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John Boudreau

SMART MACHINES: THE NEW “HUMAN” CAPITAL?

March 26, 2020 by John Boudreau

© Can Stock Photo / abidal

As algorithms and robots get smarter, workforce planning systems need to strike the optimum balance between people and machines.

Stephen Hawking and colleagues warn that “success in creating artificial intelligence would be the biggest event in human history.… Unfortunately it might also be the last.”

From self-driving cars, to intelligent assistants on smart phones, to IBM’s Watson beating humans at Jeopardy, to potentially autonomous military weapons, the effects of increasingly sophisticated automation are undeniable. With leading companies like Google spending millions to acquire artificial intelligence (AI) and robotics startups, financial markets are also betting that AI will become a bigger part of our lives and society.

When it comes to your strategy for people and human capital, the age of smart machines is often framed in traditional terms of job losses and gains. Oxford researchers predict that 45% of American occupations will be automated within the next 20 years. The first stage will be using computational power to replace jobs that rely on such things as pattern recognition, data gathering and distillation, and computational algorithms. Jobs like transportation/logistics, production labor and administrative support will go after that.

However, if you think your job is safe, the researchers also predict that artificial intelligence will eventually put jobs in management, science, engineering and the arts at risk.

Can sophisticated jobs in finance and investing be automated? Consider computer traders, once epitomized by hundreds of humans shouting on a trading floor. An Economist article titled “Dutch Fleet” notes that with the advent of trading algorithms in ultra-fast computer systems, some Amsterdam-based trading firms that formerly relied on traders and saw large bid-ask spreads now occupy a “high-volume, low-margin industry in which market-makers take a sliver of revenue from lots of transactions.” One firm saw a peak of 3,000 trades in 60 seconds. Trading is now the province of algorithms, software and decisions made in milliseconds by automated systems.

The analogy between commodities trading and human capital recruiting is obvious. It seems likely that planning and managing your people will be done more and more by algorithms, not humans. Algorithms can increasingly predict things like employee turnover and future job performance better than typical supervisors or hiring managers. An analysis of 17 studies on applicant evaluations concluded that equations outperform human applicant-selection decisions by 25%. A recent HR-technology conference provided stunning examples of the power of automation to improve and replace human processes in managing people, and admonished HR and organization leaders to prepare for a future driven by predictive analytics.

For CFOs and CHROs, it is tempting to focus on the job displacement and economic cost savings that future technology will produce. Yes, it will mean massive shifts in the balance between the humans and machines doing the work, with a resulting impact on productivity and costs.

Yet, beneath the surface of this issue is something more nuanced. Your concept of work and human capital may need to change, not simply to think about machines versus humans, but about a more nuanced future as humans and machines collaborate.

For example, algorithms can digest thousands of scientific articles much more efficiently than biochemists, producing promising hypotheses for scientists to study. The U.S. Sloan-Kettering Cancer Center estimates that only 20% of the knowledge that human doctors use to diagnose patients is based on published scientific evidence, because it would take at least 160 hours of reading a week just to keep up with new publications. IBM’s Watson computer has been trained to read the medical literature on certain cancers, search up to 1.5 million patient records, interact with doctors in real time with natural language, and present verbal opinions about the best treatment.

I have written that “deconstructing” work will revolutionize talent management by revealing new opportunities to get work done, ones that today are obscured by typical job descriptions or organization charts. The job of “software engineer” includes software coding, project management and team leadership. Rather than hire software engineers to complete a computer coding job, why not deconstruct the job, take out the coding, and employ TopCoder or other talent platforms to post your coding tasks to thousands of freelance coders worldwide? Rather than maintain your own R&D function internally, why not form an alliance with other firms to pool your R&D, as Eli Lilly and Immunocore did?

Scientists working side by side with conversational algorithms show the power of combining the idea of deconstructing work with the idea of the smart machine. The trick is to get the balance right. Today’s human capital planning systems are still largely built on a platform of job descriptions and organization charts, which can lead to a traditional mindset of deciding whether to replace humans with machines. Learning to creatively deconstruct the work and your organization chart can reveal ways to optimize your talent and your work that strike a more creative balance of humans with machines — essentially, an alliance with the machines.

