By Steven T. Hunt
Lauren Pytel and I recently reviewed 2017 predictions from twenty-one HCM thought leaders to see if the future will look much different from the past. We identified 13 general trends. Then, because I like wine, we categorized the trends using the newly developed HCM Technology “Wine Bottle Index” (WBI).
- Old vs New Wine: A ‘1’ on the wine scale means the trend is “old wine”; it is not a new idea or concept. A ‘5’ means it is something that has not shown up in forecasts from previous years.
- Old vs New Bottles: A ‘1’ on the bottle scale means little has changed in the technology associated with the trend. A ‘5’ means the trend is radically transforming due to technology, innovation.
- Bottle size: We divided the trends into four categories based on their prevalence. From smallest to largest they are split, liter, magnum, and jeroboam.
The following is a discussion of each trend and thoughts on how it may influence future directions in HCM technology. The full paper can be found here: SAP Blogs
Culture and Engagement
Very old wine in a relatively old bottle. People have been talking about culture and engagement for decades. Most companies still think about survey technology when they think about culture and engagement, although this technology has evolved to pulse surveys. We believe culture & engagement technology will shift more toward tools used to enable and ensure managers effectively engage, coach and recognize their employees. We also expect greater use of social technology to build employee communities promoting inclusiveness, environmental awareness, creativity, or other key values associated with a company’s culture.
Digitalization of HR Functions
Old wine in ever newer bottles. Industry analysts have been talking about HR technology transformation HR for years. One could argue technology is now advancing so rapidly that almost any HR process developed over three years ago is bound to be out of date, simply because it was created under technological constraints that no longer exist. We believe digitalization of HR will increasingly fall into two categories: platform providers and application providers. Platform providers will support core HCM operations that a company cannot be easily changed from one year to the next. For example, staffing, learning, management and financial HR transactions. Application providers will create specialized tools that plug into these platforms in a manner akin to how you install an application onto your smart phone platform. The most frenetic creativity is likely to happen among these application providers.
Fluid Work Arrangements
Newer wine in newer bottles. A growing segment of workers want more flexible working relationships. These may take the form of contract work, part-time work, virtual work, self-defined work schedules, or alternative forms of compensation such as housing or social contributions in lieu of pay. Companies are already adopting new forms of HCM technology to handle these complex and varied work arrangements. We forecast greater use of specialized technology to manage highly diverse workforces and talent pools comprised of full-time, part-time, contractor, and alumni employees. Two major challenges will need to be solved in this area: 1) how to engage contract employees while navigating legal regulations that require managing contract employees differently from full-time employees, and 2) how to build a sense of long-term commitment and career-development in a labor market of part-time, “gig” employees.
Old wine in newer and far better bottles. Companies have been struggling to create diverse, inclusive workforces for over 40 years. After years of incremental success, we may be reaching a turning point that could result in major shifts toward more inclusive organizations. The percentage of women in the workforce has reached a level where women and the men who ally with them are demanding change. And the growing shortage of skilled labor combined with the financial benefits associated with diverse workforces means companies can no longer afford to NOT have an inclusive culture. We believe the move to create more inclusive workforces will grow stronger over the coming years. Inclusion will become less about using data to make people aware of inequity and more about using technology to reduce biases in decisions that create inequity.
Artificial Intelligence, Machine Learning and Predictive Analytics
Somewhat newer wine, much newer bottles. Many forecasts pointed to greater use of artificial intelligence (AI), machine learning and predictive analytics in HR. The underlying mathematical models used by AI and machine learning are not that new, although they are constantly evolving. What is new is our ability to use these models on a widespread basis to analyze large amounts of data made available through the growing use of HCM technology. We believe there will be a lot more growth in this area. Use of these methods will be bolstered when people stop talking about AI as a replacement for people, and realize these are not “artificial human brains” but simply complex mathematical algorithms.
Outdated wine in ill-fitting bottles. People have long complained that existing employment legislation is overly complex and woefully out of date given the modern labor market and economy. Companies struggle to use workforce technology invented less than two years ago without violating employment laws written over eighty years ago. Forecasting the politics of labor legislation is a risky endeavor. The only forecast we feel safe making is that some changes will happen to employment legislation and that when they do occur companies will demand more flexible HCM technology so they can adapt to new sets of rules and regulations.
