A business imperative and a paradigm shift. In a business landscape characterized by near constant disruption, HR 3.0 is the next evolutionary step.
The radical reinvention of Human Resources is a critical imperative for organizations, especially now: more than two thirds of the executives surveyed say that the global HR function is ripe for disruption.
Here, it is also uncovered widespread agreement on five common characteristics that underpin HR 3.0: deeply personalized experience-centric design; skills placed at the core of the enterprise; data-driven decision making powered by AI; agile practices for speed and responsiveness; and consistent transparency to preserve trust and reduce reputational risk.
Employee experience is central in 3.0, as HR helps drive a company’s overall enterprise transformation. But today it’s insufficient to think of employee experience as limited to the employee. In an era where the line between office and home continues to blur, the employee’s family experiences the company, too, and therefore should be considered when designing and enhancing any employee experience.
Five imperatives for the future of HR
Deeply personalized experience-centric design
61%
29%
Skills at
the core
69%
38%
Data-driven decision making powered by AI
59%
28%
Agile practices
68%
34%
Transparency to preserve trust
66%
35%
Level of importance to future of HR
Level of achievement today
However, achieving this future vision is not easy. HR executives are unsure how best to evolve their operating model to HR 3.0. Which programs and activities should they prioritize? What investments will accelerate the journey?
To answer these questions, we examined a multitude of people practices that HR units around the globe are deploying at various stages of maturity. We tested each for its impact on enabling enterprise transformation to understand the activities in HR that will have the most value. Our analysis has identified ten priority Action Areas critical to the HR 3.0 model. The Action Areas span the breadth of the human resources function, in some cases wholly reinventing traditional people practices.
The ten action areas are:
1. Action Area:
Measure employee performance continuously and transparently.
In HR 3.0, performance measurement tools are designed with an employee, not an HR, lens.
Implications for the enterprise:
Clear and continuous coaching and performance conversations are essential to proactively address workforce and performance issues
Impact:
Very High
2. Action Area:
Invest in the new role of leadership.
Leadership is moving to the edge of organizations.
Implications for the enterprise:
The role of leaders requires new and different skills and behaviours. Predict strong leaders with analytics and invest in their development
Impact:
Very High
3. Action Area:
Build and apply capabilities in agile and design thinking.
The traditional waterfall approach to problem solving is no longer tenable. Instead, companies must encourage iterative co-creation.
Implications for the enterprise:
HR must be equipped to help design and manage agile teams through operations, rewards, performance management and workplace productivity tools.
Impact:
Very High
4. Action Area:
Pay for performance and skills in a fair and transparent way
“It’s really important to base pay decisions not only on the skills that you have, but on future skills and the supply and demand for those skills” (Nickle Lamoreaux, 2020)
Implications for the enterprise:
The old model of pay for tenure prevents growth, innovation and hiring of top people.
Impact:
Very High
5. Action Area:
Continuously build skills in the flow of work
“We don’t want people to be addicted to the learning platform. We want them to learn something, apply it, and then go back to work.” (Josh Bersin, 2020)
Implications for the enterprise:
Employees and leaders must be learning all the time, with both formal and informal learning embedded in the culture, coupled with capability academies for deep skills.
Impact:
High
6. Action Area:
Design intentional experiences for employees
“To build an engaged workforce, it is more important than ever to understand and act upon employee ideas, needs and concerns.” (IBM ,2020)
Implications for the enterprise:
Today’s workforce expects meaningful employee experiences that are highly personalized, responsive to their needs and constantly improved.
Impact:
High
7. Action Area:
Modernize your HR technology portfolio
Cloud-based HR systems are essential to successful AI implementations because the most powerful cloud-based AI applications share data from systems that were traditionally distinct. (Guenole & Feinzig, 2019)
Implications for the enterprise:
The move to the Cloud-based architecture enables speed, scalability and flexibility.
Impact:
High
8. Action Area:
Apply data-driven insights
CHROs have got be 100 percent more focused on data than they were in the past. (CHRO, 2020)
Implications for the enterprise:
People analytics is now essential to understanding, managing, and continuously improving organizational performance.
Impact:
High
9. Action Area:
Reorient and reskill your HR business partners
“Winning in the marketplace is where being an HR Business Partner starts…. That’s where we create value.” (Dave Ulrich, 2019)
Implications for the enterprise:
HR must act as strategic advisors, trusted coaches and data driven problem solvers.
Impact:
High
10. Action Area:
Source talent strategically
Deploying AI in recruitment allows faster and more accurate hiring, and a better candidate and recruiter experience.
Implications for the enterprise:
Top talent can come from novel sources, so companies must look inside and outside to find the best hires to remain competitive
Impact:
High
Conclusion
Even as leading companies transform their HR model, it’s clear HR 3.0 is not a destination, just a way station.
The world is changing too quickly to allow even a hint of complacency. We’ve entered a new era of risk that requires companies to change how they plan, create strategies, make investments, and operate their day-to-day business.
It’s changing how they engage with their customers, and in many cases, who their customers are.
Above all, it’s altering their relationship with the workforce as a whole and how they interact with individual employees. The pandemic has sparked permanent shifts in the relationship between employer and employee.
Employees expect more of their employers, especially in how their employer understands and takes into account the context in which they do their jobs: their work environment, family circumstances, and communities.
The ultimate ramifications of hyper-personalized employee experiences and the holistic support employers will be expected to provide are only starting to become clear.
There will undoubtedly be further emergent developments over the course of the next year that will drive more change. As we continue to face unprecedented opportunities to build better businesses and a much better world, an HR 4.0 will evolve as a model to help us keep doing just that.
Sources:
Guenole, N., and Feinzig, S (2019). The business case for AI in HR. IBM Smarter Workforce Institute. Retrieved from https://www.ibm.com/downloads/cas/AGKXJX6M
Ulrich, D. (2019). What does it mean to be an HR business partner today? Retrieved from https://www.myhrfuture.com/blog/2019/10/14/what-does-it-mean-to-be-a-hr-business-partner-today
Amy Wright et al., (2020). Accelerating the journey to HR 3.0. Retrieved from https://www.ibm.com/thoughtleadership/institute-business-value/report/hr-3
