FUTURE OF HR: How to Thrive in HR’s Inevitable Entrepreneurial Shift
Across the past 2 decades I’ve been involved in the HR (or People Operations) industry, there has always been a call for the function and its people to be more entrepreneurial.
HR needs to be more creative.
HR needs to innovate and spearhead an innovation culture.
HR needs to think out-of-box to remain relevant.
Now HR faces its biggest challenge yet: it not only needs to be entrepreneurial, it needs to BECOME an entrepreneur.
Simply put, its market is shrinking rapidly.
With the advent of the gig economy, there has been a not-so-gradual shift in the employment pool. Each month, more and more workers are taking the leap to becoming a freelancer or a solopreneur. This study shows that in the US, as much as 16% of the overall workers are now in the gig economy. Mckinsey is saying that by 2020, 20–30% workers in Europe and the US will be “Independent workers.”
I have seen this first-hand in STORM, where there has been more and more posts which we have ceded to freelancers, much more in 2017 than any other year. The variety of jobs outsourced is quite stunning: it’s everything from programming, front-end development, system architectural advice, design, recruitment, legal advice, audit, shipping, I can go on and on.
What does this mean for HR?
I don’t think it will mean the end of organizations as we know it, but I think a very obvious outcome is a radical shrinkage of the SIZE of companies over the next few years: drastically in the first world, where access to technology and the internet is easier, and a bit more gradually — but just as inevitable — in developing countries.
When the need to take care of large swathes of people decreases, HR departments will shrink in number. Budgets for HR personnel will deflate.
The good news for those in HR is that the opportunities for HR-related work work will not only stay constant, but might even increase.
They will just look different.
For example, instead of permanently hiring a internal HR recruiter, companies will shift towards hiring a temporary headhunter, for either a milestone-based, per-hire payment, or even a monthly retainer with fees. Those of you in recruitment would note that this has been happening for years already. But what’s been astounding to me is the sheer number of recruitment firms and consultants which have sprouted over the last few years, no doubt also fuelled by the decrease of the average employee tenure.
I remember a time when there would be maybe 6–7 recruitment firms operating in the industry. Now, there’s an overwhelming amount of them. On Linkedin, it seems I get a new request per week from a recruitment firm or solo consultant to meet with me to “discuss your needs” (man, this line has not changed in 20 years)
This represent the OBVIOUS opportunity set for HR — the ones on the company side of the equation. It’s easy to imagine becoming a headhunter, becoming an HR consultant, or putting up a HR services firm and then going after companies. After all, these are typical career paths I’ve seen for a good number of HR veterans: after 20–30 years in HR line management, they transition towards one of the aforementioned careers. (with more than one person I know making the transition because of the need to rest: I guess its also just really taxing being in HR especially of large, complex companies)
BUT…I think big opportunity for HR will come on the OTHER, supply side of the spectrum: the fast-growing independent worker segment.
As companies shrink in number, so will their “HR” related concerns and issues: there just would be less of a workforce to worry about.
Meanwhile, the gig economy at one point will comprise most of the workforce. You will have enormous swathes of people…who will be without HR support.
We have to ask the primary question then: what the heck is HR for anyway? There are a lot of definitions, but at its simplest, I’d like to think that its the function that takes care of people.
That need does NOT disappear as the gig economy takes over. An individual will still need to be guided, will still need mentorship, will still need to develop properly, will still need to be trained, will still have a need for benefits, will still need to be evaluated properly, will still need to find her next job, will still want to have a clear career path, will still have a need to collaborate, will still have a need to contribute to a higher cause.
I think this is a HUGE opportunity.
The HR practitioner can be a driving force of good in this new economy. Without being beholden to one company, I can see HR practitioners championing industry-wide best practices, become crucial moral compasses, and increase standards on how the economy takes care of its workers.
It WILL require a substantial paradigm shift for the HR practitioner, though.
To survive and thrive in this brave, new world, I think the practitioner has to embrace four crucial elements. These four are very much also informed by my own leap from HR employee to HR entrepreneur.:
A) Embrace Independence
I remember the very first time STORM received its first paycheck. I don’t remember exactly how much it was, it was a measly sum, maybe around P2000. I do remember how transformative it was, though.
It opened my eyes and my cofounder Paolo de la Fuente’s eyes. Up until that point, we were salaried workers for years and years. But getting that check made us feel the opportunity on a truly affect level: someone actually paid us for work we did!
At that point we knew deep in our bones that if we created something of value, people WILL part with their hard-earned money. This is a crucial psychological, even spiritual, leap you have to make — you can do it on your own.
We had learned independence. You can, too.
B) Embrace Sales
Any company’s lifeblood — whether it has 100,000 employees or 1 employees is sales. This is what the HR-entrepreneur will NEED to do to thrive in the new economy.
A number of HR people I know find the concept of sales a bit intimidating. Hey you know what, you’ve already been selling! A ton!
Recruitment is NOTHING but selling. Training is selling new ideas and new behaviour. Getting your boss to cough up budget for a new HR initiative is selling. Change management is a huge selling process where you try to get groups of people to follow a new process.
Don’t sell yourself short, HR practitioner! You HAVE been selling. You just need to adopt to a new audience. Don’t be afraid.
(Quick addendum: I think to reach gig-economy workers, one needs to do more than selling, one needs to embrace evangelizing. So let’s say you’ve been working in HR and you’ve developed a certain expertise in worker health and wellness thru meditation. You decide to become a meditation consultant which markets to the gig economy worker. Sounds great. You’re going to have to PROVE though that meditation is an awesome investment: not only to one company through one pitch, but to the many individuals you’re targeting, consistently. That means educating the market through blogposts, talks, interviews, etc… That means evangelizing)
C) Embrace Technology
To effectively reach out to the gig economy, you have to enter and understand that world, and get used to it.
The gig economy was created and promulgated by technology and its various platforms: Grab, Airbnb, Upwork, eLance, 99 designs, and a zillion others. Get to know these platforms and how they work.
Get to know how people are leveraging social media — the nuanced differences between the platforms, what the culture is in each.
And no, age has nothing to do with it.
D) Embrace Lifelong Learning
One of the first things I palpably realised when I made the shift from employee to entrepreneur was that I needed to constantly LEARN. With the world in eternal flux and new technologies, threats, and opportunities emerging every week, I felt I needed to make sure I would have all the necessary information for me to make informed choices and craft the right strategies.
After all, I had no other bosses to lean on to. It was sink or swim, and all the accountability was mine. When I started talking to clients and prospects for the first time as an HR entrepreneur, I also wanted to make them FEEL they were dealing with someone who knew what he was doing — so I tried my best to keep up and be as competent-sounding as I can be. This demanded that I constantly learn: about the industry I’m in, its trends, how to run a company, new technology, and so on.
For the first time in my life, I started to read books to LEARN. (what a concept!) I started to ask people out for coffee to LEARN and exchange ideas. I started to be a collector of learning opportunities: events, blogs, audio books, and so on.
I realized this wasn’t just a one-time thing — for me to continue to be a entrepreneur I also had to continue to learn. I had to become an infinite learner.
There you have it…
It really has been a interesting process — seeing how the HR function has shifted and changed over the course of the last 20 years. It will be FASCINATING to see how the function will evolve in the next few years.
PSS: Our new STORM project, ALLCARE, is a direct result of this new gig economy megatrend we have been seeing and how its affecting the workforce. ALLCARE is a project which aims to supply the independent worker with the best benefits, usually reserved for larger companies. If you’re interested to learn more, do join the conversation at www.allcare.io