Transforming HR: Insights from Kathi Enderes on Systemic HR (Ep. #103)

Wendy:

Welcome to Building Better Managers. I am your host, Wendy Hanson, and I am delighted to have you with me today to learn from some wonderful guests who are going to share their information and their brilliance and their experiences around management and leadership and building great teams in organizations. I am also the co-founder of New Level Work, so check us out, newlevelwork.com. Thanks for tuning in.

Welcome. We are so glad to have you join us today. Our work in leadership development and growing managers at New Level Work is essential in such a time of change and disruption in business worldwide. We have been moving from the industrial age for the past 10 to 15 years, which requires looking at business and how HR functions in a whole new way. The only thing consistent today is change.

At New Level Work, we have taken this challenge on and created more professional development training, group coaching, and made our one-on-ones more accessible to more managers and leaders in organizations. Well, today I am so excited to share the wisdom of Kathi Enderes of The Josh Bersin Company to learn about their major study of 7.5 million HR professionals on LinkedIn and all the CHROs they've interviewed.

It's that time of change, and today you will learn about the new framework for Systemic HR and how it will help us focus on what is important, business outcomes. Only 22% of companies measure HR success by business success. These factors include growth, innovation, and customer delight. Systemic HR is going to try to change that, and we're going to learn from Kathi about how that happens.

So let me introduce my outstanding guest. Kathi Enderes is the Senior Vice President of Research at The Josh Bersin Company. She leads research for all areas of HR, learning, talent, and HR technology. Kathi has more than 20 years of experience in management consulting with IBM, PWC, and EY, and as a talent manager at McKesson and Kaiser Permanente.

Most recently, Kathi led talent and workforce research at Deloitte where she led many research studies on various topics of HR and talent and frequently spoke at industry conferences. Originally from Austria, Kathi has worked in Vienna, London, and Spain, and now lives in San Francisco. Kathi holds a doctoral degree and a master's degree in mathematics from the University of Vienna. Welcome, Kathi.

Kathi:

Thank you, Wendy, and I hope you don't hold it against me that I have a PhD in mathematics.

Wendy:

Oh, PhD in mathematics, okay. I was reading off there. Yes, you are absolutely a brilliant woman, and I'm so glad that you are in this research end and you know all this so that you can help us look at Systemic HR. So you've just finished a huge piece of research, one of the biggest ever, I understand, how major companies are tackling their biggest HR challenges right now. Tell me a little bit about the research, just how big was it?

Kathi:

We believe it has been the biggest study ever done on the HR profession overall, and the reason why we're saying that, it actually had four pieces of input. One of them was a very large survey-based study where we studied over a hundred organizational and NDHR practices and strategies of over a thousand companies around the world, covering 26 million employees overall, across all industries, all geographies.

So those were how HR organizations operate today, what are the roles, what are their capabilities, how are they organized, how are they working, all of that HR technology. Then we also fed into it another large body of research, actually our own research, and each of the disciplines of HR. So we have a big study on learning and development. We have another big study on talent acquisition, another one on total rewards, another one on leadership, another one on organization design, on and on and on.

We have all of these. We have 12 of these domain studies, and we fed all of this into this study too. The third piece that we also fed into this is our Global HR Capability Project where we studied the capabilities, actually 95 different capabilities, that HR professionals have around the world. And we had over 9,000 HR people basically self-assess themselves against these 96 or 95 capabilities.

And the fourth body of insights that fed into that was actually, and you mentioned it before, we analyzed 7.5 million HR practitioner profiles on LinkedIn. So let that just sink in. There's 7.5 million people who are in HR just on LinkedIn alone. So lots and lots of different data points here. If you think about how big the profession is, 7.5 million people on LinkedIn that are HR people.

So if you think about all the people that might not be on LinkedIn, maybe in countries where LinkedIn is not used so much, I know it's not used in China, for example, lots of people. Some people might just not be on LinkedIn because they just don't feel the need to be on LinkedIn. So if you think about how big the profession is, it's really massive. So it was a really, really big study.

