Strategies for dealing with AI and other disruptive tech in HR

August 2018  David Creelman

There is a lot of hype around AI in HR. While it sometimes seems that vendors are simply using the term “AI” to sow confusion, you only have to see AI’s ability to translate languages or have human-like conversations (e.g. Google Duplex) to be stunned by the possibilities.

The challenge that we face is that it’s hard to know what impact these technologies will have, when that impact will be felt, and how to prepare for that impact. I wanted to share three general strategies for coping with the impact of AI.

Rule 1: Focus on decisions with long term impact

AI will have an enormous impact over a ten-year period, it’s impact won’t be so large year to year. The HR decisions you need to worry about are ones that have long term implications. For example, if you are in an environment with high turnover you don’t need to worry too much about how changes in technology will affect the employees since they won’t be around that long. On the other hand, if you have low turnover and it’s hard to lay off staff, then decisions you make today may haunt you when AI revolutionizes how things are done.

If you hire a 25-year-old teacher in the public sector today, then you are making a bet on what the school system will need 40 years from now. You should not make that decision without a sense of what could happen with AI in education over those 40 years. In fact, the only smart choice is to, wherever possible, avoid decisions that lock you in for a period more than 6 or 7 years.

Make a list of decisions that have a long-term impact, think about how AI might change things over 5-10 years, then act to mitigate the risk.

Rule 2: Spend more time scanning the horizon

I recently spoke to a professional at a large American organization and he had been horrified to find that the HR department saw no reason at all to move their on-premise system to the cloud. It’s true that some years ago the cloud, or more properly SaaS, was a strange and scary concept. Now, in 2018, it’s almost always the best solution. How could the HR team not know this? Presumably, they were so heads down in their daily work that they had no idea how much the world of HR technology had changed. They had no capability for scanning the environment to keep up to date on what was happening in the world.

The changes we are seeing in technology are bigger, faster and less predictable than anything we’ve lived through to date. You can’t begin to adapt to the changes if you’re not aware of them. There is an endless amount of information about new technologies on-line. Spend more time keeping your eye on what’s out there. Use your commute time to keep up to date. Insist the HR department have quarterly meetings to discuss the latest advances in AI and other technologies.

Rule 3: Start with the impact on your business and industry

The important impact of disruptive technology on the HR department in the grocery industry isn’t that it may speed up hiring cashiers; the important impact is that on-line grocery shopping (Amazon) or employee-less stores (see the Tutudaojia in Yiwu, China) will disrupt the existing business model. If Amazon eats up the grocery industry the way it has other parts of retail you won’t be worried about speeding up hiring, although technology to speed up layoffs may help.

The lesson is that changes to the business will set the context for everything that goes on in HR. Make sure you know how AI and other new technologies are affecting your business before you zoom in on how technology affects HR.

The best way to learn about how technology will affect the business in the next 5-10 years is to talk to your business leaders about what changes they are expecting. If they don’t have a good idea, then bring them this article and get them to identify decisions with long-term impact and create a process for scanning the horizon to become aware of what might happen.

Summing up

The potential of AI and other disruptive technologies is so profound that it can lead to paralysis. You need a strategy for constant adaptation while still getting your day to day work done. The three tactics discussed in this article will get you pointed in the right direction.

 

 

David Creelman is CEO of Creelman Research. He is best known for his workshops on Agile Analytics, Evidence-based Management and the Future of Work. You can connect to Mr. Creelman on LinkedIn or email him at dcreelman@creelmanresearch.com

 

 

 

 

 

 

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Conversation as Technology

Note: this article was originally posted in 2005, 10 years later it still feels relevant.

In The Wealth of Nations Adam Smith wrote about the specialization of labour in a pin factory. In those days when you watched people working you could see them pushing carts, operating machines and hitting things with hammers. I imagine Mr. Smith would find the modern work place rather mysterious. Walk into any head office and you see people talking in meetings, conversing in hallways, communicating by email, and chatting on the phone. The modern organization pays a great deal of money to people who spend their days talking to each other.

We do not think too much about conversation as a business tool since most people start conversing at age two and never stop. However, the science of conversation is interesting. Conversation analysis (which looks at the details of each segment of a conversation) shows just how complicated the process is and how we unconsciously manage to steer through misunderstandings, incomplete thoughts and disruptive interruptions. Speech act theory suggests that conversation is not just an exchange of information, but is actually a type of action. When a judge says, “I now pronounce you man and wife” something rather important has happened—it’s not just words. Similarly when you tell your boss, “I’ll have it done by Monday” or a customer forgives a problem by saying, “Don’t worry about it” those speech acts have real significance.

It’s not only scientists and philosophers who have recognized that conversation is more than just words. All sorts of business thinkers have stumbled upon the idea that modern business is all about conversations. Listen to the following experts:

  • Henry Mintzberg observed that managers spend almost 80% of their time in conversation (meetings and phone calls)
  • MIT Professor Peter Senge says, “Although systems thinking is seen by many as a powerful problem solving tool we believe it is more powerful as a language”.
  • Neuroscientist turned management consultant Rick Ross talks about the practical importance of, not just talk, but “skilful discussion”.
  • Kees Van Der Heijden, of Royal Dutch/Shell describes scenario planning as “the art of strategic conversation.”

