HRTech Europe: are you ready for the network economy?

Profile picture for user pwainewright By Phil Wainewright April 2, 2015
The network economy is here but most HR professionals are still worrying about how to upgrade outdated technology and processes

Martin Hinssen onstage HRTech Europe London 2015 by @philww
I always end up feeling sorry for attendees at HRTech Europe events. The reality they have to return to after two days of galvanizing keynotes, inspiring user stories and next-generation technology demonstrations must be so dispiriting.

The London event was bookended by two superb keynotes that portrayed the future of shape of the enterprise, and neither of these cameos were anything like the kind of organization that most attendees have ever experienced.

Author Peter Hinssen opened the event (pictured above) with a fluent exposition of the theme of his book, The Network Always Wins. He contends that organizations have to break out of static, hierarchichal structures to become fluid and adaptable. The catalyst for this change is "the advent of networks" in which people, organizations and machines are all digitally interconnected. He warned:

Markets are turning into networks very rapidly. If you don't learn the language of the network you are irrelevant in the age of the network.

If markets turn into networks, companies have to turn into networks as well.

It was a vision I fully subscribe to (if you'll excuse the pun), but delegates were unleashed into the coffee break with precious little guidance on how to actually achieve this transformation.

There were plenty of vendors on the show floor offering to help them do a better job of social collaboration, mobile engagement or data integration and analysis. Somehow, none of that seemed to add up to the kind of radical transformation Hinssen apparently has in mind.

Dissatisfied with technology

Most of the problems HR technologists are trying to solve are far more mundane. David Wilson, CEO of Fosway Group (the HR research firm formerly known as eLearnity) presented some results of a survey of European HR professionals that Fosway will publish later this month.

Four fifths lack standardization in their HR systems, while one in three are dissatisfied with specific functions — most often workforce planning and succession — and nine out of ten express some level of dissatisfaction with their HR system. Four out of the top five priorities they cite concern technology constraints (the fifth is strategic influence).

Yet many of the constraints they're trying to fix predate the kind of issues that a networked society will expose. In a break, I dropped in on video interviewing vendor HireVue's booth to find out more about its Insights product, which uses machine learning to analyze interviewee behavior and rate factors such as attitude, engagement and communication skills.

This is technology that exploits several of those network advantages that Hinssen had highlighted. But only a few customers are using it, I learned. Most are still getting over the sheer novelty of using video in place of face-to-face interviews. Getting to first base in the face of ingrained patterns of behavior is HireVue's main concern.

Missing the point

This is a problem I constantly worry about. In battling to modernize its existing technology, HR misses the key point that Hinssen and others seek to convey. Technology can automate and standardize HR processes, but, as I wrote last year, the risk is that it ends up creating a monster:

That monster problem is the Franken-HR of legacy processes that still permeate their organization. More adaptable software can't save HR that's no longer fit for purpose. Much of the administrative burden that weighs down HR is a hangover from an era when paper dominated enterprise processes. Digitizing the paper as a self-service web form isn't progress, not even on an iPad; it's stagnation dressed up in a pretty outfit.

Over lunch, I bumped into Jerome Ternynck, CEO of SmartRecruiters, which earlier this year launched an enterprise edition of what it likes to call its hiring success platform. This is a complete reinvention of the old application tracking system (ATS), reoriented to engage with the way people find jobs in today's networked world.

With close LinkedIn integration, a mobile-first user experience and collaborative processes built in, SmartRecruiters epitomizes the networked approach. It also offers an open API and developer program so that it can easily connect into other applications and services.

The company's challenge is finding those HR teams that have the imagination to embrace a radically different set of recruitment processes. It's a big leap from what they're used to.

Marketplaces eat firms

Rachel Botsman collaborative economy expert
Rachel Botsman

And yet that leap will be even bigger in a few years' time if the event's closing keynote speaker is to be believed. Rachel Botsman spoke about her research on the emergence of the collaborative economy led by digitally networked businesses such as AirBnB, Uber, Lyft, TaskRabbit and many others. Her stark message:

Marketplaces are starting to eat firms. This I believe will become one of the defining characteristics of the twenty-first century.

This will be a world in which many people will have not one single job but "a portfolio of what they like to call micro-businesses," she said.

While there's an alternative view (recently aired on diginomica) that characterizes the sharing economy as a 'capitalist con', Botsman emphasized the positive experiences of these 'micro-preneurs'. She argued:

This is a reintegration into the workforce of people for whom traditional jobs are too rigid.

Typical workers in the collaboration economy were university students, stay-at-home parents, retirees and professionals who were moonlighting "because they're not fulfilled in their full time jobs."

She cited the UpCounsel site for legal services, where the most active participants are legal professionals who are 7-8 years into their career and choosing to make $150-200k per year with a balanced lifestyle rather than pursuing the high-pressure partner track in a traditional legal firm.

At the other end of the scale from Upcounsel is Australia's Airtasker service, which enables individuals to outsource everyday tasks such as cleaning and handywork. The most commonly requested service, she said, was assembling Ikea furniture.

We can now create a market for all kinds of jobs that there has never been a market for before.

Most interesting was her assertion that many of the providers in this kind of market are not motivated primarily because they need to earn extra cash, but because of factors such as flexibility, control, variety, relationships and recognition. And therefore the most important currency is not cash, but reputation:

This new economy has a new currency — trust between strangers. Its measure is reputation ...

Within a decade, our reputation capital will become more powerful than our credit history.

As a result, she concluded, one of the most transformative shifts taking place in society is that the value of corporate brands and institutional trust is declining as people begin to use these emerging networked platforms to build individual brands and peer trust.

My take

There's much to reflect on here but a few key points stand out:

  • Connected digital technology is changing the world faster than most organizations are going to be able to keep up with.
  • Your employer's succession planning process will often have less impact on your personal career progression than your LinkedIn profile and TaskRabbit testimonials.
  • There's no time left to spend tinkering with yesterday's processes and technologies. If there's no simple fix then rip-and-replace is probably the better option.

Image credits: Martin Hinssen on stage by @philww, Rachel Botsman by @rachelbotsman

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