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How HR is reinventing itself

As human resources teams move on from administration and compliance, they are becoming central to workplace transformation.

Kath van der Merwe, group executive talent and culture at ANZ, says the bank's workplace transformation has gone beyond buzzwords and is having consequences for other practices. Eamon Gallagher

David Marin-GuzmanWorkplace correspondent

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They used to be called human resources officers. Now they go by titles such as "people and culture chief", "employee experience leader", "people operations chief" and "happiness officer".

Even for a profession notorious for corporate buzzwords, the new titles may be the best indication yet that HR is undergoing a much-needed transformation.

For Alex Hattingh, chief people officer for people management software company Employment Hero and a former executive at Google US, the change is overdue.

Hattingh argues that much of HR in Australia has become moribund and risk-averse. That's partly due to the country's complex regulatory system but also because they've been lulled into complacency from decades without a downturn.

"When I moved back after 15 years overseas, I realised how far behind Australia was with the strategic function of HR," says Hattingh. "I made a promise never to take a role with HR in the job title … I think that stems from HR having a bad reputation. They're administrative, they're police, they're head of compliance, they only get involved if things get bad."

While some local start-ups experiment with horizontal work structures or total pay transparency, HR within major corporations has been stuck managing policy and procedure. But years of sluggish productivity, and the advent of new technology, may have finally prompted some executives to view workplace change as integral to their firms’ profitability. And HR departments are at the centre of this transformation.

Policies for another era

Dominic Price, resident work futurist at tech giant Atlassian, says that over the past two decades, companies have been introducing technology but failing to see an uptick in productivity.

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"Part of the problem is that you also had to change the people to marry the technological change," he says. "Collaboration is a human-to-human art form – tech can amplify that, but a fool with a tool is still a fool."

Price believes many workplaces are still stuck with policies designed for an era when productivity was all about having a line of sight on your workforce. "During the last industrial revolution, where we were all using our hands in a factory on a production line, those policies probably worked," he says. "But in a world where we want people to be creative and curious and experiment and explore, HR needs to change its mindset."

Even for companies going through workforce transformations, of which there are many, change can be little more than a public relations stunt.
Price recalls how the chief information officer of a tech company asked him to send over Atlassian's "flexibility policy" because he wanted to introduce "agile" ways of working.

"He said: 'I need a policy because I want flexibility, but people can't work from home on a Monday or a Friday.' And I said: 'Why?' And he said: 'Well, we both know they would be taking the piss.' And I said: 'No, I think you missed my point entirely.'"

Atlassian work futurist Dominic Price: "A fool with a tool is still a fool." 

The CIO went on to develop the policy himself alongside a tool that tracked the key strokes on employees' laptops while they worked from home.
When the executive returned to Price, he pointed to an employee whose key strokes were 60 per cent less working at home than working at the office and said: "You see, I was right." But on further investigation, he discovered the employee was the chief of staff for the CEO and the reason for her key-stroke slump was she had turned off her internet to do deep work.

"This guy was honest enough afterwards to say that in the generation in which he grew up, there wasn't the trust there," Price says.

The CIO eventually embraced flexibility and later reported productivity had gone "through the roof". But Price warns that the executive's initial attitude is indicative of a "massive danger for Australia".

"I think what he was after was a PR exercise, but he didn't actually want to go through the change. I'm seeing that en masse with senior leaders outside Atlassian.

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"You’re not a 'successful' HR person if you're not spending millions of dollars on an external consultant to drive transformation.

"The irony is I don't think they should be transforming, I think they should be evolving. There's so much change every single day; why should we run 18-month transformations to catch up when we can change a little bit every day and just stay relevant?"

Not surprisingly, it is the tech firms leading the charge when it comes to empowering HR to reinvent the workplace, instead of focusing on administration and compliance. The result is greater innovation and a more satisfied workforce, companies report.

HR chiefs at LinkedIn and Netflix have pioneered unlimited paid leave at the companies’ US worksites – something trickier to introduce in Australia due to rules around paying out accrued leave – while Atlassian famously pays new recruits to take a holiday on their first week so that they start work fresh.

Change to planning cycles

Hattingh says annual performance reviews are on the way out. Instead, Employment Hero "checks in" on staff quarterly and grants each employee a share of the company.

The banks and telecommunication giants have emerged as some of the big first movers. Telstra, with the assistance of Atlassian, has transformed the way it works, scrapping a 12- to 24-month planning cycle in favour of an "experiment and explore" model.

The old two-year model, combined with approval and capital funding processes, was viewed as a killer for innovation.

"The guesswork involved in [setting goals two years out] is a waste of time," Price says. "But the minute you put that plan on paper, someone holds you accountable for delivering it. So you end up delivering that plan regardless of whether it's the right one or not."

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Two years ago, ANZ announced a move to bring agile ways of working to most of its workforce. The restructure cost thousands of jobs, with many having to reapply for roles. But the bank pushed through the challenges and Woolworths now cites it as a model for its own organisational transformation plans.

ANZ CEO Shayne Elliott led the change, later bringing in Kath van der Merwe, who has a background in management consultancy, to redefine HR in a new position as head of talent and culture.

Van der Merwe says both the bank and HR have reduced age-old hierarchies and created flatter, cross-functional teams where leaders are much closer to the work.

ANZ's Kath van der Merwe. Eamon Gallagher

Instead of steering committees that used to meet weekly, teams now work together on three-week "sprints" to deliver projects. Teams have daily "stand ups" – a more efficient form of meeting – where they clear away roadblocks stopping them from responding at pace.

Van der Merwe says the change has gone beyond buzzwords and is having consequences for other embedded practices, from how the bank invests in the business to how employees have a fulfilling career.

"It genuinely is a cultural transformation," she says. "It’s not just about re-appointing people into tribes and squads with different titles. It is a different way of working.

"A lot of principles are around empowering people to do the work, but that also requires clarity on what the work is and what are the guard rails, and what are the priorities.

"If you have a bank where some parts are working that way but others aren't, how do you align the rhythms? ... Agile parts [of the business] tend to work on a quarterly rhythm, but historically we have an annual investment process. You’ve got to adapt a lot of things."

Flatter structures and a shorter corporate ladder mean ANZ has had to reinvent what a rewarding career means for its employees.

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"It's about how you help people develop mastery and how might you round out a skill set by doing the same activity but working in a different part of the bank, solving a different type of problem," says van der Merwe. "You're learning and growing, but it's not necessarily reflected in moving your way up a hierarchy."

The attention on employees, and employee empowerment, echoes a key component in reinventing HR that may get lost with senior executives leading transformations.

Employment Hero's Hattingh stresses a reinvented HR needs to have an understanding they’re not solely responsible for people and culture. "They're the voice at the table for the employee," Hattingh says. "They sit there as an advocate of both employer and employee, and again I think that's where a lot of the mistakes are – they often side with management and are not the voice of reason for both sides."

In other words, drop the resources and focus a little more on the human.

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David Marin-Guzman
David Marin-GuzmanWorkplace correspondentDavid Marin-Guzman writes about industrial relations, workplace, policy and leadership from Sydney. Connect with David on Twitter. Email David at david.marin-guzman@afr.com

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