To embrace agile HR, organisations need to transform. So, it’s no surprise that digital transformation is the buzzword on everyone’s lips, both in human resources and the wider world of business. But at the FUTR Asia Conference 2019 held in Singapore this October, a panel of senior HR executives cautioned that it is not about transformation for transformation’s sake, but for the potential benefits that it can bring.
Key among these benefits is agility. Transformation, the panel said, should lead to greater business agility. It is how an organisation strategically adapts to market conditions and remains competitive.
But whose job is it to effect such a change? Is it the responsibility of the business itself, or a specific function or skill group, such as HR? Any major organisational change is strategic and more often than not extremely costly, so the team that undertakes this responsibility will have to be one of the key strategic players within the organisation.
The evolving strategic role of HR
The role of HR leaders has evolved from a classic HR partner to an organisational business adviser to the chief executive. Rate of change is dependent on many factors including how HR leaders position themselves from “knowing” the business to driving business outcomes (Dave Ulrich’s HR model of “strategic positioners” and “credible activists”) and perception by senior management of how HR can add value. When it comes to revolutionising workplaces, HR should be agents of change.
Laurence Smith, a leading HR and agile business transformation expert, who spearheaded the digital evolution of Singapore’s DBS Bank into “the world’s best digital bank,” started referencing the Ulrich model as early as 2011 at industry conferences.
Under Mr Smith’s direction and chief executive Piyush Gupta’s agile leadership, DBS was able to instil a digital mindset and a true culture of innovation across the organisation, on both the front and back ends. DBS was subsequently one of the first banks in Singapore to move banking services online.
It was also an early-adopter of recruitment hackathons, which it branded ‘Hack2Hire’. In these sessions budding software engineers competed over two days in a pressure-cooker environment to solve tech-related challenges in a bid to be hired by the company.
Looking at this example alone, it would seem HR has evolved into a more strategic function, just as Mr Ulrich had envisioned. But the reality appears to be a stark contrast to this idealistic picture.
Last year, an Asia-Pacific poll of over 200 APAC C-Suite leaders conducted by KellyOCG found less than one in three feel that their HR functions can provide strategic workforce insights.
A separate global survey of 25,000 business leaders conducted by EY, Development Dimensions International, and the Conference Board also concluded that a majority of chief executives in Asia-Pacific believe HR managers “focus too much on adminis-trivia” and lack strategic vision and insight.
Improving perceptions of HR in APAC
Local practitioners have several explanations for this poor perception of HR. Some believe it is due to obstacles presented by the businesses themselves, while others think it’s an internal HR issue.
According to Brajesh Singh, director of talent acquisition, Asia-Pacific and Middle East, at Capgemini, most Asia-Pacific leaders are generally conservative in their management style and lack trust in HR, preferring to employ risk-averse, old-school approaches.
“Trust-based empowerment does not come easy, and this has resulted in a mind-block on HR’s capability to provide strategic workforce insights that will enable organisational transformation and greater agility,” says Mr Singh.
The diversity of the Asia-Pacific region also makes it hard for businesses to be agile, let alone implement and execute any significant change initiative.
“In my company, there are over 13 countries [branches] within Asia-Pacific, and each country possesses its own unique culture. Transformation is always a challenge with so many diversified cultures, because there is no one-size-fits-all solution,” says Mr Singh.
“Transformation is always a challenge with so many diversified cultures, because there is no one-size-fits-all solution”
Another factor inhibiting HR in the Asia-Pacific region from driving greater agility and change is that the markets’ overall revenue contributions are still relatively small. Lower revenues mean tighter investments in many Asia-Pacific organisations, further adding to HR’s inability to contribute strategically.
On top of this, most organisations are still trying to drive business strategy in Asia-Pacific the same way they do in other markets. “So there is a learning cycle involved in developing a localised market strategy for the business to thrive, which leads to delayed adaptation,” notes Mr Singh.
Sureash Kumar, director of corporate HR at semiconductor manufacturer UTAC’s global headquarters in Singapore, agrees that many businesses in the region have not been as proactive and progressive in building internal capabilities. Instead they compete just to stay in business.
The result is an overall lack of investment in digital infrastructure and technology, which negatively impacts HR through a lack of tools, data and other information, all of which are essential for driving business growth and agility.
Socio-political uncertainties in parts of the region, such as the 2019 Hong Kong protests and the Thai government’s ongoing internal divisions, have also had spillover effects on other countries, organisations and departments, including HR.
“We compete in a globalised business environment where we are interdependent on and connected to each other,” says Mr Kumar, adding it is inevitable there are some financial years that are better performing than others.
But as Sandeep Chanana, Asia-Pacific HR business partner at Japanese ecommerce platform Rakuten, says, the problem also lies in the mindset of HR.
“I’ve been saying for years, and still continue to, that HR folks tend to get stuck in the ‘three Ps’ of process, policy and payroll,” says Mr Chanana, a digital transformation champion in his own organisation.
“We’ve forgotten why we as HR exist. We exist for employee experience, to use data and be analytical and, of course, to impact revenue and enable cost-saving.”
How HR can become more agile and strategic
Mr Chanana says that for HR to become agile and truly strategic partners, it is not enough just to implement a Workday or SAP Success Factors system. They need to know how to support and prove the value of these implementations with data.
He adds that in all businesses, there are five key outcomes that are expected of HR. These are measurable employee experience, improved organisational agility, higher productivity, talent attraction and retention, and sustained and agile innovation.
At UTAC, one approach that has proven effective in the Asia-Pacific region has been for HR to take the initiative in addressing and influencing the organisation’s people agenda. This includes HR helping to formulate the company’s annual people strategy, as well as designing and launching key HR initiatives alongside data-supported key performance indicators.
Mr Kumar and his team have been able to turn a once-fragmented organisation with thousands of employees across the Asia-Pacific region alone, into one unified company. In particular, Mr Kumar and his HR team were instrumental in reorganising and merging global sites acquired in Singapore, Malaysia and Indonesia. Not only that, HR also established its role as a strategic function in the eyes of leadership, as it is now included in all levels of decision-making, he says.
According to Mr Smith, the transformation at DBS Bank was possible because two key conditions were already in place. In the role of HR, he regarded supporting the chief executive’s vision on digital transformation as the most important part of his job. Conversely, the chief executive entrusted HR with the all-important task of digital transformation, making the department the chief supervisor of the transformation project.
As evidenced by the recent transformation successes of Asian corporations, including UTAC and DBS, when HR is regarded as a strategic business partner and given the opportunity to help drive growth, the business is able to be agile and evolve. This is especially true in a geographically diverse region such as Asia-Pacific, where structural and cultural challenges vary from country to country. Without the inclusion of HR on some strategic level, business agility will always be a tough ask.