Is the Future of HR — AI?

The next page of the HR story
By Dr. Reg Butterfield

Introduction

The subject of artificial intelligence has rapidly entered the conversations of societies across the developed world, whether as business owners, workers, governments, or other societal groups. [For example, the public facing version of ChatGPT reached 100 million users in just two months and was discussed extensively in both printed and online media.]

This media frenzy has created an air of positive anticipation with people investigating opportunities on the one hand and concern and fear about the changes to work and society on the other hand. Both sides agree that whilst the future outcome of the AI development and implementation is uncertain, it will impact just about every aspect of society and work as we know it today. Some governments have already started developing legal frameworks in an effort to reduce any potential negative impacts as they are forecast or come to light during use of AI; the US and EU are but two examples.

The legal frameworks will always suffer from the tensions between the societies they are designed to protect and the need for organisations to gain optimum use of AI. These tensions naturally extend into the role and operations of HR in all sizes and types of organisations.

Today’s newsletter aims to identify how AI can be used by HR as a means to bring about its wish to be more a strategic business partner as opposed to the more commonly known role of delivering a range of linear specialist people related activities and processes.

During our deep research into organisations, we also examined the nature of work itself in some detail. One of the outcomes we noticed was the varying mental approaches associated with the types of activity required for different forms of work. In our experience, this is seldom considered when identifying different or new ways of delivering work activities such as HR. We argue that this clarification of the type of behaviour required in the work of HR is a critical component of the decision-making process when deciding the role of AI in HR’s work.

It is challenging for us to bring such a complex subject into the form of a newsletter that is read by a wide range of people with differing interests and experience. The subject is so important for the success of organisations that we needed to take a wider perspective of the issues involved as opposed to merely advocating the subject areas suitable for technological support or change. You can read this type of list on hundreds of websites courtesy of Google.

With this in mind, we have broken the subject into two newsletters. This edition provides a background discussion of the subject and in our 20 August edition we discuss numerous ways of using AI to introduce and manage a new approach to the delivery of HR in organisations.

We posit that if organisations are to truly understand what is needed to support their people to achieve their desired outcomes, they need to start at the process of the work that produces those outcomes. Once this is undertaken, it is only at this stage that the necessary organisational support and associated AI can be understood and developed. This can then help to ensure that the work is supported and undertaken effectively. Starting from the HR activities themselves will only re-invent the existing, often using AI to replace people where possible.

It is important to identify whether an equivalent of the current HR role is needed, or some other approach needs to be developed, if optimum use of AI is to be achieved.

This newsletter is divided into six sections, each focusing on a different perspective of the subject of HR that we believe is important to understand when considering the use and impact of AI on the role and working of HR:

1. Clarification of what is meant by the term AI

2. Beware the sellers of snake oil — some background about HR and technology

3. The role and models of HR — challenging traditional approaches

4. A different perspective of HR — administrating, optimising, and connecting activities

5. Where to focus HR

6. A taster of the use of AI in HR

What do we mean by the term AI?

Before going into any discussion regarding AI and its impact on HR, it is important to briefly describe what AI means. For readers who have a clear understanding of the difference between artificial intelligence (AI), machine learning (ML) and digital assistants (DA), we suggest missing this short, indented section.

Whilst there is not just one set of definitions for these terms, they all lead to the same overall understanding of the similarity and/or difference of what AI, ML, and DA represent. For convenience we use the following descriptions from Oracle’s Human Management Capital Cloud:

Artificial intelligence (AI) is an area of computer science that emphasises the creation of intelligent machines that work and react like humans.

Machine learning (ML) is a subset of AI that is more narrowly focused on how computer programs interpret data and learn. Instead of relying on a person to code a program to complete a task, ML can recognise patterns and make predictions that can inform the AI. For example, an ML system can catalogue employee behaviours to evaluate whether they may be departing for a new opportunity.

In short, AI encompasses all of the ways computer programs can make intelligent decisions, while ML focuses on how AI collects and uses data that’s not explicitly programmed by a person.

Digital assistants (DA) are conversational interfaces where users can ask questions using their own words. For example, digital assistants can help new hires complete onboarding tasks and provide guidance on what to do next, and they can help employees quickly get the answers they are looking for, without having to scour various documents or web pages and take up valuable work time.

