2018 HR Unity Insights Report HR loves change€¦ · 2018 HR Unity Insights Report HR loves change...

2018 HR Unity Insights Report

HR loves change– Except when it comes to themselves.

of HR Directors in Australia don’t measure the commercial implications of their People & Culture initiatives.

76%

HR Unity Insights Report – June 2018 © We Are Unity 2018 3

Executive summary– Our world is changing but HR isn’t – or at least not fast enough.

Oil refiners are becoming electricity retailers in anticipation of driverless cars. Banks are striving to become technology companies to get ahead of Silicon Valley’s vision for financial services. Insurance companies are becoming less invisible by offering to plan our wellbeing. Meanwhile, the wholesale giants of Australian FMCG are diving into e-commerce to sell directly to consumers, bypassing retailers who are themselves preparing for the sophistication and speed of Amazon’s supply chain. Markets are being disrupted, and many organisations are just starting to learn the true meaning of “customer centricity”.

The question we wanted answered was where does HR fit in?

Over 100 Australian HR Leaders contributed to this study so we could better understand their hopes, fears, capabilities, challenges and priorities.

What we found, is that most HR leaders recognise that the world is changing. Their challenge is enabling the rest of their business to keep up with the external market – or, more importantly, stay ahead of it. This isn’t an HR problem: it’s a business one. Because organisations can only change when their people do.

31%

of HRDS rated ability to change as a top priority to successfully execute business strategy

44%

rate driving culture change as a priority.

20%

are focused on pace of change.

Yet only

FY19 is going to be mission-critical to future proofing Australia’s corporate economy. The fact that we’re still asking what part HR has to play in that is concerning.


In our opinion, it’s because the link between people, culture and business performance is not immediate enough. Business leaders respond to commercials: that is, hard stats that clearly link people investment with business returns. When we’re using people data in isolation, we’re not making an explicit link between employee experience and customer experience.

70%of HRDs do not measure the commercial value of people & culture initiatives.

52%

of HR leaders list customer/consumer centricity as a top cultural priority, as driven by business strategy.

20%

of HRDs say that innovation is key to achieving strategy, but only 10% have plans to unlock innovation in the next two years.

13%

see employee experience as driving acquisition

Only

So is the issue that HR doesn’t have access to commercial data, or is it that the capability to understand and apply the data doesn’t exist in the HR team? And is it fair to expect HR Directors to speak the languages of sales, marketing, brand and innovation – as well as being subject matter experts.

The HR function has traditionally been on a repetitive journey of cost cutting, so HR Directors are no stranger to making data-driven decisions. But has the goal of operational efficiency now made HR’s focus to take value out of an organisation, rather than design environments and build capabilities to enable value creation?

The good news is our study indicates that mindsets are changing. Customer centricity is reported as a top priority area that organisations need to focus on from a cultural perspective. Employee experience data is seen as the most valuable data HR leaders would like to have. 60% said that improving the employee experience is expected to result in greater customer experience, revenue growth and operational efficiency.

24%

8%

of HR Directors in Australia have commercial outcomes linked to people performance, and only

Just

use analytics to predict how they should invest their budgets in future.


So what’s next?– HR Directors are constantly being challenged for not having a credible seat at the table. In the era of transformation and disruption, that legacy thinking is going to be a problem. Because the cultural change your organisation needs to deliver that expensive strategy on a page starts with HR.

Here’s our advice for unleashing the true innovation potential of the HR function. • Focus on designing a commercial culture. In today’s experience economy,

there are two types of business: the kind that future proofs and the kind that gets disrupted. The difference between the two? Culture.

• HR uses data to measure the past, rather than the future. But you don’t have to leap head first into predictive analytics. Figure out the top three commercial measures of success your team can influence. Think revenue, speed to market and new product development for starters. Where do you need to be? How can you help the business get there? Take it from there.

• Don’t be afraid to ask for access to raw consumer and customer data. And don’t be afraid to admit that you don’t fully understand or haven’t used it before. The knowledge you need to unlock data exists in your business: leverage it.

• Use the new perspective and language you gain to emotionally engage and align your executive colleagues to unlocking the true commercial value and opportunity inherently present in your culture. Talk revenue uplift in the short term, total shareholder returns in the medium, and brand equity further into the future.

