Staffing Management

COVID-19 has fast forwarded HR by 10 years

By Alan Watkins

Jul. 8, 2020

With every global crisis, we also experience a time-warp. Ten years of progress can happen in just a few months. 

For example, COVID-19 has probably done more for digital transformation than a 1,000 CEOs could do. Companies have been forced to embrace a completely new way of working that they were planning to roll out over several years, and now suddenly the home office digital connectivity and new website is up a running a couple of weeks later. 

The same compression has happened in HR. New HR practices not expected to emerge until 2025 are already up and running in some global organizations. But to understand the compression we must briefly explain where HR has come from and where it is going.

The history of HR

The factory system shifted production from village craftsmen and small businesses to the “dark satanic mills” of William Blake’s poetry. HR all started with Mrs. E. M. Wood, the first “welfare officer”, essentially the first HR manager. Her role in 1896 to take care of women and children working at the Rowntree factory in the UK. The Welfare Workers Association (WWA) formed and grew into a consortium of 34 employers. It is now known as Chartered Institute of Personnel and Development (CIPD). This first HR wave was paternalistic.

Every few years HR practice starts to fail, and a new way of working evolves. These new levels of HR practice or wave of development mirror the prevailing worldview at the time and emerge largely as a solution to the problems caused by the previous wave or way of working. With every new wave of HR practices there are initially huge benefits to business. But eventually each wave starts to fail. It is that failure that then triggers the next evolutionary leap to the next wave of progress.

For example, Paternalism became untenable in a push toward greater productivity. The Power wave then emerged and with it, HR 2.0. Factory owners exerted draconian power over employees while employees recognized there was strength in numbers. The “welfare officers” of HR 1.0 became “industrial relations officers” of HR 2.0, and trade unions emerged to try to even the odds between owners and workers. A monumental power battle emerged after the First World War, and it only stopped after the end of the Second World War. 

After the war, the need to establish order and rebuild the country triggered a focus on process and the emergence of HR 3.0, the Process wave. Rules, regulations and procedures were put in place to kick-start business again, reduce the risk of further power battles and acknowledge the considerable contribution made by working class men on the battlefield. There was a push for greater efficiency on top of the previous focus on productivity. 

That effort took decades, reaping significant benefits. But by the mid-1970s the inevitable downside of the Process wave started to emerge. Business complained about a lack of flexibility, adaptability and entrepreneurialism. Too much process and too many rules were hindering progress. 

Once again, the downside triggered the next evolutionary jump up to HR 4.0 – the Profit wave where “shareholder value” became king. Although the obsession with money had been bubbling away in the background for decades it wasn’t until the 2000 dot com crash and the 2008 global financial crisis that the negative elements of HR 4.0 came into sharp focus. For the first time, the very notion of capitalism came into question. 

The greed, hubris and fraud that facilitated the global financial crisis was exposed, and the escalating inequality it created triggered the emergence of the People wave (HR 5.0). Whilst most HR functions are still stuck at HR 4.0 or earlier, a handful have sought to pursue a wider, more purpose-driven agenda rather than define their raison d’etre as simply to make more money for their shareholders. 

Also read: The evolving role of a chief people officer

The current state of HR

The change that was expected beyond 2020 — characterized by HR 6.0, the Paradox wave, and HR 7.0, the Planet wave —  is already here. 

The Paradox wave is marked by the fact that the word of work has become very complicated with many contradictory or paradoxical things happening. For example, there is a global health emergency at the same time as an emergence of the fact that our immune systems are very vulnerable to zoonotic diseases such as COVID.

covid-19

In the Paradox wave, chief people officers become chief development officers, helping to lead “deliberately developmental organizations.” In HR 6.0 we have woken up to the idea that it is the maturity and sophistication of employees that is the primary competitive advantage. Developmental programs must deliver genuine people change not just teach skills or increase knowledge. 

HR 7.0, the Planet wave, is so called because it ushers in the realization that not only should people be ahead of profits, but so should the planet itself. In this wave companies will no longer be allowed to drive profits at the expense of the planet itself. 

In waves 6.0 and 7.0, companies will become three-layered networked organizations —  fluid, agile and highly collaborative. They will engage with partners, dissolve their silos and operate with a swarm mentality. Employees will be shared with other like-minded organizations in corporate alliances. Fully flexible employment contracts will become the norm. Companies will need a social license to operate and report on their community building initiatives as much as their profit returns to have any hope of attracting tomorrow’s talent pool. 

This transformation will be led by the chief development officers  who will become the change agents of tomorrow. If HR seizes the opportunity and starts leading, they can change the workplace and change the world.

Also read: Chief people officer trends: More women, more degrees, more turnover

 

Dr. Alan Watkins is the CEO and co-founder of Complete, a leadership consultancy that works globally with CEOs and executive boards in multiple markets. His latest book "The HR (R)Evolution: Change the Workplace, Change the World" was published by Routledge.

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