Digital assistants are built with ML algorithms to understand natural language and the intent of a user’s question, and to provide intelligent guidance to complete required steps.

“Generative AI” is causing a lot of the debate around the subject and use of AI. It is a specific subfield of artificial intelligence that focuses on creating models and systems capable of generating new data that resembles a given dataset. These models learn the underlying patterns and distributions in the training data and can then generate new samples similar to the ones they were trained on. Generative AI models are particularly useful for tasks such as image synthesis, text generation, music composition, and other creative applications.

AI is not new albeit the subject is now on the agenda for organisations worldwide. In more recent history the idea of AI was planted in people’s minds via science fiction writers and early robotic images such as the “Tin Man” of Wizard of Oz and the humanoid robot in the film Metropolis (one of my favourites). Around this time the famous mathematician Alan Turing was exploring the mathematical possibility of artificial intelligence. He stated that humans use available information as well as reason in order to solve problems and make decisions, so why can’t machines do the same thing? Young people today know the answer and take it for granted, and yet at the time of asking the question, the computing function of memory needed to demonstrate its feasibility was not there, it was also extremely expensive [in 1950 leasing a computer alone cost $US 200,000 per month based on 2010 values].

If we fast forward a few decades, we reach the period of the 1980s when AI was re-energised through algorithmic toolkits and private finance. The birth of expert systems in business was the result and a major project in Japan, “Fifth Generation Computer Project”, was set up and funded by the government to explore and capitalise on computing. Unfortunately, it failed to meet its objectives and yet created a whole raft of young energetic engineers and scientists who took their ideas forward.

Today, there is no organisation that does not use or benefit from AI in one form or another, even at its most basic level. In one of our earlier papers (Futocracy and a New form of People Management, 2021) we discussed HR having access to as many as 75 different technology tools designed specifically for HR and the number of apps was estimated to be 2,700. At the time, these tools were predominantly based on Machine Learning (ML) and Digital Assistants (DA); the game has now changed with AI and Gen-AI entering the arena at affordable prices.

Beware of the Sellers of Snake Oil

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The claims made by suppliers of tools and systems as to what different AI, ML, and DA can do and how they can support or improve the role and activities of HR are very seductive. Particularly for those organisations going through a significant process of change or direction of their business. In our 2021 paper we discussed some aspects of what these tools can do and raised a note of caution, particularly for small to medium enterprises (SMEs) regarding compatibility, connectivity, and cost of the larger systems. The main terms associated with HR support systems are:

HRIS, or human resources information system, is software that allows users to electronically manage, track and automate core HR needs.

HRMS, or human resources management system, is software that combines necessary core HR functions into one integrated suite, allowing users to perform tasks, analyse data trends and create reports.

HCM, or human capital management, describes comprehensive HR software suites. These are meant to handle the entire employee life cycle, from attraction and management, to development, engagement, and retention.

Unlike HRIS and HRMS software suites, which typically stick to core HR needs for SME businesses, HCM software suites cover a wide range of core and strategic HR functions for even the largest enterprises. All three approaches, HRIS, HRMS and HCM are capable of a range of analytics and reporting capabilities.

One of the most important aspects of the powerful technologies available for HR is its ability to be personalised and customised. This means that HR can potentially move from a primarily linear systems process-oriented organisation to a more individually focussed organisation. In doing so, become more human in the process!

This more human focus comes about because the HR professionals can be removed from the repetitive tasks that can easily be performed by the software and thus enable them to focus on strategic areas and real human contact. However, some people see the technology as a threat that reduces the number of people employed in HR professionally, which is also reinforced by those who see and write about AI generally in such terms.

It would be foolhardy to ignore the voices of concern. Before introducing and implementing any major form of technology, it is advisable to first make sense of what the role and outcomes of HR will be once the technology is implemented.

Commonly stated attributes of AI for HR

Much is being promised in terms of how AI can transform HR. The journals, on-line magazines, social media sites, and provider rhetoric tends to focus on the following areas:

· Automation of tasks

· Better talent acquisition

· Faster and personalised employee onboarding

· More efficient and effective employee training

· Employee self-service

· Higher employee retention

This all looks seductive and can make a big difference to the way that HR is set up and run, particularly for the more traditional specialist linear segmented approach used by the majority of organisations.

