3Sixty Insights #HRTechChat with Steve Hunt, Chief Expert, Work and Technology at SAP

Some restructuring efforts have become notorious for favoring cost cutting over the employees who drove their success in the first place. We must develop better frameworks that value employees and facilitate learning from our past experiences to ensure restructuring is handled more equitably going forward.  

Joining me on this video podcast of #HRTechChat is Steve Hunt, chief expert, technology and work at SAP and author of best selling book “Talent Tectonics.” In this episode we share an outline of an upcoming research paper we are collaborating on about the “New Era of Restructuring: How Companies are Leveraging Innovations in Work Technology to Manage Restructuring Differently.”

There was so much to unpack in a short time during the recording.  We offer one definition of restructuring, three different reasons for restructuring, and seven different technology categories for managing restructuring differently.  One of my favorite parts of the video podcast, besides singing ‘The Twelve Days of Restructuring’, is when Steve calls it “almost crazy” to do restructuring without an organizational network analysis tool.  

“One of the most underutilized tools in the field of HR and restructuring … is organizational network analysis tools,” says Steve. “When you eliminate people based on organizational charts or spreadsheets, you have no idea what relationships are being destroyed or severely damaged.  Some of the most critical people in the company are not necessarily the ones who have highly visible roles.  Just because you know where someone sits does not mean you know the impact they have on people in other parts of the organization.  It’s almost crazy to do restructuring without [the organizational network analysis tools].”

Our concluding comments are around embracing restructuring with the employee experience in mind.  Steve shares “it is not putting employee needs above company needs, but at the same level.”

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Jennifer Dole 00:00
Well, hello, and welcome to 3Sixty Insights, #HRTechChat. I am very honored today to be here with Dr. Steve hunt. He is the chief expert at SAP and best-selling author of talent tectonics. So Steve, welcome. So great to have you here today.

Steve Hunt 00:25
Thank you. It’s great to be here. I’m looking forward to this conversation. And Jennifer, we’ve been chatting about today’s topic quite a bit. So I’m excited to dive into it.

Jennifer Dole 00:34
Yeah. So today, we’re going to be talking about the new era of restructuring. And that’s really what brought us together. And we’re collaborating on a research piece around it.

Steve Hunt 00:47
Yeah. And it’s funny because we were chatting and we realized that Jen and I have been like one degree of separation for like, years and years. And we finally connected and immediately we’re talking about what’s going on in the world of work and got talking about this restructuring coming up, which I think awesome. A lot of people are like, what kind of feels like we’re talking ourselves into a recession. But let’s not delve into that side. But Delve onto the side more we are saying of what have we learned about restriction in the past, but also there are tools last time we went through a major phase of economic restructuring was, like 15 years ago, 2007 2008 14 years ago,

Jennifer Dole 01:29
we probably both remember it. Yes. Yeah.

Steve Hunt 01:32
You don’t forget? Well, that’s a good thing. You don’t forget these things. It’s it is it is a traumatic life event, even if you are not directly affected by it, people, you know, are affected by it. So you do remember, and that’s kind of we’re looking at the same Well, what do we know about this psychologically, but also, which I could go on in great length? And hopefully, we’ve learned something that but the other one we really didn’t in general, I’m so excited about this conversation, is there’s tools available technologically that we didn’t have 15 years ago. So let’s hope we approach this next one in a different way than we did in the past.

Jennifer Dole 02:09
Yeah. And I think that’s why I’m so excited to collaborate with you is to bring in the psychology to bring in the technology and create experiences that are more humane.

Steve Hunt 02:22
Yeah, absolutely. And, you know, one of the things too, is people, the 2007 ones were brutal, but like one of the things like I got to hold it up my book by obligation. Here it is. When I wrote talent tectonics, one of the things that I focused on, which talks about the shifting nature of work, and actually has a whole chapter that talks about restructuring, because it’s a reality in companies even not in economic terms. There’s different times you have to do when you grow and you build. But one of the things I talked about talent tectonics also saw work is changing. I will say one thing, and restructuring is why 2007 was painful. If you looked at the restructurings that happened the previous decades. They are were unbelievably brutal. Like, this is a true story. I worked with a company where they brought all the employees into like the big cafeteria break room. They separated them into groups and like the, and they had some stand on one side and some stand on the other. And the one that stood on one side, they had them all walk out into the parking lot.

