Current Issue • August 2018

Future Ready: The Human Capital Agenda

Future Ready: The Human Capital Agenda

Richard R. Smith and Chandrasekhar Sripada in conversation with ISBInsight

Richard R. Smith, Academic Director of the Master of Science in Human Capital and Leadership programme at Singapore Management University (SMU), delivered the keynote address at the inaugural Thought Leaders’ Summit on the Future of Human Capital Strategies at the ISB. Chandrasekhar Sripada, Clinical Professor in the Organisational Behaviour and Strategic Human Capital Area at the ISB, outlined the agenda for a new ISB Human Capital and Leadership Initiative (HC&LI). ISBInsight caught up with the two speakers.

ISBInsight: What, in your view, are the top challenges that will drive human capital practice in emerging markets in the coming decade? How can a human capital perspective contribute to addressing these challenges?

Chandrasekhar Sripada: A decade is a long time in today’s fast-paced world. In the next two to three years, we will see a digital tsunami hitting all our organisations hard. Leaders and workforce at large have to be re-skilled and prepared to cope with and leverage the massive opportunities that Artificial Intelligence (AI), Machine Learning (ML), the Internet of Things (IoT), robotics and associated digital platforms will throw up. This will be our most overarching challenge. Within this, we have to reimagine four distinct areas of human capital strategies: first, the future of work; second, skilling workers for future work; third, developing leaders for the future and fourth, designing organisations and employment contracts for the future.

First, on the future of work, the McKinsey Global institute in their May 2017 report on “Technology, Jobs and Future of Work” found that about 60% of all occupations have at least 30% activities that are technically automatable, based on currently demonstrated technologies. This means that most occupations will change, and more people will have to work with technology. Work designs have to undergo a change. Many routine and repetitive tasks that currently humans perform will have be given to machines. For examples, factory workers don’t have to manually handle their machines. Machines driven by IoT and AI can look after themselves. This will require us to re-imagine the work of the factory worker and find means of getting more value-addition from them.

Second, regarding the skilling of workers, almost all categories of workers, including Chief Executive Officers (CEOs) have to reskill to leverage and handle new digital platforms. CEOs have to innovate business models (like Uber did) for which they need new skills. Managers need to learn to manage a new workforce with both humans and robots working together. Planning, forecasting and managing such a workforce will need new skills.

Third, developing leaders for the future will be a different task. Conventionally, content for leadership development has focused on knowledge and skills. The future is far too volatile for this content to stay relevant for long. Learning to learn will be the new leadership prerequisite. Amidst all the flux and disruption, mindfulness and emotional intelligence will be the new leadership skills. All this may require that we reinvent our known pedagogy. We have to rely more on real life projects.

Fourth, on designing organisations and employment contracts for the future, organisations will become more loose networks than tight hierarchies. People will assemble for real-time projects , organise themselves around these projects and move on, as the task gets completed. Some of this already happens but the fluidity of structures will only intensify. Freelancers will increase. Based on current workforce growth rates reported by the Upwork and Freelancers Union commissioned study “Freelancing in America: 2017”, the majority of the United States workforce will freelance by 2027. The youngest workforce generation is leading the way, with almost half of millennials freelancing already. This trend is catching up in all major economies. Freelancing spells the death of the ‘career’, as we understood it all these decades. The ‘organisation man’ will finally disappear with people choosing autonomy and mobility over so-called job security.

Richard Smith: Developing markets pose an interesting challenge in two ways. First, there seems to be an abundance of human capital. In other words, there is a perception of available talent on which we can draw. But the paradox is that while we have many people, we do not always have the talent that we need in particular sectors or areas. Due to the nature of developing economies, we have had limited opportunities to develop the talent that we need to fuel economic growth. That is one dimension I have seen extensively in China, India and Indonesia.

Developing markets pose an interesting challenge in two ways. First, there seems to be an abundance of human capital. But the paradox is that while we have many people, we do not always have the talent that we need in particular sectors or areas.

The second challenge is the way we view human capital. Rather than taking a systems-view, we often see it as headcount or sets of skills and knowledge. When I say system, I mean viewing human capital more holistically. In other words, we may have the right competencies in individuals but what do we do with them? How do we create the culture of the organisation? How do we structure that talent? Putting all those pieces – talent, structure, culture, and leadership – together is often a challenge.

Some commentators are arguing that AI is already having a major impact on job creation in India. What do you see as the future of work in emerging markets?

Chandrasekhar Sripada: In fact, at the Thought Leaders’ Summit on Human Capital, we heard the contrary. All Chief Human Resource Officers (CHROs) told me there are no job losses due to AI. The job losses being discussed in the popular media are due to an earlier surplus that grew in services companies as middle management bulged. AI is helping in many areas like user experience, decision making and product design. It is being used to improve performance and not to cut jobs.

