Episode Transcript
[00:00:00] You, I'd like to give you a brief history of the human resources profession that I think will help you understand where we are and where we need to go. Now, as a lot of you know, in the 18 hundreds before the turn of the century, organizations were primarily made up of management and labor. And in the early days of the industrialization in the United States, we set up hierarchical organizations with senior executives, senior leaders, managers, supervisors, and then labor. And labor was considered to be the hourly or replaceable, oftentimes manual labor that would be trained for jobs. They would do their jobs, and if they failed, we would replace them with other people. And so what HR departments or personnel departments did was basically take care of the transactional, compliance and financial operations of the people, part of the company, hiring people, paying them, perhaps negotiating their salary or not dealing with labor. Unions taking care of some amount of operational training, although a lot of that was done by the business and keeping records of who worked in what job and where they fit into the hierarchy. And even though this sounds a little bit odd, I've read books about slavery that show meticulous detailed records of the slave hierarchy, which slaves were trained in, which roles and which jobs, and which skills. And HR people do this kind of stuff around the turn of the century. By the way. This was also the time when Frederick Taylor and other industrial psychologists started to study the work practices in factories and realized that there was actually a science to this and that as an industrial engineer, people could look at the rate of way people were working in these factories and make them more productive by changing the amount of weight they would carry, the location, how far they would have to walk between stations and other things. And then along came Carl Jung and actually, who was actually a disciple of Freud and looked at the psychology of work. And so HR people started to become focused on industrial engineering a little bit on psychology and the beginnings of surveys and so forth started. And so anyway, this was all part of the transactional operational work that HR did. And most of the people that came to work for companies in those days lived until their 60s, maybe their 70s. They worked for one company most of their career. So there was also work to do in the pre hire to retire, talent management space to move people into new roles or new jobs and to take care of them as they got older and went into retirement. Along comes World War I and then World War II, and all of a sudden we started to be conglomerates. And when I entered the workforce in the late early 80s, every big company was really the place to work. And we wanted to work for these big conglomerate organizations GE, IBM, at, and T. Et cetera. They were great, great companies. And people dedicated their entire career to these companies. And so what the HR people did is they moved out of this role of transactional administration, and they moved and did a lot of other things. They did succession management. They did leadership development. They did more extensive assessment of people for recruiting, psychological assessments, and I O psychology. Prehire assessments became very big. They worked on pay bands, pay levels, performance management processes that were based on the hierarchy. So that, believe it or not, in those companies, there was a cascading goal process. And you would oftentimes have goals that were cascaded up to the organization at the top, and at the end of the year, you would go through your goals, and your pay or your bonus would be dependent on would be based on this role you played in the hierarchy and the role your organization played in the hierarchy. HR people managed all that, and to some degree, they did not have a seat at the table because they were really managing operational parts of the people, part of the company. They weren't involved in strategic organization design, not that, you know, Jack Welch, to give him a lot of credit, actually decided early on in his growth as a leader that the HR people were very important. And at GE, he actually pioneered a lot of work on culture and training and corporate universities and so forth that were very popular in the 1950s and the 1960s and became a new life for HR people. So as companies grew into these conglomerates, HR people started to get promoted into more sophisticated jobs. We also started much more focus on surveys and annual surveys to look at engagement because we didn't want people to leave. And then, of course, in the late 1980s, early 1990s, we started to adopt technology in our companies. And we realized that the hierarchy wasn't necessarily good. Sometimes it was getting in the way we needed to manage innovation and growth and creativity and new technology systems. And so the HR community and profession moved along and started to look at its role in redesigning the organization, in flattening the organization, in improving creativity and innovation, in creating more psychological safety, and studying issues like, why is one group developing products faster than another group? And the profession got involved in the domain of organizational design and even more employee listening to get more feedback from different parts of the organization on what could be improved. Companies like Gallup became very big, and other technologies used for listening. And then we had what was called the