HR departments have embarked on their digital transformation, and yes, it's fantastic news! According to a study by the Markess firm, 88% of HR professionals believe that digital technology is essential to their function. 65% consider Artificial Intelligence to be useful, even essential! Beyond the tool aspect, HR departments now have a clear vision of their role. It is about creating value for each stakeholder: the company, its shareholders, customers, and employees.
The predominant role of financial markets, globalization, easy access to information and expertise, and the decrease in innovation costs—all contribute to accelerating the pace. HR departments are now using modern methods such as design thinking and collective intelligence to collaborate with their internal clients and deliver relevant solutions more quickly. Clearly, HR departments have embraced digital culture!
Would this be an idyllic scenario? No, it's the observation that everyone (starting with myself) can make when in contact with visionary HR professionals committed to enhancing the company's human capital. Just as some CIOs have managed to engage in the transformation of their function (inspired by the methods used by innovative organizations).
HR managers before
The "human resources" function evolves with society and companies. The role of HR professionals and their sphere of influence have also grown as society and business leaders have placed more importance on employees.
Until the 1970s, it was referred to as the "personnel department," whose mission was centered on regulatory functions. Contract management, payroll, disciplinary matters, and compliance with social legislation were its main tasks.
Gradually, the "personnel management," formerly part of the administrative and financial department, gained autonomy and influence. It became the "human resources department" in the 1990s. It joined the management committees and executive committees.
The acceleration and internationalization of trade and innovation led to a widespread awareness. Employees became a competitive advantage, and their management needed more planning and anticipation. This is also the case for other resources: financial, material, and immaterial of the company, risking the loss of employees and therefore the medium/long-term competitiveness of the company.
HR: Towards Human Capital
Today, it is increasingly common to hear about "human capital." This underpins other concepts: investment and return on investment. Indeed, capital is a sum of investments used to generate profit, or "return on investment" (ROI).
This evolution in positioning and discourse reflects HR professionals' desire to speak the same language as their counterparts in the Executive Committee (COMEX/CODIR). They talk about investment and ROI on a daily basis. Investing in a product, a service, a country, a technology... and now, in employees. Because yes, now we invest in employees! Isn't that another fantastic piece of news?
In finance, ROI is the financial ratio. It measures the amount of money earned (or lost) compared to the initial investment in a project. There may be non-directly financial returns to an investment, especially in human capital...
The Return on Investment of HR from a Marketing Perspective
Looking at marketing, they also express return on investment. This could be evaluated by the client more or less explicitly through the [perceived value / paid value] ratio. The value here is defined by both factual and intangible elements. However, the manager (especially at a high level) generally needs to measure to decide, including the intangible. Thus, Fred Reichheld defined in an article published in the Harvard Business Review in 2003 that the Net Promoter Score (NPS) would be the ultimate indicator. It is simply the difference between the percentage of promoter customers and the percentage of detractor customers. A simple way to measure both tangible and intangible aspects together.
If we feel that the marketing definition is closer to the HR environment than that of finance, it raises another question. So, who are the HR clients, i.e., those who evaluate the value and buy HR services?
Focusing on the client... Okay, but which one(s)?
Strictly speaking, the client is the one who obtains a product or service in exchange for something. The notion of exchange is interesting because each type of client may seek a specific form of it. Here is who I consider to be HR's clients, what they "buy," and how they measure the value provided by HR.
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Employees: they seek a positive experience within the company. From recruitment to exit, including the development of their skills, promotions... and it often starts with fair pay! The quality of this "employee experience" is inspired by the customer experience. It is now measured in the same way as the Net Promoter Score® through engagement surveys... although this is a reductive view of what the employee experience is, and visionary HR professionals seek to go beyond it... I'll come back to that in a future article. The role of HR is to provide an ecosystem conducive to development (HR Ecosystem Builder). As for its posture, it should adopt that of a Coach who accompanies while challenging.
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Managers: they seek support and expertise. More generally, they seek solutions to their recruitment, skills development, and disciplinary problems. Moreover, they want to anticipate staff movements. Visionary HR professionals measure the satisfaction of their manager clients. They usually also measure indicators such as responsiveness and the quality of responses provided. HR's role towards them is that of a Business Partner. Its posture is that of an Operational Designer who co-builds with managers the solutions adapted to their problems.
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The management, and by extension the shareholders. They seek security on legal aspects (to avoid lawsuits and impact on image). Also, they aim for anticipation of future skills needs, innovation capability. They also aim for maximization of the HR performance/cost ratio. It's no surprise that the management includes criteria close to finance, but not only! The role of HR is to be a visionary, and its posture, that of a Strategic Designer.
Internally, different expectations
HR must ensure a quality of service equal to all. However, the internal clients' expectations are diverse in nature. Whether it is in the level of service expected based on the maturity of each organization and sub-organization (subsidiary, business unit...), and in their level of urgency. HR thus seeks to deliver tailor-made services. At a lower cost and shorter time, and they have found how to do it!
Being a digital HR manager to embody digital transformation
As seen in the introduction, visionary HR professionals now use collaborative design methodologies to solve problems and propose more tailor-made solutions. The benefits are decisive: team empowerment, management involvement, better adoption of induced changes... This also saves time in problem-solving. These methodologies are part of the innovation corpus imagined at Stanford University, which inspired the working methods of most global startups, like the design sprint developed at Google Ventures, hence this association with digital culture.
By appropriating these methodologies, they do not simply define new digital tools. They become digital in their way of thinking and working. Thus, they co-build with their clients and shorten the cycles of creating new services. Moreover, by doing so, they reduce the risk of error when industrializing. Finance and HR controllers will therefore be reassured when discussing ROI!
By becoming digital in their mindset and way of working, HR embodies the desired digital transformation by the general management. They are therefore in an excellent position to carry it out alongside their internal clients. This concerns other business and support departments in particular. HR fully embraces its role as a Strategic Designer. Indeed, it speaks the same language as its partners and delivers more value, faster, to its clients. And that's really fantastic news!
I look forward to discussing this with you! Whether you want to debate it or imagine how to accelerate the digitalization of your HR processes.
Sources
[1] https://fr.wikipedia.org/wiki/Design_thinking
[2] https://fr.wikipedia.org/wiki/Capital
[3] https://hbr.org/2003/12/the-one-number-you-need-to-grow
[4] https://en.wikipedia.org/wiki/Net_Promoter
