What will HR work look like in the future?

At the HR BarCamp on October 24, we discussed the future role of HR with HR managers from various companies. In doing so, we developed the idea that there could be a radical individualization of employment conditions in the future. We have taken this idea to the next level.

What new role would HR then have to play?

What would it require to successfully pursue this strategy?

 

De-industrialization as a long-term trend

If we dare to take a broad look at where human resources originally came from: a prerequisite for the industrial rise of HR as a function was the standardization of employment conditions. Equal wages, working hours and other factors provided the predictability and synchrony needed for efficient mass production.

Work rules were strict, role diversity was tightly controlled, pay scales were transparent, and organizational structures resembled military hierarchies: efficient, effective, and powerful.

Human Resources was the administrator of this system of order – from the 1970s it acted as an intermediary between the collective bargaining parties and the codetermination bodies. But the main focus was – if we are honest – ‘predictability’ of work performance and labor costs as the basis of economic (and societal!) progress and prosperity.

Job profiles, groupings, pay systems, time clocks, part-time work, promotion guidelines, position plans, headcount budgets, orientation values, target systems, competence lists, dress codes – all this is an expression of a fair and transparent system of order.

Legal frameworks such as vacation protection laws, wage maintenance, collective bargaining agreements, and working time legislation provided the basis for this.

Many HR managers saw themselves first and foremost as the guardians of these governing systems – the keyword being ‘governance’. There were many consequences for identity and attitude that one had to bring along as an HR manager. This was an essential part of our value contribution: the ‘commodity’ of human labor had to be standardized to the maximum and made available at market prices.

But to be honest, we had been feeling the pressure to make these rigid systems more flexible for many years: Trust-based flex time, flatter hierarchies, abolition of ranks and titles have all been expressions of the de-industrialization of employment conditions since the 1990s.

The direction of this development is an increase in individuality and flexibility. Trust-based working hours, flexible salary bands, complex dynamic job maps, competence catalogs, etc. have already initiated a de-industrialization of the employer-employee relationship years ago.

Many start-ups have snatched some candidates away from the industrial companies and attracted the GenY’ers striving for individuality because there was no time clock, no rigid role profile and you were allowed to bring your dog.

The increasing digitalization of many business models and the resulting changes in roles have forced and continue to force changes in the classic industrial organization of work.

The agility debate of the past 5 years has only turned the spiral up another level:

Complex, creative product requirements can no longer be met by industrially standardized ‘functions’. Flexible roles in changing teams, maximum autonomy and collective decision-making processes, flat or no hierarchies, self-control, ownership as an ideal, room for individual development, work-life integration, holistic MBO instead of working hours, SCRUM instead of superiors, development, purpose and intrinsic motivation as concepts – all this is an expression of an increasing individuality and flexibility of employment conditions.

Nevertheless, most companies still have the old regulatory framework with job profiles, groupings, functional levels, collective bargaining agreements, and usually a jumble of company agreements that were laboriously negotiated with the works councils. Within these boundaries, everything has to take place within the company.

The so-called ‘Taylor tub’ brings this effect into the picture.

 

Home office opens a door to a new dimension

One could simply say, now in addition to the right to a vacation, there is also a right to a few days in the home office – so what? Hubertus Heil is already thinking about this. Is home office just another privilege on the employee side that you just have to arrange operationally?

We think it is coming along with much more! With the step towards the establishment of home office, a very special door is opening in our post-industrial development, which will have far-reaching consequences for the organization of work and thus for the role of HR in particular. And which is a great opportunity for HR and companies. The systems of order described above are almost all tied to the ‘place’ of business. You leave this framework when you leave the company. Cynically, one could say: that’s what ‘restlessness’ is for.

It is true that many people also answer their e-mail at home in the evening. The question of a comprehensive home office suddenly raises completely different questions about a possible regulatory framework:

• Who can/may work at home and how much? Who is not? Is it a privilege?
• Which activities are suitable (for whom) for working at home – which are not?
• Who has the capabilities for a home-office (technically, spatially, ..)?
• How do you recognize the necessary self-organization ability in employees?
• How do you adapt work to changing life phases and living conditions?
• How can performance be evaluated, if not by active presence? How do you prevent the dissolution of work boundaries and protect employees?
• How do you manage virtual work/virtual teams?
• How do you notice in time when someone slips away, withdraws?
• How do you create spaces for collaboration – where it makes sense virtually, where it is necessary personally?
• How do you create networking, like learning on the job, like collegial consulting?
• How do you recognize conflicts, overwork, the dissolution of work boundaries, internal immigration?
• How do you create loyalty to your employer – when there is no physical proximity?
• What is home at all – close to the place of work?
• Possibly also in the vacation home? Possibly abroad?
• The question of abroad is then followed by questions such as social security, tax, permanent establishment and competent labor law?

