How do the foremost HR organizations drive value in the face of disruption? How do the foremost HR organizations drive value in the face of disruption? How do the foremost HR organizations drive value in the face of disruption?

As the world recovers from the Covid-19 crisis, it cannot be denied that it has left an impact on the way organizations operate. Not only that, but the past decade has also seen significant advancements in technology and automation. This has been dubbed “double disruption” by the World Economic Forum (WEF), with many organizations succumbing to it.

However, in the face of such unpredictability, around 10 percent of the global sample of HR organizations have utilized the disruption as a catalyst for change and to drive value. These HR organizations have been aptly termed as ‘Pathfinders’ by KPMG professionals. 

Pathfinders are HR organizations focused on integrating and mutually reinforcing capabilities such as employee experience (EX), data analytics, workforce shaping and digital HR learning. Not only have they shown themselves as exemplary in leading the way through double disruption, but also in other challenging areas including climate change and generational differences. In addition, they tend to be more positive about the future, more likely to adopt leading technologies than their peers, and have responded more quickly during the pandemic compared to their counterparts.

Notable Pathfinders in HR were found among leading organizations in the banking, technology, health care, retail, insurance, and manufacturing sectors. 

KPMG Global professionals conducted in-depth interviews with HR leaders who have demonstrated Pathfinder characteristics. So, what did they learn?

• The ‘S’ in ESG
  Pathfinders understand the tremendous value that Inclusion, Diversity and Equity (IDE) bring.

• The ‘total workforce approach’
  Pathfinders challenge existing approaches to talent management and embrace a new ‘total workforce’ philosophy.

• Reimagining HR for the new world of work
  Pathfinders experiment with new ways of working as well as emerging technologies. 

ESG stands for Environmental, social, and governance, and refers to the sustainability and impact of a company beyond that typically covered by financial reporting. It has seen a surge in interest, with 30 percent of senior executives looking into investing more than 10 percent of their company revenues on ESG activities over the next three years. With the pandemic, the social aspect came under the spotlight, accentuating IDE concerns that needed to be addressed.

Pathfinders recognize IDE’s tremendous value and incorporate it into shaping their organizational strategies. Leveraging on data analytics, Pathfinders are actively working on identifying hidden biases that may affect performance and drive attrition.

By utilizing data insights, a Pathfinder within the health care sector realized that their recruiting pipeline lacked diversity. To source a diverse pipeline for talent, a multi-pronged hiring strategy was launched, and included investing in paid internships and exploring tuition-free opportunities. The Chief Human Resources Office (CHRO) notes that taking the long-term approach helps generate lasting changes, not only across the organization, but also within the community.

Pathfinders believe that they should be leaders of change for societal issues, such as IDE-related biases. For instance, a Pathfinder in the insurance sector utilized data on specific employee populations and discovered that minorities felt less included. As a result, listening sessions were conducted to encourage a deeper understanding of their experiences. At the same time, the findings led to the enhancement of recruitment principles to protect against bias as well as the launch of reverse mentoring programs to educate managers.

Pathfinders, therefore, recognize that significant change occurs when everyone in the organization acknowledges their own biases and adapts their behavior in response. The outcome? These organizations are actively reassessing key leadership capabilities to encourage greater diversity of thought and experience, with CEOs and CHROs alike agreeing on the need to uphold organizational purpose and values to retain and attract employees. 

Pathfinders embrace the new ‘total workforce’ philosophy, even though it challenges traditional approaches to talent management. They have shifted to becoming more employee-centric, rethinking performance management, improving digital enablement, and helping employees build the skills they need – a lasting approach meant not only for today, but also for the years to come.

Establishing the right organizational, employee-centric culture and owning the EX are both key characteristics of Pathfinders. Leading-edge technology plays a role in implementing the employee-centric model; when applied correctly, it provides the foundation for more employee-centric processes and seamless experiences.

With the cost pressures of recruitment and a narrowed talent pipeline due to the pandemic, rebuilding the workforce via reskilling and upskilling have become top priorities. HR leaders are finding more efficient and innovative ways of identifying and solving skills gaps. In the height of the pandemic, a Pathfinder within the banking sector closed their physical offices as they developed new ways for customers to interact virtually. Instead of laying off branch teams and hiring new digital support staff, they reskilled 1,500 employees to move into their virtual banking environment. “The top three highly demanded jobs of the future don’t exist yet, so building skills in this digital world has become hugely important” notes the EVP Employee Success Business Partner.

