Josh Bersin is Principal & Founder of Bersin by Deloitte, who provide consultancy on people strategies based on research. More than 5,000 organizations worldwide use their research and consulting to guide their HR, talent and learning strategies. The company was founded by Josh in 2001 and acquired by professional services firm Deloitte in early 2013. We conducted this interview with Josh at HR Tech Europe, which took place on October 24th and 25th 2013. The next HR Tech Europe will take place on October 24th and 25th 2014.

So obviously you’ve been in the industry for a long time Josh. What’s changed?

Well, in the technology area the number of vendors and the consolidation of vendors has been spectacular. Now there are hundreds of companies selling talent management software, hundreds selling learning management software, etc. The big names – Oracle, SAP, Workday, ADP – are all selling integrated HR solutions when they really used to just have small pieces of the HR puzzle. New tools being invented for analytics, social sourcing, employment branding, recruitment advertising – there’s just an amazing amount of technology flowing into the HR sphere.

Another thing that’s changed is the explosion of digital media and the use of electronic devices as HR tools. HR has been transformed by this. A lot of the traditional HR practices like performance appraisal, succession planning, identification of high potentials, which were all traditionally done face-to-face, human-to-human, are now done online, using social tools and video, so a lot of HR departments have had to really adapt to using new technology.

The third thing is that there’s almost no company that isn’t affected in some way by the global economy and the globalisation of business. You can’t be an HR professional in a reasonably sized business without learning about different cultures, countries and the global labour market. Five or ten years ago that was probably true in large companies, but the world has gotten flatter and more interconnected. Here’s an example: Twitter’s about to go public and that’s a real time communication network, so the speed of communication is getting faster, and the availability of mobile devices means employees are communicating all the time, making the organisation run faster, making business cycles run faster, so HR has to run faster, be innovative, develop new approaches to traditional practices and really just get comfortable with technology.

That’s an interesting picture. The speed of change seems to be most important factor. I enjoyed the piece in your session [at HR Tech Europe 2013] about HR having had access to data for a long time and that there’s been a natural evolution of the amount and complexity of data, all the way from the factories of the early 1900s to the integrated management suites today. What will the product of the day be in 20 years?

It’s very hard to tell but there’s a big chance that cloud computing will be dominant so we will be using technology on the internet from a lot of different companies and it will just transparently interoperate. So instead of having to buy a piece of software, run it and customise it, it’ll be more like Google, where we’ll have a system online and our employees will be in there, and there may be five or ten companies behind the scenes we’re doing business with, and every employee will have access to that system, on every device (probably in the shower too because by then we’ll have embedded devices). This process will create loads of data, and this data will be used. Let’s take Google as an example. Google has done for the consumer internet what technology providers are trying to do for the enterprise, but the enterprise is a good five to ten years behind the experience you have when using Google. So as easy as it is to use Google for your own technology needs, it’s nowhere near that easy to use HR software. But if we look 20 years into the future, it will be.

Another big change will be the explosion of mobile and wearable computing. Every device we buy will have an internet IP address, such as phones, watches, glasses and clothes. This will change the way employees work. If you’re in professional services there will be data collected on where you’re spending your time, if you’re in retail they’ll be data collected on what you’re selling, collected from this wearable technology. All this technology will make it easier to understand the workforce and the way people work.

Also, the role of leadership is changing. Every year we look at leadership and leadership development. We see a shift towards more agility, more focus on collaboration, more focus on team work, more focus on developing people, and we’re not going to do away with the old fashioned hierarchical leader but there’ll be fewer of them 20 years out than today. As an overall trend, we’re moving towards more dynamic leadership.

The barriers between organisations are also coming down. Historically you joined a company, took a job, got a payroll cheque every month, and went to work in a building with a manager. Now you don’t go into the building, you work from home, and 30% to 40% of the workforce works on a contingent basis, so they’re freelancers or contractors but crucially they’re not employed directly by the company. There’s a good chance that 20 years out companies will be networks of talent. People will be hired for work but not full time employment – we’ve already seen a slow but steady trend towards more outsourcing of work, and more people becoming freelancers. However, there will always be an enormous need for people to be employees.