And we've also taken 30 or 40 different interviews of CHROs, chief HR officers, of large companies that are successful in this, and also those that might not be that successful yet and are trying to get on the journey to Systemic HR.

Wendy:

Wow. I love how you've collected all this information, and then you've organized it all so we can do something with it. What challenges do you find companies are facing now, Kathi?

Kathi:

The challenges overall that companies are facing are really, really different than they used to be. If you think back like 10, 15 years, did we talk about hybrid work? Did we talk about mental well-being? Did we talk about belonging and inclusion? Or did we talk about redesigning jobs for AI? No, not really. We didn't think about those things so much. All of these challenges are now landing on HR's plate.

I was just talking with a group of CHROs at the CHRO Roundtable, and some of them have been in the profession and leading HR organizations for 15, 20 years, and they said this has never been as complex, but also never been as interesting and exciting as it is now. One of them said it's never been as hard and it will never be as easy as it is now. Because looking back it was less complex, but all the challenges get more and more complex.

And that's why we concluded, you can't really operate HR in the same way that it has operated for the last 30 years or so. So that's why change is needed.

Wendy:

Yes, and I'm sure that you saw such a difference in how HR leaders functions and where they choose to put their energy. I've worked with some fabulous HR VPs in the past who were really partners in projects, and then there are others that are really looking at the benefits, counting. They're not playing at that higher level. So I'm glad that you're pulling all this out so that we can look at this in a different way.

Kathi:

Actually, I just wanted to add something. I'm glad you mentioned the HR business partners because apart from the CHRO, HR business partners are actually the most important role overall in the HR profession as we discovered, and maybe not surprising. But if they are good, they can be really great. They can absolutely move their HR function forward, adding much more value to the business.

But if they don't have the right capabilities, if they're operating much on a lower level where they just say, "Well, let me just help you put something into the system. Let me just help you write a job description," something much more tactical rather than really helping the business leaders move the business forward and create a better employee experience overall, it can break down really fast. So HR business partners are really one of the most pivotal roles overall in.

Wendy:

And as you mentioned, the tactical versus the strategic and making sure that we need more strategic people out there to be partners. That's great. Now, what did you find out about how they're tackling these challenges that they're facing?

Kathi:

We saw that the most successful organizations, and by the way, there's only 11% of them that are really in this bucket of the most successful HR organization, the most systemic, or as we call it, problem oriented organizations, they are really operating completely differently. So if you think about the operating model that we've had in HR for the last 30 years really, it's been one that Josh sometimes calls the IT help desk or the 1980s IT help desk, where you basically just say, we get a question from the business, and then we going to just resolve that.

So very reactive, very much more like basically you call us if you have a problem, we'll find the answer, and then we move on to the next problem, rather than proactively saying, where does the business need us to go? Where should our talent strategy go to? How do we help managers and leaders be better leaders, lead the business forward? If we want to enter, for example, a new market, a new geography, offer a new product, a new customer segment, how does that impact our people strategy?

So it's a very different way of working together. And the way that our HR service delivery model was designed was really in specialized silos. We have the silo that say, well, here's the learning and development team and they do learning and development. Here's the talent acquisition team. They recruit people. Here's the employee experience team. Maybe they just make sure that employees have a good experience. Here's the total rewards team that just looks at compensation and benefits.

Here's the diversity equity inclusion team, maybe that just looks out to DEI. Talent management team, on and on and on. Here's the HR tech team. Maybe here's this HR service center that just makes sure that all the transactions go through efficiently and effectively. Rather than saying, well, every problem that we have, all the problems that I just mentioned are not single function problems. So hybrid work, for example, is not... Who's going to own hybrid work? Well, everybody has to own it.

Everybody has to play a part in it. How do you recruit people for hybrid work? But then also how do you onboard people in a hybrid work? How do you help performance management in hybrid world? How do you train people in a hybrid world? And how do you reward people? How does it change compensation structures? Soon enough, all of the problems that we're now facing... Or well-being is another one. Not a single domain focus area because well-being is not just about well-being programs, it's also about management and how managers and how teams interact with each other.

