A think piece – for guiding you on how to successfully operate in a volatile whack-a-mole world.
What Exactly Is VUCA, And How Does It Impact HR?
Unfortunately, a majority of HR professionals that you ask about VUCA will have literally never heard of it, even though VUCA may be the most volatile and dynamic business environment in the last century. Not knowing about it is, of course, extra concerning because HR has been struggling under VUCA for more than a decade. So it’s hard for me to understand how so many HR professionals can’t expect to survive, no less prosper, under a VUCA environment that will continue for many more years.
If you are not familiar with the term. VUCA is an acronym that stands for an environment that is volatile, uncertain, complex, and ambiguous. Examples of this volatility and uncertainty we get occur in all aspects of life, including:
- Huge fluctuations and instability in economic factors, including inflation and interest rates
- The sudden collapsing of entire industries (i.e., Bitcoin)
- Devastating health pandemics
- Quantum shifts in economic and business growth
- Dramatic record-breaking weather
- Historic political turmoil
- A continuous flow of startling new technologies
- An intense global competition where everything worthwhile is instantly copied
- Turbulence is now more frequent because more than ½ of the most turbulent quarters over the past 30 years have been in the past two decades. And the average duration of periods of high turbulence has quadrupled over the past 3 decades.
In talent management, we have seen dramatic, often record-breaking up and downshifts in candidate availability, employee turnover, employee/candidate expectations, remote work, diversity, technology, and the need for future skills.
Samsung has adopted the slogan “perpetual crisis.” To make it clear to their employees that they see VUCA as a permanent but manageable condition.
First, Understand The Four Defining Characteristics Of VUCA In HR
VUCA (pronounced voo-ka) is an acronym that represents our current business and HR environment. The term originated in the military but is now widely used throughout business (but not yet in HR). Its four defining characteristics in talent management include:
Volatility – where almost everything in talent management changes breathtakingly fast. Those changes are now almost always so dramatic and severe that they are record-breaking.
Uncertainty – in a chaotic world where major “disruptive changes” occur without much warning. The causes of those changes are difficult to determine because the past is no longer an accurate predictor of the future.
Complexity – the frequent changes in today’s talent management are complex. Talent changes are broad, often hidden, and they almost always impact highly interdependent areas. And because these changes are so complex, simple talent management solutions have little impact and may even hurt.
Ambiguity – where and why change happens will be confusing. Most changes are non-linear, meaning they don’t appear one at a time. The causes and the “who, what, where, when, how, and why” behind these talent marketplace changes are unclear and hard to identify.
How Must HR And Its Professionals Should Operate Differently Under VUCA
The changes under VUCA are so impactful that executives and HR professionals can’t ignore them. Some of the 15+ talent management capabilities that HR should consider developing to successfully operate under VUCA include:
Strategic changes in talent management
- Uncertainty makes it difficult to plan traditionally, so you must use a scenario planning approach – when facing so much uncertainty because so much non-linear change is occurring. Precise forecasting and workforce planning will become extremely difficult in an uncertain world where the future doesn’t look anything like the past. So the most effective preparation approach for everyone will be scenario planning, where you prepare a written outline for how you will handle each of the three most likely scenarios each team will face. And if you are going to be forward-looking. It should “identify the precursors” that will alert you to the beginning of each of your three scenarios. Then forecast the likely range of the upcoming speed of change that everyone must prepare for.
- You must scenario-plan for each of the four growth modes – in an unpredictable world where accurate forecasts are highly problematic. You must have a written outline of a scenario plan for all 4 possible company growth modes. These growth modes include 1) Retrenchment and cost reduction mode, 2) slow / no growth mode, 3) rapid growth mode, and 4) innovation and “startup” mode. The scenario plan for each growth mode must cover both the best and worst-case scenarios for each mode.
- You must proactively increase your speed of change throughout HR – talent management will be one of the primary areas throughout the organization that will need exceptionally fast change. An organization whose employees move fast and in unison is essential in order to gain a first-mover competitive advantage. So smart talent leaders will have to measure and then increase the average speed/rate of change and improvement throughout talent management. Until it matches or exceeds the speed of change already occurring in your company’s products and services.
- HR must become technology and data-driven – you won’t be able to quickly identify VUCA-created talent management problems and opportunities if you continue to rely primarily on intuition and historical best practices. Only a completely data-driven management approach, supported by machine learning and other technologies, will allow you to identify and solve your talent management problems at VUCA speed.
- Prioritize and allocate HR resources to high-impact areas – to ensure that your talent management resources have the highest possible impact. Talent leaders must prioritize and focus resources on business units, functions, jobs, and individuals with the highest business impacts under VUCA.
- Fluid job descriptions are required for increased flexibility – they must only utilize fluid and continually evolving job descriptions and hiring standards so that each job’s capabilities and requirements are continually updated at VUCA speed.