Jennifer Dole 03:17
It’s crazy. Probably could all go on with a story about restructuring from the 90s and early 2000s, where he was just done. So poorly, I was an HR manager at that time I was doing these things, and it was hard for us too

Steve Hunt 03:41
Oh, yeah, no HR was put in the terrible thing because they had to execute strategies that were created by people who don’t actually, I think even work with people like you know, that. But it’s always kind of joke. Anyone who tells you work was better, like 30 years ago didn’t work 30 years ago? No, no. It’s not where it should be. But it’s a lot better than it used to be. Well, let’s dive into it. Jen. So we’ve talked about like restructuring. Well, first of all, people throw this phrase restructuring around is what do we mean by restructuring?

Jennifer Dole 04:13
Yeah I think we’ve talked about three different types, right. And the different types are sort of initiated by different aspects in the business, whether it is a financial restructuring, or business restructuring, and even on this is hard to say, and organic restructuring.

Steve Hunt 04:39
Yeah. Yeah, I think it’s like how we kind of talked about this and defined a restructuring. First of all, that it’s anytime there’s a significant change to the roles and reporting relationships with people in a company. So it’s not just people being laid off, obviously, it’s, and it’s also it’s also not just adding people into existing roles. It’s when you’re significant. only creating different roles and organize reorganize the organization. And when you look at it this way, there really kind of three reasons that drive restructurings. One is operational, which is you know, our company’s strategy change, we’re going to certain areas less and other days we’re making a move people around. I would also put under the operational if you’re really honest about it, sometimes it’s just ego driven when leaders like I think the company would look better if there were more people under me.

Jennifer Dole 05:26
Or when you get a new leader in and he wants or he or she wants to do things differently. We certainly read about headlines,

Steve Hunt 05:34
so I’ll but they always call that strategic even though if it is ego driven. Um, but you know, some of those the operational restructurings, the other one is economic, which is the ones that I think creates the most anxiety, which is the layoffs and that sort of thing like that. And then the third one, which really didn’t exist as much in the past, but because of technology is becoming a lot more prevalent is what do you call my call organic restructuring, which is significant movement of employees around the company that’s initiated by them? Yeah, they’re like, I don’t want to work in this department anymore. I want to work in that department. So I’m going to move to that department. And by the way, if you don’t let me move, I may quit entirely. So the which is a different but often we don’t think of things like in the tech space. This is called like the talent marketplaces or opportunity marketplaces that are designed to promote employees going to different parts of the company. That is a restructuring. And it has a lot of the issues and problems of restructurings, even if people don’t call it a restructuring, so we kind of like kind of dive into each of these. So what do you want to start? Do you want to just talk through each of these types? Or do we want to dive into how technology is changing? And how do you want to approach?

Jennifer Dole 06:49
I think it would be interesting because the technology is what’s new, for this current economic situation. And it’s, you know, there’s different types that are going to help make this more humane. These restructurings, these redeployments, more humane, you already mentioned the talent marketplace? Are there a couple of others that are top of mind for you?

Steve Hunt 07:16
Well, I think we have a list, there’s a bunch that I would go through, I think there’s, I think we have to explain a little bit of what they’re doing. So first of all, you know, and before we even get into this, one of the things is different about the restructuring going through now is we have, you know, record low unemployment, chronic skill shortages, when I’m looking at companies getting rid of people and thinking, Are you not planning to grow again? Is there some way that you, aside from we know a lot more about how to more effectively manage people in restructuring, and you can make arguments that you should never restructure? Almost never do it? I mean, that sometimes the reality is companies have to do it, right. But the the issue is, how do we do restructuring in a way that is minimally disruptive to the company and minimally disruptive to employees. So when I look at this, the technologies that exist now, that really did not exist in 2007, one we just mentioned talent marketplaces, or opportunity marketplaces, which are tools designed to identify employees based on skills and interest in one part of the company and link them to opportunities. In other parts of the company. And particularly in large companies, this is a big issue, there may be a need for somebody skills that they’re not even aware of, because it’s in a completely different department. So those definitely enable restructuring. Historically, I mean, they’ve been thought of it more as a career development tool.

Jennifer Dole 08:41
Absolutely. I mean, career pathing.

Steve Hunt 08:44
But I think that’s also one of the reasons is I’m talking to companies are using them. They’re saying, Yeah, from an employee perspective, and maybe career development from a manager perspective, you just took away some of my headcount, you didn’t give me any backfill. That sounds like a restructuring. So what is a career development? Restructuring firm manager? So that was one, I’ll just go through the list really quick if you want jobs, related to talent marketplaces is artificial intelligence, linking tools and skills ontology tool. So these tools allow us to get a much better understanding of both. What skills do employees have? What skills does the company need, and then you can use that information for learning, training and workforce planning. And then again, it often feeds into these opportunity talent marketplaces.

