CEOs spent the last year guiding their companies through a year of pandemic, social upheaval, and economic chaos. But their laser like focus on tactical survival risks missing the strategic story of the year: In 2020, employees’ relationship to work changed fundamentally and forever. There is a new world being born – the human workplace – and leaders need to pay attention.
In the next five years, the global investment in human talent will be $1.2 quadrillion, 2.33 times as much as will be invested in technology, real estate, and all other physical capital combined. Despite this, C-level executives are typically slower to grasp the implications of human capital trends than changes in business models or technologies.
Take a lesson from leading tech firms like Apple, Tesla, and Zoom: Their success is based on designing the human journey through an emotional experience. Design matters in human capital as much as software or cars, and that requires a company culture in which everyone is passionately engaged, empowered, and united by common values.
To design such a culture, leaders need to recognize three vital truths from the last decade:
- Managing work has evolved permanently from command-and-control to autonomous, self-governing teams. Employees know what they want and insist companies honor their values.
- The workplace is the “new community” for tens of millions. Business is society’s most trusted institution; for many employees, it’s a safe haven of united purpose and values in a polarized society.
- We need to harness humanity to move ahead. In 2020 the best of our employees’ performance was shown in empathy, creativity, and innovation. Now we can never unsee the power of humanity at work.
Based on these truths, I see five inexorable forces moving us into 2021 and beyond:
Because business is more trusted than government, media, schools, and other institutions, employees think that work and companies are the last best place to influence the course of society. The Edelman Trust Barometer found that 68% of employees believe CEOs should lead on issues like income inequality and the ethical use of data. Authentic connection binds a community – most effectively when people appreciate and respect each other, recognizing their efforts and their common values.
In the human workplace, people of all kinds are honored for bringing their whole hearts and minds to the job. In 2020, companies with a recognition program increased their expressions of gratitude: Our customers gave their colleagues more than 12 million recognition moments across 176 countries. People recognized and thanked each other for all the creativity and extra effort it took to keep the organization going. That cadence of connection is so valuable that it must continue into the next new normal.
2) Pay will be agile
Traditional compensation systems (salary, bonus, annual increase) haven’t moved the needle on performance for decades. They are the smoldering remains of command-and-control management and need redesign based on a simple fact: The people closest to the work are best suited to rate performance.
Agile pay means a percentage of pay is given to employees to award to each other through a social recognition program. Using 1% or more of payroll funds, peers can reward each other for great performance, symbolically highlighting values like customer focus, innovation, integrity, and caring. Agile pay is like agile management: It’s empowering, decentralized, and opens the possibility of surprise. The recognition system spreads the word about what behaviors are living examples of company culture.
3) Performance management will be agile
Likewise, traditional performance management is woefully outdated. What employee looks forward to a tedious hour reviewing the past year? What manager relishes the thought of preparing 12 documented performance review sessions?
Agile performance management enables all managers and peers to communicate goals, set priorities, and detail how work was done successfully. It can be using the wisdom of crowds, which means anyone can note great performance in the moment with the perspective of recognizing great performance, sustaining good ideas and values, and looking ahead to the coming challenges. Managers can’t be everywhere; therefore, they should welcome written peer-to-peer appreciation – and analysis of that data – for a deep look at real performance.
4) The Human Workplace needs human metrics
Objectives and Key Results (OKRs) are a legacy of industrial-age quantification. They assume that you know today what you’ll need six months from now – an idea that was already becoming obsolete before the pandemic. What metrics matter in 2021?
The next metrics will connect behavior with results, recording not only what happened but how it happened. In an environment of constant change and adaptation, the key to understanding what makes the bottom line happen is narrative. For example, why does one department have twice the turnover rate as another, costing a fortune in hiring and retraining? Why is one group innovative? OKRs won’t answer these questions, but a growing narrative of recognition moments, analyzed with natural language processing, will.
5) Empathy and belonging will replace conformity
The great lesson of 2020 was that empathy and belonging are the new gateways to greatness in company culture. Empathy meant people went the extra mile to understand their unique situations, from the single parent holding a toddler in a teleconference to the manager who declared “meeting-free Fridays” to handle extra work (and still get outside). Belonging meant people celebrated those differences. It meant leaders made frequent public acts of inclusion and elevated the profiles of diverse employees.
The human workplace has grown in the past decade from a notion to a necessity, accelerated by the trials of 2020. Employees no longer dream of democracy in culture, pay, and performance management – they insist on it. It’s incumbent on leaders to redesign their cultures, metrics, management style, and rewards to hire and hold the best of humanity.
There is so much to say about each of these trends that I’ll detail each, along with actions leaders must take to get ahead of them, in five future columns.
This piece originally appeared on Forbes.
About the AuthorMore Content by Eric Mosley