• Use your C-Suite’s newfound understanding of the tangible and business-critical impact of culture on the performance of your organisation to start reallocating your existing resources. What capabilities are becoming automated? What value can new roles bring? Embrace the opportunity to create immense diversity of thought and capability in HR and become the go-to department leading innovation.

It seems like a lot to change, but it’s worth noting that future-focused HR leaders are already changing their data conversations. We’re seeing forward-thinking teams move away from engagement surveys and soft people questions as their sole measures. Instead, they’re asking for commercial, performance-based insights. And rather than looking externally to benchmark, they’re looking internally to how they’re progressing against their business strategy.

Section 1:

Breaking down the barriers– Leadership, culture and barriers to successful transformation


Right?– Our survey asked how big a transformation respondents’ organisations are currently going through. Nearly two thirds –

Change is the new normal.

64%

reported going through either large transformation or the largest transformation they’ve ever experienced

With organisations facing so much change and disruption, the biggest barriers between HR and successfully executing business strategy were unsurprising. See Fig 1.

All three barriers – leadership capability, cultural alignment to strategy and addressing reluctance to change – demand transformation on an individual as well as organisational level.

How would you rate the scale of change your organisation is going through?

Key: The percentages represent the number of organisations who selected each option.

Extremely large transformation i.e. The largest transformation we’ve ever gone through

19% Small transformation i.e. Continuous improvement

15%

Large transformation i.e. The whole business

45% Not significant at all i.e. Business as usual

3%

Medium transformation i.e. Single business unit

15% The question is not relevant to my organisation

3%

Fig.1


It was therefore also unsurprising that in small organisations leadership capability was by far the biggest barrier, followed by lack of resources. Smaller organisations are likely to be less experienced in building senior capability and more likely to be led from the top. They also lack the resources available to larger organisations.

In organisations of 10,000+, culture was seen as the biggest barrier. Again, this isn’t a surprise. Larger organisations have a more established culture, reinforced across myriad individual interactions and touchpoints, which makes it highly nuanced and time-consuming to change.

It’s important to acknowledge the results represent the view from HR leaders’ perspective. The result may have been different if we had asked the same question of CEOs or other business leaders.

What are the biggest barriers to successfully executing your business strategy? (respondents were asked to rank their top three)

The percentages represent the relative importance of each answer option out of 100 (taking into account respondents’ top 3 rankings with equal weighting)

Leadership skills

Culture alignment to strategy

Reluctance to change

Resources

New skills i.e. digital & AI

Limited data & Insights

Lack of innovation

Technology

New industry regulations

Speed to market

Senior leadership

Technical skills

Industry/geographical trends

Lack of capital investment

Other

11%

10%

9%

8%

7%

7%

6%

5%

5%

5%

3%

3%

20%10% 15%5%

17%

4%

1%

Fig.2


The culture conundrum– While leadership capability has been identified as one of the biggest barriers to success for decades. The culture that stems from it is something that has been less measured and reported on. Culture is often seen as intangible by nature and difficult to measure. And demonstrating its commercial impact is even more difficult. But it’s possible.

When asked about what aspects of culture the organisation’s business strategy requires them to focus on, respondents ranked customer centricity as a top cultural priority, followed by organisational agility and collaboration.

More traditional HR focus areas, such as inclusion and transparency ranked at the bottom of the list. Is customer centricity’s high ranking driven by the general trend towards customer experience? Whatever the reason, this focus offers an opportunity for HR to demonstrate the commercial impact its work is having on customer and shareholder returns.

Which aspects of your culture does your business strategy require you to focus on? (respondents were asked to rank their top three)

Adherence to processes

Transparency

Inc lusion

Other

External orientation

Collaboration 12%

Results driven 9%

Accountability 9%

Pace of change 7%

20%10% 15%5%

Customer/consumer centricity 17%

14% Organisational agility

Efficiency

Resilience

Risk tolerance

Disrupting & challenging

Learning orientation

Long-term focus

Entrepreneurial

1%

1%

1%

1%

1%

3%

3%

3%

4%

4%

4%

4%

The percentages represent the relative importance of each answer option out of 100 (taking into account respondents’ top 3 rankings with equal weighting)

Fig.3

Section 2:

Time to dig deeper– Getting the right data to work harder for HR


We’re all talking people analytics,but are we doing it?– Most organisations have a lot of people data, without trying too hard to get it. So the question isn’t “Do we have people data?” it’s “Do we have the right data, and are we using it in the right way?”