Yet AI can be used to develop and support a new range of thinking about the relationship and management of the people populating an organisation and how they deliver the desired organisational outcomes. This then challenges what the HR function needs to be and how it works.

The Role of HR

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When researching content for this newsletter the most difficult part was to find a definition of what is meant by the term HR. Our searches identified what HR is alleged to do or should do in specific fields and yet a concise description of what HR is, alluded us. The nearest to a definition was the following:

“In simplest terms, the HR (Human Resources) department is a group who is responsible for managing the employee life cycle and administering employee benefits.”

Some others were on a similar line such as, “Human resources (HR) is the division of a business that is charged with finding, recruiting, screening, and training job applicants. It also administers employee benefit programs.”

The sources of these quotes don’t really matter here because we solely use them as an example of how a lack of real clarity about what the HR role is may account for the plethora of models that have been developed and associated with HR to bring together people-related activities over the last century or so.

The activities attributed to the responsibility of HR seem to be one or more of the following, depending on the size and type of organisation: Recruitment and Hiring; Employee Onboarding; Compensation and Benefits; Performance Management; Employee Relations; Training and Development; Policy Development; Employee Engagement and Retention; Employee Motivation and Retention; Legal Compliance; Strategic Planning participation; and Change Agent.

HR Business Model

In line with other organisational roles such as sales, marketing, R & D, finance and so on, the business model of HR has been the subject of much research leading to a range of business models, both in structural and operational forms. It is not our intention to describe them in any detail as there is an abundance of information about each one on the Web. However, we list some of them below as an indication of what has been promulgated over the last Century. They are in no order of importance or sequence of introduction as each model is still in use in some form in many organisations today:

The Standard Causal Model of HRM

The AMO model — Ability, Motivation, Opportunity
The 8-Box Model by Paul Boselie
The HR Value Chain
The HR Value Chain Advanced

The Human Capital Theory

Competency-Based HRM
The Harvard Model of HRM

High Performance Work System
The Guest Model
The Warwick Model
The Ulrich Model

However, the Ulrich Model is still probably one of the most popular today. It is known as the HR Business Partner Model and was developed by Dave Ulrich, an influential HR thought leader. This model focuses on transforming HR from a traditional administrative function to a strategic business partner and focuses on three operating groups within the HR function: Strategic Business Partner; Centres of Excellence; and Shared Service Centre. These are based on four key roles that HR professionals can adopt:

1. Strategic Partner: HR professionals in this role align HR strategies with the overall business strategy. They work closely with senior management to understand business objectives, identify human capital requirements, and develop HR strategies that support organisational goals.

2. Change Agent: HR professionals act as change agents by facilitating organisational change initiatives. They play a critical role in managing change, whether it involves restructuring, mergers and acquisitions, or introducing new technologies. They support employees through transitions and help create a culture of adaptability.

3. Administrative Expert: While the model emphasises strategic contributions, it acknowledges the ongoing need for administrative functions. HR professionals in this role ensure compliance with labour laws, handle employee records and payroll, administer benefits, and manage day-to-day HR operations.

4. Employee Champion: HR professionals act as advocates for employees, supporting their well-being and promoting a positive work environment. They focus on employee engagement, retention, and satisfaction by implementing initiatives such as performance management, employee recognition programs, and work-life balance initiatives.

The relevance of the Ulrich Model is arguably reinforced by similar approaches by the major consultancy companies such as the EY Business-led HR model; Deloitte High Impact HR model; KPMG model based on Treacy and Wiersema’s framework; McKinsey Agile and Talent Value Leader model; and Mercer’s Next Generation HR model. (The following overviews are a summary drawn from different critiques of these HR models.).

EY’s model includes Communities of Practice (COE), People Solutions and Services (Shared Services) and Business Advisors (HRBPs). The model is very comprehensive, yet confusing to understand how the model can be applied.

Deloitte lists three model elements that correspond to the New Standard: HR Operations Services (Shared Services), Communities of Expertise (COE) and Business HR (HRBP). In an effort to be comprehensive the model leads to some confusion about how the 15 elements interact.

