“…corporate survival today requires the capacity for rapid change, and forward-thinking HR departments are transforming themselves to meet the demand for evolving skills and work models. They’re taking their cues from a surprising source—the IT department, which at many organizations has adopted agile processes to speed its evolution and better serve customers’ needs."
- Adi Ignatius, “How Tech is Transforming HR.” Harvard Business Review, April 2018
Digital transformation is impacting nearly every industry, geography and business function. Now it is Human Resources’ turn to experience the impact of some disruptive tech trends. Is HR ready? Recent AESC research identified CHROs as the least prepared, relative to other C-Suite roles, for digital transformation. The HR world itself is being disrupted, and HR leaders need to prepare themselves and their organizations.
While the changes are significant and coming fast, some experts welcome the transition. “I would say it’s an extremely positive disruption.” Steve Patscot is the North American leader of Spencer Stuart’s Human Resources Practice. “Technology is making every aspect of the HR value chain better—from pre-employment to benefits, total rewards, employee/executive development and so forth. Technology is disrupting all of that in very, very exciting ways.”
Charles Bien, Managing Partner of Signium Greater China, provides some context. “In the past, HR was administrative, then it became functional in nature. Now HR is much broader. HR’s understanding of technology and experience in applying the technology is a key requirement, these days.”
“Technology transforms how an organization can think about delivering HR to its people,” says Kinga Peers, a member of Russell Reynolds Human Resources Practice. “The huge difference that we’ve seen is the pace of that change driven also by the expectations from the end-users. As companies seek to become more customer driven from a commercial perspective, innovative HR leaders are doing the same for the employee experience and ensuring seamless HR delivery.”
Gary Dent, a leadership assessment advisor with Greenwood/Asher & Associates, Inc. and Managing Member, Devine Talent Management, LLC, a strategic human resources consulting firm in Cincinnati, Ohio, reminds us that understanding business technology is not only about the technology used within the HR function. “HR leadership must understand how it is used in their organization and by their customers to support their organizational needs. They must be focused on the future of their organization and understand the business they’re in and how technology is used and integrated in their work.” For example, he says, “If in higher education we’re talking about moving to a new, high tech library and learning management system, if the HR leader isn’t at that table understanding what we’re talking about, they can’t help find or help grow the people needed to lead and sustain the change successfully.”
Anna Penfold, who leads Russell Reynolds' Human Resources Practice from the UK, agrees. “Every company is going through a change program which affects the HR organization, and there will be a technology component to all of that.”
Bastian Wilhelm is a consultant in Spencer Stuart’s London office specializing in CHROs. He says, “If you look at talent acquisition, talent management, reward, learning and development, performance management—technology cuts across all of these disciplines. There are numerous businesses coming up with really clever ways of developing tools that allow specialist functions within HR to become the best at what they do.”
From digital tools to managing data to AI, a lot is happening in human resources.
Sourcing candidates just got a lot more sophisticated. Franz Gilbert is Vice President, Solution Provider Programs at Bersin, Deloitte Consulting. He describes the use of neural nets, or algorithms that learn to recognize patterns, to conduct a better search. “People are applying true artificial intelligence to sourcing,” he says. “They’re using neural nets. One way to do that is for a search firm to load in all their historical search data, and that allows the AI to learn: What are the partners really looking for? What are the nuances? By loading in that data—and it’s called back propagation—it allows the AI to start instantly modeling what those individuals are looking for.”
Automated candidate engagement is also on the rise, with a profound impact on efficiency.
“There’s some fantastic technology,” Penfold says, regarding tools that automate non-executive hires. “For example, with something like HireVue, in the recruitment space, if you’re a larger corporation you can save thousands of man-hours via people self-screening. In relation to volume recruitment, in fact, this technology may well be more effective than recruiters manually screening.”
What About Bias!
The often-voiced concern about technology entering in the screening and selection process is that it will amplify bias that resides in the data.
