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This is the era of the Fourth Industrial Revolution and rapid information technology advancement. As of 2001 — when the new millennium began — the world's most valuable companies were GE, Microsoft, Exxon, Citigroup, and Walmart, in that order. As of now (March 2019), the order has changed to Microsoft, Apple, Amazon, Google, and Facebook. The emergence and mutual combination of new technologies — internet, smart devices, social media, 3D printing, cloud, AI, augmented reality — are not only transforming daily life but also entirely changing the corporate ecosystem and the work environment. The term "disruption," implying sharp severance and collapse rather than digital transformation or evolution, has emerged as the word that represents the changes driven by IT advancement.
To respond to this rapid change, Korean HR is also actively considering HR digitalization. However, many companies are still at a level of (1) removing low-value elements from existing HR processes, (2) analyzing which processes that are currently performed without digital tools could be carried out with digital tools or automated, (3) researching what digital tools are available or what tools leading/similar/competing companies are using, and (4) deciding which tools to introduce and how to make the transition.
Of course, starting with a few specific HR functions and adopting digital tools to lift employees' work efficiency is not meaningless. But if the very foundation of all work activity is shifting wholesale to a digital workplace, will partial or piecemeal adoption of HR digital tools be enough to respond to business strategy and employee needs?
In the past, as computer technology and the internet developed, email and electronic approval systems were the first to begin replacing traditional paper documents. Soon after, real-time messengers reduced cumbersome email and gradually took over the core role of communication. As a result, simple discussion, reporting, and decision-making could be carried out efficiently with email and messengers alone. The traditional ways of working that had not yet been replaced were simultaneous collaboration and in-person meetings.
But considering the recent levels of technology innovation and adoption, even these can be immediately replaced. Multi-party video conferencing — which used to require expensive remote conferencing systems — can now be done with personal mobile phones alone. Multiple people can simultaneously work on documents, slides, and spreadsheets using only free cloud and drive services. They can share their PC screens in real time and discuss the work output, and they can draw and organize discussion items as if on a whiteboard using a tablet and smart pencil.
All work and communication records are stored digitally, and if needed, content and progress can be shared immediately without separate reporting or sharing meetings — boosting work efficiency and productivity exponentially. Beyond this, not only software development companies like InVision and Basecamp but also traditional companies like IBM, Accenture, eBay, Unilever, AT&T, and McKinsey are adopting full remote work or expanding the share of remote work based on a digital workplace, lifting employee productivity.
To summarize, recent technology advances and the maturation of the digital workplace are connecting organizations, people, and information in new ways and enabling real-time communication, creating new value through this. What is further accelerating the maturation of the digital workplace is the emergence of a new generation.
Born after 1980 and now reaching about a third of the economically active population, the Millennial generation is the protagonist. They have used computers since childhood and have experience interacting with others through virtual worlds.
They are also accustomed to building and maintaining relationships and communicating through the social media that has developed recently — they have the experience and capabilities to adapt to the maturation of the digital workplace faster than previous generations. Often called "digital natives," Millennials are accustomed to sharing and communication and prefer immediate responses. They have a strong desire for horizontal, free communication, prefer feedback grounded in development and recognition, and tend strongly toward flexibility in where, when, and how they handle work.
With the maturation of the digital workplace and the emergence of the Millennial generation, signs of change are appearing in traditional HR strategy areas as well. The change is especially pronounced in performance management, organizational culture, organizational structure, and recruiting.
The maturation of the digital workplace enables the real-time sharing of work processes and outcomes, and makes it possible to implement systems that immediately leave recognition and feedback based on contribution and level. Accordingly, more cases are emerging where traditional performance management is being shifted to real-time agile performance management. Agile performance management also fits the characteristics of Millennials — who want to receive feedback in real time — and helps lift organizational and work engagement.
As the digital workplace matures, the need for hierarchical, procedure-heavy communication and decision-making gradually decreases. In addition, considering the Millennial generation's preference for immediate communication and participation, culture is shifting toward encouraging information disclosure and respecting the individual and autonomy so that employees can naturally participate in work and decision-making.
If organizational culture is the software side, organizational structure is the hardware system. To respond agilely to the rapid changes of a business environment in which new information and technology continuously pour in, more companies are adopting agile organizational structures. An agile organization is an autonomous organization built to break out of traditional function-centered hierarchical structures, focus on specific tasks, receive delegated authority, and rapidly repeat decision-making, execution, and learning. Agile organizations promote performance in environments with high uncertainty and complex problems to solve.