KPMG argues that HR structure should be organised around the company’s strategic driver. They use Treacy and Wiersema’s Value Disciplines framework of Customer Intimacy, Operational Excellence or Product Leadership as those drivers. As a result, KPMG’s HR Architecture feels more like tactical choices within an HR strategy that have no impact on structure. For those unfamiliar with the Treacy and Wiersema framework, it presents a theory for how companies can win in the marketplace but it’s challenging to understand the specific links to HR structure.

McKinsey’s model calls for creating Talent Value Leaders (supercharged HRBPs — human resources business partners) and putting analytics at the core of the HR structure model. Their structure has a team of interchangeable HR resources who would be dynamically deployed based on incoming needs. In a sophisticated HR environment, the model has potential. However, most organisations are nowhere near the maturity level needed to execute this model and can lead to inefficient use of resources.

The Mercer model also retains the core elements of the New Standard but adds in People Development Managers whose job is to coach managers through review and development tasks. They sit outside of the HR function and are not accountable to HR nor is there a way suggested for them to work with HR. This model calls for adding resources because managers aren’t doing their jobs, rather than holding them accountable to develop their team.

The different HR models developed over the last Century illustrated above serve to indicate that HR has been the subject of much debate about how it should be set up in structural forms. It seems that the model is pretty much fixed (Strategic Business Partner; Centres of Excellence; and Shared Service Centre.) and yet how the systems work is not presented in any detail. The emphasis is still on a structural approach that fits within a traditional hierarchical organisational business structure. This lack of discussion around how to implement such models may be one of the reasons that progress in bringing about change in the way that HR works has been slow for the majority.

It’s the Mortar, not the Bricks

However, to borrow the term coined by the Talent Strategy Group (TSG) in their report entitled, “It’s the Mortar, not the Bricks: The State of HR Organization Design & How to Bring Your HR Structure to Life” (May 14, 2020). We argue that to gain the maximum advantages offered by the use of AI in HR, it is time to break away from structural discussions and challenge the operating assumptions around HR.

We found a multitude of discussions around the design and structure of HR and yet little about how to operate HR effectively. As the TSG report shows, it is the “bricks” that frame the structure, but it’s the “mortar” that holds the bricks together and ensures a stable and supportive foundation. They identify two areas where great quality mortar helps ensure that an HR design delivers the expected results; these are ‘How HR Operates’ and ‘HR Quality’ (pp., 5 & 6).

If we are to examine and make sense of the “mortar”, then maybe we need to re-visit the definition of HR. Casting our net even wider we came across another form of definition for HR and HRM (human resources management), which we quoted in our 2021 paper mentioned earlier.

“Human resource management is the strategic approach to the effective management of people in a company or organization such that they help their business gain a competitive advantage. It is designed to maximize employee performance in service of an employer’s strategic objectives.”

This definition is certainly more focused towards the “mortar” side of the business than the definitions quoted earlier, which focused more on the “bricks”.

However, is HR the most appropriate function for the maximising of employee performance? We suggest that the answer needs to be no. It is the role of the management to achieve the relevant outcomes. The role of HR is to work with them in order to identify and co-create the skills required for successful outcomes. This means identifying what needs to be done and how best can it be done. It is also the manager’s responsibility to provide the necessary environment to support the successful completion of those tasks, not HR personnel. We argue that it is a collaborative relationship-based process between HR and management, particularly as the traditional specialist HR tasks (not skills) are being challenged by the introduction of more sophisticated technology.

The separation of the traditional day-to-day specialist roles and work of HR is an important part of identifying the role of HR prior to aligning the appropriate AI, ML, and DA to their work. We asked ourselves, “to what extent is HR the ‘driver’ of these specialist activities (the traditional approach) as opposed to ‘enabling’ the workforce and management to use support methodologies and processes provided by HR in collaboration with management?”

With this shift of focus and emphasis from “HR driving” to “HR supporting”, we suggest a different approach to defining the role of HR that emphasises the “mortar” and its application.

“The role known as HR or HRM is to co-create successful business outcomes with management. This is achieved through identifying and aligning the people and skills necessary to undertake the tasks that need to be done. It does this through the application of a collaborative relationship between HR, management, the workforce, and AI in its different and emerging forms.”

This different perspective of HR and its relationship with the rest of the organisation is one of the drivers for the need to reconsider how HR services and support are delivered.

Where should HR focus?

