Employees and HR functions alike find themselves on the eve of the fourth industrial revolution. The World Economic Forum states that current changes are so severe in respect to their velocity, scope, and systems impact that they will most likely profoundly affect our way of living, working, and relating to each other. They will do so to an extent that has been never experienced by former generations of the workforce. This revolution is characterized by a combination of technologies that redefines physical, digital, and biological spheres and boundaries and will have a strong impact on our economies: According to research by MIT Sloan Management Review, 76% of representatives from all industries expect digital technologies to disrupt their industries strongly or moderately. However, less than 50% of those interviewed believe that their organizations are ready to respond to the digital changes.
It’s a People Topic!
Employees find themselves in the eye of this storm: 91% of them believe that digital technologies will fundamentally transform their way of working. On the other hand, only 43% of employees are satisfied with the way their organizations respond to digital trends. HR functions now have a unique opportunity, even an obligation, to embark on a transformational process that eventually enables them to master the digital disruptions. The question is: How? And where to start?
When looking for answers, we’ll find two facts: Bad news is that the HR function requires nothing less than a transformative paradigm shift. Good news is that there is a concept in place: ‘Customer Experience of HR’ (CxHR) is the most promising approach for HR transformation, and its principles have been proven by consumer marketing.
The Impact of Customer Experience Design (CxHR)
Applying the marketing principles of customer experience design to HR is rewarding: Companies that apply customer experience design achieve on average 16% higher customer loyalty. Customers are more likely to recommend such services, more willing to buy additional products, and less willing to switch providers. Applying the principles designed for customers of consumer goods to end-users of HR services (employees, line managers, senior executives, applicants, learners) will result in a more worthwhile experience for these internal customers. And it will, consequently, make the HR function more effective and competitive and will ultimately lead to higher employee engagement, retention, and performance. Let’s have a closer look at the framework of CxHR, let’s begin by defining the starting point (the ‘from’) and, after, the goal (the ‘to’) of transformation. Finally let’s examine the ‘how’ of the transformation (the ‘by’).
Goals of CxHR
From HR-centric HR to Customer-centric HR
A lot has been achieved in HR since Thomas Stewart described it as “nestling warm and sleepy in your company […]” in 1996. Still, HR functions in too many organizations are too focused on themselves. Yes, the Ulrich model is frequently used, but in all fairness: How often has the model been revised since its first implementation – especially for those organizations with an HR Business Partner model in place? A CEB study shows that more than 80% of organizations are planning or even undergoing an HR transformation. Considering the pace of transformation, it seems impossible that HR can focus on the needs of their customers.
An HR function that adopts the CxHR approach breaks away from that. The example of Digital Learning strikingly demonstrates the power of customer-centric HR. Within the HR-centric approach, technology in learning is used to provide the traditional training content in a digital format and to automate the learning process, e.g. registration or feedback. The customer-centric approach of Digital Learning uses technology to adjust training concepts for the sake of the learner. Collaborative elements make learner reflection on training sessions more effective while ‘Gamification’ – the gratification of learners e.g. by scores or level systems for correct answers – motivates learners to actually undergo the coaching. Case studies show that participation rate and effectiveness of training are much higher when the customer-centric approach of Digital Learning is adopted.
From Unknown employee wants, needs, and skills to Empowered individual
The average company tries to collect knowledge about employee sentiments by running engagement surveys. In times of digital disruption, the role of these – cumbersome – exercises is, thankfully, diminishing. Honestly: What do they really tell HR about the wants, needs, and skills of the workforce? And do they really evoke action in response to apparent weaknesses – given the time lag between running the survey and receiving results?