Here’s an example from today. In the US, if the healthcare reform takes hold, you won’t need healthcare from your employer, which will make employees think “well, if I don’t like this job, I can work part time or on contract basis because my healthcare is independent.” Healthcare has been a really sticky factor which has kept people, at least in the US, with one employer. Once that’s been taken away, there’ll be more of a freelance economy.

It’s interesting you say there will always be a need for a permanent, employed workforce. Why do you say that?

I think human beings like to be part of teams, they like to be part of a group, they like to go into the office, they like to know where their desk is and they like to go out for lunch with people. There’s a social element to working life. Not everybody is like this, I mean I’m an entrepreneur, I’m perfectly happy to do my own thing. I don’t need to be part of a big company to be happy, but I’m at the stage in my career when I’m ok with that. I think early on in peoples’ career they want to be part of a bigger group, they want to learn, they want coaching, mentoring, etc. So there will always be a need for integrated organisations.

And there are benefits to the organisation. They can share proprietary information and strategies that they wouldn’t share with the outside world, but more and more jobs like software engineering, marketing, PR, sometimes HR, can be outsourced to great people who aren’t necessarily full time employees. That will grow, but it won’t be everything.

You mentioned clothes that come with IP addresses which can track what people are selling and how long it takes for them to sell it. Aren’t there privacy issues with this?

Great question. Here in Europe the governments are much more sensitive to this problem and they are grappling with it. In the US we haven’t reached a critical point, we’re behind and there’s an enormous amount of data in the hands of private parties and we don’t know what they’re doing with it. And so it’s really a political issue as to when the general population decides they’re upset enough that they don’t want to share their data. Nowadays we’re sharing much more information than we want to, and we have no control over it, and companies like Google, Facebook, Apple Twitter and virtually every company that’s on the internet is gaining data and we don’t know what they’re doing with it. I’m not a political analyst, but I have a feeling we’re just going to have to get comfortable with a lot of this, and certain things will get regulated, but we’re going to live in a world with a lot more data.

Most of us have a phone that has a map and a GPS device. If you’re ever lost you can open your phone, find out where you are and where you need to go. Does it really bother you that the provider of that phone knows where you are? Not that much because it’s really nice to have the product. But the whole data privacy thing is an unexplored area – it’ll be an interesting thing to watch.

That’s the privacy angle. What about the impact on the employee? Won’t staff get frustrated if the company knows everything about them e.g. how long it takes them to sell, what they said, what they didn’t say?

I’ve done a lot on data in the last 10 years, and the thing about data – especially in the ‘people side’ of the business, is that it never tells the whole story. So in finance you can measure things to the penny, in marketing you can measure every click. But in HR you can measure a lot of stuff, but there’s also personality, drive, motivation, engagement, learning agility, passion – you can’t measure these things. So one person may have a bad day and they didn’t make sales numbers, but there could be good reasons for that that are unknown to the data that could go away the next day. So I always say the analytics part of HR might help us with 50/60/70% of decisions, but never with 100% of decisions. There will still be a certain ‘personal’ ethos to management in HR.

Let’s talk about data-led decisions. You have a decision-maker looking at a screen filled with data. By this point the software will logically and efficiently recommend what decision you should take based on the data. Isn’t it dangerous to take the emotion out of decision-making?

It’s inevitable and it already happens. So if you look at sales organisations today, they use Salesforce or similar tools, they know what their sales people are doing every day, they know how much they sold per week, how much per month, so that data is already being captured. The real question is, “what do you do with the data?” If I’m a sales person and I’m behind on my quota, and I’m a hard working/ambitious person, I’m going to look at the data and say “what can I do to improve my performance? If you can give me some data to help me be better, I’m happy then to get that input.” So it needs to be used to not only evaluate, but to help people get better. It all comes down to how it’s used.

In the learning industry there’s a technique called space repetition and the idea is based on the Ebbinghaus Forgetting Curve. The forgetting curve is very hard to overcome – the key is repetition. There are ways we can use data to remind people of things, warn them of things and help them learn. This leads us to all get a bit smarter and aware of what’s going on because we’re getting more data on our various different devices.

