Wait-and-see approach to technology ‘risky stance’ in disruptive times: Report

Two-thirds of HR executives say profession undergoing digital transformation

While change is inevitable when it comes to digital transformation, HR leaders have conflicting attitudes and approaches in dealing with the change, according to a report from KPMG.

There’s a gap between action and inertia, with forward-looking HR leaders harnessing the resources and insights that will redefine the traditional HR model and its contributions — that means strategic plans and newer technologies such as analytics, digital labour and artificial intelligence (AI).

On the other hand, there’s a larger segment of less-confident HR leaders taking a wait-and-see approach. But that’s a “risky stance” because those making limited strides could see today’s technology disrupt them out of existence, according to The Future of HR 2019: In the Know or in the No, based on a survey of 1,200 global HR executives.

The adoption of AI and newer tech is still in the early stages in Canada, according to Soula Courlas, partner and national leader for people and change services at KPMG in Canada.

“We’ve seen this with analytics and the whole drive towards data analytics. That is something we’ve been talking about for years — it takes some time. I think it’s the conservative nature or within the DNA of our country and also within the function — sometimes it takes some time to see the value of it, before diving wholeheartedly into its application,” she said.

“Sometimes it’s a bit of ‘We don’t know what we don’t know,’ and to foresee the end game is difficult in some cases with tech, because it is continually evolving.”

Coping with and embracing change means facilitating collaboration between employees and technology, exploiting the capabilities of data and analytics tools for informed decision-making and predictive insights, and having new skills critical to success, along with meeting the needs of a multigenerational workforce, according to the report.

As the pace of change quickens, not only does HR need to transform itself, but it needs to help organizations transform as well, said Eric Beaudoin, director of future of HR, people and change adviser services at KPMG in Montreal.

“More and more, the C-suite is realizing how important their talent, their people are, and investing in it, and they’re turning to HR to help them through that change, that evolution, thinking about what they’re going to look like in the future, what capabilities they need. And that demands a lot of time.”

At the same time, HR needs to look at itself and see how it can better use technology, he said.

“And AI may be scary because some people will think ‘It’s going to take my job.’ But… it’s just going to be enhancing your job, bringing you to actually be able to do high-impact, high-strategic work that will enable your organization to fully realize the talent that they have internally and be able to stay at the top of the pyramid of Maslow where the organization will be able to fully expand, reap the full potential of the talent.”

Lack of confidence

Two-thirds of HR executives believe HR has undergone or is undergoing a digital transformation. But only 40 per cent have a digital workplan in place at the enterprise or HR level, found the survey.

And while 70 per cent of HR executives recognize the need for workforce transformation, only about one-third (37 per cent) are very confident about HR’s ability to transform itself and the workforce, while 24 per cent are less or not confident.

The speed with which HR adopts digital advances can depend on whether it’s operating from a more transactional,
traditional place, or a strategic position, said Courlas.

“If they don’t have a seat at the table or don’t have the same reception of their value at the highest levels, its gets a bit more difficult to advance from a technology perspective unless it becomes a way to minimize the function,” she said.

“Traditionally, leadership might see HR as a necessary evil rather than a real, true differentiator and a value-add, so if it’s more on the necessary evil (side), those organizations may be a bit more behind the eight ball or behind the curve when advancing in technology.”

Often, HR is seen as the gatekeeper or protector of talent, so it can become risk-adverse and those technologies can be daunting because HR doesn’t want to mess with some of those fundamentals, such as payroll, said Beaudoin.

“People can be scared by that.”

Sometimes, HR is seen as lacking vision in terms of where it wants to be, he said.

“It’s no longer just HR strategy or people strategy, it’s technology strategy in understanding what’s out there, how to be connected with others, and what you’re going to do. Because things are coming on the market ongoing so if you don’t understand where you want to go, it can be difficult because the market is large and opportunities are endless.”