If the HR role is to be a “strategic partner”, we suggest that it is important to consider what that means when compared to the standard “stakeholder” approach.

Partners take an active part in HR’s business model, through stable and collaborative work relationships. They help implement it and put it to work. On the other hand, HR’s stakeholders can influence or have interest in HR’s activities, although they do not directly participate to achieve the strategic objectives of HR. The stakeholders are more interested in their needs being met, often on their terms, or being directed by HR to do or not do something, the “HR policing role”.

This indicates that the stakeholder approach is a power-relationship approach, whereas a collaborative partner approach is based on mutuality.

Whilst we can understand the term stakeholder in its widely held definition that readers will be aware of, we use the following to make sense of what the term collaboration means in the context of this discussion about HR using AI as part of its role in an organisation.

“Collaboration is a working practice whereby individuals, entities, or organisations, work together for a common purpose to achieve a business benefit.” “A business benefit in this context is anything that supports and/or enables the business to achieve its purpose and associated strategic objectives.”

There is no doubt about the importance for HR leaders to have a deep understanding of the financial, operational, and functional aspects of their business if they are to be a strategic business partner. At the same time, they should be able to comfortably discuss with any business leader how that leader’s area operates and the key drivers of success.

However, the relationships between organisations and the workforce have changed significantly over the last few years. HR leadership must be well versed in those changes and their impact. Some of the issues are well documented and include:

· Poor levels of employee engagement.

· More than 50% of employees are “quiet quitting”.

· Employee stress remains at record high levels.

· Employment opportunities are rising.

· Over half of employees are considering leaving their job.

· Organisational culture and environment are the main changes employees would make.

· Recruiting processes are increasingly a cause for concern by candidates.

· Development opportunities are important for attracting and retaining people.

· Skills shortage in most areas of work: knowledge workers, blue collar, services, and trades.

· Demands for a healthier work-life balance.

· New hybrid working arrangements and associated practices.

· Sustainable business practices and other social demands.

· A challenging economic environment with resource shortages of almost all types.

A holistic business approach

The challenge for HR is to bring everything together to support and enable the management to achieve the organisation’s purpose and their strategic goals. This does not mean a new organisation design is necessarily needed. It does mean that a new way of thinking and working is required to bring about a suitable approach on how to deliver a complex, multi-faceted business in a changing internal and external environment.

Whether this means a new HR business model is needed will depend on the current maturity of each organisational HR approach. For example, if the HR business model is a traditional linearly specialised approach with ‘functions’ such as recruiting, training & development, health & safety, employee relations, and so on, it will almost certainly need to re-think its approach and organisational set-up. Experience of such linear approaches indicate real difficulties in providing flexibility of both thought and actions needed today. On the other hand, if it has a more team focussed approach working as part of an organisational network of collaborative support activities, then it will be easier to adjust the way it works because their existing approach already requires flexibility, collaborative minds, and associated behaviours; it is more a re-focusing of how to support the organisation.

Preparing HR for using AI

In our 2021 paper we outlined the history of HR and how the role has emerged and grown over centuries. The growth emerged in parallel with, as a result of, or even a driver for changes within the relationships between societies, organisations, and their workforce. Figure 1 illustrates this movement from purely administrative activities through to the role of arbitrators and facilitators that became prominent during the latter half of the 20th Century, albeit the other activities also continued as part of the role of HR. The question we faced at the end of the 20th Century was the likely direction of HR during the 21st Century.

Figure 1: The expanding role of HR.

In our 2021 paper, we provided a case for HR increasingly being involved in creating social collaboration throughout the organisation and moving into a yet to be clarified role within the emerging network collaboration that organisational designs were moving towards (see figure 2).

Figure 2: Emerging roles for HR in 21st Century

The social collaboration within organisations is an important phase in breaking down the ‘silos’ that have developed as a result of traditional hierarchical, functional approaches to work and management. This breaking down of silos is essential for the flexibility required to cope with the behavioural changes necessary to maintain competitiveness in a world of changing social and business priorities, led mainly by comprehensive technological advances. Social collaboration is also a process of ensuring equality of treatment irrespective of the area of focus, be it racial, gender, or other areas of human behaviour and interaction; this area of HR work has taken on a major emphasis, both reactive and proactive, thus far in the 21st Century.

