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“As we are well into the 21st century by now, industries and organizations are facing a growing number of economic, social, political, technology, and customer issues. These disruptive forces are challenging business strategies and ways of working. A new set of expectations from society, customers, and the workforce demand a shift in mindsets, new operating models, and innovative workplace practices. Deloitte’s 2019 Global Human Capital Trends Report, based on insights from nearly 10,000 global leaders, found that 84 percent indicated they need to rethink their workforce experience to improve productivity and they are facing new pressures to move faster and adapt to market conditions more than ever before.1
While many organizations are transitioning to new business models, deploying innovative operating practices, upgrading technologies, and adapting to marketplace changes, HR often remains attached to older ways of working that are no longer enough. For HR to be able to thrive in the face of these new business challenges and outcomes involve a fundamental change at its core. It is time for exponential HR. An HR organization that can move faster, innovate, anticipate challenges, adapt quicker, and stay laser-focused on business outcomes can thrive and, indeed, achieve sustained performance. HR operating models and ways of working designed 5 to 10 years ago for a different time are now ready for renewal and it is time to reimagine HR.
Our industry and client experience, as well as research from Bersin™, Deloitte Consulting LLP, indicates that the highest performing HR organizations are now more likely to change their mindset and ways of working in four foundational ways: 2, 3
Achieving this exponential performance demands that HR rethink its roles, capabilities, structures, processes, and technology. In fact, there are six tendencies or priorities that exponential HR teams tend to practice to enable this breakout performance. When these practices are prioritized by HR, they can produce a sustained performance in the current dynamic environment.
Too often HR (and many other functions as well) designs, measures, and reports on activity rather than focusing on and measuring the outcome the activity is projected to have on a goal or target. HR has traditionally measured activities such as days to hire, yet often stops short of deeper evaluation of whether new hires are doing a quality job, performing as expected, and driving tangible value for the enterprise. HR has traditionally been measured in areas such as learning by producing a scorecard with the number of participants who completed a training course, the percentage of participants passing the learning evaluation, and the participants’ satisfaction rating of the training program, however, rarely do these training measures extend to the outcomes of training delivered. Exponential HR invests in measuring if participants change their on-the-job behaviors and, most importantly, if the new on-the-job behaviors produce the business outcomes as expected.
Exponential HR starts, ends, and measures the value of its solutions and services to align with and achieve business outcomes. HR shifts its mindset:
The new currency of business is speed. The digital age has enabled businesses to innovate and go-to-market faster than ever before. Exponential HR recognizes this acceleration and stays at pace with the business. Exponential HR deploys agile practices and mindsets, using iterative design cycles to test and evolve solutions. This “agile” philosophy can take inspiration from the technology methodology of the same name, though not be confused with a technology method. Rather, simple yet profoundly relevant inspiration can come from following the advice of Walt Disney who said, “the way to get started is to quit talking and begin doing.”5
At Deloitte, we recognized the need to reinvent performance management a few years back. This started Deloitte and HR on a journey to design a new way of doing performance management, piloting the program in different parts of the organization, and evolving it over the last couple of years. If HR waited until the performance management program was perfect before implementing, we might be still waiting for a reinvented program. Thankfully, we took a different, though less common, approach, put a thoughtful design into the organization, tested it, gathered lots of feedback, determined what worked and what didn’t, and continued to evolve. Perhaps most notable about this experience was the transparency with which the journey was conveyed to the people of Deloitte—complete with version numbers for the many stages along the performance management reimagination journey. Exponential HR prioritizes speed and building prototypes and has a tendency to test and evolve.
Exponential HR recognizes that science has been knocking on its door and is now inside the house. Access to large volumes of workforce-related data is driving HR to use data, conduct empirical tests, and leverage statistical analysis to sense trends, analyze patterns, validate designs, and predict workforce behaviors to help improve business outcomes. Deloitte’s research finds that, although HR organizations have access to a wealth of workforce data, many organizations are not taking advantage of this newly found treasure. Over half of HR organizations are still at the primary stage of HR maturity, level one, focusing mostly on operational reporting, having limited resources, and standards dedicated to analytics. Only percent of organizations are at level four maturity, which we would call exponential HR. These HR organizations have a culture of data-driven decision-making, analysis, and predictive capabilities.6
Exponential HR can outperform its peers by investing in analytics, embracing a data-driven way of working, building data literacy capability across HR, and deploying technology to enable advanced statistical analysis.
Eighty-four percent of leaders indicate that employee experience and workforce engagement is a major priority for them. It is not hard to understand why this is one of the most important workforce issues facing organizations today. MIT research shows that companies in the top quartile of employee experience, compared to the bottom-quartile companies, are twice as innovative, experience double client satisfaction, and achieve 25 percent higher profits.7
Exponential HR recognizes this driving force in workforce engagement. Typical attempts at this have centered around simplifying HR transactions and processes and easing access to HR information. Unfortunately, these programmatic changes have helped but have not completely addressed the issue. Most of these programs borrow ideas from customer experience practices, but often these fall short. Exponential HR, with a tendency towards experience vs. programs, realizes that workers are different from customers in that they have an on-going personal relationship with their employer—whether short-or long-term. The workplace experience is social, built around multiple communal connections, and workers want a sense of purpose and meaning from their work—easy HR transactions by themselves no longer make for leading workforce experiences.
Exponential HR designs experiences that address the human needs of the workforce. Exponential HR goes beyond program changes and realizes that HR needs to design workplace experiences that operate at the personal, digital, physical, and organizational levels.