However, there are many employers actively seeking to advance their technology proficiency, according to Holger Kormann, president of ADP Canada in Toronto.

“If there’s anything that’s holding them back, maybe there is a lack of confidence, and HR has not been traditionally asked to lead technical transformation; (they’ve) never been given a platform,” he said.

“More companies today expect that digital workflow to expand across different divisions in which people are a large component of it, and they are stepping up to ask HR to get involved in that. And I don’t believe, traditionally, HR teams have good technical backgrounds — obviously, it’s a very people- and human touch-driven education profile.”

HR doesn’t need to be cheerleaders for progress and digital innovation, said Kormann, but “it is incumbent on HR to have a road map on what it’s supposed to be. Some industries are fine with rather slow progress on that, but companies are not well-served having no plan because they will just be reacting.”

“It’s not a short-term project — really, it’s gradually layering on, making the right decisions for data application, making the right decisions for systems to be comfortable and being able to connect all of those things. Because they’re not all coming at once.”

Barriers to change

Forty-one per cent of respondents said workplace culture is a top barrier to digital transformation, and 35 per cent said their current culture is more task-oriented than innovative or experimental.

HR executives who believe the profession has a strategic role in their business are more likely to be pursuing digital transformation (67 per cent), compared to those who view the role as unchanged (48 per cent).

Barriers usually come up because of tension or resistance around priorities, expectations, budgets and funding, legacy behaviours, or simply just not knowing, said Courlas.

“People need that psychological safety at the bottom, and disruption… creates the perception of lack of safety. So people will inherently resist… There’s much newness all at the same time, the pace of change — it creates a resistance.”

Just 20 per cent of HR leaders believe analytics will be a primary HR initiative for them over the next two years. And only 12 per cent say analytics are a top management concern.

It’s a challenge because the ROI of the new technologies is not always clear to leadership, but there can be gains when it comes to engagement, culture and productivity, according to Darwyne Lang, president and CEO of JungoHR in Toronto.

“Technology helps with that because it frees up the HR team to spend more time on their environment and culture inside a company, including better training and better road maps and clarity,” he said.

“The biggest hurdle you’re going to find is the information is not digitized yet and CFOs not wanting to spend money… it’s a tough sell.”

“AI is not cheap, and if you haven’t digitized yet, that’s a huge step and a really difficult step to get the CFOs to move in that direction.”

Making the investment

Investments in technology have been the highest for human capital management (HCM) software (49 per cent) and cloud capabilities (32 per cent), found the survey.

Over the next couple of years, more investment is planned for predictive analytics (60 per cent), enhanced process automation (53 per cent) and AI (47 per cent), found the survey.

Just 14 per cent of HR leaders have invested in AI over the past two years, while 36 per cent have started to introduce AI.

Among those who have invested in AI, 88 per cent said the investment was worthwhile, focusing primarily on learning (35 per cent) and analytics (33 per cent), found the survey.

ADP has started using AI speech analytics for its client calls, said Kormann.

The technology listens for keywords spoken by customers, conducts a background search for knowledge content and delivers that to the agent who can then respond better to the customer.

The coexistence of digital, machines and robotics with humans is a key element of what HR needs to cater to, including the messaging to employees, he said.

“More and more, the broader executive team at any company looks to HR to offer those insights, and that could go beyond engagement, looking at attrition, seasonalities, and offering up rich interpretations back up to the business.”

But employers can’t have those insights, interpretations and analytics without a good data foundation, said Kormann.

“If that’s not done, rich insights in analytics are not going to happen for the business, so it’s also HR’s role to create that data foundation around the company workforce.”

HR also has a huge role in sourcing the right talent and making sure the company moves forward with finding the right talent profile and is attractive as an employer, he said.

It’s about finding the people with “digital DNA” who want to make a difference and don’t want to work for employers that are perceived as static or lagging, said Kormann.

“HR has a key function in facilitating that as an employer brand.”

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