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02/29/2016

The road for HR in 2016

In the midst of the wide variety of roaring buzzwords on how modern companies should be organized and on how they should leverage human capital it is of vital importance to observe the department responsible for a big part of those transformations in its actual coping with those buzzwords. How are today’s HR departments managing the explosion in data ability? What about their big data-capabilities? How are they driving agile working methods throughout the enterprise? Are HR processes fully adapted to the modern organization?

“Big data” and “Agile”, these two buzzwords form the backbone of the current challenges for HR departments. On the one hand they are urged to become people data managers while on the other hand they are supposed to support a framework for agile working methods. These challenges greatly define the list of trends and to do’s for HR in 2016. On the level of data management (and digital transformation in general) we see a list of transformations and opportunities such as improving analytical skills, the acquisition of infrastructure and talent and partnerships with software providers. As for supporting an agile organizational framework, HR processes should be transformed so they align better with agile working methods that often imply more volatility, change and less rigid structures. 

Challenge 1: Digital Transformation

Even though digital transformation may seem like an obvious must in the digitizing environments in which modern companies tend to operate, a 2015 CEB survey proves that the road towards full digital efficiency is still long and filled with obstacles.

 

Improve data analysis competences

Today most HR staff, especially HRBPs, must analyze quantitative HR metrics to support the line leaders. However, less than one-half of line leaders believe that their HRBPs are effective at applying talent and business data to support decision-making and reporting on HR is being perceived as the least correct throughout the entire company. Current data analysis skills in HR are in great contrast with the amount of HR leaders that state to be willing to prioritize the usage of big data in the next coming years. The digital transformation needed to establish successful “big data” handling begins with the amelioration of data analysis skills, the more HR leaders are capable to understand what has happened in the past the more they will have a grasp on the situation as it is. The benefits of better data handling serve different main goals among which to improve sourcing and hiring competences, to ameliorate learning and development tracking and to create better performance management.

 

Towards Predictive Analytics

Next to improving data analytics, one of the 2016 trends will be to take analytics a step further, a trend that changes the scope of usability of data skills from only company reporting towards business intelligence and predictive analytics. The trend towards predictive analytics is not a new phenomenon, in the past organizations have adopted predictive analytics for their business functions such as finance and risk, customer relationship management, marketing and sales, and manufacturing. These predictive analytics allow them to take better decisions in: customer retention, sales forecasting, insurance pricing, campaign management, supply chain optimization, credit scoring, and market research.

As is already stated above HR analytics are perceived as being the weakest across the company so it is no surprise that the use of predictive analytics in HR is still very limited. Just as ameliorated data handling offers valuable insights, increasing predictive skills comes with solid opportunities. Some of the applications of predictive analytics are: employee profiling and segmentation, employee attrition and loyalty analysis, forecasting of HR casting and employment needs, recruitment profile selection, employee sentiment analysis, etc.

To adopt predictive analytics, HR leaders require a structured data source that is aligned with the business. While HR processes such as recruitment and resourcing, workforce administration, performance and learning, payroll, and time management often use structured data sources, these are not always integrated with each other. The key to leveraging predictive analytics and realizing maximum benefits from the HR data lies in tying the data source to strategic business outcomes.

The HR function also needs expertise to use analytical tools to effectively manage talent and recruitment data and therefore needs to acquire the right talent as explained above.

Together with the amelioration of basic data handling and business intelligence the usage of predictive analytics enhances the function of HR and re-enforces its strategic role in business growth.

The Need For IT Talents

The third internal digital transformation an HR department will go through is the explosion of the need for data related jobs. The paragraphs above already clearly motivate a rise in the need for data analysts, controllers, processors, etc., however the need for data security jobs will be on an even steeper rise. Demand for such jobs is expected to augment with over 125% in the 5 years to come, a very comprehensible figure when the yearly costs of cybercrime are up to $445 billion.

