Future of work : Why digital requires transformation of HR and management

We are in an exciting era: the Fourth Industrial Revolution. For energy companies, such as the one I work for, this translates as Industry 4.0. Developments in previously disjointed fields such as artificial intelligence and machine learning, robotics, nanotechnology, 3D printing and biotechnology are all building on and magnifying one another. From a business perspective we can harness these new technologies to innovate and find cheaper, more accessible, quicker, more efficient, safer and greener ways to run our operations, offer our energy products and services and revolutionise the customer journey through digital solutions.

Concretely, for my employer, we have taken bold and pioneering steps to embrace and lead Industry 4.0. Our efforts were rewarded with recognition as France's top digital company in the eCAC40 rankings awarded by business media Les Echos and France's digital champion to the EU Commission Gilles Babinet. Our work with big data (our exploration teams have one of the world's most powerful supercomputers, Pangea), machine learning, predictive maintenance, block-chain and robotics were all cited in the reasons for our rise to the top of the rankings. Since then, in addition to internal leaps forward, further progress has also been made with external collaboration with start ups, and with new partnerships with Google (AI for geoscience) and the launch of a digital innovation centre in partnership with TATA Consultancy Services.

Indeed, it is inconceivable for a large industrial player to not benefit from the digital transformation to innovate and enhance its operations. For example, rather than conducting costly and time consuming routine and preventive maintenance, digital solutions permit a shift to predictive maintenance. Industrial plant is upgraded, IoT solutions installed, and we redesign the way we work to automate inspection and maintenance tasks, and analysis of the data allows us to deploy resources where and when needed. The case for digital solutions for industrial assets is clear.

Digital impact on human capital

But what about our greatest asset? People are our primary wealth. The role and functions of the human capital will inevitably transform in this digital revolution as machines, algorithms and artificial intelligence transform or automate tasks previously undertaken by employees. Some activities will simply disappear, whilst new ones will evolve. By one estimate cited in the World Economic Forum future of jobs report, 65% of children entering primary school today will ultimately end up working in completely new job types that don’t currently exist. In such a rapidly evolving employment landscape, the ability to anticipate and prepare for future skills requirements and job content is increasingly critical for employees to fully seize the opportunities presented in the new digital workplace.

Whilst digital technology may replace some tasks, machines are unlikely to replace functions that require human interaction, functions that require empathy and emotion. According to an OECD report, two types of skills are likely to be particularly important in the future. First, with the disappearance of routine tasks, growing emphasis will be placed on skills which are more difficult to automate. In particular, there is evidence that the labour market is increasingly rewarding soft skills such as the ability to communicate, work in teams, lead, solve problems and self-organise. Secondly, the importance of digital skills is increasing. Rapidly changing skills needs raises the risk of skills mismatch and shortage, both of which have significant economic costs. For individuals, skills mismatch has a negative impact on job satisfaction and earning potential. For the employer, it reduces productivity and increases on-the-job search and turnover, while shortages increase the cost of hiring and hinder the adoption of new digital technology.

The human "soft skills" don’t come naturally to everyone, and not everyone is brimming with emotional intelligence. Older generations are used to a world of work that favoured IQ over EQ. Not all employees feel "digital ready" either. Now is the time to train and develop employees. The development and use of soft skills such as empathy are strongly linked to our emotional state. When people feel under pressure or under stress, the hippocampus — the part of the brain’s limbic system that is associated with emotion — is much less able to engage in empathic listening or appreciating the context of a situation. The brain basically closes down to learning or performing soft skills at the very time we most need to do so to differentiate our human skills from the automated digital solutions and machines. In analogy to our industrial assets, we need to shift to a preventive, proactive soft skill development rather than waiting for our human assets to "fail" and require corrective maintenance, or worse still replacement.

Historical analysis of the macroeconomic data describing the British economy from 1760 to 1913 of the effect of the last Industrial Revolution show that the introduction of new technologies in that period caused considerable human disruption as workers struggled to reskill to meet the needs of new industrial economy. This period, termed Engels’ Pause, resulted in deep unhappiness and a reduction in productivity before people upskilled and society was redesigned. It is essential we learn from the past, and better prepare our people for the skills required in the future and minimise the human disruption, safeguard employee wellbeing, and avoid the negative business impact of a second Engel's Pause.

Role of the Human Resources function

As an employee in any organisation being transformed by Industry 4.0, you should have high expectations of your Human Resources function. HR should have a driving seat in leading this strategic transformation. Senior leaders in the HR team must operate at a strategic partnership level with executive business leaders and help the management to adapt to the new skill requirement for its future workforce. HR needs to shake off any lingering "administrative/tactical" reputation and must be more analytical, and future focussed. This will entail robust workforce planning, transparent talent management with an open internal job market, being vigilant to internal and external talent trends, providing insights into skills gaps and ultimately having a forceful value proposition of people solutions to the business.

