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When I’m 64

Should I envy the new entrants in the labor market for their youth, future and possibilities? The Economist’s fantastic summary of the Future of Work which I used extensively to write this blog, made me wonder. While instinct says yes, reason holds me back. The treshold to enter the labor market has never been this high. Millions of graduates in the EU for all sorts of reasons struggle to find a rewarding role. To fit an employer’s choice today, understanding how costly labor in the EU is, the future looks  harsh. Having the labor market ruled by unadapted laws and practices for the digital economy is one thing. Failing to acknowledge and respond to the challenges is however another.  It is time Marianne Thyssen within the EU framework formulates a long-term plan to bring the world of work into the 21st century.

 

While national governments, employers and unions complacently lack the courage to structurally reform the world of work, the EU is risking to waste a big part of a generation’s talent. Stubbornly holding on to an antiquated labor market framework while sacrificing millions of new potential contributors is shortsighted and ultimately suicidal. Priviliging the hoardes of spoiled baby boomers who’ll retire over the next decade, isn’t a sustainable policy either, especially when this astronomical invoice is irrevocably passed on to the next generation. If you’re starting your career now, it will be impossible for you to save enough money during 45 to 50 years of working life to fund 25 years of retirement unless you work till 75 years old or more. You are presented with a double bill: paying for your house and family and your future retirement while paying off the retirement bill of all former generations. The blessing or curse of longevity, depending on where you are in your career, is literally a life sentence.

 

Still, the EU and all other developed nations, i.e. Japan, need a massive amount of employed talent not only to fund the pension gap but also the health care bills for as long as public spending favors caring for the old instead over investing in the young. Although this stream of money, from young to old,  is recently new, it looks like it is here to stay. The political and economic power of the greying generations will guarantee this upstream money-flow. The world of work will have to cater for it. Radical disruptive reform is inevitable. The governments, employers and unions will have to fundamentally rethink their contribution to the world of work. In other words, these 3 wiil need to embrace the future and let go of the past. This will be hardest for the unions as the past is their present raison d’être.

 

The EU faces another problem: 85% of the young people live in developing countries. The competency level of this you generation is increasing year on year. The developed nations will have no choice but to attract their prime talents and entice them to build a prosperous career as an immigrant. Half of the countries in the EU but especially the UK have monetized the benefits of imported qualified labor. Immigration for all developed nations is no longer a choice, it is a must. While the EU is politically and culturally not ready for this reality, the workforce of its retirement homes just like any other workplace, increasingly reflects the need for imported qualified labor.

 

Japan is facing this reality more than any other nation today. With over a third of its population soon to be over 65 years old, it is starting to attract foreign talent in a pro-active way. Millennials of developing nations are recruited through targeted websites like flexoffers, promoting working abroad. The EU countries have no other choice. They need to upgrade their workforce with foreign talent. Unifying while harmonising its labor market would benefit all.

The baby boomers are counting on you as a new entrant to the labor market, immigrant or not. You’re likely to live to be a hundred years old and work for more than 50 years, paying off their bills. While they are making your life unfairly tough, they thank you for your contribution. Need I mention that most have retired way before the blessed age of 64 ?

Ulrich’s funeral

Over the past 25 years, Dave Ulrich’s model has been the inspiration and lifeline of the HR function. The transformation from an administrative personnel department into a value-add strategic business asset has been the mantra and the raison-d’être of many HR functions. The illustrious coveted seat at the table has been the catalyst for a radical overhaul on how HR viewed itself. It changed its mission, attitude and transformed its competencies. At least that is what is prophesized by the profession.

Reality is that the seat at the table is still for many HR functions a lofty goal. Scanning through the results of many self-assessed HR functions, you cannot deny the partial if not total failure of many of them. Getting from the day-to-day paper pushing to any form of strategic value-add has proven a very tough objective.

The biggest hurdle is the HR function itself. Many HR professionals do not even embrace the strategic objective as they cannot penetrate or gauge what the requirements or benefits would be. The administrative mindset continues to rule strongly in the HR community and the army of administrators seeks safety in numbers. The purely strategic or value-add positions rarely exceed 20% of the HR workforce.

Is it an illusion that the HR function can transform beyond recognition, just like a caterpillar into a butterfly?

The past few decades have shown very mixed results. One of the consequences of the HR transformation is a dichotomy in the HR-function. Talent Management in its broadest meaning has been trying to accelerate its value-add by embedding itself in the business while the rest of the HR function has continued to sideline itself, buried in processes, policies and programs.

The traditional part of HR has reluctantly but incrementally moved with forced changes, like the introduction of technology or globalization of practices. These conservative administrators however continue to push the status-quo and are at best unintentionally harmless. They clog the business with outdated practices and beliefs and stifle the competitive edge of the company’s human capital. Yesterday’s wisdom for yesterday’s world is sadly how today’s human capital is hired, developed, rewarded and exited.

The value-add component of HR is ready to jump ship. The strategic positioners, the credible activists, the capacity builders or whatever fashionable label today applies, are disappointed and disgruntled. The association with the HR function is strenuous and unreal. The value-adders belong in the business, in innovation or change functions, as practitioners and drivers of progress, applying innovative solutions to continuously changing challenges. They continue to prove their business impact and value in daily interventions, pushing reflection, innovation and change. Their strength lies in diagnosing and fixing dysfunctional roles, people, relationships, structures and processes. They co-create with the business a talented network of associates and promote a culture of initiative, collaboration and success. They constantly focus on people and output.

So here’s a thought: reduce HR to a core team of seasoned human capital practitioners. Focus all your internal HR resources on vital talent work. Create a TTT, a talent tiger team.

For all the rest, find another solution, like partners or service centers. Traditional ‘nice to have’ HR functions do not belong in an HR department striving to unlock and create business value through people actions.

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.