Disrupted HR – how rewards policy needs to catchup with disruption

Creativity and care are the next big employment opportunities – how should we reward?

iDisrupted Commentary  – Guest post by Phillippa o’Connor, PwC

Since people first sharpened pieces of flint, technology has transformed how people work and how they are rewarded for that work. Those that adapt to new tools thrive. Others become extinct. The situation we face today is very much another loop of this cycle, but with a critical difference – it is not the technology people use that is being replaced, but the people themselves. Of course this isn’t necessarily a negative, and embracing nascent digital technologies will allow businesses to continue to improve productivity, efficiency and safety.

It is likely, however, that over the next ten years we’ll see the mass displacement of human workers in professional white collar jobs and a far reaching change in the nature of what it means to go to work. Companies, as employers and innovators, are at the forefront of this revolution and business leaders will play a key role in addressing the economic, employment and social challenges that will emerge as a result.

A necessary and fundamental part of this transition will be a shift in the way employees are paid and incentivised – and indeed in the very essence of what it means to be an employee. Human resources professionals will need to use the analytical Disrupted Peopletools and capacity for customisation facilitated by digital technology to ensure that pay is fit for purpose in whatever new world of work develops.

We look at four areas of change in HR:

  1. The changing nature of work as jobs are replaced by technology
  2. Skills requirements in a digital world
  3. A new model for reward
  4. The social consequences of change

The changing nature of work

The nature of what companies (and their employees) do has been evolving in recent decades, even in the most established industries. The advances in technology driven by the digital revolution are now transforming the nature of work itself at an ever increasing rate – whether through the displacement of human labour across the manufacturing sector by robots, or the use of algorithms where taxi dispatchers once manned the phones.

People can also work more flexibly than ever before. Digital technology enables performance to be assessed at any time and over any timescale. Many of us now work independently of location and for multiple employers – contracting may eventually become the most common model for employment, with people working for only a short time for any one employer before moving on to their next role.

Skills requirements

As the digital revolution shifts more work away from human hands, the skills needed for an employee to be valuable will change. Organisations must consider their talent pipelines and think about the impact of the evolving role of the human worker – and the inventive and innovative (as opposed to analytical and process driven) abilities required to fulfill that role.

What tangible action can be taken by companies? Skills and capability scenario planning will give sight of the gap between where a company is and where it needs to be, allowing steps to be taken towards the adaptable, creative, hi-tech workforce of the future – whether achieved through recruitment, or the development of skills. Naturally any large scale reshaping of the workforce will result in redundancy or redeployment, and anticipating future employment needs can help mitigate these challenges.

Helpfully, technological advances can also help us in understanding their own impact. Using predictive analytics and the huge amount of data now held by companies on their workforces, the right tools can quickly draw out business critical conclusions around the state of the workforce.

A new model for reward

Will digital technology change how we’re paid? We’re unlikely to see people paid in Bitcoins any time soon – but monthly paychecks and annual bonuses are inextricably linked to the profile of the legacy 20th century job, and the unwieldy machinery of the traditional payroll function.

This structure is poorly suited to a more creative and dynamic workforce. Our lives are increasingly flexible, and personalisation has been one of the greatest impacts of technological change. Pay should be no different. Companies are likely to shift from a ‘one size fits all’ approach to increasingly customisable and flexible total reward arrangements – which current HR systems are unable to deliver.

Employers will also need to think carefully about how to reward and motivate the digital worker – a good starting point is the model followed by those technology startups which have so successfully harnessed creativity. These organizations see failure as part of the creative process rather than as something to be punished. One major tech company pays a bonus when a partially completed project fails (and not if it succeeds) – rewarding the fortitude to drive forward an idea.

The social consequences

The combination of global economic volatility with growing automation and mechanisation means that job insecurity is now a common theme across the developed world. Fears around employment prospects have increased concerns (voiced widely by the media) about inequality in our society, and have driven a loss of trust in business.

Research tells us that 47% of all jobs are now at a high risk of being replaced by digital advancement within 10 years1. The fallout as white collar workers see their jobs fall victim to automation will only serve to add swathes of currently contented individuals to the ranks of those concerned with socio-economic inequality.

The political and social consequences of this change are hard to anticipate, but it is plausible that the anti-capitalist or even nationalist agendas will slowly gain support from a tide of fearful professionals.

Where next?

Organizations must seek to understand the people issues that now face them. But years of schooling in centralisation and top down thinking may have dulled the professions’ collective senses and made it less open to the innovation and creativity needed to meet the digital challenge. Reward professionals need to build their skills to ride the technology wave rather than being drowned by it. Otherwise they may find that rather than enhancing their roles, technology has replaced them.

For further enlightenment please see the PwC HR Blog