So I think this has as many positive things as negative things – in fact a lot more. As long as the data guides decision-making rather than forms the sole basis of it.

What about external data, so you have a worker who hasn’t performed for two weeks due to their child being ill, but that’s not reflected in the data. Are there steps being taken to assimilate external data into the organisation?

I don’t think HR departments will do this as they’ll run into a lot of legal issues. Once you’ve decided you’re not coming into work for personal reasons, it’s not company information as to what those reasons are and I don’t think that’s going to change.

What about other sources of external data that aren’t personal?

Oh yeah, absolutely. Here’s an example of one. We talked with a company that’s a manufacturer and servicer of cell phone towers. If one of their employees walks up to a cell phone tower and wants to repair it but has not been trained in that equipment, their phone knows where they are, and the company monitors their location, and sends them an alarm that says they’re not trained to work on the cell phone tower, and the lock that grants them access won’t open. This is good for employees and the company.

What about flaws in data analysis? With such a large potential data pool you need analysts who know what they’re doing, especially if you’re basing big decisions on this data. Will these people be external consultants?

HR staff will become smarter about data and analytics. Our latest research shows we need to build an analytics function or centre of excellence in HR – that doesn’t exist in most companies, yet. Around 14% of companies are somewhere along the right line of doing that today. It’ll be just like the recruiting department, there’ll be the Analytics and Talent Department or similar. And there will be half a dozen to a dozen people in there and they’ll be very good at this. Not everyone in HR needs to be a data analyst.

A lot of people say Data Analytics should BE the HR department rather than be IN the HR department. Are these people getting carried away? What mistakes are companies making when it comes to Big Data?

No, the HR department will always need to deal with hundreds of issues that are very personal and people-related. Leadership training, labour relations, performance, engagement – all these will continue to be important. Data analytics is a tool – but it isn’t everything.

I don’t think companies are doing anything wrong, but there are various stages of risk-taking and experimentation. The companies that are harnessing talent data are willing to take a bit of a risk, get their feet wet, clean up the data they have and hire someone to analyse it. If you sit around worrying about it, waiting for others to do it first – well there are definitely laggards, there’s companies who will do it 5 years from now and they’ll be behind, they’ll watch their competitors do it, and then finally they’ll do it. So we’re at a stage now where there are lots of early adopters and a lot of what I call the early majority, who are typically big conservative companies who have put a lot of time into analytics. But 80% aren’t there yet while 15 – 20% are, so we’re in the early stages.

What tips would you give to companies looking at vendor selection?

The vendor landscape is always a challenge. I think there’s a couple of criteria. Make sure you know what your business problem is before you run out and buy something, because these tools all look great and look like something you’d use but if they’re not orientated towards a real problem you have in your organisation, you can buy something that no-one’s going to use. The vast majority of HR software is not really being used for all its capabilities. Someone once did some work on this and said, on average, companies use something like 15% of the features in their HR software. So look at the business problems you want to solve first.

Secondly, look for vendors who have experience serving companies of your size and in your industry. Talk to references that have done what you want to do with that vendor. So if you want to solve your problem for global recruiting and you’re a retailer located in the UK, find similar retailers – what tools have they used, what worked for them? Then you need to do research on vendors, not just on their tools but on their companies, how they’re funded, how long they’ve been in business, is the stability of their management team, the effectiveness of their customer service, the number of positive references you can talk to. It’s very easy for software companies to market themselves as one thing and actually be something else. And usually the word gets out but you don’t want to be the person who didn’t get the word that something doesn’t do what it’s supposed to do.

I saw your panel session [at HR Tech Europe] with Workday, Oracle and SuccessFactors and one of the things that came out of it was the collaborative nature of the client/vendor relationship. Is this a good thing?

Absolutely. HR isn’t like finance where everybody does it the same way and you can sell a general ledger system that works the same company-to-company. Every company does HR differently, does leadership development differently and does performance management differently. Everyone has a unique approach to recruitment. So you can’t sell cookie-cutter software. All the vendors have to have consulting services, have to have customisation services and have to advise the client on what is or isn’t an appropriate use of their software. They must also be willing to provide flexibility in their software to accommodate how different companies do the same thing. And I don’t think that’s ever going to change.