Is HR Ready for the Future of Work?
Every organisation, company, your boss, colleagues and the media are talking about Artificial Intelligence or Big Data technologies and its potentials and risks. We all hear, read and think about how it changes the way we work, communicate, process information and share knowledge with others. It influences all aspects of our private and working lives – whether we want it or not. In this process, HR departments are not an exception, but a central part of the transformation.
HR is at the forefront for two reasons: first, central tasks of HR like recruiting, onboarding, talent management, and career planning are directly influenced by digitalisation and complemented by chatbots, workforce analytics, or real-time digital learning platforms. In this sense, the digitalisation enables HR to focus more on the strategic and human side, while parts of the manual and repetitive can be automated by emerging technologies. Second, HR is responsible for designing a workplace characterised by open collaboration, knowledge sharing as well as ongoing and personalised up- and reskilling possibilities. Due to increasing technological permeation and changing employee expectations, HR is in charge of creating an effective symbiosis between humans and machines with an emphasis on meaningful work and transparent decision-making.
Is HR ready for this transformation?
We have gathered and analysed more than 120,000 HR-specific job postings from nine target countries across the world to examine whether HR has adapted to a changing business environment. One of the core measures is the evaluation of the future orientation of required skills listed in the job postings sorted by countries. We analysed the demanded skills using a powerful data base: a self-developed dynamic skill catalogue which includes over 10m skills that are ranked regarding their future importance (decreasing/stable/increasing). This rating is based on the occurrence of skills in continuous labor market demand analyses. If skills are increasingly demanded over time or cover an industry trend they are considered to be ’future oriented‘.
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Figure 1 reveals the results regarding the future orientation score of the analysed countries. There are some interesting differences to observe: HR departments in the Netherlands, the United States and Canada mostly seem to have identified future trends and have started to translate these insights into skill requirements reflected in their job postings. This is evident from the fact that at least 30% of the demanded skills are classified as future oriented in these three countries. At the other end, companies operating in Germany and more strikingly in India seem to lack behind in recognising the full potential of trending areas such as digital HR or workforce analytics, which may explain the relatively low demand for future oriented skills. However, the results should be considered with caution: as we have no information on the internal structures and processes of the analysed companies, we can only draw limited conclusions on the actual functionalities and hence, future orientation of the respective HR departments. Nevertheless, they provide a first indication on transnational differences in the process of preparing HR for future challenges. Overall, it can be assumed that HR departments of German and Indian companies still mostly perform administrative tasks that align with the demand for more traditional and somewhat outdated skills. Conversely, HR departments in the Netherlands and the United States seem to have partly stepped up the corporate ladder inducing new roles and required skillsets.
Fig 1: Future readiness score (all countries, 2017-2018) Source: Own calculations
IT skills in HR gain importance
Moreover, it is essential to understand which skills are increasingly demanded and which lose in significance. For this reason, we formed skill clusters and combined results for all focus countries. Figure 2 delineates the demand growth for these clusters. The results indicate that HR domain skills, such as recruitment, payroll, onboarding, or training and development, are gaining in importance which aligns with the tendency for further job specification. However, it can also be hypothesised that most HR departments are still far away from progressing towards strategic business partners and rather operate within their traditional functional silos. Additionally, the demand for IT skills, especially concerning Human Resource Information Systems-, social media- and data analytics, increased by 1.3 percent points between 2017 and 2018. This growth suggests a slow, but ongoing digitisation of HR processes and increased permeation of emergent technologies. Finally, the overall demand for soft skills dropped by 0.3 percent points in the same period. However, it is important to distinguish while the demand for soft skills such as interviewing, supervising, delegation, or evaluation decreased substantially, other soft skills like empathy, teamwork, or coaching were required more intensively. This can be attributed to a declining emphasis on organisational hierarchies partly caused by technologies which enables people to organise around work itself due to expanding information flows throughout organisations and less through hierarchies.
Figure 2: Skill demand growth of different skill clusters (all countries included, 2017-2018)
Aiming to contribute to companies’ profitability, HR departments have to invest in emerging technologies to develop an effective digital strategy. In fact, advanced IT skills are a core prerequisite for optimising and connecting business processes, forecasting skill shortages, building an effective data architecture, and integrating robotics into the workflows.
The digitalisation of HR bears the potential to incorporate technologies such as analytics, AI, or VR in order to implement new management practices and design a working environment that enables productivity, deliver solutions and establish an organisational culture based on innovation, collaboration, and sharing. The digital shift is occurring rapidly, and HR should see it as an opportunity to climb up the organisational ladder and help lead the digital transformation.
ABOUT THE AUTHORS
Florian Fleischmann is dedicated to the development of cybernetic decision-making processes. In the past, he was working as a financial manager at Nokia Siemens and Siemens and also founded a company with a focus on the analysis of marketing data. In cooperation with large German companies, also from the telecommunications branch, he developed a data-driven HR management approach, which was the baseline for the foundation of HRForecast. At HRForecast, he is responsible for project management and for the implementation of data-driven decision-making tools.
Maximilian Tallgauer is a research associate and Ph.D. student at the Chair of Human Resource Management and Intercultural Leadership at the ESCP Europe Berlin Business School. He studied international economics at the University of Paderborn, the Tohoku University in Sendai (Japan) and the ISG Business School in Paris. His doctoral thesis deals with the effects of digitization on the nature of work and the premises for effective implementation of big data analytics.
Prof. Dr. Marion Festing holds the Chair of Human Resource Management and Intercultural Leadership at the ESCP Europe Berlin Business School and is founder of the ESCP Europe Talent Management Institute. She researches and teaches on matters of human resource management, leadership and intercultural management in master programs and in executive education and is the author of numerous scientific publications and the internationally leading textbook on International Human Resource Management. In various functions (e.g. as Rector of the Berlin Campus 2012-2017) she has played a major role in the development of the ESCP Europe.
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