Jennifer Dole 09:33
I think there’s also a connection between skills and the strategy. And understanding the skills that you have helps you to understand their readiness to achieve your strategy.

Steve Hunt 09:48
Yeah. And how you need to restructure because part of it is you know, if a company goes wow, we’re going to build this division. It’s like, well, you have no people with those skills, because all restructuring It’s not just about downsizing, right? It’s stretch strategic, it’s often about growth, so much better insight into how’s our strategy can impact by the availability of labor in our company? And how do we need to plan that out? So I think that’s, that’s really interesting. There’s a lot more interesting data that can start feeding into sort of company’s strategic decisions about their workforce from artificial intelligence and these skills. Analysis tools might be a good term for him. The next one, so we talked about skills, that’s the hard part of an organization. But the part that makes an organization actually run is relationships. Right? You know, organizations are communities of people that are sharing resources around mutually supportive goals. You know, that’s what an organization is. And I think one of the most underutilized tools in the field of HR in general, but particularly, restructurings is organizational network analysis tools, which are tools, that there’s different ways of doing it. Um, sometimes there’s survey based sometimes they look at communication patterns, like through email and stuff like that. But they do is they basically show you who works with who, who’s interacting with orange, yeah, beyond kind of the org chart, right, because it’s not the org chart, because your chart is not the way the world works. And so using these tools, because I think one of the things I’ve definitely seen in restructurings, and I talk a lot about this in the book, because I think when I was writing it, because I’ve seen it play out that what makes a company highly performing, especially a really knowledge service based company is relationships. And when you eliminate people based on org charts or spreadsheets, you have no idea of what relationships are destroying, right, or severely damaging. And so, and often some of the most critical people in the company aren’t necessarily the ones who have highly visible roles. Because just because you know, or a person sits does not mean you know, the impact they have on people in other parts of the organization. And so I think the use of organizational network analysis tools, is, you know, it’s almost crazy to do restructurings without them, but most companies don’t use them. So they’re doing it all the time.

Jennifer Dole 12:20
Right. Well, you know, maybe people don’t even know that that technology exists, that it’s possible.

Steve Hunt 12:26
Yeah, I think that’s exactly the issue. And it’s starting to get more aware, I’m going to give a shout out to a colleague, Michael arena. I don’t know if you’re Michael arena, but he’s done. And he’s some of his colleagues, they wrote a book on this, but he’s done a lot of work in this area. So very applied. The next one, so we kind of got through talent marketplace is AI skills analysis or organization, network analysis and relationships is compensation, technology compensation technology, again, if you use it, while the company is down, is getting far more sophisticated, particularly around like commission management and much more complicated pay structures. And I saw this in the pandemic, where companies that have large commission based workforces, their ability to avoid having to let people go, was heavily influenced by their ability to really change their pay structure quickly, you know, to say, what we thought we could achieve is not achievable. If people can’t sell, they don’t get paid, if they don’t get paid, they’re not going to stick around. But conversely, we have to make sure that we figure out some way that we can pay them and balance this out. And so I think, much more leaning into the technologies for pay, including and this is something I also, you know, I think we have to challenge the assumption compensation can go down. It doesn’t have to be all or nothing.

Jennifer Dole 13:57
That’s a tough one, right? I agree with you. People make decisions all the time in their compensation, and it can go up and it can go down. And, you know, I had a experience where during the pandemic, there was a company that asked for a 20% salary sacrifice from all employees. And the CEO was overwhelmed by the messages of support for that decision. Because it meant that people could keep doing good jobs and keep contributing to the mission because they believed in it. And they were willing to take that salary sacrifice.

Steve Hunt 14:46
And I think the key thing is transparency around this because understandably employees are going to be wary about this right. But if you have high levels of pay transparency, and your high levels of transparency on an account Companies businesses doing, people will see that connection. I mean, if you think about compensation is an investment in the future potential of people and their contribution, just like any investment, these things go up and down over time. But the way that companies have historically approached it is like this all or nothing, oh, you add value add value in UI, you must add no value at all, because we totally got rid of you.

Jennifer Dole 15:25
We’re not giving you any salary increases, because you’ve hit the top of your range.

