Future of work: How HR can use data to drive transformation

We as a people have gone through significant turmoil and change over the last year. The COVID-19 pandemic has impacted every single person, company, and government around the world. We have redefined and revisited how we work, where we work, and the technologies we use, with the pandemic increasing the pace of technology adoption for most companies.

We now live in a world where rapid advances in technology trends like Artificial Intelligence (AI), Machine Learning (ML), Robotic Process Automation (RPA), cloud computing, blockchain etc. are impacting operations in every industry, and impacting the skills employees need to be successful at their jobs. Bridging this skills gap is top of mind for employees who are getting displaced by technology.

Recent research has shown that nearly three-quarters (73%) of employees would first turn to their employers to help navigate how work is changing, but a majority of them have serious concerns about their employers ability to help [1]. Against this backdrop, we believe that the role of CHROs and HR leaders has never been more important, and that HR will play a pivotal role over the next few years in shaping future organizational operating models.

Recognizing our stated belief for CHROs and HR leaders broadly, we felt it was important to touch on a recent McKinsey article, The new possible: How HR can help build the organization of the future with a specific lens on how organizations can leverage data and Key Performance Indicators (KPIs) to track their progress on their unique transformation journey. McKinsey highlights that HR leaders can help create an organization of the future by focusing on nine imperatives across three key themes: Identity, Agility, and Scalability. This framework serves as a foundation to detail our complementary perspective.

Identity

Under Identity, the three key imperatives that McKinsey highlights are Purpose, Culture, and Values [2].

Communicating a core sense of purpose, an emphasis on company culture, and focus on the value of talent does help drive company performance, employee engagement and organizational health. A common theme here is the employee and putting employees at the center of everything. The importance of employee experience is already being acknowledged, with 78% of HR leaders agreeing that it is one of the most important considerations in driving organizational success [3]. Research from Gallup has shown that companies who score in the top quartile on employee experience tend to see 23% greater profitability than their peers [4].

HR leaders need to identify and map out key moments that matter in the employee journey and work to ensure that the organization delivers in those critical moments. In mapping the employee journey, HR can make sure that the organization’s purpose is communicated at every stage, and incorporated into recruitment, onboarding, performance, and compensation decisions. And finally, HR needs to make sure that they are soliciting employee feedback with the help of regular pulse surveys.

So, how can HR leaders hold themselves, or the business accountable? What is the outcome of creating a great employee experience? This is where HR leaders can leverage the power of technology and monitor KPIs to gauge organizational performance.

At Ceridian, we try to live our promise of Intelligence at work by leveraging business-specific KPIs to help our customers monitor performance as they mature on their transformation journey. Some KPIs that HR leaders should consider tracking here are Engagement Score, Leadership Score, Absenteeism Rate, and Average Tenure to help gauge the impact or outcome of employee experience initiatives. HR leaders can also leverage KPIs like Voluntary Turnover Rate, 90-day Attrition Rate and First-Year Attrition Rate to monitor whether their organization is successfully training and rebalancing talent resources. All KPIs need to be viewed in the context of a customer’s industry, historical performance, and business priorities, but identifying the KPIs and monitoring trends over time helps HR leaders move the dial on organizational culture and values.

Agility

Next addressed was Agility, where McKinsey covers the three key imperatives of Decision Making, Structure and Talent [5].

The emphasis on the need to adopt new organizational models, create a flexible workforce, enable faster decision making and introduce next-gen performance management is not surprising. Previously, 17% of the U.S. population worked remotely five (or more) days per week. Today that number is up to 44% [6]. While the final composition of in-office and work from home is unknown, most companies recognize that a hybrid working model is most likely.

Employees want the best of both worlds, with 70% of employees wanting flexible work options to stay and 65% wanting more in-person time and office collaboration [7]. In addition to the remote working trend, the growth of gig work is another trend that has upended the traditional working model. Today, 36% of Americans are part of the gig economy in some capacity [8] and gig workers could represent more than half of the country’s workforce by 2027 [9].

Therefore, it is reasonable to expect that HR leaders must reexamine every facet of their organization, inclusive of its people, process, strategy, structure, and technology. A recent Deloitte survey found that 61% of executives today are shifting their focus from optimizing work to reimagining work [10]. With a re-imagined work model, HR must understand the implications on sourcing talent for full-time vs. gig, leveraging innovative sourcing methods, enabling skills-based staffing practices, delivering continuous performance management and completing the on- and offboarding experiences with minimal disruption to teams and colleagues.