That’s why we’re seeing a trend of commercially focused HR leaders employing the services of business analysts and data scientists. Today, technology investments are aimed at integrating different datasets and bringing them to the cloud. But how are HR teams currently using the data they have access to and turning it into commercial insights?

Most of our surveyed organisations are still conducting basic levels of analysis with the data they have. They look at different HR data (think turnover, performance, engagement) in isolation. This means the data is predominantly reflecting past state rather than future.

The second most prevalent practice is to look at the links between different HR measures, like engagement and turnover, or employer branding and cost to hire. This level of analysis still describes the past, but it does so in greater depth: giving a richer picture of an organisation’s people issues.

What people analytics practices do you currently have in place? (respondents were able to select as many as applied)

Looking at HR measures separately35%

Strategic workforce analytics8%

Real-time employee experience analytics3%

Linking different HR measures24%

Commercial outcomes linked to people performance6%

Organisational network analytics2%

Connecting HR measures with business metrics18%

Predictive analytics3%

Other2%

The percentages represent the relative importance of each answer option out of 100 (taking into account respondents’ differing number of how many answer options they selected).

Fig.4


Right now, organisations that link HR measures with business metrics (e.g. engagement and sales revenue) are in the minority (6%). While there is a lot of talk about predictive analytics (using data to anticipate future outcomes), only 3% of respondents have actually moved to more future-oriented analytics. This shows that we’re still very much in the infancy of utilising commercially focused analytics in the people space.

This is compounded by the fact that only 24% of organisations measure the commercial implications of their People and Culture initiatives. It’s important to acknowledge that connecting commercials is not as simple and clear-cut in HR as it is in Marketing and Sales. It’s straightforward to link digital marketing with products bought. Revised culture and values? Less so – but still absolutely possible.

However, even with this in mind it’s borderline astonishing that three quarters of HR leaders are managing to secure funding without clearly demonstrating the financial growth return of their projects. What could we unlock as a sector if we were to demonstrate how our work drives revenue, market growth and brand value? The fact that this joined-up approach to metrics isn’t in common usage is a good thing for most HR teams: it means there is still time to implement ahead of the curve and create competitive advantage.

What data is most valuable to you in your current decision making? (respondents were asked to rank their top three)

Employee engagement

Turnover

Performance review

Leadership effectiveness

Employee experience/eNPS

Sales/revenue

Culture assessment

Productivity

Customer experience NPS

Diversity & inclusion

Safety

Wellbeing

Reward

Brand/recruitment

Team effectiveness

10%

10%

10%

9%

7%

7%

6%

5%

4%

3%

2%

1%

20%10% 15%5%

19%

3%

2%

The percentages represent the relative importance of each answer option out of 100 (taking into account respondents’ top three rankings with equal weighting).

24%

of organisations measure the commercial implications of their People and Culture initiatives

Only

Fig.5


Most valued: data – According to our study, HR leaders see employee engagement as their most valuable dataset, followed by other traditional HR measures, such as turnover and performance review data.

This changes when looking at the results by organisational size; large organisations list sales/revenue data within their top three. Interestingly, while greater customer centricity is a top culture focus (as driven by business strategy), HR teams using customer data in their decision making is not common.

Is that because of a lack of access, or limited knowledge and support in how to read and use the customer data effectively?


Right frequency of people measurement– Continuous listening has become another buzz term in the HR community. But how many organisations have actually moved on from the traditional annual survey? Not many: 59% of the organisations in our survey still measure engagement or employee experience annually or less frequently.

How frequent is your employee engagement or employee experience measurement rhythm?


Annual or less frequent59% Monthly5%

Every 6 months17% Daily1%

Quarterly10% On-demand basis8%

Our research revealed that most organisations (60%) would like to measure engagement or employee experience more frequently, either every six months or quarterly. Around a quarter of respondents want to stick to annual or less frequent measures. The driver may be organisation size. Organisations of 10,000+ employees were in favour of increased frequency, while smaller organisations are planning to stick with annual surveys.

Fig.6


Perhaps the question isn’t how often HR wants to measure, but how often can an organisation survey its workforce based on its capability to action feedback. Many organisations are concerned about ‘survey fatigue’ – which is a valid reservation, if no action has been taken between measures. What experience are you giving your people if they complete a survey and nothing changes before the next one? You’re essentially showing them their opinion won’t change anything. And then what happens? Metrics plummet and response rates drop, rendering your continuous listening tools essentially useless.