At the personal level, exponential HR focuses on designing experiences and end-to-end solutions that create personal connections and mechanisms to drive a personal sense of purpose and meaning between workers and the organization. Exponential HR deploys digital solutions that enable work and learning in the natural flow of work, foster team collaboration, and ignite creativity by using experimentation, design thinking, and rapid innovation. Exponential HR designs physical workplace environments that enable physical and virtual collaboration and create safe places to work and innovate. Finally, at the organizational level, exponential HR holds everyone accountable-leaders, workers, and partners—for promoting a positive, engaging work environment.
HR technology is integrated into our daily lives both outside and inside the workplace. Exponential HR embraces this revolution. Exponential HR embeds digital solutions to automate and help unlock insights rather than viewing technology as only an enabler connected to processes as almost an add-on. This shift in perspective about technology is helping HR become exponential by using digital solutions to provide insights into forecasts that help leaders with more accurate decisions and actions; automate processes like recruiting, training, benefits, data management, and payroll; and engage the workforce by providing scaled personalized and mobile platforms for HR and work-related information, communication, and data. While many organizations have deployed HR technology to enable their programs and processes, exponential HR goes two steps ahead of this.
First, exponential HR recognizes that to be able to derive real value from HR technology, there needs to be a unified engagement platform that integrates and makes it easy to access information and complete work. These platforms combine things like content, chatbots, transactions, personalized communication, work, and life information, and work schedules into one consistent experience.
Secondly, exponential HR defines the partnership between human workers and their new machine co-workers. Exponential HR wrestles with questions like, “how do workers and chatbots work together?”, “what are the rules that govern machine learning?”, “what are the factors artificial intelligence (AI) recruiters use to select candidates?”, “what are the right experiences and skills to expose workers to, using VR, to learn new on-the-job behaviors and skills?”
The final priority of exponential HR, and maybe the most important, is the move away from individuals directing and doing work to recognizing and igniting the use of connected multi-disciplinary teams to define and resolve business challenges. Recognizing that no one person in a room is as smart as all the people in the room together, exponential HR is harnessing the power of teams.
Exponential HR leads with a team-based approach to work in two ways. First, outside the walls of HR, exponential HR creates a culture, organizational structures, tools, and reward programs that promote multi-disciplinary collaboration and empowered decision-making. Exponential HR designs ways of working and teams that are agile, collaborative, and connected. Exponential HR redefines, selects, and develops leaders with new capabilities who are proficient at being versatile, connecting resources and empowering teams, embracing vulnerability, and creating an environment of creativity and inclusion. Finally, exponential HR develops team members who are adaptable, experimental, creative, curious, and have a growth mindset. This team-based way of working is needed to quickly sense and adapt to a dynamic and disruptive environment, to get closer to customers, and to drive purpose and meaning in work.
Exponential HR does not stop at evolving the environment outside the walls of HR, but, in addition, it addresses its own operating model and ways of working. It reimagines the operating model, roles, capabilities, and practices—becoming more adaptable and more agile, implementing multi-disciplinary teams to focus on business outcomes, to be able to move more quickly and provide more strategic solutions.
What is exponential HR? It is a paradigm shift. HR has been operating with the same basic operating model since the 1990s, but this model is no longer sufficient. It was designed for a time when things were more stable and predictable. Now, 30 years later, there’s a completely different landscape and terrain to navigate. Exponential HR is the next phase in evolving HR to meet the new challenges of today’s active and disruptive marketplace and changing workplace expectations.
It is imperative that HR is able to meet business outcomes by becoming adaptable, agile, architecting, and augmented. To enable this, six biases come into play: outcomes over activity; pace over perfection; data over opinions; experience over programs; digitally-integrated over technology-enabled; and teams over individuals. Are you ready?
Arthur Mazor is a principal with Deloitte Consulting LLP and the Global HR Transformation Practice leader. Art collaborates with complex, global clients to drive business value by transforming human capital strategies, programs, and services.
Gary Johnsen is a specialist leader with Deloitte Consulting LLP and the deputy leader of the HR Strategy & Employee Experience practice. He helps complex organizations design and deploys innovative HR strategies, operating models, and HR customer experiences along with enabling processes, tools, and capabilities that build the bridge between business and HR.
Jodi Baker Calamai is a partner with Deloitte Consulting LLP and the Global lead for HR Strategy, Digital HR & Employee Experience. She has worked with some of the world’s leading organizations on their HR transformation journeys—focused on enabling HR to reduce structural costs while increasing business value.
Art, a principal with Deloitte Consulting LLP, is the Global HR Transformation leader, and a part of the Global Human Capital Executive. Art is accountable for guiding the firm’s continued innovation and capability growth to drive unique and powerful client business outcomes that have enabled Deloitte’s position as the world’s #1 HR transformation consultancy. Art collaborates with complex, global clients to drive business value through transforming human capital strategies, programs, and services. He is the firm’s thought leader in setting people and HR strategies to pivot toward the Future of HR in the context of dynamic business, workforce, and digital disruption. Art has previously served as Deloitte’s Human Capital practice digital leader and the global practice leader for HR Strategy & Employee Experience. As a hands-on leader, Art is actively engaged in driving major human capital and HR transformation initiatives with some of the world’s best known brands. Art’s professional journey for more than 20 years has been exclusively focused on human capital management. He has held senior HR leadership, outsourcing executive, and human capital transformation consulting roles that form the multi-faceted foundation from which Art delivers value to his clients. Art earned his degree in Organization & Management at Emory University's Goizueta Business School.
A specialist leader in the HR Transformation practice of Deloitte Consulting LLP, Gary has more than 20 years of experience leading and delivering HR strategy and transformation projects to help clients improve the intersection between business and people strategy. Gary combines his experience in HR management and consulting with a strong track record in learning, HR operating models, organizational and process design, change and talent management, service centers, and HR technologies.