The Future of HR
Cultivating the capacity of the organisation to shape its future
“It is understandable that business has not been totally adept at cultural leadership since cultural expectations usually only change slowly, maybe generationally or over multiple generations, absent some major catastrophic shock to the system. No longer. Cultural expectations are changing fast. Cultural disruption is now as rapid and as foundational as technological disruption — if not more so”. — Joe Zammit-Lucia 1
From 2003-2007, I ran a peer learning programme for senior executives and HR professionals with Professor Lynda Gratton of London Business School.
Each member organisation sent a senior executive with an HR colleague to the programme, designed around dialogue between the participants, with academic input from Lynda, and practitioner insights from me and my colleague Dr Peter Scott-Morgan, creator of the Unwritten Rules of the Game approach to culture change. 2
Before this programme I’d not encountered many senior HR folks — despite having already worked for more than 15 years with senior executives helping them create future-fit cultures of innovation, agility, and adaptiveness in their organisations.
Does this conspicuous absence of HR in those previous 15+ years strike you as strange?
After all, cultures of innovation, agility, and adaptiveness are all about people — their mindsets, attitudes, behaviours, actions & interactions, etc.
But HR were rarely involved in this work because they were mostly seen by the senior executives as an administration and compliance cost centre.
As someone unkindly said of their strategic value, “HR” was “Hardly Relevant”.
But the programme above attracted forward-thinking HR and business colleagues who appreciated the need to create future-fit cultures long before the digital revolution made this much more obvious (Facebook only launched in 2004, Twitter in 2006, and the iPhone in 2007).
The HR practitioners were particularly curious about what I’d learned about how high-tech organisations create their renowned cultures of innovation, agility, and adaptiveness.
Compared to other firms, the much more dynamic culture in high-tech primarily stems from senior executives operating from the perspective that the people best equipped to keep them ahead of the curve are younger employees adept in the latest technologies.
As a result, these senior executives tend to hog decision making far less than in other sectors — where the problematic perception that people with more years in management make better decisions is more prevalent. 3
Senior executives in high tech largely understand their primary role is not making decisions but creating conditions — in which innovation, agility, and adaptiveness flourish, and decisions made by others are pragmatic and well balanced in risk and reward.
Senior executives in high-tech tend to have an intrinsic feel for “culture”, which in other sectors is often:
mistaken for having a list of supposed shared values 4
delegated to HR as employee engagement 5
In best case scenarios, HR plays an effective role in the cultivation of leadership — defined by my colleague Dr Peter Senge as the capacity of a human community to shape its future 6 — which is something HR could be doing more consistently in other organisations.
What HR can learn from QA
When I started out on my professional career in the 1980’s, Western firms were learning some tough lessons about Quality Assurance (QA) from Japanese competitors.
Today it barely seems conceivable, but back then, “Made in Japan” typically meant “shoddy plastic junk”.
So imagine how surprised Western giants in electronics, automotive, and consumer durables were at losing their previously unchallenged dominance of home and overseas markets to Japanese invaders offering higher quality products at lower prices.
Japanese industry had been quietly transforming itself by applying the principles of Total Quality Management (TQM) — aided by Western advisors whose ideas and insights had largely been ignored at home.
By embracing QA & TQM principles, Japanese workers not only produced better products and services, but also played a central role in making continuous improvements — so products and services got progressively better and better.
Senior executives in Japanese firms were creating conditions in which sense making, decision making & action taking were much more tightly coupled, iterated, embedded, and distributed throughout the organisation than in Western competitors. 7
Up to this point, “Quality” in the West had been about control, not assurance.
Organisations paid small armies of Quality Inspectors to sit at the end of production lines to (hopefully) catch problems before they were shipped to customers.
But the inspectors had little involvement in feeding back the problems they observed to colleagues upstream who could improve design and manufacturing quality.
As a result, the same quality failures occurred again, and again, and again…
With QA & TQM, things were very different.
Rather than inspectors who couldn’t actually prevent problems, only hopefully stop them reaching customers, under the QA & TQM philosophy it was the responsibility of everyone to build quality into their everyday actions and interactions, thereby reducing or eliminating the need for end of line inspection.
Being forced to emulate this shift from inspection to assurance transformed the culture of quality in Western organisations, especially in the manufacturing sector.
If HR is to play an important role in cultivating the capacity of the organisation to shape its future, a similar shift is required away from traditional inspection-like HR activities:
monitoring people performance;
moving people who don’t fit;
mopping up messes when things go wrong.
A new name is not enough
Some organisations have rebadged HR as People and Culture, Culture and Organisation or, following Google’s example, People Operations. 8
Where this name change reflects a genuine shift in focus, capability, and activity — not just a new badge stuck on the same old function — HR has the potential to become a Centre of Excellence for cultivating the capacity of the organisation to shape its future.
In this role, HR would support senior executives in making the mindset shift in their role from making decisions to creating conditions.
They would also take a lead in building greater organisational capacity to shape its future in tackling the complex systemic challenges it increasingly faces including:
uncertainty and unpredictability in the external context
new entrants and technologies changing the competitive landscape
evolving demands of employees, customers, and regulators
increased complexity of expectations beyond just financial performance
unrelenting pressure to continue delivering profitability
Complexity of demands
As well as disruption due to digital technologies, organisations face an increasingly complex mix of competing demands in multiple dimensions, potentially pulling in different directions.
In recent years there’s been a rapid rise in social activism, most visibly as groups like Extinction Rebellion (XR) take increasingly direct action against organisations they see as failing to curb their contributions to climate change. 9
The proven ability of activist groups like XR to get on the agendas of senior executives means the number and variety of such groups will increase in future.