The authors of “The Second Machine Age,” Erik Brynjolfsson and Andrew McAfee, point out that machines are unlikely to take over all jobs. “I don’t think this means that everything those leaders do right now becomes irrelevant,” McAfee told McKinsey Quarterly. “I’ve still never seen a piece of technology that could negotiate effectively or motivate and lead a team.” He suggested that an increasingly important skill for senior managers will be to figure out, “Where do I actually add value and where should I get out of the way and go where the data take me?”

Leaders not only should ask that question about their own jobs, they should partner with their HR leaders to answer it with respect to the full spectrum of current and future work. Deconstruct, automate and reconstruct.

Might the future bring a conversational computer with a seat at the strategic workforce planning table? Let’s just not name it after Toby on the television show “The Office.”

Previously posted on CFO.com

Filed Under: Artificial Intelligence, Automation, Future of Work, John Boudreau, Talent Acquisition, Technology Tagged With: recruiting, workforce planning

THE FUTURE OF HR: FIVE ESSENTIAL BUT OVERLOOKED QUESTIONS

February 26, 2020 by John Boudreau

The future of HR is inextricably entwined with the future of work, leadership, society and organizations.  It has long been insufficient to consider the future of HR strictly from the perspective of changes in the HR function, its organization, its operating model and its technology.  Such questions are important, but HR leaders and their constituents (non-HR leaders, investors, workers, policy-makers and others) must consider the future of HR through more fundamental questions about the future of work.

Though there is an immense amount of useful writing and information about the future of HR and work, here are some questions that often get too little attention and research activity, and that also happen to be the focus of emerging research at the Center for Effective Organizations and its affiliates.

What is “talent” in organizations?

Every organization has a “talent management” system, and the word “talent” will undoubtedly appear thousands of times in organizational statements of their values, culture, employment branding, investor communication, and descriptions of social and sustainability efforts.  It’s easy to assume that the concept of “talent” means the same thing to all of these groups, because that’s a basic assumption for an effective system of talent, work and HR.  Lacking a common perspective, can organizations expect these diverse constituents to work together toward common goals?  The inconvenient reality, however, is that the fundamental concept of “talent” means very different things to different constituents, organizations and contexts.  Try this experiment:  Convene a group of leaders, employees or strategists, and simply ask them to define “talent” as it applies to your organization.  When Sharna Wiblen and I did this experiment at the recent meeting of Center for Effective Organizations sponsors, we heard definitions ranging from “the high-potential employees who are identified for significant advancement” to “the inherent capability that exists in each of our employees,” to “the competencies that we identify in our internal system,” to “the capacity that our employees have to do their jobs.”  Think how differently your talent systems would define value, productivity, performance, potential and advancement under each of these definitions.  As Sharna’s research has convincingly showed, the “epistemology” of the word “talent” reveals often-overlooked differences that can explain thorny problems of goal alignment, performance management, and effectiveness in attracting, developing and retaining your workforce.  As an example, consider how differently leaders approach conversations about employee development depending on whether their concept of talent is “the high-potential employees identified for significant advancement” versus “the inherent capability that exists in each of our employees.”

Is Automation Part of the “talent pool?”

The implications of work automation are no longer just the topic of discussion for economists, HR leaders and social scientists.  If you wonder whether work automation is mainstream, just take a look at a 2019 segment on “This Week Tonight,” where the host, John Oliver, describes the research finding that there are actually more bank tellers today than before the automatic teller machine was invented.  Mr. Oliver’s closing point is that it’s not a question of workers being replaced in jobs, but how work changes when humans and automation are combined.  The future of work will increasingly mean that the “talent” doing the work represents an ever-changing combination of automation and humans, so optimizing how work gets done will require understanding and guiding how work elements are constantly reinvented.  The idea of a fixed “job” will be increasingly outdated and less useful.  What will replace it?  Organizational systems, including HR systems, must evolve to allow the elements of work to be “deconstructed,”and considered on their own.  Those deconstructed work elements, whether they be tasks, projects, etc. become the new currency of work.  They will be constantly recombined and reinvented.  Sometimes automation will replace the human worker doing that task, but just as often automation will augment the speed-efficiency-reliability-safety of the human doing the work, and frequently automation will allow the work to transform the human worker to contribute much greater value in ways that were simply impossible without automation.  Considering how fundamental is this human-automation combination, shouldn’t the concept of “talent” and “work” include automation?  Seen this way, we can envision that soon the HR function may be the place to start an automation project, rather in the IT or Operations disciplines.  How would your talent systems need to change, to incorporate automation into measures of human performance, potential and development. Sharna Wiblen posed a fascinating question at the CEO sponsors’ meeting: “Will the most valuable human talent in some situations be the ability to know how and when to turn the technology off?”