- Accelerate leadership development – because decisions will have to be made faster under VUCA. Many more leaders will be needed at every level in order to meet your VUCA challenges. That means leadership development must be expanded to more levels of the organization. And the whole development process must be significantly accelerated using social media, part-time projects, and VR technology.
- A flexible corporate culture will be needed – a rigid and unmeasured corporate culture will severely limit your ability to adapt. So, develop a process for proactively updating your culture to match the VUCA environment more accurately.
Your workforce must change radically
- Your employees must be highly adaptable – because things change so rapidly and severely under VUCA. In order to handle these constant changes. You must focus on hiring, developing, and retaining highly adaptive, agile, and resilient employees. In fact, adaptability will be “the most important soft skill in job candidates,” according to 69% of surveyed hiring managers (Source: J Shappley, LinkedIn Global Recruiting Trends).
- Speed becomes an essential employee capability – in a rapidly changing world, every element of the organization, as well as every worker, will need the capability to complete tasks faster. So you must focus on hiring and retaining employees that do things fast while meeting quality standards. Your managers will need the ability to identify problems and opportunities and to make accurate decisions much faster.
- Your employees must continuously learn and develop future skills – your workforce won’t be able to keep up with the many emerging VUCA changes unless you continually develop “future skills” among your key employees. In addition to rapid skill development programs, HR will have to hire and retain employees that are rapid self-directed learners. In fact, Google found that learning ability was their leading predictor of success. It was No. 1 above intelligence and education.
- If your goal is to build a competitive advantage, you must focus on innovators – the highest ROI of any employee activity is implemented innovation. So it is essential that you prioritize the talent areas that focus on innovation, risk-taking, and collaboration because each is essential for creating innovation in a VUCA environment.
- Performance management must become data-driven – in a rapidly changing world, employee skills become obsolete more quickly, and performance standards are continually being raised. Both require a performance management function that rapidly fixes or releases employees who no longer meet your standards.
- Contingency workers and internal movement are essential for shifting talent to where it’s needed – the sudden appearance of both business and talent management problems. It will require HR to have the ability to respond rapidly by increasing or decreasing your volume of talent. In today’s legal environment, the ability to suddenly cut your talent costs and capabilities can best be accomplished when as many as one-third of your workers are easy to add and release because they are contingency, outsourced, or gig workers. A process for rapidly redeploying talent internally can also help you resolve “spot talent problems.”
HR processes must radically change
- Standard HR processes will no longer work under VUCA – the many changes that will occur on the business side will directly impact the effectiveness of your current talent management processes. So that even your incrementally updated HR processes in recruiting, retention, and development will no longer work over the long term in this radically different VUCA environment.
- HR processes must be adaptable and scalable – the processes in HR can only operate effectively under VUCA if they are highly adaptable, agile, and scalable. And all new processes must also be designed with constant change in mind. So they can quickly adapt and then rapidly scale up or down to match whatever workplace scenario arises.
- You must assume automatic obsolescence in all current HR processes – in a rapidly changing technology-driven world. Your speed of process obsolescence will continue to get faster. And this increasing rate of obsolescence will occur, no matter how effective your current HR process is.
- You must broaden your benchmarking in order to identify upcoming problems – because your industry may not be the first to encounter VUCA-related problems and opportunities. You should expand your benchmarking to the fastest-changing industries in order to get some advanced warning about the problems and opportunities you will soon likely face.
- You must have the capability to improve several processes simultaneously – rather than addressing one program or process at a time. HR must have the capability of moving in multi-directions at the same time.
|If you can only do one thing – during this tight labor market. An individual recruiter can have the most impact on their recruiting results by eliminating or discouraging the use of “fit assessment” during any hiring process that they are participating in.|
What Are The Factors That Are Creating This VUCA Environment?
In the past, isolation was common because of limited global communications and little cross-region travel. And that meant that business changes and related problems moved very slowly between distant regions.
However, with widely available Internet connectivity, truly global communications, and increased global travel. The populations living in dispersed regions of the globe now almost instantly demand the same products and services as the ones available in most advanced countries. This same global demand is enhanced by the wide Internet visibility of emerging products and services. And global product design is sped up by new technologies and the rapid copying of products, business processes, and ideas. And this equalization of worldwide demand is further facilitated by cheap and fast product supply chain and transportation. Finally, the expansion of global modernization (and its increasing omissions) now directly influences our weather.
To HR, this means that in our volatile VUCA environment. All business and talent management processes now change much more rapidly. And because now, even medium-sized companies operate on a global basis. The global competition now forces each to increase speed, adaptability, productivity, and innovation continually.
The time is over for wishing that a more stable and predictable business environment will ever return. Instead, executives need to face the reality that the “new normal” both in business and in Talent Management will be full of rapid, volatile, and hard-to-predict changes. And rather than viewing this turbulent VUCA world without a blueprint as scary and frustrating. Some firms like Samsung and Apple have already accepted this new VUCA world as an opportunity for HR to become an organizational role model and change champion and provide a new corporate competitive advantage in talent management.
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