The Future of Work and HR’s Struggle in Driving Business Decisions

By Zac Ma – Associate Director, SEA Sales, Links International Singapore

The future of work.

Gig economy, digitalisation, mobility, analytics, robotics, Gen Z-ers…  

You are probably familiar with these buzzwords. They relate heavily to the dynamics of the changing workplace and concur with living in the age of disruption.

HR has a role to play and has the opportunity to step up and initiate innovation to help businesses adapt and welcome the future of work. However, for most organisations, HR teams are still struggling to exert influence on business directions and leadership behavior.

HR’s Struggle in Driving Business Performance

It pains me to hear from a seasoned business leader that, for most, the HR function is administrative and often lacks vision and strategic insights to help drive business performance. It pains me because it is, the majority of the time, true.

While big data and analytics play a key role in companies’ decision-making processes today, the reality is that most HR organisations fall well short of mastering these capabilities. 

According to Bersin by Deloitte, only 15 percent of organisations believe that their HR teams have strong credibility in talent metrics and analytics and 86% of organisations are still at least two levels away from achieving High-Impact HR.

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Many HR teams are still grappling with their ability to manage HR metrics and analytics effectively to influence business.

It is really a weird phenomenon, because other functions such as marketing and sales seem to be leaps and bounds ahead from a similar perspective. There’s a higher chance that the marketing function has the ability to provide predictions on consumer preferences, and the sales function to generate analytical win-loss ratio, than for HR to provide attrition predictions.

Losing the Talent War

I had a conversation with an HR manager in the retail industry a few months ago with regards to their challenges around staff retention strategies for their retail shops.

The HR Manager told me that the time-to-hire is getting longer and it is becoming more costly to hire replacement staff, due to competitive labour market conditions. In order for them to retain staff, the company decided to increase the rate of commission payout in the hope of reducing attrition rates. The HR Manager commented that it seems to be working well, as the attrition rate is decreasing since there are less recruitment requests from hiring managers.

I became curious and asked if they made the decision to increase the commission scheme as they had projected that there would be long-term savings in terms of revenue from being able to reduce attrition rates.

The answer was no. They didn’t do any analysis at all.

By now, it becomes apparent to me that the business understood very little about the potential and actual impact that this has on employee engagement, store revenue and the cost of operations. So, it came with little surprise that I was made aware that they were also not measuring the effectiveness of the scheme – i.e. how much longer are the employees staying? By how much has the attrition rate decreased? And does it motivate employees to sell more?

Regretfully for them, at this moment, they form part of the 56% of organisations with level 1 talent analytics maturity model and, according to Bersin by Deloitte, it would typically take five to seven years to reach level 4 mature analytics. During this period, their peers might have already gained an upper hand on the talent war with their superior insights if they are already a couple of levels above them.

It’s not difficult to realise why, from this example, the majority of HR departments have little or no influence in boardrooms and remain on the back foot when it comes to influencing people decisions.

How Can HR Data Drive Business Decisions?

Bersin by Deloitte reports that organisations with mature analytics are:

  • Two times more likely to improve their recruiting efforts;
  • Two times more likely to improve their leadership pipelines;
  • Three times more likely to realise cost reductions/efficiency gains; and
  • Two and a half times more likely to improve talent mobility – moving the right people into the right jobs.

Below are a couple of examples on how HR could potentially involve big data and analytics to influence business direction and performance.

  1. Scraping Annual Performance Reviews

In an article by FastCompany, Deloitte revamped its performance management system in 2015 after discovering that it was spending nearly two million hours a year on its review process. Last year, Adobe calculated that its 2,000 managers were investing 80,000 hours into performance reviews. Accenture learned that 75% of its review process was devoted to talking about employees, leaving only 25% for actually talking to them.

In fact, according to a recent Harvard Business Review article, it is estimated that by now, more than one-third of US companies have since abandoned the traditional appraisal process.

Employees are now looking to their managers for coaching and mentorship, and find purpose through constantly learning and growing on the job. Hence, companies are now recognising the importance of employees receiving timely feedback on an ongoing basis following assignments. If organisations want to develop high performers, managers must be equipped to coach and empower them.

  1. Embracing the Remote Work Environment

Historically, remote work has been a small part of the employment landscape, but, thanks to the internet and advancing mobile technologies, it is now possible to have a connected workplace away from the office. The ability to work from home is fast becoming an increasingly popular and sought-after perk in modern workplaces.

According to a 2015 Gallup poll, 37% of the US labour force works remotely, and that number is only rising. There was a huge number of misconceptions about remote work before it became popular, with the number one concern being a decrease in productivity due to lower employee engagement. However, a study by Harvard Business Review proves the contrary, noting that some companies saw worker productivity increase by 13.5% after permitting remote work.

I attended a recent HR event presentation on Dell’s approach to driving People Decisions with HR Metrics and Analytics. The HR Lead mentioned that Dell found out through their annual employee engagement survey that flexibility is a key driver for engagement and remote work has no negative impact on attrition and performance.

Dell also reportedly wants half of its workforce to work remotely by 2020 and said that it makes good business sense as the company saved $39.5 million by consolidating office space or converting it to flexible unassigned work stations that can be used by any staff.

Change is not the problem, resistance to change is…

What are you and your business leaders doing to close the gaps and prepare for the future? How confident are they that they will remain competitive while meeting the future demands of the workplace?

Driven by demographic shifts and technological advances, many organisations are now trying to evolve and close the gaps among technology, individuals, businesses, society and governments. The 21st century challenge for business and HR leaders is to rewrite the rules of engagement to ensure that they can remain competitive.

For many, change is not the problem, resistance to change is…

Links International is an award-winning one-stop human resource outsourcing provider in Asia Pacific. If you’re interested to know more about us, please click here.