Yes, that time of the year again – no, I am not talking Christmas or New Years. I am talking Performance Management – it is the time of the year again where thousands of companies demotivate their staff by still holding on to an antiquated process that – and this is a fact – just does not what it is supposed to do (or what it is named). Performance Management you would think is about managing performance of employees towards joined goals and to motivate them to bring out the best in them. However, still way too many companies are holding on to the outdated process of: Objective setting – Mid-year Review – Calibration – Year-end Review and send their employees off for a demotivated Christmas. Is your company doing the same? How do you feel after your review? – check out this post
One of the big themes and big discussions today is Industry 4.0 – what is meant is the next industrial revolution via IoT (Internet of Things) and further integration, communication and automation of machines. You can read more about it here. It will for sure have another big impact on worklife, culture and society.
What I would like to talk about today though is Shared Services 4.0 – which I believe is going down a similar route like Industry 4.0 – and therefore the same naming convention 😉
Shared Services 1.0 – 3.0
When you think about Shared Services from its origins in the early 90ies till now, it was about the following themes:
- Process standardization
- Process rationalization
- Near- or off-shoring of work
And subsequent near- or off-shoring of jobs. Because of Shared Services, many former colleagues in HR (or in any other (back-office) function) have lost their job, were in need to find a new job. Some of these colleagues had luck and found a new job – some of them for longer, many of them for short periods only. Why that? – quite frankly it was not one company that implemented Shared Services, but many – and with it 10.000s of jobs, all the same kind of jobs were near- or offshored. And only some former employees of these jobs understood it right and found their work-future in upskilling towards jobs that could not (at least for a period of time) get near- or offshored. A big majority though did either not understand that “rule” of life-long learning or – and no offense – were not capable to perform the next higher-level job. These former colleagues have lost contact and access to their job market – they are the lost people of globalization, being not unhappy anymore, but angry – don’t see any perspective other than turning back time. And as we all know, you actually cannot turn time back (at least not yet ;)) – and even if, there are sufficient people that don’t want to do that. In any case though, there are winners and lost people that now rather fight against each other than try to repair what has been damaged for the greater good of all.
If you think in broader terms though and at a global scale, you must admit that the majority of the jobs were not made redundant, they were just relocated. And so, the Shared Service economy has born new winners – countries like India, Costa Rica, the Philippines, a big portion of the Eastern European countries have “received” 1000s of jobs and with it managed to catch up with western countries, created new middle classes and brought young people into great starting jobs – with big potential for international careers.
Shared Services 4.0
The new waves of innovation and thinking in the shared services industry though will have different effects. Nothing will really change with the losers of the first waves – except that the distance between their knowledge and capabilities and the job requirements is growing. It is more and more unlikely that these former colleagues find a new job similar to their old one – they either stay unemployed or go for 2-3 parttime jobs which still cannot feed their family at home.
What is worse though is that the winners of waves 1.0-3.0 will turn into losers as well. – and the upskiled colleagues from the first rounds will lose their jobs, too. RPA and AI are the keywords.
Robot Process Automation (RPA) will slowly but surely eat away the lower qualified jobs in Shared Service Centers. Robots are getting sufficiently smart to execute without break, without mistake most of the standardized work within centers. Recent studies show that by now 80% and more of standardized work can be transfered to bots. And in turn, 80% of new colleagues will lose their jobs.
But it does not stop with RPA – AI, the next evolution is already on its way. Today mostly too expensive to replace low-cost country colleagues, but tomorrow (and it is almost literally tomorrow) this will change and not only standardized work will get automated but even more complex work where situational assessment and decision making are required. I know that most of the readers cannot wait to have AI in their life – me, too – but in their private lives, not at work. At work, this will lead to the next “let go” of colleagues – now though again in both western countries as well as low-cost countries. New losers of globalization are created.
Of course, this is great for the bottom-line of a company’s balance sheet and maybe for its Shareholders. But what about the rest of the country? rest of the world? – it will only further grow the difference and distance between the “haves” and “have nots” and it will further spur societal conflicts that are already on the horizon – or already in our lives like Trump and Brexit.