One of the most serious attempts to take the science of conversation and apply it rigorously to business was in an early email program called “Coordinator” devised by the Terry Winograd and Fernando Flores. This program tried to force people to manage their communication according to speech act theory. It proved to be too restrictive to be popular however that does not mean it was not a step in the right direction.

The essential point in all this is that conversation is complicated and is central to management so we should not take for granted that we can do it well. It’s true we are all pretty good at talking, but if we want a great organization being pretty good is not good enough.

I like to think of conversation as a technology. The IT department is responsible for information technology. HR needs to be responsible for conversation technology. It’s an enormously powerful tool that we can get more out of if we treat it seriously. Various consultants offer advice on how to have better conversations; the best ones can have an important impact on organizations.

Image: Benjamin Vautier [Public domain], via Wikimedia Commons

Is a collapse of white collar pay possible?

Many blue collar workers in the US have seen their pay levels collapse.  Sometimes it is because their high paying manufacturing job has disappeared and they end up in a low paying service job.  There are other times when people wake up to find their jobs outsourced and they are presented with an offer to do their old job for the new outsourcing vendor at a fraction of their former pay.

Is such a thing possible in white collar work?

If we continue to have high unemployment of talented professionals we will start seeing people applying for $100,000 jobs  but willing to work for $60,000 (Accompanied by “Please, I really need the work!”).  I’m sure recruiters will say that it’s not a matter of “we will start seeing” but that it is already happening.

There is real resistance to paying people less than they are ‘worth’ because it upsets the salary structure.  Also a manager doesn’t want to bring on someone at much lower pay because it suddenly makes their own salary look too high.  But resistance will only slow things down, not prevent the ultimate undoing of pay if that is where the economy wants to go.

If corporate jobs remain highly paid compared to what the market is willing to supply, the work will flee from those corporations and be done by free agents, overseas outsourcers, and cheaper startups who don’t have a 20th century pay structure to defend.

This is clearly a bad thing and completely opposite the ‘war for talent’ perspective, but if we do remain in a long period of low growth and very high unemployment then a collapse in white collar pay is not out of the question.

Karl Moore’s Forbes Blog

If you read about management you’ve probably bumped into the work of McGill’s Dr. Karl Moore.

This time he has something to say about my boards/HR work so please take a look:

http://www.forbes.com/sites/karlmoore/2011/12/14/the-most-neglected-board-responsibility-and-what-you-should-do-about-it/ 

Do managers think their employees suck?

A new book by Eric Chester (Reviving Work Ethic) proposes this categorization:   “Workers tend to fall into one of four quadrants:  the Idle Quadrant, those employees who don’t understand work ethic; the Lucky Quadrant, those employees who may actually fall into the Idle Quadrant but through luck, show up on time or appear reliable; the Cheating Quadrant, those employees who know what they are supposed to do but choose not to; and the Valued Quadrant, those workers who have a clear knowledge of what they are supposed to do and do it, and possess work ethic values that make employers proud.”

Now if you use this quadrant and find at least three-quarters of your workers end up in the Valued Quadrant, then that’s fine. But its not a big leap to presume that Chester is warning us that most employees will land in the Lucky, Idle or Cheating Quadrants.  If this is so either there is a huge problem with the workforce or a huge problem with the manager who made the assessment of where employees land.

I’m uncomfortable with any manager whose first instinct is to blame poor performance on idle or cheating employees.  There are many reasons why a group may under-perform — poor strategy, poor job design, poor processes, lack of training, bad hiring, lack of clear goals, no feedback, lack of appreciation and so on. It’s the managers job to get all these factors under control and bring out the best in people. If they think the problem is idle cheating employees they won’t even bother to look at these other drivers of performance.

As the economy continues to move through difficult times individual stress builds up, we get angry and we look for people to blame. This fog of reactive anger, eager to latch on to any easy target, is the real threat to our organizations. Yes, there are some idle cheating employees, but if your manager’s think their employees suck then I wouldn’t work on improving the employees, I’d work on improving the management.

Do decisions matter?

As you can guess from this blog’s title I’m going to try to take an almost undefendable position: that decisions don’t matter. Let me start by retreating–of course deciding to invest all your money in gold or close down a factory is an important decision. But there is a lot of chatter about ‘management decision making’ that implies management is all about making decisions. This is a misleading approach.

Now let me retreat again. It’s true that walking down the road is all about decision making. You decide how fast to walk, you decide where to put your left foot, you decide where to put your right foot…you get the idea.  But to describe walking as being ‘all about decision making” is ridiculous and it’s equally ridiculous to talk about management as being all about decision making.