In the past, many cases of building EVPs focused on what compensation/benefits structure the company had and how it developed talent.
Recently, there is a growing trend of building EVPs centered on what the organizational culture is, how work actually proceeds, and what environment is in place to support work — fitting the Millennial generation's emphasis on sharing, communication, autonomy, and flexibility. In particular, there is a tendency to use actual interviews of employees in the field rather than general explanatory descriptions.
Traditional e-HR systems were dominated by on-premises deployment. But with recent IT advances, cloud costs are gradually falling, cloud performance and usability are improving, and more cases are shifting to cloud-based deployment. In particular, as the need for HR digital to closely combine with mostly cloud-based digital workplace tools rises, the share of cloud usage is growing. Looking further ahead, since shifting to the cloud is essential for combining big data accumulated in digital workplaces and HR digital with data analytics and AI, cloud is likely to dominate going forward.
Early HR digital began as services specialized in specific areas — recruiting, organizational culture, compensation, company information sharing (reputation). Recently, each service has been expanding its area or shifting into connected/integrated services through M&A. In Korea as well, more cases are appearing where company information sharing (reputation) services expand into recruiting, or recruiting services acquire compensation services.
Beyond that, entry from outside HR digital — like specific job-family communities or training services expanding into recruiting integration — is also actively happening. This implies that for HR digital, accumulating data in each area matters, but combining data across areas can produce information of even higher value.
Traditional IT services had clear boundaries — whether they were business (B2B) or consumer (B2C) services. The HR digital area also had relatively clear boundaries between business and individual services, but recently the meaning of this distinction is gradually fading. For example, individuals can now check compensation information from individual-targeted services to compare against their competitors, and there are services that let individuals reference data analyzed from corporate-provided statistics.
Furthermore, companies continuously monitor the services where individuals directly post company information sharing (reputation) to find meaningful improvement points. Again, this is about how data from different sources — companies and individuals — can provide higher-value information when accumulated and combined in one place.
As we have seen, gathering HR digital data from various areas and various sources in one place — especially the cloud — becomes the foundation for producing more valuable information. What is needed at this point is data analytics functionality that can analyze big data and draw out meaningful insights. Among global companies like Google, Dell, Bank of America, and Ford, people analytics has already spread, and in Korea, IT companies are exploring its possibilities.
At our company as well, after accumulating several months of work records, recognition, and feedback records and conducting data analysis, we derived meaningful insights about people dynamics, attrition risk, and more — and judged them as information worth referencing for future HR operations. The more digital workplace and HR digital data accumulates, the more the importance of data analytics for obtaining meaningful information will be emphasized.
The digital workplace and HR digital are changing rapidly. It is hard to predict what form they will evolve into, and in a situation of maximized uncertainty, it is not easy to argue that a particular capability should be prioritized and strengthened first. But if we had to pick one, it would be "learning agility."
The fiercer the wave of digital disruption, the more we need to be unhesitating about understanding and acquiring digital technology, tools, and culture. Leaders and HR who must lead the digitalization of the workplace and HR should actively try various digital tools and review their applicability inside our own organizations more than anyone. This will become the foundation for not only quickly capturing digital-related opportunities but also making timely decisions.
The more the digital workplace matures, the more essential a culture is that does not hesitate to accept change and recognizes mutual differences. The digital workplace will fundamentally change the way work is done. In-person meetings and collaboration will disappear, and at the extreme, the traditional office may disappear entirely.
On top of that, the share of Millennials in the workplace continues to grow, and the social entry of the next generation — Gen Z (born after 1995) — is now just around the corner.
They will perform work based on experiences and ways of thinking that are clearly different from previous generations, and to motivate them and create performance, we must recognize the difference, understand their needs, and resonate with them. The engagement of new generations will be the foundation that lifts the organization's execution and creates sustainable performance even in a digital disruption environment.
The digital workplace and HR digital do not simply mean paper documents disappearing from the work process or introducing digital tools into part of the HR process. The maturation of the digital workplace means a holistic shift to more efficient ways of working that leverage digital tools.
In this process, HR should preemptively raise its understanding of digital and set HR strategy on that basis. Executives should clearly share the vision and strategy for digital workplace maturation and support its execution. They should also create the physical and cultural environment in which generations with new experiences and ways of thinking can fully settle in.
Most importantly, HR should first dispel the fear of new things and not hesitate to learn. The mindset of thinking big and broad — but starting from the smallest things first — is critical.