Steve Hunt 15:29
Yeah, you know, just the way it’s done. Whereas if you have sort of a transition, you know, and you say, Hey, we’ve got a really salaries, if people feel that’s unfair, well, then they can leave, you know, but it’s, I think, much more. really treating compensation as an investment and not sort of a transactional reward because somebody was 20 years ago, thank you. So true. We don’t actually pay people for past performance, we pay people on a belief on the future contributions they’ll make. You know, unless it’s a highly transactional job, you know, the usually it’s a different way thinking about so I think, really leaning into what compensation technology can do now to, but not to the technology to really rethink that relationship of pay. And people often say this, it’s like, I mean, first of all, money is a huge motivator at work. I hate the people say money is not what motivates people. It’s like, yeah, try not pain. You’ll find out how modern but it’s not the only thing that motivates people. Exactly. You know, and so I think if, if we just had a more transparency, candid conversation around it, I think that we could avoid a lot of the traumatic restructurings.

Jennifer Dole 16:45
And that transparency comes with the alignment to how am I contributing to the most critical objectives of the organization?

Steve Hunt 16:55
Which, yeah, we could do a whole nother conversation on pay transparency. I mean, basically, if we’re totally candid, the only reason companies are not transparent as pay is because they cannot or do not want to explain the differences in pay. The research is pretty clear on this, that this idea that employees don’t want, you know, patriots versus they do. It’s a, if you’re withholding information from people, you’re withholding it because it gives you more power or takes away power that you don’t want to give them. That’s why we withhold information. It’s not just Well, yeah, sometimes it’s privacy and sensitivity. I don’t buy that.

Jennifer Dole 17:35
it’s complicated. And like you said, we could probably do a whole nother podcast on that. But have you gotten through like the top technology?

Steve Hunt 17:45
I have not, that’s the crazy thing. There’s more. So to recap, I feel like the 12 days of Christmas on the first day of restructuring season

Jennifer Dole 17:55
I hope that doesn’t take off.

Steve Hunt 18:02
So it’s the first talent marketplaces, AI skills and analytics, organizational network Relationship Analytics, sale, it was called sales, performance management, compensation, whatever, but tools to more effectively manage compensation being more transparent about it. Then tied to that, but a little more broader is analytics tools, particularly that link HR and non HR data. Yes, you know, we were talking about that the real value of employees is not measured in HR technology, because HR technology measures like people’s skills and their engagement and their retention. But companies don’t pay people to help them be engaged and not quit. We pay people for, you know, generating productivity sales, customer service, but that’s not measured in HR systems that’s measured in business operation systems. And there is a technology that sometimes called interoperable technology. There’s different terms for it, invisible technology, I like that phrase where it’s tools that allow you to link together these very disparate systems. This is where cloud technologies really helping. Because often the way companies track things like financial results are operational results of customer service. It’s a very different structure, very different systems than the ones that are used to track employee data costs, engagement. And now we’re getting technology that’s linking these things together. And if you think about restructuring, that’s when you really need it. What would be the implication on the business operation of the company, if you eliminated these five people, you know, somebody said, What is the cost of not hiring somebody? Right? And to calculate that we really need to link this and this is just starting to happen. But to me, actually, when it comes to restructuring and HR in general, that linking of HR and non HR data, it’s like the Holy Grail of human resources. It’s truly linking business people.

Jennifer Dole 19:59
Sure. There is, and it is the Holy Grail. And I think, you know, as I listened to what you’ve shared around technology, HR technology now is so much more than automating process.

Steve Hunt 20:12
Yes. Absolutely. And there are two more, I haven’t even gone through this list. Very there’s it really is, it’s, it’s not the 12 days of technology. It’s the seven days of the week, as I’m looking at this. The next two is contracting technology, technology for managing employee contracts and contracting plays out. And, Jen, when we were starting, as I shared with you a fascinating article I read where a company, when faced with an economic downturn, rather than laying off its employees, what they did is they outsource their employees to another company, kind of the way, like professional services companies do this all the time you think of a professional services company does is it plays some it pays somebody’s salary, but their salaries actually paid off a consulting fees, because they learned that people aren’t. And it’s like, well, you could apply that concept in any company. And there’s really, you know, contracting technology and I was coming to place, you could almost it’s a little bit like that talent, marketplace technology, but across organizations, you know, where you’re like, hey, we have a downturn, but here’s somebody has skills, we will continue to pay their salary and their benefits, but they’ll work for you for six months. And we actually saw this done in the pandemic, at an industry level, some really interesting work where companies in the hospitality industry help their employees get jobs in the grocery industry. Now, the problem they ran into is a lot of those employees never came back.

Jennifer Dole 21:47
Which can be difficult. But I think in this contracting, that you’re describing, I think that’s just such a beautiful way to help organizations with the cost of employees, and the skill shortage.

Steve Hunt 22:03
Yeah, absolutely.

Jennifer Dole 22:05
Here’s the expert resource to solve your problem customer.