When researchers try to understand how a big decision was made in an organization they often find it surprisingly ambiguous.  There is no clear story about when the decision was made, why it was made or who was involved. Often things just kinda happen over time for a whole variety of reasons.

The lesson is that when anyone wants to put a lot of focus on “better decision making” they may well be leading you up the garden path. Most decisions are not made, they just emerge.  In management, you want to be good at moving forward, paying attention and adapting (just as you need those same skills for walking in rough terrain) but the idea that your journey is characterized by a series of clear decision points, hides the true nature of management practice.

For more on this read the works of James March such as A Primer on Decision Making: How Decisions Happen.

Do CFOs have a problem with reality?

We often complain, rightly so, that HR is weak on numbers. But there is another perpsective, perhaps much more serious: maybe CFOs have a problem understanding reality.

Reality is complex, uncertain, vague and ambiguous. Everyone who thinks seriously about the world makes the same observation Einstein did “Not eveything that counts can be counted.”  Eveyone that is, except some CFOs.

CFOs are in an odd profession, one that takes as the limits of its world “the set of things that can be counted”.  That’s fine, just like a vegan chef who takes the limits of their cuisine to be “the set of foods that don’t include  animal products”.   The problem arises when CFOs confuse the limits of their world, with the limits of the world.  A CFO who denies that organizational culture matters because it can’t be counted is confusing their world with the world. We must not succumb to bullying from this kind of CFO.

You sometimes see the same sort of blindness from engineers.  They will argue that it doesn’t matter what colour a product is as long as it works. That is true in their limited world of engineering, but not in the world.   If an engineer tries to argue otherwise they should be sent to a psychatrist.

There comes a point where HR needs to stand its ground and say yes, we know the numbers, and we also know the world beyond the numbers and very often it is in the world beyond the numbers wherein lies the difference between success and disaster.

 

The 5 Deadly Sins of HR (#5)

Sin #5 We need to update and upgrade the quality of HR professionals

This last sin which Dave Ulrich has suggested hits pretty close to home.  We’ve all met some great HR leaders but at the same time there is a general impression that the quality of HR professionals is not where it should be.  The failure to upgrade HR is not for lack of trying; HR folks are generally very interested in learning and there are various associations that work on improving the quality of the profession.  Clearly, these efforts have not been enough.

I have heard a couple of specific suggestions on how to address this:

1) Recruit the best grads to HR.  HR should be a very attractive profession.  HR should aim for the best and brightest when they recruit and craft the kind of deal that will allow them to succeed in closing the deal.

2) Become industry specialists.  A big problem with HR is that we are not seen as business experts and that is partly because we jump around from industry to industry. HR pros might do well to pick one industry and become an expert in that.

My overall advice is not to take Ulrich’s advice on the 5 sins seriously and not just feel that HR is being beaten up.  HR has come a long way but we need to do more and addressing those 5 sins will take us a lot further.  Ulrich has given good pointers on what to focus on, let’s take advantage of that.

 

 

The 5 Deadly Sins of HR (#4)

Sin #4: We need HR analytics and measures that show business results

Dave Ulrich suggests that the fourth deadly sin of HR has been reluctance to embrace metrics and analytics–in particular ones relevant to the business, not just numbers about HR operations.

We need to be a little bit careful about sin number four because  some people issues are resistant to measurement and inappropriate measurement can be worse than no measurement at all. However marketing, production, and finance have found real power in using analytics to inform their decisions and HR needs to follow that lead.

HR professionals have generally been slow to tackle analytics with any kind of discipline or enthusiasm. This despite the fact that with today’s HRIS systems large amounts of data are readily captured and doing analysis is easier than ever. The place to start is with understanding what your stakeholders are interested in and finding the HR factors that link to those issues. Remember that analytics don’t need to provide the whole answer; if they can help you make informed decisions then they are valuable.  HR needs to get going on analytics is the function is to remain credible.

The 5 Deadly Sins of HR (#3)

Ulrich’s proposed third sin is:

Sin #3: We get focused on HR administrative work not business and strategy

Well, not a lot needs to be said about this one. I do know that some will object that there is so much essential administrative and compliance work that there is no time for business and strategy. That feeling is understandable but ultimately it’s a lame excuse. Thinking about business and strategy need only take an hour a week–or maybe I should say a dozen “5 minute moments” where you stop and ask “Ok, what’s the strategic issue here?”  I’m not suggesting you need take a week off for a strategy offsite meeting.  Being strategic and business focused comes from what you think about on your commute, who you talk to at lunch, and how you frame the things on your to do list.

We hate to admit it but administration is attractive because we don’t have to think as hard, and we don’t have to ‘put ourselves out there’, we just do the tasks. So, let’s put an end to that. Let’s make sure that as we confront our to do lists we think about activities in light of broader business issues and when we set up our calendar let’s make sure we are scheduling time to meet business stakeholders.  Stop reading the newspaper for a month and read the Harvard Business Review or INC magazine.

Practice talking like a CEO, at first it will feel odd, but in the end you’ll be focused on strategy and business, not HR administration.