war for talent. And around the it was around the same period of time McKinsey and others sort of coined this idea that if we're going to have companies that are very dynamic and people are going to move around between companies now, they weren't going to stay in one company their whole career. We needed a fight to get them. And the war for talent created this highly muscular focus on talent acquisition and recruiting. And there was a period of time early in my career as an analyst when there was a massive amount of energy in HR towards sourcing employment, branding candidate experience, better, faster technologies for assessing people, more intelligent technologies for assessing people. And later, as a result of that, looking at how do we maintain retention and how do we improve the internal mobility. And by the way, there was also starting to become a lot of data in HR. And this data that was floating around in training systems and recruiting systems and core HR systems became a new domain of HR called people analytics. So we could look at this data and we could figure out when people were leaving, why they might be leaving, who's getting promoted, who's not getting promoted, and also look at things around equity. Equity, of course, became big in the 60s during affirmative action, when the United States government mandated variety of programs to force companies, including the EEOC, to be fair in their hiring, but the HR people responsible for that too. And then that turned into diversity and inclusion and culture programs. And now, of course, a whole focus on many, many forms of inclusion, many forms of diversity, and then this new debate going on about whether diversity is good or bad or legal or illegal and so forth. But that became a big part of HR as well. And then, of course, we have the acceleration of technology, and suddenly we don't have enough skills. And then the HR people got responsibility for finding technical people, assessing technical people, building internal capability academies for skills, defining what the skills are, working with the business leaders on different skills. And we're still sitting in that world, of course, today, and now dealing with the emergence of AI as a further accelerant of all of these other things. Of course, the other thing that was going on during this period of time is the role of training was typically done in the line in the early days of HR, but then it moved into HR, and HR got more and more responsibility for not just functional training in education, but leadership developing, building leadership academies, crotonville other corporate universities. And then when training went online, the HR department took responsibility from e learning for e learning, blended learning, learning in the flow of work, micro learning, self authored learning, and all these other technologies that were used to train and enable and facilitate growth inside of the company. Through this evolution, the HR function that didn't need a lot of technology in the 18 hundreds and 19 hundreds and early two thousand s now is desperately linked to technology. In fact, we now have research that shows that if you are not good at technology, you cannot function as a high performing HR function. In fact, it is a big differentiator now, it isn't just a nice to have. Now, while all that was going on, the number of HR roles exploded. There are more than 500 or maybe 1000 job titles HR. We have 92 capabilities in our capability model, and we're missing a few. It became very complex, very multidisciplinary. The folks in recruiting didn't know what the folks in learning were doing. The folks in compensation had their own little island. The dei people had their own little island. The folks that were involved in technology and data were sort of in their own little island. So we had all these groups. And of course, in every company that grows while this is going on, the HR department grows. And the way the HR department typically grows is in a small company, it's all in one place and oftentimes reports to the CFO. And then there's a lot of focus on recruiting and pay and fairness and training. And then there's a division in Europe, or another office in another state, or we buy a new company, and there's a second HR department, and a third HR department, and a second HRMS, and a third payroll system, and multiple training systems, and multiple recruiting systems. And what happens is these organizations, as they grow, the HR department grows in a fragmented way. And somebody wakes up 1 minute day and says, why do we be spending so much money on HR? Why do we have so many people, by the way, who's interfacing with the business versus who's working in centers of excellence? We need a quote unquote transformation. And so for the decade or two before today, we spent a lot of time with consulting firms going through what we called an HR transformation. And oftentimes the HR transformation was driven by the implementation of a new platform. Well, most of those transformations didn't have nearly the impact everybody thought, because all we really did during the transformation was we rationalized the roles and created what I like to call the 1980s It department, which was we standardized roles in centers of excellence. We created service centers. We set up a role of a business partner who interfaced with the business, and we optimized around cost reduction and time to service delivery. We didn't do a lot of training of the HR people. We didn't do cross training, we didn't try to turn them into consultants. We just tried to lower their cost. And we have interviewed a lot of companies that have been through these transformations and walked out of the transformation saying, well, we did save a lot of money, but we're not very strategic and we're not very consultative, and we're not able to solve a lot of the critical issues we have. So those transformations are what we call level two out of our four level maturity. So anyway, that was going on. And the one thing it did do is it forced the HR function to operate in a global way. And it got the number of technology platforms reduced. Now here we are in 2023. 