And it's about how the organization is operating, and all of those kind of things. So each of the problems that we just talked about are not single domain topics. So systemic HR basically says we need to integrate and work together, collaborate in much different ways together across HR, but then also with the business. So being much more business integrated, being much less on the receiving end of business issues and much more upfront getting analytics in is hugely important.

So using people analytics, using talent intelligence, intelligence about skills and capabilities and market insights, labor insights, economic insights, customer insights, putting all of this together to be the true business partner to the business and the true business leader, not just an HR operator. That's what we mean by Systemic HR.

Wendy:

And the fact that before everybody was siloed in these different groups is just not useful whatsoever, and being able to see this coming out and have everybody working together. And one of the things, I was reading some of your research and saw that a lot of HR leaders don't even get enough professional development on all these areas, and that's been a problem.

Kathi:

Yeah, that's a huge problem. Because as we identified, maybe not surprising, that HR capabilities play a huge role. Because how can you work together in cross-functional teams if you don't really understand the other areas? So if I'm a learning and development person, but I don't know anything about talent acquisition, for example, I will never even know to ask somebody in talent acquisition to work together with me because I just don't have enough understanding.

Those cross-functional capabilities and also business capabilities, data and analytics capabilities, consulting capabilities, they don't come from out of nowhere. The vast majority of HR organizations actually don't spend enough or hardly spend anything really on developing their HR people. Yet, as we know, it has a huge massive impact on organizational performance outcomes, how well-skilled and how cross-trained and cross capable the HR people really are.

But yet under 10% of organizations even have any kind of formal professional development program for HR people. Also, we heard some stories, a professional services company, they said they spent about $5,000 on average on development for their client facing employees, and they spent about 500 or less than that on HR development because they just don't value it enough.

But the uplift is huge. We can show with data how important that is for HR people to have the right capabilities, so training them, but also rotating them around, giving them opportunities to be mentored, work on projects, all of that factors into that development as well.

Wendy:

Yes, and having business outcomes is just so different from I think what a lot of HR people are used to. So I love how you're pushing that as you go ahead. Do you have specific examples of companies that are using the idea of Systemic HR now, Kathi?

Kathi:

Yeah, for sure. There's many, many different examples around the world. As I said, on average it's about one in 10 companies that have Systemic HR models as highest level maturity, but they are across all different geographies, different industries. So Lego, for example, is a great one. We have a great case study on them, how they transformed and keep transforming their organization around Systemic HR with a different HR business partner model and different models of these centers of excellence, much more integrated and much more community-based.

MasterCard is another one. Nick Benaquista, the SVP for the HR business partners, just spoke at our conference together with me actually about their transformation and reinvention of the HR function around Systemic HR, also to change significantly the role of the HR business partners, but then also to think about in a different way on how they create better employee experiences and are much closer to the business because their business is growing massively.

It's grown a lot, doubled in size in the last few years. And so they realized the old model was just not scalable anymore. So MasterCard is another one. Unilever is another great one. IBM has a very agile HR operating model and HR organization structure as well. New York-Presbyterian, so a healthcare organization, very large US healthcare organization.

Their CHRO Shaun Smith just spoke at our conference too about their Systemic HR journey as well and how they have become much more business oriented, much more business integrated, and how they have moved from this really personnel function approach of HR where HR was really just a cost center and just something to administer and to keep the company out of trouble, all the way now where they are moving towards a much more systemic operating model and organizational model as well.

Many different examples, many different industries. I could go on and on with many case studies. TomTom is another one in Europe. So all across the world, many different companies, many different industries as well.

Wendy:

And that is going to make such a difference even recruiting in HR because you're going to be able to have more of an exciting platform to play than people that were getting into HR before. I think that talking about business and making it a profit center rather than just a cost center will be a wonderful thing that we can see in the future.