Gilbert says, “Artificial intelligence is always going to have some level of bias innately in it, initially, because the data we loaded it with is based off of historical human decisions; and second, we program it with some sort of criteria that inherently creates its own bias.”
Fortunately, the problem is being addressed—by technology. “A number of firms are releasing AI bias testing tools for this very purpose,” Gilbert says. “You’ll hear about it under ‘ethical design.’”
Wilhelm adds, “If you think of diversity and inclusion, you want to make sure that you’re eliminating bias when you hire, that you’re not using language that discriminates against any particular ethnicity or gender. Providing you are watching out for algorithmic bias, technology can help de-risk the hiring process and allow the organization to make better hiring decisions.”
Assessment Upgrade – mature science, reintroduced
Digital tools that measure personality, motivation, cognitive ability, and predict one’s likelihood of success in a job function have been in use for decades. “This is an incredibly mature science,” Gilbert says. “It is absolutely amazing in terms of what the science community has done.” The difference is the tools are now digital.
Penfold says, “If you can use online psychometrics and databases in order to quantify and qualify your views on potential candidates, to add an extra layer of rigor in science that has been robustly calibrated rather than a gut-feel thing, that’s got to be more effective in the long run.”
Gamification – assessments, reward, engagement
Gamification is the use of game design and game-like experiences in a non-game setting.
Gilbert describes a situational job assessment for a hotel chain. “One of the best examples of this is a major hotel chain that did one where you were running a SIM version of a hotel. You had guests coming in, you had to figure out how many rooms to prepare, you had to deploy the cleaning staff, you had to know what were you doing in terms of banquet services, etc. and the system tracked how well you were running the hotel.”
Gamification with its digital interface and earned levels, badges, and scores can impart a sense of accomplishment in employees, encouraging learning and increasing engagement. It can also enhance collaboration and provide a wealth of employee data on skills, motivation, and engagement.
Better Bots – RPA, chat bots and voice assistants
Smart agents are reshaping how employees engage with HR. Peers says, “User friendly self-service and chat capability are becoming more important from a cost, quality and customer expectation perspective. People coming to the workplace are used to working with intuitive and exciting technologies in their private lives and have come to expect the same at work. The choice of available technology and devices can now be a key factor when choosing an employer and so the implications are broader than pure HR delivery.”
Patscot says, “Imagine ten years ago and you had a benefits question—you had to find the 800 number, then call the number, probably wait on hold until someone could get to you. All that stuff is incredibly not consumer friendly. Now you go on your phone, enter the question, and a bot responds to you in real time and the situation is resolved in minutes rather than hours or days.”
Robotic Process Automation can streamline educational checks, background checks, reference checks, and a number of repetitive, high volume administrative tasks. Technology can also better engage with job applicants, improving response times and applicant screening.
On the opposite end of the spectrum, Dent is reminded of an organization “still using obsolete ways of relating to applicants. They miss outstanding people with the competencies needed by advertising their job vacancies in the printed newspaper. Most potential applicants will never see the employment opportunity, and the employer has very little chance of knowing the people who might be a fit for their organization.”
Gilbert even sees efficiencies for search. “There are scheduling systems, even chat bots that do scheduling, and just an amazing set of systems out there that allow a search agency to set up with the client and the participant and schedule those interviews without needing coordinators—because those take a tremendous amount of time.”
Workplace learning and development in the digital age is expanding its offerings and moving to the cloud. According to McKinsey, “Sophisticated organizations are now expanding their use of cloud-based learning to run such personalized applications as MOOCs (massive open online courses), SPOCs (small private online courses), instructional videos, learning games, e-coaching, virtual classrooms, online performance support, and online simulations.” (“Learning at the Speed of Business,” McKinsey Quarterly, May 2016)
Patscot says, “Learning management used to be a simple inventory: what course did you take? Now, it is far more engaging. People want to be able to consume training in a much more personalized, customized, and sometimes offline experience, when I’m on the train, I’m on the plane, I’m at a coffee shop. I want to be able to take that course, and I want to be able to work on it when I want, where I want, how I want, and then I want everyone to know I took it and did a really good job—those badges and stars. That applies to Millennials as well as older generations in the workforce.”