2024 in a very tight labor market, rapid improvements and need for new skills, industries converging with each other. The economy's sort of teetering with high inflation and various scenarios for growth and the limitations of global warming and changing energy supplies and lots of disruptive changes. And we're suddenly taking this organization that's been through massive change for the last 100 years, and we want it to do something different. We want it to be consultative, problem solvers. We want them to be experts on every domain of the people side of business. We want them to understand how we can be more competitive, how we can improve productivity, how we can flatten the organization, how leaders can be better aligned to what they need to spend time on. How we can hire people and steal people from other companies, how we can pay people more fairly and more equitably without going running out of money. How to improve engagement and employee experience when everybody's burned out and has mental health issues from working at home. How to implement a hybrid work policy. How to use AI. And it goes on and on and on. And so what's basically happened is this profession that started out as a pretty simple sort of back office administrative function has become very complex, very important, and very interconnected. And as you'll read about in our research and what we're going to launch next week, this is a new model. Now, it isn't a step change.
[00:13:29] We're not just launching some model and say, voila, here it is. Here's the unveiling. Go do this. We're going to show you how to get there from here. Because what we found when we did this research and Kathy and Christophe and others here worked on this is this is a stepwise evolution of your operating model. The roles you have in HR, the skills you have in HR, what you do with technology, what you do with your business partners, how you're aligned with the business, what kind of data you use and how it's brought together into different forms, and the product or solution orientation, design and implementation process you have for HR. Systemic HR is a very big idea, and I don't think anybody will disagree with the idea, but it's really a question of how. And what we've done for the last year or two is we've figured out how. We've interviewed probably 40 or 50 very large companies. We've looked at lots and lots of data and I think really come up with some very important principles on how this function will evolve. It doesn't matter where you are if you're a small company or a large company, if you're an HR professional or an HR leader, if you're a recruiter, or an L and D person, or a tech person, or a compensation person. This systemic HR research will help you figure out how your role can change and will change and how your organization can be more effective. I am very excited about it. It's really, in some ways, the culmination of my work for 25 years as an analyst. And the team here has worked very, very hard. We've validated this research with a lot of our clients, and we're going to be working on this all year, next year. This is not a piece of paper that you read. This is a whole set of ideas and practices that we're going to work on with you for the next couple of years to help the profession evolve, to help your organization evolve, and to help you evolve. And the final concept I want to give you is what I call transformation from the inside out. The number one thing that holds people up in these transformation projects is the skills and capabilities of the HR people themselves.
[00:15:41] We can't operate in this systemic, high value, consultative way if we don't know what to spend our time doing, if we're unfamiliar with the domain, if we're not comfortable with the consulting process, if we're not product oriented, if we're not solution oriented, if we're not falling in love with the problem, in other words. So a lot of this is also heavy duty focused on professional development of your HR team. And that comes out very clearly in the research. Now that we're not back office clerks anymore, we've got to be really well trained on business, on technology, on people practices, on psychology, on the economy, and of course, the culture of the business that we're in and what will and won't work. And that is a big part of systemic HR too. So anyway, join us on this journey. You're going to see a lot more coming. The introduction is taking place in October, and there'll be a lot more to come through the rest of the year. Our research members, of course, if you either join the Josh Person Academy or become a corporate member, we will give you in depth information, benchmarking and tools to take advantage of all this. But we'll certainly also communicate a lot of this externally because we want the maximum number of people to understand what we've discovered and really learn from this process. Thank you very much.
