December 19, 2018

Transformation and Change Management in the HR and Payroll World

Continuous Improvement, HCM Support
Cropped hand of businessman giving golden relay baton to colleague outdoors

It’s no surprise to most executives that the world is changing dramatically. One need look no further than the self-driving car to see we are living in a time of unprecedented technological change. With that in mind, what do forward-thinking business leaders see, in a world of constant innovation and disruption, as constant?

The surprising answer (and perhaps because it is so obvious) is human nature. Anywhere on this globe and even on the Moon or Mars, people will always be people. They will continue to act in ways both rational and irrational, constant and inconstant, consistent and capricious as they have for as long as human history.

Technology tends to create an ever more level playing field. Consequently, business thought leaders see the human capital competitive advantage as being the most sustainable in the future. Like Peter Drucker, the great business thought leader, they see the potential for better management of human nature.

In the near future, the one sustainable competitive advantage most organizations will be able to maintain will be how they manage people. That means HR functions will be increasingly crucial to both top line and bottom line results, going forward.

Compared with other investments, optimizing the human capital management (HCM) business process is going to garner the most significant return. But as any student of human nature knows, change comes neither quickly nor easily.

As human beings, we are wired to resist change, not to embrace it. And thus, organizations are presented with the irony that to better harness human nature, we need to first overcome human resistance when optimizing our HR processes.

Transformation Versus Change Management

What that means is that forward-looking organizations embrace a transformation or change management approach even as we as individuals resist it. First, a couple of definitions:

  • Transformation is the goal, the future state, the vision of what an organization would be, could be, and wants to be as it moves forward.
  • Change management is what it takes to get there.

For that reason, the first step an organization must take to optimize their human capital management process is to define what the transformation will look like once it is complete. Creating and promoting this vision of change requires more than just management skills.

It requires the leadership that only C-level executives have the authority to provide. Although leaders may find some of the changes personally unpalatable, they know they must drive that way for the good of the organization. That is what leadership is all about.

But the smart executive is not blind to human nature. Far from it. To form and articulate the vision of transformation, they must first ask themselves why would the stakeholders change? What are the challenges an organization faces in making the change? What are the drivers behind the scenes forcing a change?

Driving Factors

Since we live in a time when technology and not geopolitical or economic factors are the primary drivers of the need for transformation, the savvy executive also takes technology into consideration when defining the vision of change.

They need to ask themselves what the current HCM vendor doesn’t support. They need to ask themselves what is available today. They need to ask themselves what HCM package best supports their vision of transformation.

As the software world itself is transitioning to a cloud- and AI-based vision, functionality that wasn’t even available for love or money a few years ago will soon be cost-effective to utilize. In our experience, most organizations are not looking far out enough.

They spend a lot of money and involve a lot of employees on a transformation that is hardly worth the effort. With a little more forethought, the executive suite could widen the scope of the HCM vision to address sustainable competitive advantage.

To give an example of the leadership required, at the end of the transformation, do executives want employees to focus on data analysis and consultative work or administrative tasks? Even if analysis and work are the primary focus, do executives still want to commit to a measure of employee self-service? ROI is not always the best guide to the use of data and technology in these deeper questions.

For example, “lift and shift” may seem like the best choice from a budget perspective as it retains the status quo while changing technology. But looking at the broader scope of people, processes and tools indicates the transformative approach is more warranted.

Executive involvement may be limited in lift and shift to a vision of what the organization is doing today and what new products will be needed to continue to do it in the future. Yet this is more about management than leadership.

Taking the transformative approach requires, before even looking at new systems, defining the mission of the transformation. It requires weighing the goals of streamlining processes with those of reducing errors. It needs setting expectations and changing people and roles.

There are some fundamental pitfalls to either approach, such as not staying committed enough, not touching enough bases, or not collecting enough key metrics. That is why it can be helpful to have an outsider or objective third party guide the leadership team through the transformation and change management process.

Why Not Be Wise About It?

A third party such as Wise Consulting, which counsels HR and financial leaders, is a good choice. Wise offers the ability to efficiently help define the transformation vision and help manage the change management process. Wise clients benefit from years of experience knowing what to do and, more importantly, what not to do, helping clients minimize risk and commit only the minimum amount of resources needed to accomplish the change.

Just as individual employees, executives are people and, therefore, wired to resist change, not to embrace it. With proven methods and a clear vision, organizations can better harness human nature.  Optimizing HR processes through technology provides a clear path for achieving desired transformation.