The future of work will change in all markets. We will have the benefit of smarter digital technologies. Let me give you an example in the human capital area – AI-led résumé screening will speed recruitment processes like never before. This will release much-needed time for recruiters to spend on interviewing and improving the quality of hiring. Job dynamics will continue to see ups and downs. New jobs will get created even as the old ones lose relevance.

Richard Smith: AI will have an impact on both enhancing jobs as well as changing jobs. India and the Philippines and to some extent China will also see this type of disruption. The digital transformations in businesses and AI will have a great impact on the economy and potentially in the services sector.

The challenge is how we think differently about industries. If we can transform the way work is done, we can change this from a threat to an opportunity. While there is a transformation going on in the services sector, there is an even bigger transformation going on in the manufacturing sector. In other words, when we think about IoT, how do we take that know-how in technology and services and bring it into manufacturing?

For example, the manufacturing of a toaster is quite simple these days. Yet what we have not done is create the services side of the manufacturing. We are not too far away from the day where we have intelligence built into products as simple as a toaster, to create an artificial intelligence interface. I am waiting for the day when I walk out of the house and I get a message from my toaster that says, “I am sorry, Sir, is there something wrong with my service? Why did you not have toast this morning?”

For the first time, we can think about customer satisfaction. We are now able to understand customer usage of a product. Before, our only source of information was customer complaints.

For this type of smart product, with the use of IoT, our manufacturing companies need new workforce capabilities. How do we take that capability from the services sector and build it into manufacturing in India? We need to think differently about the talent that fuels the industry as well as the nature of the industry and the future potential. The Make in India campaign could be really exciting if we think not just about traditional manufacturing and instead ask: How do we get into the smart products? How do we get into the Internet of Things? India is well-positioned to do that.

We are creating services inside manufacturing. Think about tennis rackets that have a user interface so that you can analyse your swing. For the first time, we can think about customer satisfaction. We are now able to understand customer usage of a product. Before, if we were making tennis rackets, our only source of information was customer complaints. If we change the nature of our customer interface now to understanding usage patterns, for example, the way that the product is used, the patterns of customer activity, we can create a whole digital transformation inside the product-based, manufacturing-based company. This begins to foster a services orientation, which could be exciting for India.

Being a great place to work is not just a good thing for your employees, but something that makes dollars-and-cents sense. There is a proven link between being a great place to work and being a high performing organisation, in terms of financial results.

There is a tension inherent in the Indian context between generating high-quality jobs to reap the demographic dividend and in embracing novel disruptive technologies to innovate and automate operations. How can a human capital perspective help organisations walk that tightrope?

Chandrasekhar Sripada: In a way, it is simple. Even earlier waves of mechanisation and automation displaced some amount of work. Now too, new technology platforms will get more work done through more intelligent machines. Not all work will go away.

People will still be masters of machines. We should be smart enough to enhance the value addition by human beings while unburdening them of work that machines can do better. There should be resultant productivity gain, first at the firm level and then at the national level. Such productivity gains should be reinvested to create even greater employment for people. A combination of sharp productivity gains and smart redesign of work will lead to new employment and help us walk the tightrope.

At SMU, you lead the Human Capital Initiative. Could your learnings apply to the kind of work that we want to do here with ISB’s Human Capital and Leadership Initiative?

Richard Smith: In Singapore, we are fortunate to have some great organisations and great partners to work with. But at the end of the day, relative to India, Singapore would fit in a small corner of Mumbai. I am envious of ISB and the scale and diversity opportunity in India.

In Singapore, we have had a lot of great achievements that I am proud to share. One recent effort is understanding what makes a great place to work. The Great Place to Work initiative works globally on measuring the things that matter in companies. It uses research to create a ranking of great places to work, in various types of companies, all around the world. This ranking process has been ongoing since 1997. It is a very consistent and proven methodology.

Being a great place to work is not just a good thing for your employees, but something that makes dollars-and-cents sense. There is a proven link between being a great place to work and being a high performing organisation, in terms of financial results. We have partnered with the initiative in Singapore to look at some of the dynamics with Singapore-based companies.

We have also worked quite a bit with industry partners to create education opportunities in the area of human capital. We have launched a new Master’s programme in Human Capital Leadership. We have also created a number of small courses for executives and for managers in human capital. These are jointly sponsored by some of our industry partners as well as the government.

At SMU, we act as a hub in South East Asia for a number of the surrounding countries. We are excited about the opportunity to work more collaboratively in the region. Hopefully, we will be able to do more in partnership with ISB.

The topic of bridging business practice and academic research is an ongoing challenge. The area of human capital is ripe for more focus on evidence-based management. As organisations begin to use more data and analytics, we can more easily connect to research, especially in the area of human capital. The time is right for more academic and business partnerships to take shape.

Scroll To Top