Performance Management Transformation
Moderately new wine in newer and newer bottles. Performance management transformation was new five years ago. Since then, many companies have made significant changes to methods used to align goals and expectations, provide ongoing feedback and reward and recognize contributions. We forecast that much of what is now considered innovative in performance management will soon be mainstream. Companies that cling to traditional “once a year” annual reviews will be the exception and will struggle to compete for talent with companies that have more engaging continuous performance management methods. We expect a steady improvement in the design of technology that facilitates ongoing, continuous performance dialogue between managers, direct reports, peers, and even people outside of the company.
Manager and Leadership Development
Rediscovered old wine being moved to new bottles. Middle managers are a critical to changing a company’s culture and executing its strategies. But for years, many people downplayed the value of managers with some even calling to eliminate managers altogether. This trend of "manager bashing" appears to have turned around. Companies are realizing that managers are core to creating a highly engaged, agile workforce. The concept of managers is certainly not new, and the basic elements for being an effective manager have been known for decades: setting meaningful goals, providing ongoing support and coaching, and recognizing people for their accomplishments. What is new is increased use of cloud and mobile technology to train, enable and ensure managers do these things effectively and consistently.
Transforming Organizational Structure
New wine stuck in outdated, extremely old bottles. Many predictions called for replacement of hierarchical organizational structures with new models that emphasize teams, dynamic relationships, task activities, or employee experiences. It seems somewhat amazing that companies continue to rely on hierarchical organization charts whose basic format would be recognized by members of the Roman Empire. The challenge is no one seems to have a sustainable, easy to understand method to structure roles and accountabilities that can effectively replace the traditional organizational chart. Once this technology solution is created we expect to see transformation of organizational structures spread rapidly across companies.
Very new wine in very new bottles. There is increased focus on providing employees and job candidates with greater transparency into company talent decisions and work environments. This is fueled by the growth of public sites like Glassdoor that provide an unfiltered view into company life. It is also related to employee concerns with equity and a desire to work for companies where the "rules of the game" are clearly defined and consistently followed. While people have advocated extreme levels of transparency in the past, a move to high levels of organizational transparency would be unchartered territory for most companies. Nevertheless, companies may soon find that they can either share the data themselves or have someone else share it for them via a 3rd party internet site. We forecast this will lead to new developments in recruiting marketing and social outreach technology to communicate sensitive information related to pay levels along with “intangible benefits” companies provide beyond pay.
Old wine in new types of bottles. The importance of employee recognition is certainly not new. What is new is the growing use tools to formally and informally praise and reward people through a variety of mechanisms. Companies are incorporating recognition tools into mobile applications, social collaboration platforms, integrated talent management platforms and gamification models. We forecast this trend to increase as companies explore new ways to promote manager, peer, direct report, team-based and customer-based recognition. As recognition technology generates more data, we hope to see greater understanding of how to maximize the power of this ancient form of employee motivation — letting people know they are appreciated.
Digitalization of HR Profession
Somewhat newer wine in somewhat older bottles. The field of HR is constantly expanding the use of technology and many HR activities are becoming much more data-driven. This digitalization of HR is not new. But some people believe it will soon change the nature of HR from a people-centric field to a technology-centric field. Our view is there will be considerable growth in technical and data-oriented HR jobs, but HR will still require individuals who are experts in working with people as well as machines. We believe the most valuable HR professionals will be ones that are comfortable engaging with both people and technology, and who understand the interaction between HCM technology and workforce culture and productivity. A true HR/IT professional is neither a specialist in HR nor a specialist in IT — they are a specialist in both.
Health and Well-Being
A new category of wine in need of a new type of bottle. We were surprised that little mention was made about workforce health and well-being in many of the forecasts. We believe this will become a major focus of HCM over the coming years due to several factors. The move to an “always on” world is literally burning people out. The increasingly competitive nature of business is demanding companies ensure their employees are mentally and physically performing at peak levels. The rising costs of healthcare are making employee health and wellness a major factor affecting company profitability. And research is showing that companies can significantly improve employee health and wellbeing by changing how they manage their workforce. We forecast increasing development of technology designed to enable employee health and wellness and create healthy work environments.
We hope you enjoyed this tour of the 2017 HCM wine cellar. We did not see much in the forecasts that we would consider to be extremely new or unexpected. There were some fancy new bottles but not that much truly new wine. In fact, some of the largest trends, such as Culture & Engagement and Digitalization of HR Processes are based on very old wine. Just because something has been around for a long time does not mean it lacks value. But it may need to be put in a new and more attractive bottle for people to recognize its worth.
This article was also published on LinkedIn.