The Future of HR

“The Future’s So Bright, I Gotta Wear Shades” – Timbuk3

Complication

Many of today’s larger companies have overly complicated, hierarchical structures. As they grew to their current size, control processes were put in place to create efficiencies. To ensure reliable operations and avoid risk, work became standardized. New layers of supervision appeared, more silos were created, and knowledge acquisition was formalized, all in an attempt to gain efficiency through specialization. Support departments, like human resources, were added to manage the resulting complicated structure.

Complexity

These organizations are now facing increasingly complex business environments that require continuous learning while working. Typical strategies of optimizing current business processes or reducing costs only marginally influence the organization’s overall performance. Faster market feedback challenges the organization’s ability to act. Decision-making becomes paralyzed by process-based operations and the formal chain of command.

Hierarchies assume that management knows best and that the higher up the hierarchy, the more competent and knowledgeable that person is. But hierarchies are just centralized networks. They work well when information flows mostly in one direction: down. Hierarchies are good for command and control. They are handy to get things done in small groups. But hierarchies are rather useless to create, innovate, or change. Hierarchies are ineffective when things get complex.

In an interconnected world, systemic changes are sensed almost immediately. Therefore reaction times and feedback loops have to get faster. In addition, workers are dealing with increasingly complex situations, as software takes over routine work. Workers need more trusted relationships to share complex knowledge. But these take time to develop. Sharing knowledge in trusted networks does not happen over night. Complex problems cannot be solved alone. They require the sharing of tacit knowledge, which cannot easily be put into a manual. Tacit knowledge flows best in trusted networks. This trust also promotes individual autonomy and can become a foundation for organizational learning, as knowledge is freely shared. Without trust, few people are willing to share their knowledge.

Learning and Work

Guild Sign: Master Painter

For thousands of years people developed work skills through apprenticeship. This worked for small numbers and developed into the highly structured guild system in Europe. Industrialization marked the fall of the guild system. The industrial economy adopted a new management frameworks, which included something called ‘human resources’. But the industrial economy no longer drives the developed world. We are shifting to a creative economy.

In this new economy we have to change how we think about learning and work. The most significant change is in how we deal with information and knowledge. We no longer have to go to the library to get a book and we have access to a growing network of expertise from people, like bloggers, who are willing to share their knowledge for free. Expertise is becoming ubiquitous through the Internet and professional social networks. One’s position in the hierarchy is no longer an indicator of one’s influence or knowledge. As a result, many are challenging the hierarchical nature of the organization in a creative economy.

Human Resources

Recruiting, talent management, professional development, and every other area of HR is trying to deal with the post-industrial workplace. Most business leaders see that the Internet is changing their business. They understand that automation is a force to be reckoned with. However, many do not have a clue where or how to start. The old ways of thinking are still firmly entrenched but we cannot deal with the new era in the same way we managed the old one. Leaders need to understand what they are dealing with and use the appropriate methods. First they need to understand the difference between chaotic, complex, and complicated situations.

Chaotic situations require action; complex problems demand cooperation; and complicated projects need collaboration. Cooperation differs from collaboration, in that cooperation means freely sharing with no expectation of direct benefit. Cooperation is not team work. It is helping the entire organization, and this requires people who are not just doing their job, but involved in the whole system.

Most of our current human resources practices assume the system is complicated and understandable, given enough time to analyze it. But more of our problems are complex and cannot be completely understood except in hindsight. Complex situations require small probing actions that are safe to fail. We can only understand complexity through active experiments, accepting that perhaps half of these will fail. Encouraging failure, and learning from it, must be encouraged in complex environments. This should be the focus of human resources in a creative economy.

How can an organization build awareness, investigate alternatives, and act on complex problems? The organization needs to connect the outside with the inside. This is not a technology challenge but rather a structural one. Organizations need to help knowledge flow and this only happens when people are connected. Technology is a facilitator, but people are the key. This is too often overlooked, as in most enterprise social network implementations, where training is bolted on at the end of the technology build. Encouraging awareness, experimenting with alternatives, and taking action can each be supported within a unified organizational framework. Human resources can play an active role in such a framework.

New Work Structures

We have communication technologies to know what is happening across any organization. Most companies are also listening attentively to external social media. Given all this information, it is easier to let people experiment as long as they share what they are doing. Practices such as working out loud help build trust. In an age when information is no longer scarce and connections are many, organizations must let all workers actively share their knowledge. To succeed in the creative economy, organizations require a combination of actively engaged knowledge workers, using optimal communications tools, all within a supportive work structure.

We are at the beginning of another management revolution, similar to the one that created modern business schools and their scientific methods. There are many examples today of companies testing out new management models such as the social enterprise, democracy in the workplace, self-organizing work teams, and networked free-agents. While there are no clear answers, it is fairly certain that standing still will lead to failure. Giving up control is the great challenge for human resources management.

Organizations have to become knowledge networks. An effective knowledge network cultivates the diversity and autonomy of each worker. Networked leaders foster deeper connections, developed through ongoing and meaningful conversations. They understand the importance of tacit knowledge in solving complex problems. Networked leaders know they are just nodes in the knowledge network and not a special position in a hierarchy. The new focus of human resources has to be on supporting human networks.