things: reward the really strong performers through merit and bonus attributions and secondly document a development or performance improvement plan for those not in that category. The chance is also high that 80% of the employees are demotivated through the process, disillusioned in its fairness and outcome but above all disengaged. What is also certain is that the process paralyses the company for the better of 4 months, let alone the HR department being very busy with being very busy.

There are multiple reasons why the annual performance management process dissatisfies most stakeholders. First and foremost, the business value is questionable. Do companies make more profit through this tool? Do people actually work harder, even though they know they will never be the top performer receiving a mega-bonus? For 9 out of the 10 people in a team, there is somebody outperforming them, taking the lion-share of the bonus pool. You can argue number 2 or 3 may compete, but number 4 to 9, which is half of the team, is disinterested from the start. Let alone number 10: most of them know halfway through the year that there won’t be a merit or bonus, let alone a job.

Secondly, all individual annual performance management systems sin heavily against common company values, like team collaboration and innovation. Promoting individual performance in today’s work environment puts every team member in competition with each other while the team/company is dependent on the successful collaboration of these same team members. The fact that this is counterproductive and illogical doesn’t seem to bother most managers. What is even more worrying is that this stifles sharing of knowledge and therefore stalling innovation, which is crucial for the wellbeing of the company.

Moreover, business and people do not act in years. Businesses go through cycles, just like products. Variable reward, where it makes sense, should mirror that cycle as closely as possible. If the cycle is 3 months, so should the performance management process be. If the cycle is 5 years, idem ditto. Still, the added value of having a performance process might not be there. What is sure is that the one size fits all approach does everybody wrong.

Performance through people is a people issue, not a budget cycle. People only perform when they are engaged. Engagement comes when their hearts and minds are correctly addressed. Motivation and commitment will never be the result of a performance management process. People need a cause to perform. Performance is driven by emotions as much as reasons. Companies need to deserve performance. Just paying for it reduces the employee to a mercenary and the company to a system to make money.

Also, by its very nature, the annual performance management process looks primarily at the past, not the future. Influencing and changing the future should however be the focus of any management action. Strong managers facilitate future performance by checking-in on a daily basis, by coaching and caring, by creating space for the employee to perform, by allowing them to learn along the way, by relinquishing command and control. With trust, scope and accountability, 90% or more of the employees live up to great performance. You don’t need an annual review paralysing the company for months to single out the few exceptions.

Today, when most of the work in Europe is think-work, not by an individual but by a network of people transgressing team and company boundaries, individual performance reviews are redundant. The network itself will deselect the non-performing elements. You don’t need a manager or a bureaucratic process to address this issue. Just let the network decide.

Tomorrow’s HR department will look radically different

Tomorrow’s HR department will look radically different. Everybody agrees that the administrative, monolithic, support function that HR sadly in many companies in Europe still is, has no future. All CEO’s expect more from HR even if most of them cannot define what more entails. We all intuitively feel HR has a lot of work to do to become the business function it needs to be if it is to be at all.

You know I do not shy away from blue-sky thinking. Let me take you through my initial, albeit unstructured thoughts: As the way we work undergoes radical change so does our experience of the world of work. Not only where we work or when we work has become fluid, so have the hierarchical lines and the once so established processes. The new way of working is based on networks, skipping formal lines and out-dated structures. Flexibility is no longer a buzzword but part of the genome of any work-related concept. Work today is about thinking and sharing your thinking. It’s about communication in its broadest sense.  Boundless in time, space and format, without any established or preconceived rules. Hierarchy, career ladders, perks with titles,: all this is becoming obsolete and pointless just like corner offices.

There will always be the proverbial dinosaur but the new manager will be a coach and a co-worker, not a boss. The new employee will take initiative and demand accountability, not wait to be told when and how with whom to do what. The employee will grow and be productive by constantly improving his thinking output.  Iterative networking will format competencies and performance . With other words, the employee will have to act at a higher level and will need to continue to be relevant in this dynamic network if he or she is to remain economically valuable. Like companies, employees will have to create their own eco-system. We’ll all be associates in one form or another, all part of a dynamic network, both employers and employees, with varying economic interdependencies.

This is not just happening in Silicon Valley or in some brave new world scenario. The economies in Europe form no exception: they have shifted from manufacturing to knowledge, from do-work to think-work. Delocalisation of do-work has been a topic for the past 40 years. Think-work has proven to be no different. Reality is slowly kicking in. The future of work in Europe is brainy and techy but competitively challenged by the rest of the world. Europe’s massive unemployment sadly illustrates its reluctance to adapt to this reality.

Like Europe needs to transform, so do its organisations: systems, structures, processes, people, practices, etc. The work will be processed in a different way. The old practices, remedies and wisdom are defunct and will no longer apply. This has massive ramifications for the traditional and contemporary HR department.

HR in its totality needs to be reinvented. Old Band-Aids, like outsourcing the HR back-office part and putting some business partners in the field, will not do the trick. This is so nineties.

To turn HR into a value-add in today’s economy, a new paradigm has emerged: HR’s prime goal in life is to enrich and optimise the network in terms of talent and output.

This does not mean HR cannot have other goals but all will be derived from or supporting this sole raison d’être.

I will try and demonstrate what this means for HR processes like recruitment, talent management, labour relations, etc.  in future blogs. It’s not just the world of ‘people analytics’, or  ‘data-driven HR’, or ‘statistics and algorithms’, or ‘sociometrics, etc.: it’ s more than science meets HR. Just following the data in this VUCA world is a beginning but not enough for success.

Stay tuned. This new paradigm has arrived.