Members of such groups will not just include outsiders, but employees too will demand, in increasingly vocal and (via social media) visible ways, senior executives take effective action to address a growing range of political, social, and environmental concerns.
There’s already mounting pressure on organisations in the US to take more explicit stands on race and gender issues, and where the US leads, other countries tend to follow.
Then there’s the mental health crisis, where the World Health Organisation cites a 25% increase in the prevalence of anxiety and depression worldwide post-Covid-19. 10
Regulation is also increasing — the global occupational health and safety standard ISO 45003 (June 2021) highlights the need to manage psychosocial risks impacting mental health in organisations. 11
And waiting in the wings, driven by rising prices and the failure of trickle-down economics 12 to curtail the widening gap between executive and employee pay 13, it can’t be long before we see an Extortion Rebellion activist group. 14
As Joe Zammit-Lucia points out in The New Political Capitalism:
“It is increasingly seen as essential that business makes a visible positive contribution to the broader social good — a contribution that goes far beyond employing people and generating economic activity. This is a new world where senior executives brought up in a world where financial performance and their perception on Wall Street was not only their main business goal but tended to define their whole ego and self-image are now faced with a set of expectations that are different, somewhat fluffy and intangible, and ever shifting”. 15
These are expectations that senior executives cannot hand off to PR agencies or management consulting firms like in the past.
It’s a big ask for them to shift from an almost exclusive focus on financial performance to creating an organisational culture that’s fit for a future filled with escalating external and internal expectations .
Organisations that fail to engage their people to shape its future will remain prey to the seductive overtures from finders, minders, grinders consulting firms promising to take the problem off their hands. 16
Senior executives were highly susceptible to such overtures, right up to a couple of years ago. But in the wake of the Covid-19 pandemic, the combined external and internal demands can only be met by people becoming ever more active in sense making, decision making & action taking throughout the organisation.
Consequently, the outlook for the traditional consulting dinosaurs is bleak.
In future, we’ll look back on Covid-19 as having been their meteor strike.
The question is how long they’ll hang on before extinction, and how many clients they’ll take down with them…
For HR to step up will require courage, new skills, new insights, and support — just not from consultancies shipping in large numbers of their junior staff to do the heavy lifting, thereby preventing people in the organisation from genuinely developing its future-fit muscles.
HR’s future options
HR can either grow into importance, or it can shrink into irrelevance.
This is arguably the best opportunity HR has ever had to step up to playing a genuinely strategic role, reinventing itself as a Centre of Excellence for cultivating the capacity of the organisation to shape its future — shifting from inspection & compliance to enablement and assurance.
Where to start?
In helping organisations create future-fit cultures over the past 35 years, amongst the first things I’ve done with new senior executive clients is identify and enrol internal change champions who possess, or have a natural inclination to develop, a 2D3D innovative mindset. 17
Cultivating 2D3D mindsets is central to creating the future-fit cultures organisations need, and is best guided by internal change agents with appropriate mindsets, attitudes, and skills.
Alongside a deepened understanding of the central importance of cultivating 2D3D mindsets, the second main thrust is to recognise the pivotal role of key influencers in systemic culture change.
As the name suggests, key influencers (who are not always in the most senior positions) represent the locus of maximum leverage for changing the system of mindsets that form and informs people’s awareness of “the way we do things round here”.
Finding and focusing on shifting the mindsets of the key influencers is the low risk, high leverage way to create a future-fit culture of innovation, agility, and adaptiveness. 18
HR is the obvious place to develop this as an organisational capacity.
Doing so will prove challenging where HR has hitherto been primarily focused on operational aspects such as compliance, recruitment, assessment, engagement, performance management, and shared service delivery.
Routine operational activities like these are already under increasing threat of digital disruption with the rise of machine learning and artificial intelligence.
If its primary focus remains here, HR is increasingly likely to shrink into irrelevance.
Questions for reflection
How deep and broad is the dialogue between HR and senior executives in your organisation around creating a culture that’s fit for this rapidly approaching future?
How is HR currently supporting senior executives to ensure decision-making is increasingly integrated with the sense making and action taking that’s already happening in the body of the organisation?
How will HR and senior executives work together to share the responsibility, burden, and initiative for creating the necessary conditions for emergence of a future-fit culture of innovation, agility, and adaptiveness?
Is the organisation proactively addressing these issues as seriously as it should?
Or is it waiting until it’s forced to?
By then, will it be too late?
The Unwritten Rules of the Game was McGraw-Hill’s Business Book of the Year 1994 (ISBN 0-07-057075-2). I worked closely with Peter for 15 years until he retired in 2007.
This is a common type of Seeing-Being Trap — which is the #1 personal barrier to creating future-fit cultures, as described in this seven minute video.
Culture as Shared Values is a toxic myth that’s prevented organisations from creating future-fit cultures of innovation, agility, and adaptiveness since it was dreamt up and foisted on organisations 40 years ago by a leading management consulting firm.
Employee engagement depends on the key influencers whose mindsets, attitudes, and behaviours actually actually drive it, whereas HR can only measure it. And, as the old farming adage says: “weighing a pig doesn't make it grow any faster”.
I’ve found my colleague Dr Peter Senge's definition that “Leadership is the capacity of a human community to shape its future” amongst the best ways to think about leadership when creating a future-fit culture. From The Dance of Change (Senge et al 1999 p16).
This is the essence of a future-fit culture of innovation, agility, and adaptiveness.
If they do, you heard it here first… 😉
The 2D3D mindset at the heart of a future-fit culture of innovation, agility, and adaptiveness is described in more detail in this previous piece.