Figure 3: illustrates that these different forms of work and relationships undertaken by HR require a clear understanding of the role and application of three types of activities within HR: administrating, optimising, and connecting activities.

Figure 3: Three main types of HR activity

When we mapped these on the history of HR it was interesting to see how viewing the traditional HR roles from these different forms of “brain” activity (see figure 4), each of which is a different process of sensing, seeing, thinking, and acting, provided a novel perspective. In doing so, it is possible to gain an alternative insight as to the needs of those for whom HR provide their services, as well as the providers of those services.

Figure 4: Three brain activities for HR operations

At the same time, the rapid improvements in technology and artificial intelligence mean that how such support is provided is more open to alternatives outside of traditional HR thinking and activity than ever before. For example, outsourcing is now more manageable and can be controlled by the outsourcing organisation in ways never available in the past. This means that many of the previous difficulties of quality, cost, maintenance, availability, flexibility, etc., encountered in outsourcing of services can be resolved instead of retaining or bringing the activities back in-house. Software as a service (SaaS) is one example of such a change; organisations increasingly move from in-house services to outsourcing design, maintenance, and achieving 24/7/365 instant user access at both fixed sites and remotely on demand.

Just as hybrid forms of work are being introduced and novel ideas on how they can work effectively are actively sought, we suggest that it is now time to re-invent the roles, skills, activities, and thinking traditionally associated with HR. In doing so, it is necessary to start with a blank piece of paper and not re-invent the existing. Even worse, translating and developing the different forms of AI, ML, and DA into outdated processes and behaviours.

Currently, technology is still better at administrating and optimising activities than it is at connecting activities in the context of HR activities. This is not to say that it is optimal to devolve the first two functions (administering and optimising) to technology and concentrate on the last activity of connecting things for human activity. If only it was that simple. However, it does provide some impetus for exploring the subject of technology versus human roles in the activities and processes currently undertaken by HR or HRM more closely than perhaps organisations do, currently. So often in change situations it is a matter of moving things around as opposed to thinking and acting differently. We suggest that it is time to reconsider how our brains view the processes and activities of administering, optimising, and connecting in a different light so that the strategic side of HR can be supported more effectively.

HR working Strategically Smarter

Earlier we mentioned the Ulrich business model for HR, which encourages HR to be a “strategic business partner” with the C-suite as well as becoming a “centre of business excellence” and to operate with a “shared service centre” approach.

In this part of our newsletter, we briefly describe what these mean in operational terms and then use an example to demonstrate how using AI can radically change and improve HR’s approach to work.

Strategic Business Partner

Overall, the concept of a strategic business partner, as advocated by Dave Ulrich, highlights the importance of HR professionals playing an active and strategic role in driving organisational success. By aligning HR strategies with business strategies, providing strategic advice, driving change initiatives, and measuring HR’s impact, HR professionals can contribute to the organisation’s overall performance and be seen as valued partners in achieving strategic objectives.

This is a real challenge for HR to achieve, particularly in SMEs that do not have the people resources or experience to undertake the demands placed by such a role. In entrepreneurial start-ups it is easier because it is part of the effectuation process that they employ almost as a necessity to survive and progress.

Experience of decades of using “Strategic Human Resource Management” (sHRM) has demonstrated the difficulties in making assumptions about the needs of the workforce being aligned with those of the organisation, which has proven to not be the case.

An important premise of sHRM is that it fosters enhanced commitment and that employees derive a level of personal and material fulfilment upon the achievement of organisational goals. In practice, the unitary experience appears to be the exception with studies indicating a general decline in job satisfaction since the 1990s, low overall levels of employee engagement, and the emergence of substantial job inequality.

A danger here is that compliance can substitute for commitment in an environment where ‘high performance’ work is largely a function of performance management and market discipline. High performance strategic alignment can therefore translate into employees being judged as objects to be examined, benchmarked, and modified in the task of realising business strategy.

If sHRM creates an environment of compliance as opposed to motivation and engagement, can AI help to change this situation? To try and answer this question, we now move to the second part of Dave Ulrich’s model, “centre of business excellence”.