When transitioning to a continuous listening strategy, it’s important to think about four things: how you listen (the survey experience); what you’re listening for (the commercial value of your questions); who you’re listening to (not just employees, but equally customers and shareholders); and commitment to evolving your action feedback into a more agile approach.

How frequent would you like your measurement rhythm to be?


Annual or less frequent25% Monthly8%

Every 6 months29% Daily2%

Quarterly20% On-demand basis15%

Fig.7

Section 3:

The road to HR Nirvana– Employee experience and the path to business success


Unravelling EXEmployee experience (or EX) is one of those fields that didn’t exist a few years ago. Employee Experience Officer roles are being created while organisations are trying to define what employee experience actually is. In fact, our research revealed that 75% of organisations have not defined what employee experience means to their organisation.

Employee experience is not new: consciously designing and measuring, however, is. It’s simply a different way of applying Marketing’s customer experiences principles to HR internally to drive the right mindsets and behaviours.

It’s worth noting that while HR is responsible for designing an employee experience that meets the needs of the business strategy, as a function it undoubtedly has limited control over the successful implementation of that design.

What new data would enhance your ability to make decisions and deliver better business outcomes? (respondents were asked to rank their top three)

Employee experience

Speed to productivity

Speed to change adoption

Customer experience

Employee generated revenue

Psychological safety

Social media brand sentiment

Biometric employee emotion

Ta lent analytics

Other

16%

15%

12%

10%

9%

7%

5%

2%

1%

1%

20%10% 15%5%

22%

1%

Process and systems effectiveness

Organisational network analysis


Fig.8


We already know that employee engagement data is currently seen as the most valuable measure in HR leaders’ decision-making arsenal. But when we asked what data they would like to have, employee experience data ranked the highest, followed by speed to productivity and speed of change adoption. That’s the difference between knowing how welcome new starters feel when they join versus knowing how quickly we set them up to be productive. Or the difference between gauging how employees perceive change being managed and knowing how quickly new technologies, behaviours and ways of working are being adopted. What current data tells us is rooted in emotion and perception. What HR leaders want is rooted in numbers and facts.

HR leaders also reported that 83% of Executive Teams see employee experience as important. Given that most organisations haven’t defined what EX means in the context of their own business, this number should be taken with a pinch of salt. What it tells us is that the vast majority of executives have heard of EX (in one form or another) despite the field being in its infancy. This is encouraging.

How important is employee experience on your Executive Team’s agenda?

Important48%

Somewhat important35%

Business critical10%

Not important at all7%

Fig.9


Employee experience is clearly important, but it’s a big beast to tackle. It covers not only traditional HR programs and practices – diversity, leadership, recognition etc – but, more importantly, it encompasses all aspects of life at an organisation. Think customer centricity, all aspects of technology, the physical environment, connection to products and services, speed of change adoption, even trust and energy levels.

What aspects of the employee experience are you prioritising for investment? (respondents were asked to rank their top three)

Communication

Technology

Diversity & inclusion

Organisational design

Wellbeing

Technical capability

Flexibility & virtual environment

Safety

Pysical env ironment

Utilisation/job design

Other

14%

11%

8%

7%

7%

3%

20%10% 15%5%

23%

3%

1%

1%

1%

5%

5%

4%

Leadership capability

2%

Community/Corporate Social Responsibility

Connection to products & services 1%

Alignment to customer experience 4%

Work processes & practices

Employee Value Proposition/Employer Brand

Fig.10



So where do HR leaders want to start this organisation-wide process of improving their employee experience? Our respondents listed their top three priorities as leadership capability, Employee Value Proposition and work processes and practices. It’s not surprising to see leadership at the top of the list, and we’ve found that Employee Value Propositions have received greater focus with the rise of employee experience.

What is interesting is the presence of the third priority: work processes and practices. This isn’t a traditional HR focus, but it has rightly been identified as an area with a big impact on the experience employees have every day, and the ability of the organisation to transform.

Of further note was the difference between large and small organisations. For large organisations, diversity & inclusion superseded work processes and practices in the top three focus areas.

