Leapfrog Opportunities: Why HR Needs an AI-first Mentality to Orchestrate Real Transformation
HR transformation is hot…again? In a time of economic uncertainty, a focus on productivity across all boardrooms, significant changes in employees' relationships with their employer, and the AI hype cycle in full swing, it makes sense that organizations are turning to the CHRO and asking, “What should we do?” As a result, every large organization seems to be going through a HR transformation initiative. They realize that something needs to change, but they can’t yet put their finger on what that something is. So they continue to focus on tangible actions from previous HR transformations such as implementing new technology, upskilling HR professionals with analytical skills, creating a shared service model, or focusing on employee experience. But what has the constant refrain of transformation achieved? And has that really fixed anything?
The Bureau of Labor Statistics (BLS) has found that long-term labor productivity in the nonfarm business sector is at its lowest since 1947.
Employee engagement continues to slump and regress towards the mean, with only 32% of US employees feeling engaged.
So if productivity hasn’t really increased much, and most employees remain neutral about their engagement at work, what is going on within HR? Try as they might, the outcomes of HR transformations remain relatively minor. Why is that?
McKinsey has found in their Reimagining HR report from 2022 that transformation looks primarily like digitalization, agility, and prioritization.
And if you read McKinsey’s articles from the 2010s, including “Questions for your HR chief” from 2011, their report on the state of human capital from 2012, or Deloitte’s report on “Business Driven HR Transformation” from 2011, those priorities for HR haven’t really changed much. It’s no wonder HR employees are getting disillusioned by HR transformation initiatives. They have been hearing and doing the same things for over a decade.
Perhaps our mentality when it comes to HR transformation is flawed. Gartner has described HR transformation as “the evolution of the HR function to drive operational excellence and create greater business value.” And these days, they’ve added “in a world of hybrid work,” at the end to make the topic hot again.
Can you spot the slight disconnect in the definition? Evolution and transformation are both terms used to describe change, and when it comes to HR transformation, they tend to be used interchangeably, but they don’t mean the same thing!
Let’s examine the differences. A transformation is a more sudden and dramatic change that tends to be caused by major events or changes in circumstances, and results in a significant change in the way something works. Contrast this with evolution, which is more gradual and incremental and caused by a series of small changes over long periods of time. So when we think about all our HR transformation priorities, are we transforming or are we evolving?
It seems that all of these initiatives are evolutionary. Incremental changes, shifting work around, but doing the same work. Nothing is fundamentally changing in the way something works, and perhaps that’s why employee outcomes haven’t changed much.
But a transformational technology has entered the arena, and an evolutionary mindset is going to make your HR procedures obsolete. I recently had a discussion with Professor Joe Fuller from Harvard Business School, who is also the co-director of the 'Managing the Future of Work' initiative. He highlighted that the transformation of the business world driven by Artificial Intelligence (AI) is unprecedented, and there are no recent transformations in history that compare to its global reach and magnitude. The models of change that were pertinent during the industrial and information eras are no longer predictive in the current era of business, which is predominantly driven by artificial intelligence. This new era is expected to follow a J-curve trajectory, illustrated by the widespread adoption of tools like ChatGPT.
So What’s a J-Curve Transformation Look Like?
In moonlighting as a graduate school professor of Human Resources Management, I’ve gathered that technology has been gradually rolling out better tools for educators to evaluate learning outcomes. From tools that check for plagiarism, allow for online submission of papers, and discussion boards, to solutions for digitizing the education experience (in many ways, similar to the digitization agenda of many organizations), the slow roll out of these tools over the past decade have allowed both teachers and students alike to adjust and basically digitize the classroom experience.
Nonetheless, no one is quite prepared for the level of disruption that ChatGPT will have on the educational world. Every written assignment can be run through ChatGPT to be completed, and with the right prompt engineering, no tool that checks for plagiarism can detect it. If that’s the case, especially in remote/online education, can we really determine if the learning outcomes have been achieved within that student? How does an employer trust these programs with credentialing? Can they trust the student has the knowledge they have been credentialed for if you can’t be assured that all assignments weren’t completed by ChatGPT? In fact, there are many people hypothesizing the 10-15% drop off in ChatGPT usage in Q2 of 2023 was because schools were out of session!. Following that, if most of the answers and learning in the curriculum can be found on ChatGPT, can’t you use ChatGPT instead of the person who was supposed to learn that knowledge? That’s a J-curve transition. You are left with little time to prepare and respond before your whole business model gets disrupted.
So What Now?
At the core of every HR transformation lies technology, people, processes, and culture. So this begs the question: are our HR transformation initiatives adequately preparing you for this J-curve AI transformation? Here are some points to ponder:
- Are the technologies we are implementing or considering in fact transformational, or are we merely repeating the same practices with different tools/interfaces?
- Do we have people that actually understand this technology and can help force us out of an evolutionary mindset into a transformational mindset? Do we have the people that are willing to think transformationally versus evolutionarily?
- Are we thinking about our processes in a way where we can have different AI-enabled operating models for different situations? Streamlining processes and process simplification traditionally yielded greater efficiencies, but with the new AI tools like autonomous agents is that really as important?
- Is this really going to change how the business, employees, and candidates value HR? How do we get our organizational culture ready for the rapid pace of change ahead?
If you are about to embark on your own HR transformation journey, or you are in the middle of one, it’s not too late to ask these questions. When I think about these questions, I think about another recent conversation I had with another great professor, Dave Ulirch. He posed this question to my students:
“What is the most important thing HR or business leaders can give to an employee? (Pick one)
- Physical and psychological safety
- A sense of belief (meaning or purpose)
- A feeling of belonging (community and relationships)
- All of the above
- None of the above”
90+% of the 150 students picked “All of the above,” but his answer was actually “none of the above.” It was a trick question - the students walked into a trap! Most HR professionals think about HR-related concepts, and these graduate students in HR have been learning about all these concepts, so they were primed to answer “all of the above.” But from his perspective, the most important thing HR or a business leaders can give an employee is an organization that is groomed for success in the marketplace.
So when you think about HR transformation, are the initiatives really changes that will allow your organization to succeed in this new AI-driven marketplace or are they actually going to inhibit delivering business value? Are you spending too much time contemplating the advantages and disadvantages of position management versus job management and the new processes that will be necessary if you switch without considering if it’s consistent with your go-to-market needs or product development process? Are you trying to simplify complex organizational requirements and needs because of real process inefficiencies or technology platform configuration limitations? Is the technology leading your decisions, or is the technology supporting your organizational needs?
Moreover, are you taking this opportunity to learn from others’ experiences and leapfrog all the traditional evolutionary steps into this future state? The promise of AI is that you do not need to make those trade offs, and that is a true transformation. Technology fades to the background, people are augmented by AI, the complexities of your organization and business are celebrated, and a culture of innovation thrives.
At HiredScore, we refer to this as “orchestration”. In other words:
- Where business value is at the forefront, not technology. It’s not about change management surrounding technology platform adoption, it’s about delivering value to the employee by meeting them where they already work.
- Where employees’ attention is maximized to create, innovate, and connect, and not worry about following tasks within a process. It’s not about replacing employees, it’s about assisting employees so their valuable time and attention is spent on the most important things.
- Where organizational and operational differences are embraced, not erased. Instead of simplifying or aligning to one HR operating model, it’s about intelligently accommodating the intricacies and variance that always occur in a dynamic complex system.
Orchestration is about making all these elements work in concert to tune that organizational noise into a harmony, which would ultimately leapfrog you into true transformation. And nothing compares to that in terms of delivering true results and business value.