What is “performance” and “merit?”

These changes in talent and work reflect a larger set of trends that reframe the fundamental ideas of performance and merit.  Traditionally, performance meant some measure of achievement or behavior related to job requirements, and merit-based rewards meant allocating more to the higher performers and vice versa.  Yet, as my colleague Alan Colquitt points out, decades of research suggest that typical merit-based performance ratings vary more based on the rater, than what’s being rated, and that the idea of allocating rewards against an “objective” reality of work value rests on some very tenuous assumptions, and may often cause more harm than good.  These challenges increase when the work is constantly evolving, and when human and automated work blend together.  Should organizations reduce their reliance on performance measurement and “merit” based rewards, perhaps opting for more uniform rewards except in cases where the differences in worker value are most obvious?

What is Leadership?

The changes in work at the level of the job and individual are profound, but they also challenge the fundamental idea of “leadership.”  First, the ever-increasing array of work arrangements (contractors, freelancers, volunteers, gig workers, etc.) means that some work will often be done by humans who are not regular full-time employees.  Yet, most HR and organization systems still define work in terms of a set of jobs, done by humans who have a regular full-time employment agreement, and who exist inside a boundary called the “organization” where employees are “inside” and others are “outside.”  When a high proportion of the work is done by contractors or through other arrangements, shouldn’t HR and organization systems hold leaders accountable for “leading the work,”not just “leading the employees?  How well do your leaders lead the entire array of workers, both employees and others?  Few HR systems can do that today, but it may be increasingly essential where work spans across the organization boundary.

Automation and digitization raise even more fundamental questions about leadership.  My colleague, Jay Conger, asks whether leadership in the digital age merely an extension of traditional leadership, simply transferring the same leadership principles to new types of work and automation, or something more fundamentally different.   Emerging digital capabilities will increasingly allow front-line workers to directly access digital information about processes, consumer behavior, product performance and financial results, all in real-time.  If traditional “leadership” meant communicating such information to achieve worker alignment and motivation, does that go away in the digital organization?  Can “leaders” emerge outside the regular hierarchy, through the empowerment of front-line workers with access to information formerly available to only a few “leaders?”

What is the “organization”?

Is your organization adequately represented in the organization chart?  Does everyone understand the value and meaning of job titles like “manager,” “supervisor,” “director,” “president,” etc.?  As noted above, digitization offers tantalizing alternatives to the traditional organization chart.  Haier Group reorganized the very concept of their organization as a hub for employee-entrepreneurs, who are armed with real-time data about processes, products and consumers, and then encouraged to create start-ups to implement product and service innovations, all with very little formal structure and job titles.  Consider the importance and power of your “social networks,” which comprise the actual relationships between individuals and teams through which flow information, values, energy and trust.  Evidence suggests that when those social networks are mapped, they reveal very different patterns of influence, expertise and leadership than the formal organizational structures.  Indeed, as Michael Arena noted in his book Adaptive Space, better understanding such social networks is often a key to creating and sustaining innovation.  Yet most organization and HR systems continue to rely on formal organization charts and job titles to describe things like accountability, authority, influence and information.

On their face, these questions seem to have obvious answers, which is precisely why HR leaders must help leaders, workers, investors and other constituents rethink them to understand the future of work and HR.

Originally published on The Center for Effective Organizations website

Dr. Boudreau is Professor Emeritus of Management and Organization at USC and a Senior Research Scientist with the Center for Effective Organizations. Learn more

Filed Under: Future of HR, John Boudreau Tagged With: automation, leadership, organization, performance, talent

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