Dr. Eddie Obeng delivering a keynote at ReimagineHR in London (Gartner)
At the start of his keynote session at Gartner’s ReimagineHR summit in London last week, British organizational theorist, educator, and author Dr. Eddie Obeng offered a glimpse of the fast-arriving virtual workplace. A wearable mouse attached to his wrist, Obeng gave the audience a tour of a 3-D classroom projected on the screen, walking to different chalkboards and interacting with his colleagues present in the virtual room while actually participating from a remote office. In this way, Obeng illustrated the potential of flashy new technologies in shaping the future of work.
In our HR research practice at Gartner, however, we know from hundreds of calls with HR leaders and professionals that when many of them see this flashy technology, they say: “We’re not Google, we’re not Amazon; we simply can’t afford this level of digital enhancement.” They want to know what the future of work means for them: What can they actually do with the resources they have? When Obeng asked the audience to share some of their fears about the digitally-enabled presentation he was showing them, they said it would be “impractical,” “too techy,” and “too expensive” for them to implement.
But Obeng very quickly challenged the audience by telling them to forget about technology, that we’re using it all wrong. New technology, he asserted, is of limited value if we don’t rethink the processes by which people work. Technology may be changing around us, but our habits and behaviors have not. Our habits and practices are deeply ingrained, and as a result it is difficult to imagine what the future should look like; instead, as he put it, we “imagine the present, but shinier.”
Relating his topic back to HR, Obeng noted that everything about our organizational structure and talent processes, from compensation and benefits to learning and development to the hierarchical org chart, is designed for the world as it used to be, when organizations were able to see what was coming. Today, that’s impossible: Change happens faster than we and our processes can adapt. A senior leadership team making all decisions for an organization, Obeng said, can process about the same amount of data in an hour as our mobile phones can in a minute. Rather than trying to simply move faster, we need to reimagine the way we move.
Talent analytics has rapidly grown from an experimental trend into something every organization uses. While many HR functions are investing in analytics, however, few are getting the kind of results they’d like to see. If the promise of talent analytics remains unfulfilled today, it’s not because the technology isn’t ready. Over the past two years, we have heard from HR leaders that their biggest challenge in implementing analytics has been in connecting the data to critical business questions and drawing actionable intelligence from it. Gartner research has also found that collecting high-quality, credible data is a significant hurdle for many organizations.
Perhaps as a result of these growing pains, a global survey earlier this year found that most C-suite leaders don’t have a high level of trust in their analytics programs. HR is still under pressure to get senior leadership on board with talent analytics and prove its value to the bottom line.
At Gartner’s ReimagineHR event in London last Wednesday, Principal Executive Advisor Clare Moncrieff moderated a discussion with a panel of leaders at major companies on the practical lessons they have learned in applying talent analytics on the ground. The panelists were Christian Cormack, Global Head of Workforce Analytics at AstraZeneca; Nanne Brouwer, Head of People Strategy and Analytics at Royal Philips; and Jacob Jeppesen, Specialist in HR Analytics at Novo Nordisk A/S.
The limiting factor for talent analytics professionals is rarely their knowledge of analytics, the panelists observed. Rather, it’s their knowledge of the rest of the business. Understanding how other business functions like supply chain or strategy work allows them to combine different sources of data that have never been looked at together before. This combination of data is ultimately more valuable than extremely advanced analytics that focus only on people data.
A recent article at the Economist described Uber’s user rating system for drivers as a strategy for supplanting traditional performance management, arguing that these ratings “increasingly function to make management cheaper by shifting the burden of monitoring workers to users.” Uber has an interest in ensuring that customers have a consistently good experience and thus is harmed when drivers perform poorly, but instead of devoting resources to monitoring and managing drivers’ performance, it counts on customers to assess it instead. Meanwhile, the platform gives drivers a strong incentive to earn high marks, “aligning the firm’s interests with those of workers,” with the risk of being deactivated if their average rating falls too low.