This long list makes it clear that there is probably no operational system that will not be affected by one of these fundamental issues. Home office opens a door and forces a new beginning in the organization of work. This goes far beyond the question of insurance and health protection or performance evaluation. To change this and to give both workplaces and workforce the necessary quantum leap of change is a (‘regulatory’?) task for HR in the coming years. What is needed is a new flexible, dynamic regulatory system AND the necessary cultural change.

 

What if you really think it through?

HR must not only reinvent employment conditions, but also reinvent itself:

If you think this trend toward individualization through to its logical conclusion, you will end up with a maximally flexible structure in which employment conditions are individually adapted to the specific requirements of the role and the needs of the employee. This opens up a wealth of adjusting screws that could be turned:

• Role(s) and required value contributions and scope for decision-making
• Necessary integration into physical or digital work processes and work tools
• Necessary networking in the organization with colleagues, stakeholders, customers
• Resulting presence requirements (minimum standards, scope)
• Goals, measurement criteria, dimensions of success and performance
• Requirements for leadership and cooperation
• Compensation and benefits that are fair and competitive.

At the same time, there are a number of aspects to consider on the employee side:

• Required personal qualities, values, attitude, social skills and talents
• Methodical and professional competences/experiences and further development
• Personal life circumstances, private context, life phases, ability to plan?
• Development expectations, need for support

Is there a flexible regulatory framework in which, as in a cafeteria system, conditions of employment can be flexibly assembled to meet the individual needs of the person and the role?

 

People like to compare themselves

A positive function of the old regulatory systems was also fairness. A rigid framework with functions and remuneration systems establishes a certain degree of fairness. With maximum flexibility, how can standards be prevented from building up against each other? Especially since the imperative to maintain wage levels still applies?

How do you create flexibility when standards (money, working from home, time flexibility, …), once established, can no longer be turned back?

Can there be a gatekeeper who ensures that such conditions (privileges?) do not only adjust upwards in case of dynamic change?

Would such a thing be left to the free play of forces? Do we let the executives decide that for themselves?

 

We believe that a completely new field of responsibility for human resources is emerging here:

The role of a trustee between the short- and long-term interests of an organization and the interests and needs of the individual employee. This has always been the case, but a rigid framework of employment terms and conditions has protected HR from wild bargaining. Don’t create precedents!

What if in the future there were an individual negotiation of general conditions for an activity within a flexible regulatory framework? Like in an equalizer in a recording studio, the employment conditions would be adjusted in several dimensions to the needs of the individual and the organization. And, if necessary (changed requirements, living conditions), they are permanently adjusted further. And in the event of a change of role, it should ideally be possible to take back concessions.

 

What does Human Resources need for this?

Fulfilling such fiduciary decision-making and shaping roles in a dynamic system is not an easy challenge:

1. HR of the future needs a very deep understanding of the business, because changes in strategy and business activity must also be translated into changing requirements for roles and competencies. You can’t just pull out a standard job profile anymore. A continuous exchange with executives is therefore a basic prerequisite.
2. The same proximity to employees. Changes in individual living conditions and abilities must be taken into account. Has someone moved away? Are there family commitments? Or: is there no more room in the home office? This requires empathy and the ability to build trust.
3. A trustee must also be willing to take responsibility and make decisions for the system as a whole. And they must also be able to make painful decisions in the interest of the whole without being able to invoke a framework of order. For example, when it comes to taking back vested rights. Or when it comes to negotiating the regulatory framework with works councils. That requires steadfastness and, incidentally, very capable works councils, which would hardly be able to fulfill their mandate without methodical trade union support.
4. In such a flexible regulatory system, it is no longer as easy to talk one’s way out of existing framework conditions as it used to be. You have to argue in terms of content and weigh up the interests of the whole against those of individuals. Empowerment by the management is needed here.
5. You need strong advisory skills: the ability to ask the right questions, the ability to change perspectives, the ability to familiarize yourself quickly with different circumstances, empathy.
6. Such a fiduciary role that develops and adjusts terms and conditions of employment on a case-by-case basis is likely to require more resources than in the past. Flexible systems will always require more reliable effort than monocultures of standardized employment conditions.

Digital tools will certainly be able to take over a lot of administrative and certainly also analytical work. The new AI-driven HR suites may even be a prerequisite for being able to exercise such a flexible system and the new role of HR effectively at all. The only problem is that no machine can provide the advice and credible weighing and decision-making of individual employment conditions in many dimensions. This requires experience, judgment and decision-making ability.

Shaping the path to such a new working world requires distinctive change management competencies.

We find it highly exciting and valuable to shape the new HR role in it. It is a revaluation of HR work. HR would be at the mixer – and would have arrived at its ‘very own’!

 

Alexander Gisdakis

CEO & Partner at Breitenstein Consulting