Steve Hunt 22:10
Yeah, and thinking about that. And just the also, when you treat employees like this, it gets into the very last one, what I call employee listening, and also promoting employee wellbeing technology, this technology where you’re really trying to understand the experience employees are having, and you’re being empathetic to what they’re going through, you’re getting their ideas and making them feel like part of the process so that they’re part of this change, as opposed to feelings being done to them by soliciting their opinion, their opinions and showing empathy towards them. That would be you know, there’s been such advances in that technology over the last, you know, five years. So that the ability for an accompany to go through restructuring, in far more of a collaborative, we’re going through this together, as opposed to the way it will guide, especially my like, 30 years ago was completely secretive. And then suddenly, everyone in all hands on Tuesday, 50% of you are gone, you know, it was brutal. Now, it could be a lot more transparent. And, you know, and I’ve seen that happen. It’s rare exception, but I know some companies, for example, that said this is during the pandemic, they said, Look, our market is trashed. This was not hospitality, this was actually in a retail company. And they said, we are going to have to take 25% of our workforce costs out, we’re gonna have to do it, there’s no way we can economically survive. Or I don’t know if that was exact number, but some numbers, some significant number. And they actually communicated, they’re pleased to say, but we’re not going to do it right now. We’re going to do it in six months. And we’re telling you this now, because we feel you have a right to know, because this could affect your life in profound ways. It definitely could affect decisions you’re making, like maybe now’s not the time to buy that house if you just moved here, you know, and it showed this empathy for employees by sharing what’s going on in a much open way. And I think that’s an example of a whole different way of approaching restructuring. The economic restructuring, that really reflects what it means to be an experienced management driven company employee experience driven company, which is not putting employee needs above company needs. It’s putting them at the same level.

Jennifer Dole 24:26
Yes, yeah. And I love the way that you’re thinking about this. I love the way that you we’ve communicated today. We don’t want to give away everything we’re going to be describing in the paper. This is meant just to build some interest. So we I think we got through all the technology pieces.

Steve Hunt 24:47
Yes, I think so. Yes, until I come up with some more.

Jennifer Dole 24:51
I’ll just give you a few more minutes and you’ll think about a few more I’m sure. But like as we wrap up here you know What’s the headline?

Steve Hunt 25:04
I think the headline is, one embrace one is embracing restructuring that and these different kinds because we mainly kind of gravitate towards economic restructuring, because that’s what people think about, but actually, it’s probably going to become far more prevalent is organic restructuring. Yeah. And sort of embracing the chaos of it and saying, how, you know, it’s like river rafting, when you go into the rapids, you don’t sit back when you go into the rapids, you lean forward and dig in. So I think it’s embracing that, but also doing restructuring in a much more empathetic, we’re going through this together, as opposed to this as being done by the company to you finding ways to really keep employees and companies together. So even, even if a company, I mean, we have restrictions, particularly to affect people’s careers. The ideal one is one where the person whose career was affected directly is like, Yeah, but I was treated fairly and honestly, and I would come back to that company. I’m not I hold them no, ill will. I would be a customer of that company. Yeah, the world changes. And even probably even more important is the people that are still in that company or like, yeah, I feel better about this company. Yeah, we went, we lost some people. were my friends. But the way it was done makes me feel that I would rather be laid off by this company than quit.

Jennifer Dole 26:25
Yep, and you know, hopefully, we’ll be talking more about boomerang employees. Right? Treated well during this difficult time, but they still believe in the company and they come back sometimes.

Steve Hunt 26:39
Absolutely. Because at the metal level, you know, one of the things I talk in that in talent tectonics, one of the tectonic changes, the shape changing the nature of work, is the fact that we have more people aging out of our labor markets than entering them in many parts of the world. And digitalization is driving more and more demand for specialized skills. So that’s why I kind of look back and say, these companies that don’t do this, right, don’t handle the internal organic restructuring, right, don’t handle the economic restructuring, right. You know, if you burn a bridge with a skilled employee, you’re going to need them again, unless you’re never planning to grow again.

Jennifer Dole 27:14
Yeah. That’s the headline, right? Well, I’m pretty sure that we could continue on in greater detail about this, which is what we’re doing in the paper. I appreciate you being here today, Steve and sharing your thoughts with us. It’s really been wonderful.

Steve Hunt 27:34
Well, Jen, likewise, and I’m just excited to work together on this. It’s really cool. It was just going back to that paper, we couldn’t possibly share our thoughts because they’re still coming. We’re still having things when we dove into it. We’re just like, there is so much to unpack in this area. It really is fascinating. So thank you so much.

Jennifer Dole 27:53
Thank you

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