Kathi:

Absolutely. The way that we'd like to frame it is falling in love with the problem. So basically not just administrating stuff or not just being on the back end, receiving end if the business says, "Hey, HR needs to execute on something," but really deeply understanding the problems that the business encounters and getting to the root cause of it before we create solutions. Because sometimes in HR we get very solution oriented, which seems to be a good thing.

But in hindsight, when you look back, sometimes we misinterpret the problem because we try to be helpful and we try to be useful and we say, "Okay, I already know this problem. I know what it is," and then we jump into solution mode, rather than taking a step back, really assessing, using data, using analytics, interviewing, talking with the business to deeply understand what the problem actually is, and then creating these systemic solutions.

So talking, for example, about healthcare, New York-Presbyterian, of course, they have a massive nursing shortage, very well-known I think around the world, but the US has a really huge nursing shortage. And rather than saying, "Well, we just need to recruit enough nurses because they're just not there," as Shaun told us from New York-Presbyterian, they're looking at it in a very different way.

They're saying, well, maybe we can not just recruit people, but we can also think about how do we retain the nurses that we already have? Maybe we can give those people, for example, that are closer to retirement, maybe we can give them more flexible job options so they don't have to retire because the job is so stressful and so exhausting, but they might not want to retire fully.

Maybe we give them different opportunities for the nurses that are early on in their career, maybe we give them onsite childcare so they can bring their children with them so they don't have to stay at home. Because they might want to work, but they don't have a way to have their children cared for. All of those kind of ways to retain the nurses that we already have.

In addition to recruiting them, maybe we can also think about reskilling. Maybe we can reskill people that are not in a clinical profession that we need less of. Maybe the receptionists, for example, we need less of the receptionists, maybe they might want to get an education. Maybe we give them a free education, tuition assistance, so they don't have to pay for their education and then they can grow into these nursing roles.

And maybe we also give them career coaches to help them understand what these roles are, and they do all of that. And maybe we also help redesign the jobs as we have them. So maybe the jobs can be much less stressful and much easier to do if we bring in more automation, we bring in AI, for example, we bring in lower skilled people to support the nurses.

So we call that the 4R model, because I just talked about these 4Rs, recruit, retain, reskill, and redesign, and they all have to work together. Because the nursing shortage, for example, is not just a recruiting challenge. It's really a systemic challenge that you have to address with all these systemic solutions.

Wendy:

I love all the creativity there of all the different ways. And if you take that model, you can place it onto... And certainly the hospital issues and nurses are the worst, but other companies can look at that too. How do we reskill? How do we use our best people and put them in different places?

But that's some fabulous creative thinking. I hope that our listeners are saying, "Hmm, how could I take that and put that into what I'm doing because it really is inspiring?" So what other feedback did you receive from companies and their HR people about implementing? What else happened there, Kathi?

Kathi:

What we learned about how you move to Systemic HR is actually you don't usually start with the operating model. It's always the inclination that we start with organization structure and operating model, and we say, well, let's just move the boxes around. Let's just say basically who's going to do what and we have to break open these silos and all of that. But any organization model always creates silos, right? You just move the silos in a different place.

So rather than focusing too much on the organization model and the operating model, how about starting with the strategy? So really starting with the business strategy and saying, what do we need to align our HR strategy to the business strategy? So starting from the top, starting with strategy, not starting with structure. First starting with strategy, making sure that the HR strategy is fully aligned with the business strategy and goes in lockstep.

And as you said also before, measuring the results of HR, not by HR success measures, but business success measures. Are we actually accomplishing our financial goals? Are we growing in the market where we want to grow? Are we creating new products, new services? Are customer satisfied? All of those are people challenges. Because who is doing all of these things? Well, it's the people.

So if they are not working, then we have to look for the root cause on what's breaking down in any of these areas. So starting with the strategy, then thinking about how do we operate differently, not necessarily organize differently, but how do we need to operate differently? So can we do cross domain projects? Can we bring people together on things like the nursing shortage or any of the other shortages or skill shortages, labor shortages, any of the other problems that we are working alongside?

