Where should HR directors focus in the cyber physical age?

How can HR work out priorities with the rise of the cyber-physical age?

If you’re leading the HR function for an organisation, it is important to work out where to focus your priorities for the next three years with the rise of the cyber physical age, writes Anthony Mitchell

Given the seemingly endless disruption to work as we know it, how do you chart a course when each year is seeming so different from the last in terms of what is driving business performance and society more generally? It feels like the agenda is constantly changing: adding work-life integration, employee experience, diversity and inclusion, real-time performance management and so on, while you were still implementing activity-based working, agile, shared services and employee well-being programs.

The key is to step back and look at the much bigger picture of how cyber physical age organisations will look fundamentally different from the ones that existed when today’s HR directors first entered the workforce. It’s akin to recognising that the fax machine was the apex of business technology when you entered the workforce but that today you carry a globally-connected supercomputer in your pocket. You wouldn’t construct your business around the central organising technology of the fax today, would you?

My company recently surveyed more than 500 senior business leaders (including CEO, chief HR/people officers and other C-suite leaders). Our findings? The majority of organisations are not prepared to successfully compete in today’s cyber physical age.

According to the research, 32 per cent of senior leaders believed that a typical employee in their organisation worked less than half of their full potential on a given day, with less than 1 per cent of respondents stating that a typical employee worked at full capacity (90-100 per cent). Leaders were just as critical of themselves, with 29 per cent of respondents stating that they performed at less than 40 per cent of their full potential on a given day, when compared with their most effective performance over the past 12 months.

“There are two dimensions which are most responsible for organisations being unready for the cyber physical age”

Our further research (which engaged thought leaders around the world) showed that there are two dimensions which are most responsible for organisations being unready for the cyber physical age:

1. Twentieth-century organisational architecture
Most organisations are still designed on a 20th century model, which is all about maximising managerial efficiency. This made pretty good sense in the Henry Ford era of assembly lines. The best way to run an organisation was to have the vast majority of employees operating like clones, doing the same thing, in the same way, over and over. It was a decision, whether conscious or not, to prefer consistency over motivation – that suppressing people’s full potential was an acceptable trade-off for managerial efficiency.

That trade-off no longer makes sense. Firstly, managerial efficiency now comes from technology. Where efficiency is concerned, why try to extract this from human beings who have a unique quality called ‘free will’, when artificially intelligent machines can do so at a level we can no longer even comprehend let alone rival? Secondly, why fail to take advantage of free will, when it is our ability to exercise free will that has created civilisation as we know and gives us something that even AI is a very long way from emulating?

This is exactly what the most successful organisations in the cyber physical age have done – and even they have only scratched the surface. Think of the businesses that have become overnight titans of the commercial world. They haven’t got there through managerial efficiency. They have done so through two primary levers:

  • They have created, inculcated or leveraged exponential technologies
  • They have employed the creative and collaborative talents of their people to generate these breakthroughs then execute them with passion, flair and determination

“Organisations must spend far less of their time internally focused and ensure that employees feel liberated to use their judgement to delight customers, be creative and take initiative”

How do you design organisational architecture to make this occur? You prioritise factors which foster self-determined motivation. That is a radically different mindset from prioritising managerial efficiency and one which very few companies have adopted. But those that have done so have reaped massive rewards.

When senior leaders were asked to compare their organisational architecture with the models and practices of world-class organisations, such as Google, Amazon or Atlassian, the majority of respondents to our research stated that their organisation is mediocre or worse when it comes to fostering joined-up collaboration (75 per cent were average or below) and agile responses (68 per cent). The weakest of these was the ability of companies to foster exponential technologies. A mere 18 per cent of organisations assessed themselves as doing this well and only 3 per cent saw it as a real strength, versus 79 per cent who felt they were mediocre or worse.

In the cyber physical age, organisations must spend far less of their time internally focused and ensure that employees feel liberated to use their judgement to delight customers, be creative and take initiative. If you want to move to cyber physical age organisational architecture, ask yourself these questions:

  • Does your organisation work in a way that enables employees to feel the strongest sense of autonomy, mastery, growth, purpose and connectedness? If not, you are probably leaving out at least 30 per cent of potential performance every day
  • Does your organisation eliminate antagonism, hierarchy and competition between different business areas and levels so that everyone can focus fully on collaborating on creating customer value?
  • Does your organisation make it frictionless for brilliant ideas from the coalface to make it through to practical implementation?
  • Does your organisation make it easy to experiment and blame-free to learn from ‘fast failures’?
  • Does your organisation invest deeply in helping leaders and others to develop their full potential, using the best possible methods to rapidly and durably build much higher personal capability?

“With AI machines able to do all procedural work, leaders and employees will add value through quintessentially human capabilities”

Once you can answer ‘yes’ to these five questions, you have the organisational architecture required for the cyber physical age.

2. 20th century capability development
If most organisations’ organisational architecture is out of date, their approach to learning and development is even more archaic. Our research in this dimension found that:

  • 78 per cent of respondents run development programs with little idea of what world-class in that capability looks like, with only 5 per cent having a very clear view.
  • 74 per cent give participants either no feedback on how they are improving the capabilities concerned over the course of the program, or limit this to sporadic, delayed feedback.
  • 58 per cent fail to make use of new technologies that are now available for development.
  • 75 per cent of companies don’t know if the programs actually work and don’t collect information that improves the program’s effectiveness in developing capability.

To put this in perspective, the worst performing team in the AFL or NRL would be light years ahead of 90 per cent of Australian companies in terms of the soundness of their approach to developing capabilities.

In the cyber physical age, the development of capabilities is more important than ever before. With AI machines able to do all procedural work, leaders and employees will add value through quintessentially human capabilities. At the top of this list are what we term the 6 Cs:

  • Capacity: Develop resilience and access purpose to achieve in challenging conditions.
  • Connectedness: Use the power of empathy to lead individuals and teams, and enhance customer experience.
  • Creativity: Think non-linearly to generate new ideas and deliver innovation.
  • Collaboration: Fuse the power of multiple people and perspectives to produce exponential outcomes.
  • Choice: Apply scientific methods and behavioural insights for high-quality decisions.
  • Change agility: Identify inflection points, then adapt and swiftly execute

“Redesign your organisation so that, above all, it fosters self-determined motivation, not managerial efficiency”

Top 2 priorities for successful cyber-age companies
Regardless of which capabilities of greatest importance to your organisation’s business performance, HR directors can improve their learning and development by:

  • Focusing on only the most important capabilities and cutting down ‘noise’
  • Anchoring the design of interventions on robust research on what ‘world-class’ capability looks like
  • Embedding stretch experiences throughout programs through disruptive experiences such as immersions
  • Reinforcing learnings on the job immediately through learning supports and challenges
  • Designing a hypothesis-based evaluation plan at the outset of any intervention and use robust data to measure against this, including a baseline analysis
  • Leveraging technology for all of the above

So, if you’re leading the HR function for an organisation and working out your priorities for the next three years, where should you focus? Based on our research into emerging global best practices and the steps being taken by the most successful cyber-age companies, the top two priorities are:

  • Redesign your organisation so that, above all, it fosters self-determined motivation, not managerial efficiency
  • Completely overhaul your learning and development so that it actually leads to your leaders and employees learning and developing – rapidly, durably and with a marked uplift in the most critical capabilities

Submit that plan to your CEO. Don’t forget to mention that this will put you in the echelon of the most successful cyber-age companies and distinguish you from the 90 per cent of Australian companies still stuck in the twentieth century. I suspect that your proposal may be approved.

Image source: iStock