It is on us to change this, it is on us to make sure that we take everyone with us on that journey. Again, it is not the solution to stop time, but it is time to stop spreading the difference between winners and losers, generating more losers than winners. It is on us – we in HR are the ones closest to our workforces. We need to listen and come up with a plan.
In the aftermath of the US elections, but also seeing what is happening in other countries like Germany, France, Italy, Hungary, the UK, I believe that we need to reflect on what we as Human Resources Practitioners are doing every day in our workplaces and what the effects are (supporting business reorganizations, restructurings, outsourcing, as well as our own HR outsourcing or low-cost job placement, automation, etc.). I don’t believe that anyone should now complain about a single election outcome in the US or of raising right-wing parties in European countries or of Brexit. Are we and can we really be surprised about that? – maybe if we have lived in our own bubbles for the last few years, but not truly when we think about what we in HR have done, supported, paved the way for in the last years: In essence, more and more lower qualified jobs have become obsolete or moved to low-cost countries. Don’t get me wrong, I don’t want to say that we have done things wrong or are the sole cause of what has happened in society – and I don’t believe that we need to justify what we have done. I believe we had sufficient supportive reasons for it. However, I believe that we are an integral part of the picture – and can and need support making it right again.
Now, what I want to say is that we probably have not looked at the societal impact of what we were doing. I strongly believe that we are splitting the workforce every day. Splitting it into the ones that can participate and the ones that can’t or are even ousted. Technology is a great enabler of our every day life – also at work. It is though also an instrument to split the workforce.
Let’s take the rise of the computer as one example with which the current revolution started – slowly at first, but now more rapid than ever. With the “normal” PC coming into the workplace, more and more activities could be dealt with via Computer – and you did not need an employee for it anymore. The normal computer has taken workplaces and transformed employees into unemployment.
But it is not only about “losing” your job. Let’s take Social Collaboration as another example – Social Collaboration is how we get things done at work now, or at least when we are young and grew up with it. But what does Social Collaboration do to Baby Boomers or Generation X colleagues? – No offence, but they are truly used to different ways of working and have a hard time to adjust, if they can. Social Collaboration can in fact alienate from the workplace. If you cannot participate, you are separated and slowly lose touch with your workplace, with your work.
And there are many more of these examples where I believe that for good reasons, we in HR changed the way our company operates, but maybe did not always think about the colleagues that we leave behind. And after all, I believe that being left behind at work or even losing your job is one of the main impacts or factors that places people on the losing side of Globalisation. It is explainable – it is man-made, and now we should not complain that these former colleagues or still colleagues that have lost touch and connection are unhappy and protesting. Inclusiveness at work is not only about the usual topics, it is also about technology.
BUT, in the same way we moved these colleagues to the other side, we can and should and need to move them back onto the winning side. This is the only way to keep us all together as a strong society where everyone can participate. This is the way civilised societies deal with these kind of things. It should not be about who screams louder or who is stronger – the elite (and yes, this is us) the elite needs to be the smart party here and needs to start listening and acting. Further separation and ousting of colleagues does only further nurture the fire that is burning. Globalisation, the way we live today, the way we work today, how small the world is, what we have achieved is worth fighting for – and we should fight for it. Just not in the way that these right-wing parties are doing it, not in a way that further alienates and makes people aggressive. But in a way that brings people together again – and this needs to start at the workplace. And we as HR are the ones that are responsible for the culture at the workplace, for how we work and for how we create inclusiveness.
And with this, I will start a new series of posts around how technology has shaped our workplaces in the recent years and future years to come and what the impact on workplace culture and society have been and might be. This is a topic that I believe needs more attention and explanation as it has such a big impact on our every day lives. And only when we understand, we can change something, and we can get back on a path of an inclusive society.
In one of my earlier posts (actually from quite a while ago already), I have laid out how complex HR has become and what kind of different asks, topics, areas of responsibility came into HR and bloated this function. It is massive and not everything that was placed into HR belongs into HR – but that is a story I have already written. Today I want to focus on a different issue with a similar outcome – topics and responsibilities that HR decided to take on, decided it needs to take on.