Adopting the CxHR approach demonstrably leads to technology-use in order to empower the individual employee by understanding his or her concerns, requirements, and capabilities in real time. A widely cited example is IBM’s retraction from prohibiting employees from accounting Uber and other ride-sharing services to their expense reports. It was IBM’s use of technology that eventually empowered employees to stand up in favour of Uber reimbursements. Specifically, IBM Connections, the internal social network where the said employee petition went viral first, and an HR tool to monitor employee issues implemented on IBM Connections enabled the platform to tackle and solve the issue. This example falls into the category of Digital Listening, the automated analysis of digital “trails” of employees (posts in social networks, files stored on SharePoint, level of activity in collaboration tools, etc.). Anonymously and in real time, it provides feedback on sentiments of employee groups and therefore shapes a more responsive management especially in large, complex enterprises. And recent TI People research shows that digital listening is the no. 1 emerging way of capturing employees wants, needs, and capabilities:
From Unmanaged to Managed HR tech RoI
The third benefit of CxHR is an improved return on HR technology investments. According to CEB research, 22% of the HR IT investments of the average large company are at risk due to missing end user adoption. Quite simply, employees are not using the technology they are provided with and thus business cases fail to pay off.
Involving end users in development and design of applications sounds easy, but is rarely implemented on a regular basis. Making end user needs a starting point of HR technology development leads to systems that are more engaging and create personal value for the employee.
Let’s now examine the measures CxHR takes to reach the outlined goals.
Building Blocks of CxHR
To render HR services more appealing to the customer, one needs to distinguish the offering by workforce segment. However, the way work is organized will undergo decisive changes in many organizations. While currently job definition and hierarchy dominate and often defines workforce segmentation, 20% to 40% of workforce is likely to be organized by skills – within the next five years, depending on the industry. HR is well advised to anticipate that trend and adjust workforce segmentation accordingly. Job families, skill groups, and ultimately skills are new and more efficient ways to distinguish employees compared to level, labor law categories, or functions. Getting workforce segmentation right is a pre-requisite for implementing the customer experience approach outlined hereafter.
Customer experience approach
Once again adopted from consumer marketing, the customer experience approach provides a framework for designing HR services according to the needs of the employees. It consists of six steps outlined below.
Step 1: Prioritize HR Services
To begin with, the most relevant HR services for optimization by CxHR have to be selected. Suitable approaches to prioritization are
– Selecting services with the biggest strategic impact,
– Identifying ‘Moments that Matter’ along the employee life-cycle, and
– Assessing the total number of employees or transactions impacted by the services.
By evaluating one or more of these criteria, e.g. on a five-point scale, the most relevant approaches can be selected. Most companies identify two or three HR services when first applying CxHR and later roll out the approach to other services.
Step 2: Define HR customer segments and journeys
Assuming a CxHR project team selected and recruiting as the HR service to be optimized, the next step would be identifying the customer segments of recruiting. They can be internal (e.g. hiring managers, recruiters) and external (e.g. prospects, applicants) customers. For every relevant segment, the customer journey is outlined. A journey is defined as the path customers take when liaising with the companies HR service. This journey might even start before the first interaction with the HR function. A model case would be that of a prospect who learns of a job opening from a friend, then checks out the employer on glassdoor.com and eventually gets in touch with a recruiter on LinkedIn before applying for the position. The journeys have to be initially outlined and then refined in an iterative process employing steps three and four of the CxHR approach.
Step 3: Specify personas and their goals
To get to a precise and accurate understanding of the customer journey, the CxHR project team specifies personas and their goals. Personas are tangible representations of typical customers – ‘tangible’ meaning to endow them with a name, photo, demographical background, behaviors, needs, etc. To take on the role of a ‘real’ customer makes it easier to define a comprehensive and concise customer journey. The more exact and distinctive a persona the more it can drive useful action.
Step 4: Describe touchpoints of the journeys
The personas are also used to gather and define all relevant steps they take on their journeys through HR. These touchpoints are distinguished using the personas’ perspectives and constitute the measuring points to collect the personas’ experiences and expectations and consequently derive potentials for improvement. As the persona approach forces HR to adopt an outside-in view on its services, by default the re-designed services will be more customer focused and accordingly enhance customer experience.
Staying with the example of recruiting, touchpoints from a prospect’s perspective could be
– Learn about an interesting potential employer,
– Review ratings of the company at employer assessment portals,
– Search for jobs openings,
– Clarify questions regarding an interesting job opening,
– Gather information regarding the recruiting process,
– Submit application,
– Receive confirmation that the company is aware of the application,
– Get invited to the recruiting process,
– Go through the recruiting process,
– Receive a job offer,
– Negotiate contract,
– Accept offer,
– Prepare for a job starting date,
– Start onboarding,
– Complete probation period.