What do you see as your main barrier to creating a better employee experience? (respondents were asked to rank their top three)

Manager capability

Investment in technology

Leadership buy-in

16%

15%

12%

10%

20%10% 15%5%

Lack of buy-in from other parts of the organisation 2%

1% Other

22%

9%

Investment in capability & resources

Prioritisation of competing focus areas

Complexity/size of the challenge reletive to perceived RO I

Fig.11



The biggest barriers to creating a better employee experience were reported as a lack of investment in capability and resources, the prioritisation of competing focus areas, and manager capability. This is where using data linked to commercial outcomes can make a huge difference for HR, unlocking funds that otherwise would be allocated elsewhere. As HR doesn’t own the entire employee experience, the role of the function could become more about educating and facilitating design. In this way, HR remains the architect of culture: helping the organisation evolve through overseeing and shaping the experience people have every day.

When asked about the commercial outcomes they expected as a result of improving the employee experience, our HR leaders’ answers reflected their culture priority of increased customer centricity. Customer experience, revenue and growth, and operational efficiency topped the list.

Imagine if HR could report on how employee experience drives those outcomes, in the same way marketing and customer teams report on how customer experience drives business results. A few early adopters are already demonstrating some great results, but there’s plenty of room at the table. Any organisation can achieve this by shifting their HR measures to become more commercial.

What commercial outcomes would you expect to see as a result of improving the experience your people have? (respondents were asked to rank their top three)

Customer experience

Revenue growth

Operational efficiency

Brand value/reputation

Product/service innovation

Customer retention

Customer acquisition

Speed to market

Ot her

19%

17%

12%

12%

6%

2%

1%

20%10% 15%5%

20%

Comm unity engagement

Market expansion

4%

5%

2%

Fig.12


Section 4:

Conclusion– Our take on your next steps


Transformation starts here– While this year’s study has shown HR practices are still broadly traditional, it’s important to acknowledge that many organisations already have the building blocks for HR to make a bigger difference – we (as a sector) just need to prove it. So whether you’re already disrupting in order to unite your organisation or are taking your first steps to transformation there’s plenty you can do right now, starting with a strong vision and rigorous baseline.

Here are We Are Unity’s top 10 recommendations to help your HR function become more progressive and prepared for the disruption we predict FY19 will bring.

1. Identify the top three commercial measures of success your team can support the business to achieve.

2. Ask for access to raw customer experience data and look at the relationships between this and your employee experience data. (Use external support when it comes to predictive analytics if you don’t have analytics capability or resources internally.)

3. Find out how many of your employees are already customers of your products or services (if relevant), how much they spend with you each year, and what the potential revenue could be if more of your employees were customers.

4. Define what employee experience is to your organisation, including how it relates to other people terminology in the business (e.g. employee engagement, culture, employee value proposition and customer experience) to ensure clarity, credibility and impact.

5. Run a Lunch & Learn within your team to ensure everyone knows how to build effective business cases, where people metrics are clearly linked to commercial outcomes.

6. Identify which parts of your organisation have the greatest impact on employee experience (outside of HR) and how your team could work more effectively with them.

7. Identify key complementary skillsets in the business that could benefit your team, either on project basis or for training purposes.

8. Develop a roadmap to demonstrate the sequence of HR initiatives linked to delivering commercial returns.

9. Create an employee advocacy program to maximise your people as a marketing channel for your products and services.

10. Choose a pilot part of the business to start measuring new starters’ speed to productivity.

If you would like to discuss any of the results or our top 10 tips further, please don’t hesitate to get in touch.

Reetta Makinen Head of Insights & Analytics [email protected]

Ben Bars Head of Agency [email protected]


Appendix–

Respondents breakdown by industry

Health care

Construction & property

Technology

Professional services

Media & advertising

Hospitality

Energy & utilities

Manufacturing

Government

Educ ation

12%

10%

10%

10%

10%

20%10% 15%5%

16%

1%

2%

6%

5%

Financial services

2%

Automotive & transport

Entertainm ent & sport 2%

Not-for-profit

Retail

Consumer products

4%

4%

4%

4%

Respondents breakdown by organisational size

< 1,000 employees28%

13% 10,000 - 30,000 employees

1,000 - 5,000 employees33%

13% > 30,000 employees

5,000 - 10,000 employees12%

2018 HR Unity Insights Report HR loves change€¦ · 2018 HR Unity Insights Report HR loves change...

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