This type of outsourced performance rating has expanded outside of the gig economy, the author adds, pointing to the ratings and feedback companies increasingly solicit from customers online after they interact with employees, such as in a customer service call.
As the Economist points out, user ratings systems are an attractive method for crowdsourcing the monitoring of employee performance without having to spend the time, money, and effort of having managers do it themselves. And it’s no surprise that organizations are looking for an easy way out. Our own data at CEB, now Gartner, shows that 55 percent of managers believe performance management is too time consuming, and only 4 percent of HR leaders believe their current process accurately assesses performance. With all the effort that has ostensibly been wasted trying to fix performance management, leaving it up to the wisdom of the crowd sure is tempting.
This makes a lot of sense for Uber, which treats its drivers as contractors and will never need them to perform a task other than driving. Customer ratings may be all the performance information Uber needs to decide whether or not to allow a driver to continue working on its platform. With more conventional models of employment, this usually isn’t an option, so most organizations that choose to integrate user ratings into their performance management process must do so more carefully.
Whole Foods Under Amazon is a fascinating recent case study (conducted by Harvard Business School professors Dennis Campbell and Tatiana Sandino and co-written with James Barnett and Christine Snively) which considers the cultural challenges inherent in the acquisition the e-commerce giant agreed with the high-end supermarket chain last year. Historically, the two companies had very different approaches to business, the authors tell Michael Blanding at HBS Working Knowledge, with Amazon focused on driving costs down through data-driven supply chain efficiency and Whole Foods’ decentralized model, in contrast, allowing for a distinctive personal touch from store to store, which in turn justified a higher price point. In the case study, based on secondhand reports in the media of how the acquisition is working out, Campbell and Sandino speculate on how culture clash could be making the integration of these companies more challenging:
The question that Campbell and Sandino ask in their case is: Given the pressures Amazon was facing to turn around Whole Foods’ slide, should they have approached the acquisition differently? While there are no easy answers, Campbell says that part of the issue is realizing the limits of standardization, even for a company that has perfected data-driven management.
“It’s not totally clear that data will be a perfect substitute for human judgment,” he says. “That might work in a digital platform, where you have tons of data on customer history you can use to drive a recommendation engine, but in a store environment, there is a lot of learning that takes place from employees interacting with customers that can be very localized and specific.”
Whole Foods is still in its early days as an Amazon property, so it’s too soon to say with any certainty how prepared Amazon was for this culture conflict and how well they are handling it, especially without having an inside view of the acquisition. However, we do know from our research at CEB, now Gartner, that culture fit is a huge concern for CEOs when thinking about mergers and acquisitions and discussing the topic with investors. Our research shows that 20 percent of the time, when CEOs bring up culture on earnings calls, they are doing so in the context of M&A. CEOs leading through M&A are increasingly under pressure to provide details on how they are integrating two distinct cultures to satisfy investors’ concerns. (CEB Corporate Leadership Council Members can learn more in our Inside View on Discussing Corporate Culture with the Street.)
On the final day of the CEB’s ReimagineHR summit in Washington, DC, last Friday, dozens of heads of HR and other HR executives gathered to discuss the future of the Chief HR Officer role. A panel of heads of HR, including Julie Gravallese of the MITRE Corporation, Arielle Meloul-Wechsler of Air Canada, and Pascale Meyran of Michael Kors, made their best predictions about the ways in which their jobs will change and the new challenges that will face CHROs in the coming years. Here are some of the highlights from that discussion:
CHROs Are Being Called Upon to Protect Their Organizations’ Reputations
The proliferation of social media allows crises of any magnitude to impact the brand of an organization. In addition to the external damage this can cause, employees become frustrated if they feel their organization is not defending them. Heads of HR will have to enable their employees to be brand ambassadors, promoting the reputation of the organization with a heavy social media presence. In an era when corporate scandals can develop quickly and generate misinformation, employees need to be equipped with quick facts with which to defend the organization on any platform.