Centre of Business Excellence

When Dave Ulrich refers to a “Centre of Business Excellence,” he is describing a concept related to organisational design and performance improvement. A Centre of Business Excellence (CoBE) is a centralised unit or function within a company or organisation that focuses on driving and promoting excellence across various areas of the business. The primary purpose of a CoBE is to identify and implement best practices, standards, and processes that can enhance the overall performance and competitiveness of the organisation. It serves as a hub of knowledge, expertise, and innovation, bringing together cross-functional teams to collaborate and develop solutions that can deliver superior results.

Overall, a Centre of Business Excellence serves as a strategic enabler, promoting continuous improvement, knowledge sharing, and innovation across the organisation. Its focus on excellence helps the organisation remain competitive, flexible, and adaptable in a rapidly changing business environment.

Readers of our work on New Era organisations, and Futocracy in particular, will be familiar with elements of this approach being included in what we call the “Purpose Alignment Team”. For this to be effective, we argue that this is a wider group of people, and that HR is but one member of that group. However, the “shared service centre” aspect of the Ulrich model, which follows is very much part of the future of HR and its use of AI, we suggest.

Shared Service Centre

Dave Ulrich refers to a “shared service centre” in the context of organisational design and efficiency. A shared service centre is a centralised unit within a company or organisation that provides support services to multiple business units or departments. Its primary objective is to consolidate and streamline common functions or processes that are duplicated across different parts of an organisation. These functions can include administrative tasks such as human resources, finance, IT services, procurement, payroll, and customer support.

By centralising these services into a single unit, the organisation can achieve several benefits. Firstly, it eliminates redundancy and duplication of effort, allowing for cost savings and operational efficiency. The shared service centre can leverage economies of scale, standardised processes, and specialised expertise to deliver services more effectively.

Secondly, it promotes consistency and standardisation across the organisation. Instead of each department or business unit having its own way of handling certain tasks, the shared service centre establishes standardised processes and procedures, ensuring a more uniform approach.

Additionally, a shared service centre enables better resource allocation and specialisation. Instead of each department having its own dedicated staff for support functions, the centre can pool resources and allocate them based on demand and expertise. This allows the organisation to optimise resource utilisation and provide specialised support when needed.

Overall, a shared service centre is a strategic approach to organising and delivering support services within an organisation. It aims to improve efficiency, reduce costs, enhance consistency, and leverage specialised expertise, ultimately enabling the organisation to focus more on its core business activities.

Whilst this approach is very much in line with the hierarchical approach to organisational design and management, we suggest that it is also a viable approach for New Era organisations that are increasingly team-based networks of networks.

The aim of strategically delivering and organising services is in line with the principles of New Era organisations although they tend to design and manage them in a different way to traditional hierarchical organisations. For example, the Futocracy New Era design and management system typically uses a network approach that can form dedicated groups of support activities and/or integrate them within the network of operational teams. Irrespective of the approach used, the aforementioned Purpose Alignment Team ensures efficiency, consistency, economy, and optimisation across the organisation based on the Principles of Futocracy.

The Ulrich model and AI

Whilst the Ulrich HR business model focuses on HR taking on a more strategic perspective, which makes sense at the leadership level of HR, we need to learn from past attempts at operationalising this link between business strategy and the people who do the work. Prior to AI developing to its current level of complexity and ability, this was a difficult task as it relied on old traditional approaches and knowledge about strategic goals and motivation theory. In application it relied heavily on individual managerial interpretations throughout the organisation, even if the performance management processes were clear and mandatory. Whilst the theory may have made sense decades ago, it has little or no credibility today.

With a better understanding about how people react in different circumstances today and the changes in societal needs and influence, we can approach this challenge differently. It is about encouraging commitment and engagement of people as opposed to compliance.

Instead of using the sHRM approach of compliancy we can use AI to bring alive the two major areas of Ulrich’s model: Centres of Excellence and Shared Services Centre. This requires HR as a service provider connecting with the workforce differently. It is through proactive support and provision of services using different forms of AI that HR can encourage greater autonomy and impact by those doing the work.

In this way, we move from a compliance approach to one more akin to bringing about an engaging environment that values people, encourages collaboration and mutuality.

Reflection

Before moving into our final section for today, it is important to pull together the essence of the previous sections of this newsletter.

