Charlene Li on Disruption and the New Contract Between Employers and Employees

The acceleration of change in today’s businesses creates a unique challenge for HR leaders: finding the right talent.

While filling the talent pipeline is increasingly top of mind, we must not make the mistake of failing to engage, develop, and retain talent. And that’s getting harder, because employee expectations have changed to. This calls for disruption.

A stronger sense of commitment between managers to employees changes everything Click To Tweet

I spoke with Charlene Li, bestselling author and principal analyst at Altimeter, about her Udemy course and upcoming book. We talked about the necessity for human resources to hold a strategic leadership role and what it takes to execute disruption for organizational success.

A summary of our conversation is below.

In your course description you say, “To be truly disruptive, you must have a strategy for disruption, a plan to identify and seize an opportunity that no one else has the audacity or confidence to reach for.” Getting rid of annual reviews, or ratings, is definitely disruptive. What are some pieces of the game plan?

The change is not just the mechanics. It’s the fundamental relationship between the company and its employees. Before, employees were seen as set on a course for a year, and you come back and once a year you give a performance review. So, it’s like tuning up the machine to see if it’s working or not. And it’s not a very satisfactory relationship. It’s not even crafted in the view of a give-and-take relationship.

SEE ALSO: How Microsoft Got Performance Reviews Right

The move from performance reviews to continuous feedback is reflective of a new type of contract between employees and their managers. When there’s a stronger sense of commitment between managers to employees, but also of employees to managers, it changes the dynamic of work. It changes everything.

It’s not just simple as moving the performance review; it’s about fundamentally thinking what that relationship looks like.

It’s also reflective of the need to be much more flexible. An annual review implies what we talked about a year ago is still valid today. But today, disruption is a way of life. We live in a highly dynamic, very consumptive world where things are constantly changing. We have to make course corrections if we’re going to be working in a particular way. You need to have that constant dialogue back and forth about being clear about what we’re working on, a clear vision and strategy and how we’re going to get it done, and make course adjustments along the way.

So to really disrupt this, it’s not just about changing the cadence of performance reviews, but going back and redefining the relationship that business has with its employees.

When I started doing this research about five years ago, I would ask people, “So, how would you describe the relationship? What would you describe that relationship looking like?”

And they say, “Hire, train, and retain.”

And I say, “Well, can you give me a bit more than that?”

“Well, you know, HR’s job is very functional … it’s very administrative.” They don’t see it as something much more strategic. Do we have the right workforce? Are we developing it? Are we thinking ahead of the curve, thinking about the transformations we have to make?

What are some of the costs to HR not being a driving force in digital transformation?

We keep saying that people are our most important asset. But historically, HR is seen as executors, rather than people who come to the table saying, “Here are strategic ways to think about how we work with people.” Digital transformation is something no one’s ever done before, and it could be missing what I essentially think of as your right hand, which is your people function.

If you don't have HR at the table, you're creating strategies that may not be feasible Click To Tweet

If you don’t have HR at the table, you’re creating strategies that in the end may not be feasible. You can’t execute. Your whole company is sabotaged.

You’ve written about the shift from employee engagement to employee experience, which is really interesting because I hear people use them interchangeably. Do you feel employee engagement surveys, like reviews, are also on their way out?

Engagement is an outcome of a great experience. People do confuse the two or use them interchangeably and language here really matters a lot.

Engagement surveys happen maybe once a year. You see the results, maybe if you’re at the executive level, but the people who really need to see it are the frontline.

SEE ALSO: The Ultimate Guide to Real-Time Feedback

We know that people are likely to stay or likely to leave driven primarily because of the relationship they have with their direct manager. Some of the most advanced organizations take those results and as soon as they are available, before they’ve done any analysis. They provide that data at the team level, so teams understand what’s working, and what’s not so that they can make decisions on how they want to work and what kind of experience they want to have.

It’s not to say that everything goes out the window, but there’s a greater level of transparency now. Even if you’re doing once-a-year engagement surveys, what do you do with those results?

We have the ability now to create individualized, personalized experiences in real-time Click To Tweet

We have the ability now to create individualized, personalized experiences in real-time for customers, and we’re not even close to taking that discipline and applying it to our team members and our employees.

Do you think HR analytics tools try to deal with the role of managers, in terms of measuring productivity and performance across teams?

I love the whole world of the analytics and the predictive nature of them. The biggest problem is that there aren’t enough people to deal with data analytics, and even a smaller world who look at HR analytics.

What HR analytics do now is to let you understand and sift the output and measure ahead of things. We’re not always managing in a rear view mirror, but looking into the analytics to be predictive and going into the future.

My last question is back to your upcoming book on disruption. As I mentioned, there’s a clear takeaway for HR specifically around performance management, but what else in your book should HR leaders be excited about?

The culture is the engine that drives the disruption strategy. If you don’t have a great culture, then the strategy’s not going to work. And in many organizations, the question becomes, if I don’t have the right culture, then how do I systematically change it? How to I think about my culture and say, do I have the right culture? How do I do an audit and make sure that it’s aligned against the strategy I want to have?

My book is looking at systematic ways that people are changing the culture. One of the most important ways is, how do we create a culture that revolves around customers and customer obsession? This is no longer about providing services, but how do we, from day one, get employees to start thinking about the customer in a very holistic, dynamic way?

How do we create a culture that revolves around customers and customer obsession? Click To Tweet

At some organizations, when you go through the onboarding process, you spend a day in the customer service department listening to customer calls. You get imbued in ways of thinking about customers. The way you hold meetings — everything, down to your performance is about how well do you understand and service customers.

We have a saying, that, if you’re not working on the customer’s problems then you’re probably working on the wrong thing. So how do you tune everything about your culture to be customer-oriented?

The organizations that are really customer-centric are the ones who are able to be most disruptive. Your customers will always want to move faster than you are willing to. If you can move along with your staff’s most dynamic customers, and get your organization culturally in the process of activities, the performance, everything, aligned around that vision of the customer, then your organization will not be able to help them but to be disruptive.

SEE ALSO: How to Effectively Change Performance Management

My recommendation to HR leaders is to start asking the question, “What’s ahead of me to become a more culturally-oriented organization around customers? How can we be more flexible? How can we be more adaptive?

A lot of the work I do with HR people is to say, how do I think about this strategically as an HR professional? How do I even think about the role, the job that I do, differently than I have for the past 5, 10, 20 years?

It’s a hard place to be. It’s really hard to suddenly realize you do not have the talent. There is a re-tooling and a transformation in HR that needs to happen. And like any other transformation it is not always pretty, or easy process to do.