 

Challenge 2 : Laying out the agile framework

As client expectations and market conditions become more volatile and unpredictable, organizations need to be agile in order to be able to outpace their competitors. To become a key driver of agility across the organization, HR must embrace all technological innovations that are available and reshape itself and its processes to enable this new form of organization. They need to reorganize their mission and mandate, and redefine business and talent management practices to drive agility across the organization. Once these new technologies and processes are implemented throughout the whole organization and the workforce is adapted to change, the organization will be able to more flexibly respond to fast changing client expectations or market conditions to outperform their competitors.

 

HR vs. Agile: where are we now?

Agile working methods have been on the rise for more than a couple of years now. Where does HR stand in its process towards fully transformed and agile adapted business processes? In general we can say a certain discrepancy seems to exist between the HR processes needed to fully leverage agile methods and the HR processes as defined today. This discrepancy shows itself under the form of a number of paradoxal situations in which workers find themselves on a daily basis.

 

Performance management, measurement and reward systems

A first set of paradoxes concerns the mismatch between how an enterprise desires its workers to function and the way it is actually measuring this functioning. In a company that is striving to leverage the potential of agile workers today, these workers are seen as collaborative enterprise contributors more than individual resources (in line with the very old concept of the total being greater than then sum of the parts). Collaboration is obviously key in such an environment but individual performance management and financial rewards are still heavily distracting modern workers from their intrinsic motivation to become enterprise contributors. This is where HR should set in place more flexible performance measurement systems that can easily adapt to changing taskforces, overlapping departments and other agile working methods. Next to the priority dilemma “contribution versus individual performance” there exists another priority dilemma: the one that makes workers hesitate how to spend their time between the execution of measured contractual tasks and voluntary, creative enterprise contribution. This second dilemma is a consequence of incomplete performance measurement processes as well. Hence it is clear that performance measurement and reward processes should be adapted to reflect the agility of an enterprise in order for this enterprise to fully benefit from its agile transformations.

 

The pyramid of hierarchy: go or no go?

A second set of paradoxes shows how a new way of organizing hierarchical structures within the enterprise has to be found. Neither the current overly organized pyramid structures nor the complete flat hierarchies praised in agile methods seem to be a good fit with the enterprises’ actual need. Finding the right structure will prove to be a difficult task for HR. The problem posed by classic pyramid structures is that they do not succeed to capture changing departments and taskforces in real-time. The more organizational structures become volatile, the more difficult it becomes to capture them in a flat, 2 dimensional way. Another example of a rigid hierarchy is a situation in which someone may have a certain (hierarchical) position on a specific assignment but this may not be the case on another assignment where that person works with a different team, implying that his vertical position within the organization should be variable instead of fixed. Adjusting for this by getting rid of hierarchies seems like a valid solution here but getting rid of hierarchy comes with other problems. When completely flattening an organizational structure it becomes very difficult to recognize a responsible figure from a contributor and for the workers themselves, who are confronted with complexifying jobs. It becomes unclear where to go for guidance. Hence finding the right way to organize hierarchy and organizational structure will be a story of finding the right balance between two: rigid and flat. 

 

Conclusion: Contrasting challenges for HR

Having separately defined the challenges concerning the digital transformation and the ones concerning supporting agility hides a last but complex challenge inherent to the combination of these two challenges. Obtaining data competence becomes an even bigger challenge when combined with an agile transformation; getting correct and useful data becomes even harder in a less stable, hierarchical organization. In order to fully benefit from both the digital and the agile transformation finding the correct balance between the two will be of vital importance for modern enterprises.

 

Sia Partners

 

Sources:

  • The measure of a man - The economist - Feb 2016
  • The performance transformation - CEB - Jan 2016
  • 11 trends identified by HR leaders - CEB - Jan 2016
  • The top 5 workforce trends that will impact HR in 2016 - Onrec - Dec 2015

Copyright © 2016 Sia Partners. Any use of this material without specific permission of Sia Partners is strictly prohibited.

    1 comment
    Jonathan D. Manning le 03/12/2016 pm31 18h13

    Thank you for very informative and useful article! As a HR I often face the problem of working with general database. I think that moving the one to some cloud repository like Ideals data room or similar will solve my problem.

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