How can we work together on these projects in a much more cross-functional way and also much more business integrated way? How can we bring the business into all of these problems as well and work together with them? How do we build the HR capabilities? So as we talked before as well, very important and it's almost impossible to do all of these things if people are not cross-trained and don't have these what we call full stack HR capabilities where they can understand not just their own domain, but other than domains too.

So it's not to say that we have to let go of our domain focus, the specialist is really important, but think about it less of an I where you just have one domain, but maybe more like a T, for example. So you have one big domain, but then you have all these other domains that you also understand a fair bit about and are conversant about so you can pull these lever when the business works with you and talks with you. So capability building, very, very important.

Then we have to think about how are the roles changing? How are the HR business partner roles, for example, changing? What about the role of the CHRO? So is the CHRO really a full business partner and an equal C-suite member as the CFO or the CIO, or do they have less status on the C-suite? Do they have a full business say on that as well? Very important too. Do we need new roles?

Do we need, for example, product manager roles to bring together these cross domain products, for example, that are employee centric and help our employees do their best work? And then also each HR technology, very, very important. Technology and AI can actually help a lot with that. So generative AI, and we just actually launched our own generative AI tool Galileo last week. We launched it fully.

That can help turn any HR professional into this superpowered human where you understand all the domains because you can ask it any questions that you have basically. If you are not familiar with one domain, you can ask it a question and it can become this consultant to you to really upskill and reskill and broaden your expertise as well. So using technologies and new technologies in new ways, great opportunity as well.

And we're just at the cusp of reinventing everything with generative AI, but I think it's going to be a very exciting time to utilize those capabilities.

Wendy:

Yes, it's going to make such a difference in business and the automation and, as you say, being able to get the feedback. We have a product too on our website where you can ask questions. If you were a coach and you needed to know how to coach somebody, what would be some of those things?

And it's gleaned from all of the information that has come from our coaches and our background and our library. So that's amazing. And I love how you're talking about a seat at the table in the C-suite for the CHRO, a full seat, but you need to know business in order to have that full seat.

Kathi:

Absolutely. Yeah, it is very important. I mean, the best CHROs that I talked with, they all say, "I'm the HR person second, the C-suite person first. So I'm a business person first. And yes, I also know about HR," but some of them are new to HR, some of the best ones, actually they didn't grow up in HR, and that gives them a I think different perspective. We just had Stephanie Kramer, the CHRO from L'Oréal USA, at our conference speaking on stage with us, and she comes from an operations background.

She comes from L'Oréal and she says, "I've been in HR for 18 months," and she has the senior role, but she says, "I have a great team and they help me every day. And I educate them on business every day." So it's this great collaboration, bringing the business perspective into HR and HR's perspective into the business as well. So HR people are really becoming more and more business people, not HR people that also know the business, but business people that happen to know HR.

Wendy:

That's a big difference. Yes, I like the distinction you make there. And what are the steps for a company, Kathi, say an HR leader actually implementing Systemic HR idea, what do they do? What are some of the steps?

Kathi:

It really depends on where you're at, but starting with the strategy, so really starting with your starting people strategy or HR strategy, making sure that it's fully aligned to your business strategy, and your culture as well for the organization. So if you're with a fast-growing tech company, your HR strategy will be very different than when you're with a large healthcare organization, for example, like New York-Presbyterian.

So it needs to be fully aligned with your business strategy and making sure basically you develop it together with your business strategy. It's going hand in hand. Then really focusing your work on what's most impactful, what's most needed for the business problems that you need to address. So starting with the business problems and aligning your HR work around that, like I talked about the nursing shortage in healthcare. And every company really has different problems.

Start with the biggest problems and align your HR work around that and try to offload, meanwhile, the more administrative and the more mundane kind of things. You need to do them well, of course, but offload them to technology rather than spending your valuable HR resources on that. So using HR technology wisely to automate, but then also augment HR people as we talked about too, but then also augment and support employees and managers.

So HR technology, not just being for HR, but really for employees and for managers. Because if done right, the HR and managers are working together on managing and leading the business. And then the CHRO, as I already mentioned, very, very important to have them on the C-suite and making sure actually your HR operating model and how you operate, what roles you have, how you're organized, needs to be tailored for what your business looks like.

