Radical thoughts on the digital transformation of HR

Phil Wainewright Profile picture for user pwainewright October 27, 2014
Instead of digitally chipping away at the fringes, isn't it time to completely refactor the whole HR function? Some thoughts from last week's HRTech Europe

Gary Hamel HRTech Europe 2014 sign
Halfway through the HRTech Europe show, which ran Thursday and Friday in Amsterdam last week, it struck me that there is still far too much complexity in the way HR is administered in the enterprise today.

By the close of the event, I discovered I'm not alone in this view. In a rousing final keynote, business guru Gary Hamel declaimed the bureaucracy wired into the traditional enterprise:

Our organizations are a mashup of military command structures and the logic of industrial engineering, and we wonder why they do not work.

The curse of bureaucracy afflicts young organizations as much as more established ones, he noted, citing the case of a leading cloud applications vendor that has 600 VPs to manage $4bn of revenue (no prizes for guessing which one he meant: answer disclosed at foot of article). His verdict: "We don't know how to get size without sclerosis."

Hamel offered radical prescriptions for stripping out bureaucracy and replacing it with highly distributed, peer-to-peer collaboration. But despite some crowd-pleasing sloganizising (see picture) he gave very little practical guidance on how to actually make this work in a typical organization.

Automating bureaucracy

My take is that technology is a large part of both the problem and the solution. The problem comes from the way that most enterprise HR applications merely reinforce and perpetuate those sclerotic, bureaucratic processes. They automate them, but without questioning why on earth any of it still needs to work that way anymore.

We have ended up calcifying certain ways of doing things simply because that was the way the automation evolved. Payroll was the first aspect of HR to be computerized. Benefits administration got its own set of applications, workforce management another. Later on, an entire new set of vendors separately automated the various elements of talent management. Each set of applications added a new layer of calcification.

All of this happened before the advent of smart mobile devices, social collaboration tools and all the other powerful attributes of today's connected digital computing. Now suddenly these new capabilities allow us to cut across all the sediment layers that have built up over decades of successive, disconnected generations of automation. But our progress towards the digital transformation of HR is constantly thwarted as we keep running into huge, buried dinosaur bones of impacted bureaucracy.

Unexpected behaviors

Here are a few examples of unexpected new behaviors and hidden barriers to progress mentioned during the two days of HRTech Europe:

  • Gareth Williams, group HR director at Travelex, revealed that, after rolling out self-service vacation booking, "most of our sales staff request leave between 7pm and midnight on a Friday."
  • Philippe Manzanares, HRIS director at Louis Vuitton, spoke about being able to rapidly evolve processes to suit business requirements:

Today we cannot wait two years for a process to be implemented. We need to be fast. With SaaS we can be fast ... We can do stuff in an iterative way. With two to three iterations we can get to something the business likes.

  • Lynn Hanley, recently recruited as HCM strategy practice lead at cloud integrator Appirio, told me how implementing a cloud solution with real-time dashboards at Direct Line had changed conversations between line managers and their business partners in HR:

People stopped asking how many and started asking why? You got a much deeper conversation going and they struggled with that conversation because they didn't have the answers. There was a big power shift in that.

As organizations begin to roll out social and mobile, connected cloud applications with powerful new analytics, those activities become more responsive and adaptable. But this piecemeal digital transformation simultaneously exposes the glaring inadequacies and contradictions of every remaining operation. There are still far too many manual workarounds and unnecessary hand-offs in all these disjointed processes.

The solution must be to apply the technology far more radically, to strip away multiple layers at once and reduce the HR function to its essence. Eliminate all of the unnecessary interventions and passing to-and-fro that happen, not because this is the best way to do it, but simply because we have ended up doing it this way.

1. Leave transactions to the machines

It makes no sense in the digital era to still pay people to manually process forms or re-enter data to work out pay, holiday entitlement, benefits and bonuses. All these operations should be fulfilled by self-service interactions between individual employees and managers performed on their smartphones, computers or other connected devices.

Yes these are complex transactions with many different parameters, but surely in this day and age if Google Maps can work out my 25-minute walk from the hotel to the conference center — with alternative routes — then how unreasonable is it to expect I can get out my mobile phone and see my vacation request approved or even get a real-time, interactive projection of this month's pay check? Once you've defined the policies and collected the data, it's simply a case of applying enough computing power. The vendors should be working on making this happen.

2. HR should focus on helping managers

Once the transactions are taken care of, the primary role of the HR function is simply to help managers do a better job of managing. Modern digital collaboration technology makes it possible for the HR resource to be online with managers, helping them where and when they need help to do their job of maximizing results for the organization.

Instead of collecting twice-yearly performance appraisals, mounting impersonal recruitment campaigns or administering undervalued training resources, HR should become an on-demand resource that works in close contact with managers all year round.

Successive decades of automation, layered on top of earlier generations of paper-based processes, have turned HR into its own silo, remote from the managers it is supposed to be supporting. Digital technology at last makes it possible to obliterate those artificial, bureaucratic barriers and build a new, more human corporation.

Disclosure: Salesforce.com is a diginomica premier partner. HRTech Europe funded my travel to the event as a speaker.

Image credit: @philww

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