CEO Fosway Group
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20 years of HR innovation…or not?

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24th Oct 2016
CEO Fosway Group
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The end of August 2016 was a big milestone for Fosway Group, marking 20 years of learning and HR technology research.

The last two decades have obviously brought about massive changes, both in technology and how we interact with it. What I have found interesting about reviewing our research archive as part of our anniversary celebrations is the extent to which some things have changed, but also that many other things haven’t.

Five things that have changed in HR

From personnel to human resources, from transactional to strategic

20 years ago, HR was still largely known as the Personnel Department, a mostly administrative function with remit over contracts, pay, and employment related functions.

As the role of people and knowledge became more critical to the value of a business, so did the function that managed them.

The other major technology shift has been the growth of mobile.

Firstly, becoming Human Resources or even Human Capital, and secondly gaining a seat at the top level of the executive functions of an organisation.

Many of those administrative functions still exist of course, but they no longer dominate the priorities of the Chief HR Officer or Chief People Officer, who is now focused on strategically impacting the business and its performance.

HR technology expands to capture the whole employee lifecycle

The role of technology within HR has changed beyond recognition.

Whilst 20 years ago, larger companies would of course have had a system to capture employee information and payroll, most operational processes were handled in documents and spreadsheets.

Now, HR technology has evolved to capture everything from recruitment to training, and from performance to pay.

In my view, the importance of people to the performance of companies has always been critical.

HR system vendors have created (or acquired) suites of applications to manage all parts of the employee lifecycle, but for most organisations, HR still has many different systems, not just a core HR Information System.

Empower the employee; from back-end administration to front-end engagement

Within this broader scope of HR systems, is an important shift of who uses them. Previously, they were almost exclusively used by HR staff.

Now the focus is much more on front-end engagement and direct use by managers and employees.

The term ‘engagement’ is interesting here, because actually many of these systems have historically been very unengaging! But in 2016, user experience is all, and providers are focusing lots of R&D resources on making their systems easy to use.

From on-premise ERP to the Cloud

In the 1990s, almost every HR system was installed on corporate servers and were supported by internal IT staff, or run as a managed service.

IT functions were thinking Client/Server was the next big technology, and almost no one got that the Internet was for more than email. Fast forward to 2016, and all the hottest technologies are being deployed on the Cloud.

This shift has already transformed the technology options for many HR processes such as recruiting, learning and performance management, and is now transforming core HR systems as well.

The Cloud fundamentally changes how systems are designed, configured, operated and innovated. It also transforms the total cost of ownership of these systems, and the shape and makeup of the team you need to manage and support them.

Access anywhere, connect to anyone

The other major technology shift has been the growth of mobile. 20 ago, HR systems were accessed through green screens by the select few.

As the focus shifted to manager and employee access, they became available to the masses, via PC applications and then the web.

With the rapid rise of smartphones and tablets, the expectation now is that employees are able to access corporate systems from any of these devices and most HR systems vendors now typically have a ‘mobile first’ policy, although what they can do from a phone may in reality still be rather limited...

A further factor is the growth of social technologies, enabling the workflows and people connections to be integrated alongside formal data capture and approval processes.

Five things that haven’t changed in HR

So if those are some of the things that changed in the last 20 years, what are some of the things that haven’t?

People are your key asset; treat them well and they typically reciprocate

In my view, the importance of people to the performance of companies has always been critical. In 1998, McKinsey coined a phrase which gets reused frequently – ‘the war for talent’.

This has never been more true than it is today. In an uncertain world, getting and keeping the best people has never been more important.

The structure of the workforce has changed with offshoring, global teams, contingent workforce, zero-hours contracts, aging baby boomers and millennials, but the war for talent is as important as ever.

The HR function is not a natural innovator

For all the talk of change in HR, you might be fooled into thinking that the HR function is a natural innovator. It is not!

In an uncertain world, getting and keeping the best people has never been more important.

HR processes have been slow to adapt to the changing world around them. And whilst some of the sub-functions (such as recruiting, learning and performance) have been innovative in the micro, they have often struggled to really innovate in the macro. HR transformation projects are all the rage.

But many are less about transforming how HR truly impacts the business or how it engages with employees, and are more about streamlining back end processes and systems.

Whilst HR has become more strategic in its approach, using words like partnering, engagement and business alignment are not enough on their own. HR still has to up its game.

To do so it will have to take more risks, be more innovative and upskill HR professionals to be business leaders as well as process experts.

You might be fooled into thinking that the HR function is a natural innovator. It is not!

In big companies, most HR functions and processes are not centralised

Large companies, especially in Europe, tend to be made up of many entities, business units and/or geographical locations.

Because HR by its nature has to deal with local employment rules and regulations, this tends to mean that different entities have to have local HR people and processes to support them. On top of that, recruiting, learning and performance, have tended to be run as semi-autonomous functions.

Many companies can’t even press a button and find out how many employees they have.

The net result is that in big companies, HR processes are often very decentralised.

Despite reorganisations, shared service centres, and attempts to standardise some of the main processes, only one third of organisations claim to have a purely centralised organisation.

That makes innovating HR hard and centralising HR data even harder.

HR data is still a problem

When we first started running corporate roundtables. one of the key challenges in implementing any major HR or talent process was the quality of the HR data. In 2016, HR data is still a problem.

Many companies can’t even press a button and find out how many employees they have, let alone which team they are in, what job they do, or how effective they are.

Vendors will tell you that’s because you don’t have one common system to do everything.

The reality is though that this is a) only part of the problem and b) really difficult to achieve, if not impossible, in a global company. Incompleteness and inaccuracy of HR data still negatively impacts how effective HR’s processes are today.

One of the challenges of technology is that it tends to be viewed as the answer, rather than an enabler.

Not a good return on investment for the collective billions that have spent on HR systems over the past 20 years!

Implementation doesn’t finish when you’ve implemented

One of the challenges of technology is that it tends to be viewed as the answer, rather than an enabler.

Companies expect that once a system has been implemented, you will achieve the benefits that the business case said would be delivered. I wish it were that simple.

In reality, implementing a system typically just enables you to change the way you do things so that you can achieve those benefits. The difference is subtle but important. Too many HR system projects are still all about the project to implement, rather than the project to use, adapt and improve.

Very rarely if never do IT projects deliver a perfect end state. In most cases, because of the long timescales involved, the target they were set has already moved.

As a commentator of the HR market, I think it’s too easy to get caught up in the hype.

For HR system and transformation projects, this is a huge issue because of the size and duration of those projects.

Business context and priorities change; now more than ever. We need HR systems to be more flexible and agile, and we need to focus equally on successful improvement and innovation, as well as a successful implementation.

In summary

As a commentator of the HR market, I think it’s too easy to get caught up in the hype. We’ve learnt that lesson in our research process over the years.

Terminology has changed. Technology has changed. The role of HR has changed, as has the importance of it within business.

But, as we look forward towards the next twenty years, maybe we need learn as many lessons from what hasn’t changed as we do from what has.

Check out more reflections and curated research from the Fosway archives here.

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