A dynamic workforce strategy with access to real-time workforce insights can help HR make faster decisions or pivot as needed. However, only 11% of organizations today say that they can produce information on their workforce in real time [11]. Having the right technology in place and leveraging a strong HCM platform is pretty much table stakes in the future HR operating model. Along with quicker decision making, a strong HCM platform will also help implement next-gen performance and compensation management.

With this in mind, we recommend that customers focus on Time to Fill, Interviews per Hire and Average Time to Onboard KPIs to identify bottlenecks in the talent sourcing process. Other KPIs like Number of Performance Conversations per Employee, Appraisal Cycle Time, Gender Distribution, Ethnic Distribution, Pay Gap Benchmarking and Flight Risk Indicator help companies manage talent effectively. Enabling HR leaders with these key data points helps them to be more agile and effectively respond to the need of the hour when it comes to managing the employee lifecycle.

Scalability

McKinsey concludes with an examination into Scalability, as it relates to Learning, Platform and Ecosystem [12].

Reskilling and upskilling workers is the next big challenge for HR leaders and companies over the next decade. The rapid pace of technology adoption and automation is going to seriously impact the number, and type of jobs available. As a result of a renewed macroeconomic focus on Environmental, Social and Governance (ESG), employers now expect to offer reskilling and upskilling to just over 70% of their employees by 2025 [13], with companies hoping to internally deploy nearly 50% of the workers that might be displaced by automation [14].

A prime example of a company recognizing the importance of upskilling is Amazon. In 2019, Amazon embarked on a $700 million upskilling effort to provide 100,000 employees (a third of the U.S. workforce), with access to training programs in high-demand areas like cloud computing and machine learning [15]. Amazon then upped the ante recently and it now aims to train 29 million people worldwide to work in the cloud [16]. Amazon is not alone; in a recent Deloitte survey 41% of executives said that building workforce capability through upskilling, reskilling and mobility is the primary action they are taking to transform work [17]. 

To meet these challenges head on, HR leaders need to foster an evergreen approach to learning, developing, and reskilling and must support this approach by providing the right technology and creating a value-enhancing HR ecosystem. When it comes to technology, McKinsey summarizes the imperative for HR: “The need of the hour is for HR to collaborate on and leverage the landscape of HR tech solutions across the employee life cycle—from learning, talent acquisition, and performance management to workforce productivity—to build an effective HR ecosystem.” [18]

When it comes to monitoring the success of reskilling initiatives, a key thing to note is that reskilling is a commitment to change, and change is hard. Like they say, it takes two to tango. Employees need to be on board with the concept of learning and upgrading their skills, which is why clients can track KPIs like Attendance Rate of Learning Courses and Course Completion Rate to measure employee participation. The impact of the learning programs can be gauged by looking at the KPI Internal Promotion Rate i.e. the percentage of positions filled internally over time.

CHROs and HR leaders play a pivotal role in re-imagining work and designing the organizations of the future. To do this at pace and at scale, we believe that HR must clearly define their strategy and identify what people, process, and technologies they require themselves. With that foundational design in place, the focus moves to delivery and execution. HR must become obsessed with live, multi-dimensional KPIs and data, to create and deliver quantifiable value and to deliver on the promise of the future of work.

[1] Cycling through the 21st Century Career, Cognizant, 2019

[2], [5], [12], [18] The new possible: How HR can help build the organization of the future, McKinsey, 2021

[3] Is the employee experience you’re delivering the one your people want?, EY, 2020

[4] The Relationship Between Engagement at Work and Organizational Outcomes, Gallup, 2020

[6] Change in remote work trends due to COVID-19 in the United States in 2020, Statista, 2020

[7] The Next Great Disruption Is Hybrid Work—Are We Ready?, Microsoft, 2021

[8] The Gig Economy and Alternative Work Arrangements, Gallup Inc., 2018

[9] The Gig Economy Goes Global, Morgan Stanley, 2018

[10], [11], [17] Human Capital Trends, Deloitte, 2021

[13], [14] Future of Jobs, WEF, 2020

[15] Upskilling 2025, Amazon, 2019

[16] Amazon Wanted to Train 29 Million People to Work in the Cloud, WSJ, 2020