The Magnitude and Frequency of Change Will Be a Continuous Challenge
With entire industries being disrupted on a daily basis, employees will need to show tremendous stamina and resilience to manage change in the long term. Heads of HR need the emotional intelligence to recognize when change becomes overwhelming and which employees are unable to keep up. Continuous change can scare employees who see an uncertain future in the news every day, and heads of HR will be expected to listen and show empathy. It is important to be transparent with employees and tell them that change is expected, even if the final nature of that change is still unknown.
At the CEB ReimagineHR summit in Washington, DC, on Wednesday, dozens of heads of HR and other HR leaders participated in a discussion with a panel of experts on the changing nature of corporate governance and its impact on HR executives. The panelists included Holly Gregory, partner and co-chair at Sidley Austin, LLP; Dan Kaplan, managing partner at Heidrick & Struggles; and Lori Zyskowski, partner at Gibson, Dunn, & Crutcher LLP.
The panelists brought a wide range of experience in advising heads of HR, CEOs, and boards of directors, as well as developing corporate governance in-house and advising externally on both good governance and governance crisis situations. The panelists shared some of the common concerns that are keeping board members and CEOs awake at night. Here are some of the key points from Wednesday’s discussion:
Boards Face Anxiety Over the Issues They Don’t Know Exist
In a challenging environment of disruption, expanded scrutiny, and higher expectations from society, boards need to ask the question, “What don’t we know?” Hidden patterns of employee misconduct, a body of claims around harassment, or compliance issues all represent a failure of corporate governance.
Heads of HR help boards by creating an information system that methodically elevates issues to the board. CHROs have their fingers on the pulse of the company and are involved in employee misconduct, issues with supervisors, harassment claims, etc. It is critical that these issues be surfaced, and CHROs that are not getting traction with their organization’s general counsel when these issues arise need to show courage in escalating them to the CEO or the remuneration or audit committees on the board.
The Speed at Which Governance Crises Emerge Has Accelerated
Boards don’t have as much time to respond to problems as they used to. In an era of viral media, an organization’s customers, investors, and competitors often find out about crises before the Board does. With no time to plan a reaction, it is critical that boards have the information they need and that the organization is able to respond rapidly. That means heads of HR need to develop teams that can quickly pivot and adjust the way things operate in the company.
A series of massive data breaches at major companies, including the recent theft of over 140 million Americans’ personal data from Equifax, has put questions of cybersecurity at the front of every CEO’s mind. At the Wall Street Journal last week, Vanessa Fuhrmans noted that the threat of losing their jobs or even seeing their business destroyed was pushing more chief executives to give cybersecurity their personal attention.
Their motivations are twofold: First, the frequency of data breaches is increasing at an alarming rate, and second, CEOs are increasingly getting blamed for them. After last month’s crisis, Equifax’s board moved quickly (though some argue not quickly enough) to remove Richard Smith from the CEO role he had held for 12 years. Yahoo CEO Marissa Mayer, for example, had her bonus for 2016 rescinded as punishment for a 2014 security breach that compromised hundreds of millions of user accounts and to which an internal investigation found her management team had not responded properly.
The bottom line, Fuhrmans hears from various chief executives, is that they can no longer afford to pass the cybersecurity buck to the IT department and hope to escape unscathed if their company’s data is eventually compromised. That means developing good cybersecurity habits themselves (given how much information is publicly available about them, CEOs are attractive targets for phishing scams), learning more about how their organizations’ security systems work, and taking on a more direct oversight role.
Here’s an area where CEOs could be leveraging their relationship with the HR department to be more proactive about solving the problem. Rather than investing more in firewalls to prevent external breaches, many organizations should also be looking inward, as employee errors account for nearly 60 percent of privacy failures. There’s a big role for HR in helping employees avoid the errors and bad habits that make cyber attacks more likely to succeed.