During previous industrial revolutions, it took decades to build the training systems needed to develop major new skill sets on a large scale. Given the pace and scale of disruption brought about by the Fourth Industrial Revolution this is simply not an option. The Human Resources function is responsible for instilling a culture of learning, and supporting the lifelong professional development of its workforce: For companies with an inversed age pyramid (a higher concentration of older workers) or where job functions will fundamentally change, HR will need to support wholesale reskilling of existing workforces throughout their employee lifecycle.

The learning and development functions must have a comprehensive offer of "soft skill" or EQ and competency based training as well as technical or digital training to accompany the need to upskill the workforce. It is essential that L&D teams drive the transition from traditional face to face training in small classroom groups towards larger scale and higher impact offers with enhanced use of blended and online programs, leveraging digital learning solutions offering networking, collaboration, peer to peer teaching and learning, and plenty of time for practice and action learning.

HR will also need to think more widely about the people driving the business performance and less singular focus on the office based employee. The digital revolution brings an array of changes in work practice, with increased flexible working, distance working, and internal-external collaboration, partnerships, outsourcing and project based rather than team based work. As physical and organizational boundaries are becoming increasingly blurred, HR must become significantly more agile in the way they think about supporting business managers to facilitate and support people’s work and about how the organisation manages its workforce as a whole.

Driving an engaging online presence and focus on employer recognition (through traditional social media and sites such as Glassdoor, but also though digital-specific platforms such as Github, StackOverFlow) is also key to ensuring the business can find the digital talent it needs (data science, coding, machine learning, etc). Businesses outside the IT and software tech space may find themselves facing difficulty attracting talent, and will need professional and effective HR marketing to gain brand awareness and generate candidate engagement.

The increasing pace of change and innovation, work insecurity and drive for efficiency will put more pressure on workers that can lead to stress and poor mental wellbeing. Wellbeing is also a key to the success of the digital transformation. HR must ensure the company's wellbeing programmes adequately meet the needs of the future workforce, including helping to ease the pressures placed on employees working remotely or alongside artificial intelligence.

Last but certainly not least, in order to be a credible strategic partner to the digital transformation of the organisation, HR will also need to ensure it automates and digitalises much of the administrative function and harness the power of big data analytics. Companies that haven't already done so will need to transition to dematerialised payroll (digital payslips), employee self service portal for HR data, chatbot or at the least an online forum for HR questions, paperless contrats and recruitment, and visio interview processes. Needless to say digital portals such as self service, recruitment website, job applications, training and learning management systems and HR approval workflow systems should all be as automated or digitally augmented as possible. As employees use internal digital collaboration tools like Office365 and Yammer, as well as external professional networking tools like LinkedIn, they create a set of digital exhaust that is rich in information regarding how expertise and influence flow across an organisation. Progressive HR teams will also pioneer data-driven barometers to measure employee engagement, expertise, skills acquired inside and outside the workplace. By implementing digital solutions to facilitate formalised continuous feedback in addition to, or instead of, the annual review also adds to the big data approach to HR.

And what about the management?

It's not just HR that needs to rethink its game. In the traditional sense, the manager is an employee who is in charge of others and acts to resource, control and direct people to make sure a defined operational activity is undertaken. As Industry 4.0 changes our workplace, employees demand more flexibility, and the traditional role of hierarchies disappear, the function of the manager is also changing, and managers need to adopt new skills as well. Modern managers are people who drive results and inspire people. Their role is more like a coach and less that of officiator. Instead of telling people what to do, managers need to focus on building up people their teams and providing personalized leadership that makes them approachable.

In a departure from the IQ focussed past, managers are no longer to play the role of the "all knowing" expert, and must to be able to adopt a coaching posture to accompany individual collaborators to find solutions for themselves, facilitate their thought process and help them weigh up options in their decision making. Managers should be increasingly emotionally intelligent and self-aware, knowing how to improve themselves, giving them greater perspective and making themselves better leaders and use their EQ to drive and support the transformation and lead their teams through the change.

Managers need to display compassion and empathy and care about the wellbeing of people, and understand them in order to accompany their development and their facilitate their work.

Managers need also to be agile and balance the fine line between driving performance and enabling creativity pioneer spirit. As many companies, enabled by digital solutions, move towards more flexibility for employees, managers need to know how to drive results and performance and create an environment where there is healthy balance between the short term focus on results and a longer term perspective of innovation and experimentation in the search for future gains.

The role of the people manager in facilitating networking and bringing people together from diverse backgrounds, driving collaboration (not exclusively internally but also with external partners) and building successful teams is also crucial in the future of work in this new digitally enabled era.

So, regardless of the amount of money invested in new digital technology, the key to the success of a company in embracing the fourth industrial revolution lies in its people, and how its leaders will support its workforce, both through human resources and line management. People will need to develop their human and digital skills, and let’s also not forget that new technology is developed and implemented as a result of human decisions on how to run business, and not the contrary: the fourth industrial revolution is very much a human matter.

Alan Lambert is Head of Global Management Programs for a leading global energy company.