How HR can help transform a culture
The role of HR in cultivating a human-centered organization
COVID-19 introduced a “crisitunity” (to quote Homer Simpson) for organizations: it forced them to get creative, do things differently, and drive innovation at speeds never thought possible (because of an economy that quite literally changed overnight). Now organizations need to operationalize new ways of working and bring people along in the process. But change is hard, and even more so at the present pace required. And Human Resources (HR) is often expected to lead this change.
What’s really different today?
This isn’t the first time we’ve experienced disruption. In fact, disruption — over the last 50 years — is our only constant. Still, the operating model of HR may not have changed that much over the last 50 years (at least, not as much as the change that business has experienced).
Early HR, born in the 1970s due to increased employment legislation, traditionally focused on compliance and risk mitigation. Today, HR is expected to balance the competing needs of compliance, legal, and benefits requirements with a growing list of added imperatives — talent acquisition, employee experience, HR systems and technology, health and wellness, equity and inclusion — while still often being viewed as a cost center rather than a strategic partner to the business. These expectations are challenging to deliver on even for the most mature HR organizations.
Over-indexing on any one of these areas can come at the expense of the people your organization is serving — because the opportunity cost of not focusing on people, their needs, and their experiences is increasingly greater in a post-COVID business environment.
In working with organizations of all types during this pandemic, we have seen that the business problems they are trying to solve fall into one or more of these four categories:
- Remaining competitive in an increasingly complex and evolving business and technological landscape.
- Finding and retaining great talents who are craving added flexibility in their personal lives.
- Delivering compelling customer and employee experiences that drive retention and loyalty.
- Defining new ways of remote working that build social cohesion.
All these problems begin and end with people. And while technology is an enabler, it isn’t the solution. The need for better foundational technology was exposed during 2020, driving many organizations to double down on their investment in new platforms, the cloud, data architecture — all the buzzwords. Now that we’re in 2021, we are seeing that the human investment might not have been given the same amount of focus. That’s where this story starts: an exploration in how HR can help the organization become more human-centered.
What does it mean to be a human-centered organization?
Human-centered organizations put humans first. But they do it in a way that accelerates business growth — allowing them to adapt, change, and pivot more quickly because they operationalize three competencies (see Fig 1):
1. Empathy: the ability to solve for real problems uncovered through deep listening and genuine engagement with employees and customers.
2. Co-creation: processes like design thinking and customer/employee feedback sessions that inform viable and sustainable solutions.
3. Experimentation: mechanisms for agility and a test-and-learn approach to drive adoption readiness and build champions for change.
Fig. 1: Slalom model for human-centered competencies
Businesses that do these three things well will succeed beyond their counterparts. They:
- achieve 32% higher revenue than traditional organizations (McKinsey),
- deliver value to the market twice as fast as other organizations (IBM), and
- outperform the S&P 500 by 211% (DMI).
Doing business in a human-centered way shifts the DNA of an organization from outputs-focused to outcomes-focused, which is, in itself, transformational. Digital-native organizations such as Netflix, Airbnb, Intuit, and others already have some of this baked into their DNA, but more traditional organizations are finding they have a bit more work to do to get there.
Transformation, in general, doesn’t happen at an enterprise level all at once. It happens more gradually when the top-down forces of leadership combine with bottom-up problem-solving by teams and business units. HR is a great starting place for transformation because of its position in the C-suite and because it’s being charged with leading the change around new ways of working.
So, how do you get there, and what role does HR play in that transformation?
It starts with a greater focus on the employee experience
What does it mean to focus on the employee experience? You start with the employee problems you are solving that enable a better work experience, which translates into real business outcomes.
Focusing on the employee experience is different from “employee engagement” in a couple of important ways: (1) it isn’t about a snapshot in time (based on your employee engagement or satisfaction surveys), and (2) it encompasses the entire employee life cycle (from hire to moving on or retirement). By understanding the experience of employees as they engage with the hiring process, onboarding, performance management, and transfers or transitions, HR can greatly influence business outcomes such as time to productivity, reduced costs for work-related risks, or decrease in turnover.
Four steps to human-centered transformation
Below are the steps that human-centered organizations use to solve problems that build the empathy, co-creation, and experimentation muscles necessary to transform the business.
Fig. 2: Slalom’s 4-step process for shifting an organization’s culture with a human-centered approach.
1. Defining the opportunity: This step is about understanding the problem you are solving for. To do this, HR teams must empathize and understand the problem space for the employee by assessing the current state of that experience — what it looks and feels like and the resulting outcomes. By starting from the real problem space (versus what you may perceive the problem space to be), HR can get more creative around identifying opportunities for improvement and innovation, while aligning the organization on the areas of focus for investment.
a. Example: Our retail and logistics client was looking to mitigate labor risk across their operations team. Instead of looking at pockets of business risk and addressing those, they started by doing research to understand the end-to-end employee experience for their most critical business units — to understand the problems their employees faced and what was causing attrition.
2. Visioning: Once you’ve identified the opportunities, HR can envision the future-state experience by ideating employee-centric solutions and defining success metrics for the experience. Creating new solutions or experiences doesn’t happen in a vacuum, though. This is also where HR can prototype the solutions and define some hypotheses for experiments to run with employees to ensure they address the real problems identified.
a. Example: The same retail and logistics client identified the problem space around training and professional development for managers, which could, if done correctly, enable great career paths for employees. They were then able to identify the gaps in their current support programs and collaboratively ideate on programs that could fill those gaps. They could also define critical metrics for success and tie those to business strategies to support the case for ongoing funding (remember: money talks).
3. Experimenting: Rolling out new programs can be time-consuming and costly, so human-centered organizations start by running experiments to ensure the programs meet employees’ needs and drive the desired business outcomes. By testing your solution prototypes with employees and iterating on them in agile sprints, you are able to prove the value of the change before committing to the investment.
a. Example: The client developed a couple of key hypotheses and ran an experiment to see whether improved communications about available professional development programs or manager process changes would help bridge the gap that employees experienced. They learned that simple communications accompanied by manager training would move the needle and began planning for rollout.
4. Adopting and scaling: To roll out new ways of working, you will need more than an email communication or a launch event. You will need funding analysis and budgeting for ongoing support of the change, leadership buy-in and development to champion the change, talent and skill building to enable the change, and ongoing feedback mechanisms to track and measure the success of the change.
a. Example: They made the business case for the change in communications and manager training with the executive team, obtained the required funding, and began to work on building change champions and rolling out new training programs for managers. They worked with the business unit leaders to gather feedback at regular intervals throughout the year, along with program metrics, to report back around the ROI of the changes.
When HR uses a process like this to enable better employee experiences, it is building the human-centered muscles for larger organizational and cultural transformation while demonstrating the ROI of such an approach.
HR as the model for human-centered transformation
As HR leverages this approach to solving problems, it is building a foundation for new ways of working that can be propagated across the organization, because employees see and experience the value of it firsthand.
Imagine how this way of working could also spawn a new operating model for HR that moves it from a cost center to a profit center — where ROI is tracked, measured, and delivered to each business unit across the organization through new ways of working and better employee experiences.
While COVID-19 feels like the biggest “crisitunity” in years, it will certainly not be the last we experience. Becoming human-centered helps us ready ourselves for ongoing disruption.
Slalom is a modern consulting firm focused on strategy, technology and business transformation. Learn more and reach out today.