After describing what AI is generally and then in the context of HR and organisations, we set out the numerous HR business models that have been designed to bring together the complexity of the HR roles and activities that have developed over centuries. In doing so, we highlighted that there seems to be an overall agreement that the Ulrich HR business model of three elements, Strategic Business Partner; Centres of Excellence; and Shared Service Centre, has become the preferred generic approach. However, there is scant detail about how to implement such a model, albeit online commentary indicates that the move towards the model is not an easy process, and that the traditional linear specialist approach still dominates.

Our short overview of the history and activity of HR led us to the conclusion that there are three types of work that HR needs to understand and engage in: administrating, optimising, and connecting activities. We argue that this is a different perspective of the work of HR, which enables us to consider things differently when identifying the role and use of AI in the work of HR.

Research and history indicate that the strategic expectations of the organisation and the operational application of the workforce are not well aligned. The less than productive behaviour of the workforce is said to be a result of many issues around motivation, engagement, and expectations of what work means. We listed some of these issues, such as quiet quitting, that are probably symptoms of underlying causes, which we need to remove or repair; AI can assist in this process.

We described the Ulrich model in outline and commented that its application is a major challenge for organisations and yet, the strategic alignment element can be achieved to a large degree if the workforce is supported using AI in terms of capturing and providing the ideals behind the centre of excellence and shared service centre concepts. In order to achieve this aim, we need to also consider the relationships necessary between the three areas of administering, optimising, and connecting activities.

Harnessing AI to provide a New Era HR business model

In our forthcoming 20 August newsletter, we will provide a range of examples of how HR and AI can work together to meet the demands of the three elements of HR work: administering, optimising, and connecting. The following is a ‘taster’ for this forthcoming discussion.

Bots

There are different types of bots that can be used and the most popular to date is the chatbot. Chatbots are used for a variety of purposes across different industries and applications. Here are some common uses of chatbots:

Customer Support

E-commerce

Customer Lead Generation and Qualification

Virtual Assistants

Booking and Reservations

Information Retrieval

Language Learning

Entertainment and Gaming

Internal Communication

Surveys and Feedback

One of the important characteristics of chatbots is that they can be used across various organisational functions or as stand-alone tools depending on the specific needs and implementation strategies of each organisation.

When searching how HR organisations use chatbots we found that they are almost always used for specific elements of the HR specialisms such as recruitment. In almost all cases, the chatbots are used in isolation within a specialist area and to support a particular HR function or process; recruitment is probably the most popular currently.

Chatbots have enjoyed a bumpy ride with users as they have been limited in what they are set up to deliver, which in most cases is very basic support in providing information and search facilities. However, this is now changing rapidly as the use of more sophisticated deep learning AI is increasingly being added to or replacing the basic machine learning designs to improve and broaden their use.

As this improved deep learning AI becomes available, voicebots have entered the commercial market in two main areas, informational and conversational. Whilst the former can be seen on TV as newscasters, weather reporters, information givers, and so on, the latter has developed to a point where organisations are now starting to use them in a wide range of business areas. Currently, voicebots can be used without images, such as in Siri and car control systems, or in four visual formats, three of which are virtual humans: digital twins, digital people, avators, and deepfake, which is an adaptation of an existing media. The format used depends on the objective of using the voicebots, with the preference moving towards virtual humans in areas that include media production, customer support, marketing, as greeters in public spaces, and more.

The important point with all uses of AI is to ensure that it is designed to meet the needs of the end users. Historically, poor quality of response or interaction of AI with users has led to frustration and loss of potential clients or recruits. In most cases, some form of human backup response has been available to compensate for this, access to which can also be frustratingly difficult at times. Back-up services in this way is not a good use of the time and skills of the workforce. This means that how AI is used and the level of quality of service it provides is paramount for success.

The potential use of Generative and deep learning AI is a long way away from the current predominant use of AI, ML, and DA in HR organisations. HR’s use of AI is focused more on the process of enhancing the efficiency of the HR department by automating standard and repetitive HR activities (ML), to reduce the cost and time they spend on manual HR planning and processing. AI can do much more than this if management think differently and move beyond the traditional linear specialist services approach.

In our next article we will be raising the use of AI to a higher standard and level within HR. We will provide examples of how it can free up the expertise within HR to focus more on the activities that need real people to bring the strategic aims of organisations alive. At the same time, get to the heart of the problems that are creating the symptoms we displayed earlier, such as lack of engagement, quiet quitting, and more.