Digital Feedback Systems
Employee feedback is recognized to improve performance, engagement and retention. And the information coming back from employees can be highly valuable, providing key insights. Bien says, “I wouldn’t advise the elimination of performance reviews, but more frequent feedback is probably the trend more than the annual process. In the old days we did it annually or semiannually, but these days people—especially younger generations—expect more frequent feedback, and technology definitely helps that. If you do it the old way it’s almost impractical. But now with technology, I think it’s a good way to achieve that goal.”
Tools including pulse surveys, internal social networks and app-based continual feedback models have replaced the traditional performance review in many global companies, including Accenture and GE.
Digital continuous feedback systems can measure productivity, engagement, skills development, achievements and recognition, provide critical information about the health of teams, and collect a robust data set to evaluate an employee’s performance and compensation.
Video meets Natural Language Processing
Video interviews and assessment are not new. But bring them together and add AI, and we have a powerful new tool.
A key application of AI is natural language processing. A just-emerging development is real-time translation inside video for screening and interviews, and that technology will expand into automated video content scoring for candidate sourcing, and assessments built right into a video interview; assessments that are especially in-depth when coupled with video sentiment analysis, or the ability for AI to identify emotion and engagement through facial recognition.
Gilbert says, “What these video technologies are allowing people to do is you literally can be speaking Mandarin or German or Spanish on one side, and the search consultant on the other side can be speaking what their native language is, and it translates it in almost real time.”
“I think that's going to just radically change the industry,” he says.
Gilbert says, “Because of transcription capabilities we now have access to the entire language set of what’s being done in video interviews. Think about how people source today. Normally, they source against resume databases, social profiles, special affiliations. This is where we’re searching. Now imagine if we were also running that search algorithm against all of a person’s historical video interviews.”
“Folks are starting to apply AI to do integrated assessments built into the video process,” he says.
Any regulated organization, any entity doing business under the authority of GDPR must give serious thought to compliance issues, as even more data is collected and processed.
Wilhelm says, “In the context of compliance, think of an organization that operates in various jurisdictions with different employment laws. That organization will have certain restrictions and rules set upon the business, that they need to comply with, specifically around hiring and redundancies. GDPR is also a typical compliance responsibility, that requires securing the agreement of any applicant to keep their information stored on your system. If you don’t have that, you run the risk of being fined.”
Japanese software company Attuned combines online survey tools with AI, to predict turnover risk, measure organizational culture, and provide deep insights to employers.
Patscot explains, “The technology is predicting who is going to leave and what might be driving that decision, so the employer has a chance to have a retention discussion instead of an exit interview.”
“That is super powerful,” he says. “There are a lot of companies that are using technology very thoughtfully and very interestingly to sort of get at that.” He adds, “Some of that bridges on the privacy challenge, which is always important.”
Wilhelm offers the perspective of a mid-level manager. “When you’re a line manager you get weekly reports saying, ‘these people are at risk at the moment, for these and these reasons.’ Whatever factors are being used to determine that risk, the reports allow managers to address any disengagement. It may be that the employee is ill, or it may be something unrelated to the role, but we know that leaders value having a sense of when people are disengaging.”
AI is also helping companies better understand talent mobility trends, anticipate the likelihood and timing of key departures and better manage the talent pipeline.
It may be time for organizations to invest in digital for human resources. “If you’re a CFO and you’re going to talk to your leadership team, you’re going to know what the revenues are, you’re going to know what the profit margin is, you’re going to have your cost-specific data about the financials,” Penfold says. “In the same way you would expect HR leaders to know the turnover of employees, the likely make up of different sections of the community, how many people they employ in which part of the world, the constitution of that employee base, and all sorts of different metrics about the quality, the value, and frankly the engagement levels of the population that they support.”