Very important. This is not a one size fits all solution. Every organization actually looks a little bit different. Every organization, even the most systemic ones, they're operating differently to each other. They also all say it's an ongoing journey, so we're never done. We're always constantly rethinking what the roles are, how we operate, how we work, what capabilities we need.

For example, capabilities in generative AI, it was nothing that we needed. Two years ago, it wasn't even a discussion, and now we all need to know how to use it and how you ask prompts and all of that. Well, the HR function needs to be very attuned to all of these changes all the time. So constantly reinventing. You're never done. MasterCard, for example, says, "We're never done. We're just working on it constantly."

And I think that's a big shift too from this, "We need to transform." It used to be you said, "Well, we need to do an HR transformation." And you went through this whole HR transformation, and then you're like, "Luckily, now we're done. Now we are through it, and now we can go back to working as we always work." Well, that doesn't work anymore because we have so many changes coming along and so much disruption coming our way constantly that we need to constantly be much more dynamic rather than just transforming once.

Wendy:

Change is the only constant, right?

Kathi:

Change is the only constant. Exactly.

Wendy:

And one of the things that I'm hearing you say too is that HR is now dealing with business problems and not just looking at themselves as people problems, that I deal with the people problems, because that all becomes integrated into the business. And that for some new HR people or older HR people that have been in the business and been doing it more transactionally is a big change.

Kathi:

It's a huge change. But if you think about it, every business problem is a people problem. Because who does the business? It's always people. If sales is underperforming, well, how can you solve that? Well, we need to understand what's happening there, but it's usually a people problem. If your product is not landing well, at the end of the day, who designed the product?

And two, who did market research? Well, it was people. Every problem that we have is a people problem. And so I think thinking about how do we solve, as you said, the business problems, not just the people problems and come to the root cause on how can HR help with that? In the end of the day, it always comes down to people and culture. So that's the biggest differentiator for sure.

Wendy:

Excuse my voice. Kathi, when people want to learn more about this, what's the best way for them to learn more about Systemic HR from you?

Kathi:

Yeah, we have actually a full website on our website, JoshBersin.com, and then we have JoshBersin.com/systemichr, where we have access to material. You can download an infographic and executive summary. And for our corporate members, you also have the full research report. You can also contact us. You can link together with me on LinkedIn to connect, and I'd love to talk with you about it too.

And we are also constantly doing webinars or research or articles. So if you follow us, we are on this journey to help Systemic HR actually get integrated into the business. We have a full initiative around that. For us, it's not just one research study and then we're done, because organizations need a lot of help with that, and we are there to help.

Wendy:

And you've put so much effort into all this research. Now it has to be brought forward so that people put it into action.

Kathi:

Exactly. Exactly. Because we see this is the only way actually for HR organizations to be successful in this very complex business environment that we are in today, in this new age, in this new era.

Wendy:

Well, I downloaded some of the infographics and they're just wonderful. So I really recommend that people go on there and they get the really background information on what it is, and then learn more because this is going to be the way of the future. So thank you for bringing this to us today so that we can learn more about it, and I look forward to hearing more about it in the future.

Kathi:

Thank you so much, Wendy. It was a pleasure.

Wendy:

Yes. Oh, thank you all for tuning in, and I hope that you enjoyed this talk on Systemic HR as much as I did. I learned so much from Kathi and what this movement is really going to mean for business and HR. So there's a lot that has to be done, so stay tuned. Check Josh Bersin's site and you'll be able to get more information. We look forward to seeing you again soon. Have a wonderful day.

Thank you for joining us today. For more information, show notes, and any downloads from today's podcast, please visit newlevelwork.com. We would also be so appreciative if you'd write a review. Go on to newlevelwork.com/review and you can write a review on your favorite podcast app. It makes a big difference because we want to really grow managers and leaders around the world, and we need your help. Thank you so much. Have a wonderful day.

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