Other parts of this series:
A bold vision for the future
In the previous two posts in this blog series, we’ve covered why the financial services industry is at an historic turning point—and why yesterday’s HR thinking won’t help build competitive advantage tomorrow.
That all leaves us with one huge unanswered question: what will?
This is an impossible question to answer with exact accuracy. Thanks to influential new technology like AI, major demographic shifts, and new competition, the financial services industry is changing in ways that are impossible to predict.
But that doesn’t mean that we need to leave tomorrow completely to chance. In an uncertain world, certain ways of operating and ways of thinking will outperform others.
Here are five points to guide HR in the New Digital Age.
1 – The future of this industry belongs to the agile and the truly human
As we described in the first post in this series, this industry is in the midst of generational change—in more ways than one. Millennials, now the biggest single generation in the workforce, are beginning to exert more industry influence, both as customers and, as employees. Powerful new technologies like the cloud, blockchain and AI are not only making huge impacts; they’re combining in ways that no one can predict. And competition is ramping up. HR will play a crucial role in leading their organizations through this continued disruptive change.
No one knows where this will all wind up, but one thing is certain: tomorrow will be different from today. That’s why agility—both within the HR function and across the organization—matters today and why it will matter more tomorrow. HR needs to push organizational boundaries to encourage enterprise agility and create new ways of agile working.
But agility on its own is not enough. The lives of employees, both inside and outside of the workplace, are becoming more stressful. Accenture research shows that fear and anxiety are the biggest barriers to change in financial services right now. Organizations need to inspire trust in order to foster the psychological safety needed for the smart risk taking, collaboration and continuous learning that creates organizational agility.
Helping people feel secure and creative in the midst of huge change is an important enabler of organizational agility. HR needs to have the courage to move beyond traditional change management communication practices like crafting and refining careful messages about organizational direction when all the plans are known. They need to find ways to move with speed to provide employees more frequent, direct and often informal communication before all the final plans are known and to be open to receive real-time feedback checking the pulse of the organization.
2 – HR professionals need a stronger grasp of the social sciences and neuroscience
Many leaders think about employee motivation in terms of carrots and sticks. Extra vacation and higher salaries are carrots. Punitive performance ratings are a stick. This thinking comes from behaviorism, which was created by psychologists like B.F. Skinner and Ivan Pavlov. Behaviorism places a strong emphasis on using observable behaviors to explain how a certain person acts in a certain situation. There’s a trigger and then a reaction—or carrots and sticks.
Today our thinking on employee behavior is increasingly influenced by neuroscience, which in recent years has revealed many fascinating things about how our brains work—and what that means for HR leaders. (If this is news to you, this is a great place to start.) Neuroscience offers more nuanced and useful ways of thinking about what makes employees tick.
Insights from the social sciences and neuroscience are powerful tools for anyone who needs to lead people through prolonged change—which is a pretty good description of an HR professional in the New Digital Age.
3 – HR needs to create learning cultures
As technology frees people from repetitive rules-based work, it will augment and elevate their “more human” skills and create demand for new skills. HR needs to partner with the business to find ways to optimize employees skills with automation technologies and to lead the way in upskilling employees. The industry is already facing a skills crisis right now. As the pace of change picks up, this shortage is set to deepen.
The solution is to foster communities of independent, self-motivated learners in your business. The evidence is clear that when empowered with digital experiential learning systems and encouraged to learn what they need to know when they need to know it, employees can pick up new skills at remarkable rates. HR needs to offer learning and reskilling as a real selling point for an attractive workplace.
Organizations need to shift from a talent management system of organizing and filling rigid jobs to a system that adapts continuously to work activities. Clusters of skills need to be bundled and unbundled as work evolves. This shift can enable business agility through improved re-deployment of people as organizations continuously evolve.
The task before HR is how to create a self-directed learning culture. Four key principles to get started can be found here.
4 – The new HR is fluent in data and cutting-edge technology
I’m surprised at how often I hear HR professionals say that they are not tech savvy. In the New Digital Age, this is not that different from saying that you are not business savvy.
To succeed in today’s business environment, HR professionals will need much greater comfort with data and with cutting-edge technologies. Decision science and analytics enable HR leaders to progress to evidence-based thinking so that insights can translate into improved decision making and healthy organization cultures. New roles within HR are emerging, such as data analysts, performance engineers, employee experience designers and virtual facilitators.
Human + machine collaboration is also emerging as a new and critical part of the talent puzzle in the workplace. Talent professionals will need an understanding of how AI and algorithms work to make informed decisions. HR also needs to lead the way in determining how to best combine human + machine to realize the maximum business value. How work gets done will be continuously reinvented and HR leaders need to embrace constant work reinvention.
To lead change across the business and the industry, HR will also need a keen understanding of the ethical issues involved with these new technologies. Social media sites such as Glassdoor expose every detail, both positive and negative, of working at an organization. This can create reputational risk. AI, algorithms, and other techs present an ethical minefield for financial services. HR is uniquely placed to help the industry navigate it.
5 – HR must focus on people
Technology is driving change across the industry and around the world. AI and other new tools are allowing our machines to become more human-like and more powerful than ever before. (In fact, new Accenture research reports that AI could unlock $140 billion in value for the industry by 2025.)
This is why HR’s overriding focus in the New Digital Age must be on people—not human resources, not talent assets, not tasks, but people. HR execs need to be able to create environments for leaders to lead people in nonhierarchical fluid work environments and empower talent on the front lines to drive problem solving and innovation. Tomorrow’s industry leaders will be less hierarchical, more collaborative, and more creative than today’s. Employees will be more empowered, able to re-skill themselves at speed, and accustomed to working alongside robots. Machines now our co-workers. Employee experience will be a key differentiator in the competitive marketplace.
And firms can only get there if HR refocuses itself. The time is now to put people back in HR. HR leaders should reconsider Human Resources job titles to more people-centric titles that are spoken in everyday language and reflect putting people back into HR.
Key areas HR can contribute to business success
Change can make us all uncomfortable. Some readers at this point may be worried about the future of the industry or their place in it. Therefore, to round out this blog series, I’d like to present six areas where HR can make difference in financial services right now.
- Plan for a future driven by AI and automation. HR should work with operations and technology leaders from across the business to figure out how the workforce will need to change as AI and automation take on a greater role—and how they can work effectively with machines.
- Use AI for good. HR has a tremendous opportunity to help AI’s impact on the workforce be positive and create more meaningful, stimulating, high-quality jobs.
- Cultivate a culture of innovation. Adaptability and creativity are two key sources of organizational agility that lead to competitive advantage in the industry right now. Their influence is set to only grow. If an organization does not empower people and engage them with new technology, it will be unable to attract its fair share of Millennials and risk losing talent.
- Move from a job architecture based on traditional job families to a skills–based talent architecture. Organizations need to transition from vertical career ladders based on fixed jobs to dynamic systems for mapping skills to tasks and jobs including reskilling pathways.
- Foster a culture of collaboration by involving employees in tech decisions. As the impact of new technologies grows, tech should not be something that happens to employees. Instead, they should be involved in the discovery, planning and implementation of new systems to ensure they dovetail with other parts of the business and lower the risk of bugs.
- Embrace continuous learning. More than ever, HR needs to provide training and support for employees so they can keep pace with new tech and new knowledge. (Here’s a helpful guide on getting started.)
If you have questions or concerns about the future of HR in financial services—or if you want to continue the conversation—I would love to hear from you. I can be reached here.