The (Total) Disruption of the Human Resources Business

Everything could be the target for disruption. Companies. People. Functions.

Some are difficult to disrupt. They are too agile and innovative, and mutate extremely fast. Others are easy prey, because they are heavy and slow (and very often don't even realize they are being hunted!).

Sadly, in many organizations, the Human Resources (HR) operation fall within the second category. HR has been very slow to adapt to the demands of our times and remains monolithic in many its practices. That makes it a breeding ground for disruption. And hundreds of disruptors are ready to attack and hunt.

Wait... what?

Today we have: 1) unlimited access to information and knowledge (everywhere, anytime, all the time); 2) cheap technology; 3) quick innovations; and 4) easy access to resources. The combination of these 4 things is changing the way every single business is done and propelling a tsunami of new ideas. And HR is on the way of that tsunami.

Unfortunately, many HR people don't realize that HR is a target for disruption. Just like other industries and enterprises, they still continue to operate as “business as usual”. But oblivion to the idea of disruption won't save them from it.

A breeding ground for disruption

How is the HR business getting ready for the radical transformation of the workplace as a result of automation? In 2013 Oxford University published a paper estimating that in the next 25 years almost 50% of the jobs will be replaced by machines. Is HR getting ready to effectively lead or perform during this transformation?

In reality, the HR function or business has been pretty monolithic around certain “best practices” and even the fads of the moment.

Examples of old-DISRUPTABLE-thinking

One.

One of the most evident examples is the performance management approach. Most companies are still using the annual-review rating-and-competency-based performance management (PM) approaches, even when more than 80% of their executives think it doesn’t work. The existing system, designed after World War II and “perfected” by General Electric’s Jack Welch, has been ditched today by the most progressive companies, including GE itself. It’s true that there’s no perfect PM system, but the lifecycle of the existing one expired long time ago. There’s a lot of room for improvement here, and pretty much for disruption.

Two.

Another example of how the HR business has become extremely rigid is their recruitment and hiring processes. A survey on 900 recruiting professionals indicated that almost all of them considered the resume to be an important piece of information in the recruitment process. However, they recognized that the challenge lied in distinguishing those who could be the best fit for a specific role basing their decisions solely on education qualifications. Perhaps LinkedIn is already disrupting the sourcing and recruitment “best practices”, but there’s still a lot to do. 

Three.

And yet another example of what once was a “best practice”, one that has lost most its value, is the way organizations configure their own structure. Today, even in management and leadership classes, people talk about hierarchies and matrix, functional or flatter structures, as if it would make sense to think that they are still relevant. In reality, the world is demanding a more flexible, interconnected, self-organized and self-managed structure. Such structure has to be agile enough for quick adaptation, fast experimentation and delivery of results. More importantly, it’s designed to learn from failure, find improvements and move on (all at the pace of the fastest companies that adapt incredibly fast). I’d say that most organizations are not ready for this approach at the moment, but they better get ready, because disruption in organizational design is already happening.

More. More. More.

Examples like the three I mentioned before abound. We can find many more of them in areas such as leadership development, promotions, using data analytics as decision driver, etc. And in each of them we can definitely see a set of expired “best practices”, entrenched in how HR works, but that don’t respond to the demanding and pressing needs of the workplace of today and the future.

The problem with “best practices” is that any organization could get too comfortable by implementing them. But, comfort can be very stagnating when nobody sees the need for renewal anymore. Consequently, organizations and their people are already losing their capabilities for change, even when the “best practices” that they practice are not valid anymore and they are forced to change. Disruption is precisely about finding potential opportunities to attack the market, when everybody else is busy with “best practices” and the mainstream.

The sort of comfort that the HR function feels at the moment means one thing: a warm and nutritious breeding ground for disruption. That’s precisely why I think and predict major disruptions are occurring and will continue to occur within the next few years.

Now, what’s going to happen with the HR function in the near future? Is it really going to be disrupted? If so, then how?

I want to share some very basic predictions. I will keep my predictions in just two main areas: the role of technology and organizational structures. And then I'll briefly add a few more areas.

What disruption means for HR

The role of technology

I don’t think that we will see robots interviewing people or running performance reviews any time soon (don’t discard this option, though). However, there are many areas where the impact of technology in HR is just too profound to continue ignoring or delaying action.

Some of the technologies that will dramatically change the face of HR include virtual and augmented reality, machine learning, artificial intelligence, and data and people analytics software, among others. Each of those technologies will certainly change and optimize how the HR business is performed.