The touchpoints of this journey extend the boundaries of classic HR processes and require a new level of HR involvement.
Step 5: Rate personas’ experience and expectations
To assess the current delivery of the HR service from the personas’ perspectives, three approaches are in common use:
– Assessment by projection: Make use of the power of imagination delivered by the CxHR project team. Usually in a workshop format, the team is employing role-play techniques to adapt the personas’ perspectives and reflect their expectations and experiences concerning the current HR service delivery. Quality of results strongly depends on the teams’ ability to swap perspectives and assume a critical perspective while assessing the customer experience.
– Assessment by survey: Gather customer satisfaction regarding HR services by identifying and surveying representative personas across all relevant customer segments. This survey can include quantitative and qualitative parts, the latter having advantage of gathering first-hand suggestions for improvement. It might pose a challenge to identify the survey participants and to create an environment where respondents feel safe and comfortable enough to provide honest feedback.
– Assessment by performance indicators: The evaluation of HR services can be an automated part of the customer journey itself. Across all touchpoints, meaningful KPIs provide real-time insights on their quality. A funnel metric like drop-out rate can point to weak spots of a journey without requiring active responses, while measuring the Net Promoter Score requires active inquiry and directly measures customer satisfaction.
Step 6: Derive improvements from gap analysis
Finalizing the CxHR approach, the personas’ experience and expectations are compared to identify potential for improvement. The touchpoints with the biggest gaps will be worked on with priority, out of those with a higher importance should be identified beforehand. Depending on the touchpoint, improvements could be
– Training of customers or HR staff,
– Redesigning processes,
– Initiating culture changes,
– Optimizing user interfaces. When tackling this task it is particulary important to use technology to optimize user interfaces or provide ‘smart’ digital HR tools.
‘Smart’ digital HR tools
‘Smart’ digital HR tools are intuitive-to-use applications that run on mobile devices. Their constitute stand-alone devices, i.e. an add-on to the HR master data and talent platform. They are ‘smart’ because they enable employees and managers to complete and take over – at least – parts of HR service activities without especially designed training measures for them.
This sounds compelling, at least for those 86% of CEOs that, according to PricewaterhouseCoopers, regard the use of digital technologies in HR as a major priority. A reality check shows that mobile devices can be used by only 40% of employees for simple HR services like workflow approvals, and by less than 20% for more complex activities like performance management or employee recognition. Only 4% say they are able to perform any transactions on desktop and mobile devices.
There are some great examples of ‘smart’ HR tools that demonstrate why money is well invested here:
The US automotive aftermarket retail chain Pep Boys created a Digital Learning app for safety and loss prevention. By applying the concept of gamification and reducing the time spent to 30 to 90 seconds per day per employee, training effectiveness rocketed compared to approaches employing traditional training approaches. The new tool achieved an employee acceptance rate of 95%, safety incidents declined by 45% and inventory shrink dropped by 55%.
Swiss telecom provider Swisscom makes organization knowledge accessible through “Ask the Brain”, a self-learning tool for knowledge management and collaboration. Every employee can post questions anonymously. They are displayed initially at a discussion forum. Authors of responses to the questions are identifiable, the inquirer must rate their answers. Over time, the system gathers information on who is good at answering what kind of questions. Knowledge profiles of individuals and the organization itself become visible. Respondents receive recognition by publicly visible ratings, and problems are solved efficiently. Results are impressive: With around 75% of employees contributing to the tool, 48% of questions are answered within 2 hours, answers solve 90% of the questions, and 75% of answers receive a positive rating of 4 or 5 out of 5.
The Way Forward
The CxHR approach is an answer to the specific challenges of the technological revolution highlighted at the outset of this article. Progressive companies who take this approach are amplifying the paradigm shift in HR service design. Having passed the phase of piloting HR service optimization with CxHR, they have formed an alliance to develop a CxHR Optimization Tool that will ultimately provide powerful means to lead the digital transformation. Companies may not be ready yet, but HR has found and designed a tool to drive digital readiness of their organizations.