For Peers, “With the proliferation of data, organizations are looking to build or enhance the analytical capabilities to draw actionable insights to inform and make decisions.” For example, she says, “Businesses can start extracting value by combining commercial and people related data. Some organizations have successfully correlated employee engagement, performance and turnover with commercial performance at retail store level to inform their people strategies and ultimately strengthen the bottom line.”
One of the biggest barriers according to Wilhelm is, “A lot of organizations don’t have the right amount or the right type of data. We’re seeing businesses bring in a lot of transformation leaders or HR operations/technical leads who are there to help the business understand what they need to do in order to become better at running their processes, automating things, bringing AI and Big Data into the business. But what they need to do first is aggregate and clean their data before being able to do the analysis and say ‘okay there are trends here.’”
He adds, “The quality of information is absolutely paramount. You can put in the most sophisticated AI or bots or whatever you want, but until the information and data quality is strong, you won’t be able to fulfill the needs of the business.”
For Dent, “Organizations are realizing that HR leaders need to be more strategic. So as we’re thinking about new technology, a new product design, or new service the HR leader must be at the table to ensure people resources are available and prepared to meet the demands of the organization.”
HR, Technology, and Executive Search
Organizational leaders do not always recognize the vital importance of tech savvy HR executives, and search consultants have an opportunity to make it front-of-mind.
“We do assignments in HR searches at C-level or C-1,” Bien says. “And when we talk to clients about their most important requirements, technology is usually not the top one. Usually they are very focused on strategic mind, partnership, leadership, and business acumen. But technology wouldn’t be the first item. Usually what we do is that we ask them if they would also have a technology requirement for HR. The answer is usually yes, but not off the top of their heads. It usually comes from us.”
You have to have an HR leader who is not only business savvy but understands new technologies that are being implemented by your employees and customers in whatever business line you’re in.
Dent says, “You have to have an HR leader who is not only business savvy but understands new technologies that are being implemented by your employees and customers in whatever business line you’re in. That’s why I continue to advocate for placement of HR people becoming business partners within the organization, not just sitting in an office waiting to have people needs tossed over a wall,” he says. “We don’t need HR people figuring out HR processes such as payroll, and other non-core processes—we have HR business technology for that. We do, however, need more HR people who understand talent acquisition and development, how to integrate people-business process-technology, and who can leverage that for the organization.”
It is no wonder this hyper-efficient, tech-driven environment puts pressure on HR leaders. Penfold says, “Let’s say you’re the head of recruitment in an organization. Well, you might naturally be nervous that either your job or certainly part of your team is not going to be needed anymore. An HR leader may be trying to be coach and counsel while at the same time potentially being anxious about what the new tech does to their own team.”
At the highest levels of search, Gilbert says, “It’s less about what the individual did, and more about the type of companies that they worked with.” For example, he says, “Think about a CFO. Are they the ones who have traditionally done IPOs? That’s something that’s important. Were they in the startup range? Were they specifically for AI? Or if you had growth companies, what industries were those companies in? What revenues? Were they publicly traded or privately traded? What exchanges were they on?”
The search for a tech savvy CHRO may be a challenge. Bien says, “It’s a big time in mainland China now for HR leadership. Most companies are local companies, emerging companies. Some of the younger emerging companies are getting very big. So all of a sudden everyone is looking for a CHRO.”
He adds, “The real supply of talent in this aspect, someone who is really technology savvy, is still for us quite scarce. So I think the younger generations of HR leaders understand technologies, but I see very few real drivers of that, champions of technology in the HR world, yet.”
Peers observes, “HR platforms that are well implemented provide actionable data across all employee touchpoints, from hire to retire. This helps to break down silos within the HR team and ensure all parts of the HR organization work together to provide a great and consistent employee experience.”
Technology can lift an organization’s HR services to unprecedented levels of speed, efficiency and accuracy. That is important, but sourcing the right people, understanding them, engaging them, developing them and retaining them is what ultimately makes winners and losers across markets and industries. The competition is fierce, and CHROs must be digitally savvy and leverage sophisticated tools now, more than ever.