For example, one of the areas that will radically change thanks to technology is training and capacity building. Just in 2012, US companies spent $164.2 billion on training and development. About 50% of those expenses were related to travel, facilities and equipment. Virtual Reality will take a big toll on this industry as more training can be done cheaply, on-site, on-the-job, on real case scenarios. And this is just one example of potential disruptions as a result of technology.

Deconstructing structures

Another area of disruption is the existing approach to organizational structures, bureaucracies and hierarchies. Look at your organization and think: Is it too vertical? Is it too heavy? Is it too bureaucratic? Prepared to be disrupted!

Extremely successful organizations, such as Zappos and GoreTex, deconstructed the premises behind organizational structures and came up with a different approach for more effective and agile structural design. Those organizations are not looking to aggrandize the importance of leaders based on the size of their teams or include layers and layers of decision-making before a decision is actually made.

Instead, Zappos, GoreTex and many others are playing in a different league: they want the BEST customer satisfaction, the FASTEST speed of learning, the MOST flexible approach for self-organized teams. And they know that the only way to do that is by truly empowering their teams, getting every single obstacle out of their way and letting them do what they certainly know how to do best. That’s how they design themselves. They know the world is moving at a pace  hierarchies and heavy structures cannot and will not catch up.

This is an area of evident disruption. The most flexible organizations, the ones where learning is fast and adaption is faster, will eventually take over the heavy ones.

Some other areas for potential disruption

• “Flow” at work: helping people to actually find so much joy and challenge at work (what can be called as “Flow”) so that their total self is engaged in creating, solving, innovating. If you want to hire someone and tell them what to do, then you’ll miss the enormous creative potential in talented people. Disruption at work will come from those companies who give leeway.
• Work schedules: they are the most useless thing. Who cares about 9 to 5 anymore? Oh, wait, some organizations do. I have a friend who used to work for a “tech” company that didn’t allow their people to telework. Isn’t that stupid?, work schedules will be disrupted even further than we know and, perhaps, the companies of tomorrow, particularly the ones that do creative work, won’t even need an office, but just virtual rooms (holograms!).
• Generational differences: most organizations aren’t prepared for the characteristics of the upcoming generations (not only millennials, but even the super tech-savvy generation Z). By 2020, almost half of the workforce will be millennials. A lot of them of them will be taking over important leadership roles. Stephen Covey once said “we cannot lead organizations of the 21st century with systems and processes of the 20th century.” Organizations need to transform themselves in order to get ready for the needs and world views of the upcoming generations. And HR must be a protagonist in the redesign process. Breeding ground for disruption here!
• Personalization of services: organizations apply the same rules to everyone. Well, maybe that sounds fair, but it’s not. People have different needs, ways to be motivated and engaged, and, more importantly, different ways to value rewards. It’s extremely expensive to personalize services in large organizations. However, with machine learning and artificial intelligence the costs of doing so will continually decrease overtime at an exponential rate.
• The expansion of middle class: the middle class will grow more than 50% in the next ten years. Imagine this: 5 billion people (2 billion more than today) trying to find jobs, get your services and disrupt your company. HR needs to be a catalytic force that promotes organizational change. Otherwise, neither the organization nor its HR function will survive the external pressures from an enlarged and more demanding middle class. 

Conclusions

I mentioned three examples (performance management, recruitment and structures) of traditional processes and practices that normally fall in the HR business realm. I did so to emphasize how “best practices” that were once accepted and embraced, today are in (almost) total (and universal) disgrace, yet still entrenched in the way HR business is done.

Unfortunately, getting too comfortable with “best practices” atrophies organizations and makes them unable and unprepared to change, when change is the only option to survive, grow and remain relevant. HR people need to become more aware that the world is changing too fast. I’m sure they already know it, but there′s a big gap between “knowing” and “doing something about it”.

The pressure for disruption in the HR business will continue to increase. I mentioned several simple examples of susceptible and gigantic areas for disruption. My call to action for any organization and HR professionals is to leave any (ANY!) preconceptions and assumptions behind and get ready for change. It doesn’t matter whether you know the precise direction for change. What’s important is to learn and begin the conversation for renewal. As for most industries, for HR this is matter of disrupting or getting disrupted. 

Let me know if I can help you or your organization to start the conversation about disruption in Human Resources.

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