Skills are constantly evolving. According to the WEF, the value of skills decreases by 50 percent every five years. Organizations may be seeing a decline in conventional competence frameworks and instead observe more frequent use of tools like talent marketplaces to match people, skills, and tasks. It is then easier to find talent throughout the organization by identifying skills gaps, connecting employees to projects based on skills requirements, and empowering employees to identify development opportunities.

There is a shift in performance management as organizations increasingly recognize that organizational performance is positively connected to learning and collaboration. Various Pathfinder organizations are evaluating their performance management strategy to ensure they have strength-based, agile and a ‘just-in-time’ approach focus on objectives and key results. Despite the aspiration to change, the hesitancy for organizations lies in the “we’ve always done it this way” idea. In addition, the move to overhaul performance management requires significant coaching and change management. Although conventional performance management may be complex, it is worth a rethink, as traditional methods may soon have no place within the new ways of working.

To lead in the new world of work calls for the reinvention of HR. With no playbook to navigate the new environment, HR leaders seek ways to innovate the EX with their capabilities, authority, empathy, and emotional intelligence.

The pandemic exposed us to a new reality which nobody could have prepared for. With no pre-built guide, the solutions are experimental. Pathfinders embrace an agile mindset, which gives them freedom to test new ideas, even if risky. The HR Director of a Pathfinder in the manufacturing sector reflected that “waiting to find the perfect solution before moving ahead would have put us at a competitive disadvantage.”

The art and science of listening is also key to better understanding employee motivations, predicting needs more accurately, and resolving issues before they arise. HR leaders are using continuous feedback to inform decisions and create stronger communication between leaders and the workforce. As an example, a Pathfinder within the banking sector deployed an app to support the company’s continuous listening strategy before creating a platform for anonymous employee feedback, to ask questions and engage in conversations with leaders. These real-time pulses of the EX, coupled with predictive algorithms, can indicate potential experience gaps and talent risk.

A new world of work in the new reality requires new skills. Workforce planning has become increasingly prevalent and a sought-after skill in HR. Scenario-based workforce planning – powered by predictive analytics – helps organizations make informed decisions about the workforce size, makeup and the capabilities needed for the future. 

So, how does an organization become a Pathfinder?

When the concept of Pathfinders was first explored in KPMG’s 2019 research, it was found that the shared common approach was the prioritization of workforce shaping, data analytics, digital service / EX and learning, as one systematic whole. Up to the most recent research in 2021, the same themes have consistently prevailed. This is a sign for organizations to experiment on their own Pathfinder journey.

Where to begin? For starters, the HR function should define their value. A few strategic questions to consider might be: In what ways will our workforce shape, size, organization and skills be different three years from now? How can we engage Gen Z so that they experience a great early career as well as the benefits of hybrid working? What does “building back better” look like for us?

With the use of data and analytics, organizations may deliver more. Building the capacity to deliver analytical insights and evidence is critical to finding answers to the business’s most burning questions. Pathfinders own the data collection and analysis processes and must take the lead on delivering insights across the enterprise.

The need to become the architect of the new operating model is also emphasized among Pathfinders. It requires the HR function to be more integrated by moving from siloed Centers of Excellence to Communications of Practice, such as ‘talent and learning’, and more holistic in building the total workforce by ensuring it is the right shape, size and armed with the right skills. The HR function would also benefit from being less process-driven and more focused on purpose, experience centricity and business results.

It is worth remembering this: there is no playbook in the new reality. So, what does that mean? It means now is the time for HR leaders to embark on their Pathfinder journey. 

Nur Danisha Kamal Bahrin is a senior adviser in Management & Regulatory Consulting 

Sources:

1. The future of jobs, World Economic Forum, 2020.
2. Future of HR 2020: Which path are you taking, KPMG international, 2019.
3. 2021 CEO outlook, KPMG International.
4. 2020 CEO Outlook, Covid-19 Special Edition, KPMG international.
5. The Future of HR in the new reality, KPMG International, 2020.
6. Accelerating workforce reskilling for the fourth industrial revolution, World Economic Forum, 2021