How many HR policies do you have in your organization? How long do you need to read through all of them? – or what can you do without asking HR for permission today as a people manager? I guess not much? I just recently had a conversation with some of the leading HR SaaS vendors and what they call leading processes. These leading processes are still a self-fulfilling prophecy about what HR wants to hear, wants to do and believes is responsible for instead of rethinking people processes and transforming them in to the 21st century.
Let me give you an example: Organization Management. Leading practice is supposed to still be that an HR Business Partner or similar checks and approves a new position that a manager creates. How can that be? – why is HR involved in this process in any other way than the pure back-office to make sure that all next steps are triggered correctly? Why does HR believes it owns the people costs? Does in your organization Finance approve every expense that a manager has? Does Finance own the money of the company – or do they manage it only?
I strongly believe that although we have transformed HR probably more than any other function (this topic is going on since 1997 when Dave Ulrich started all of this) in the recent years, we did not truly change anything:
- We have implemented Shared Service Centers to take on the back-office – but we did not revolutionize the back-office processes itself…
- We have installed self-services “to empower people manager” – but in the end we just ask them to do the admin work of completing forms…
- We have done away with HR Generalists and installed HR Business Partners – but in the end we just renamed them, did not change the what, how and why of their work
- We have saved millions of $ in the HR function – but today less HR people do more work and we still did not truly enable the main part of this Transformation Business Case which is the workforce
Of course, my above statements are not true to 100% of the companies and HR functions out there, but I am sure that at least two statements are true for the majority of HR departments. So what are we doing now? – is this what companies want and need? Is this what employees and people managers want and need?
Ok, let’s not really ask the “want” part of the questions, and focus on the “need”. We as HR need to scrutinize each and every HR process and have to ask us two questions:
- Does that HR process and/ or policy add any value to the company or the workforce? – and if the answer is no, just stop it, cut it out
- If the answer is yes, ask the question: Does the way we execute this process differentiate us from our competition? – and if the answer is no, just cut it out and ask a specialized best of breed vendor to take it on for you
And everything that is then still left in HR and in your company: Simplify, streamline and ask what HR’s value add in that process is. I tell you, most processes will just run fine without HR interference. I am myself an HR Pro and I believe that sometimes we take us and our function to serious and important. Let’s jointly cut it out and simplify our, our colleagues’ and the whole company’s life every day. Let’s be only where we need to be, not where we want to be.
Every company’s HR Function needs to look different, needs to be composed of different building blocks – and this is even more true when you have different industries: An HR Function for a major Retailer should be based on different building blocks than the one for a Financial Services company. This is what Consulting firms tell us and this is what we see out there – therefore, it is right.
Is that so? I see that different. The general concept of the HR Organization can always be the same. Every company needs the same foundational building blocks:
- Talent Management
- HR related Business Consulting
- HR Specialists
- HR Admin
And any company that does not see the need for any of these is definitely missing something. Now, don’t get me wrong – I don’t say that every HR Function should look the same. I am just saying that actually the differences needed are not based on industry or country or workforce – but based on firm and HR maturity.
To get the basics out-of-the-way: The way how you fulfill these 4 foundational building blocks can be very different – you can outsource, you can consolidate them into unified roles if size does not allow for separate roles, you can have contractors supporting you, etc. – but you will always have all four foundational building blocks. If not, than you miss out or… and this is where my point is coming…or you are at a different state of maturity. What does that mean? The HR function is evolving since its beginning and there is still no end to see to it – where HR will be in 10 years from now or even in 5 years from now is a very interesting question. Only thing sure is that it will look very different from today. HR is still no stable function, no commodity, but still finding its purpose and its direction, defining where it should play and where it shouldn’t. This is all influenced by many different topics like workforce expectations, regulations, management needs, etc.
HR does not stand still and won’t – and any differences that there are between HR Functions of different firms are not based on industry or size, but on maturity of both the HR Function and the firm itself. HR is 100% a support function and needs to support whatever the firm needs to be successful, and only the firm itself knows what it needs – there is no personalized model per industry or country or workforce, but there is a basic model which needs to be adjusted to the needs and maturity of a company. What is right and fitting perfect today, is wrong and too tight or too loose tomorrow. Don’t go into the trap of “if my competitor is doing it way A, I need to do it way A” – look inside your company only and listen what is needed, what is wanted – and use this to shape your HR organization, every day.