The way organizations manage their most important assets—their people—is ready for a fundamental transformation. New technologies, hybrid working practices, multigenerational workforces, heightened geopolitical risks, and other major disruptions are prompting leaders to rethink their methods for attracting, developing, and retaining employees.
In the past year alone, for instance, we have seen more and more companies adopt, innovate, and invest in technology—particularly in gen AI—in ways that have spurred more changes to people operations than we have observed in the past decade.
Many organizations are also taking significant steps to address shifts in employees’ expectations about work, pursue greater productivity, and foster greater resilience. In many cases, they are looking beyond previously established people management practices and people function (or HR) operating models and taking a step into the future of people management.
What does that future look like? In our view, it is centered on technology’s potential to reshape organizations. In the not-so-distant future, emerging technologies may allow companies to deliver personalized employee experiences, redefine work as a symbiotic relationship between human and machine, and continuously measure organizational health and performance to solve problems before they arise. Furthermore, automation through these new technologies should free up managers’ time so they can provide more of a “human touch” when interacting with employees—that is, more individualized attention as well as guidance and coaching.
To help codify this vision of the future of people management, we gathered perspectives from more than 100 experts in HR technology, executives from blue-chip companies, academics, and other thought leaders in the people and technology domains. Our conversations with these experts and our own research reiterate the value that strong people management functions can generate: Organizations that excel in both people development and financial performance are four times as likely as peers to outperform financially and one and a half times as likely as peers to remain top tier year on year.
In this article, we explore our new vision of people management, outline the core elements of the operating system required to turn this vision into reality, and suggest concrete steps organizations can take to implement a new people operating system.
Envisioning the future of people management
In coming years, effective people management will require an increased focus on employee engagement, development, satisfaction, and productivity; more fluid allocation of skills to the most value-adding tasks; and a greater emphasis on human-centric leadership.
Hyper-personalizing the employee experience
Customization is already part of employees’ personal lives—from tailored social media feeds and customized workouts to e-commerce and music streaming recommendations. People are now looking for similar personalization in the workplace—that is, coaching support, training, and development opportunities tailored to their unique interests, preferences, and needs.
Organizations will need to elevate their employee experience to address this shift in expectations. Historically, they haven’t had the technological capacity to create personalized experiences based on, for instance, language, culture, role, or people’s individual preferences. This has been especially true for large, global, matrixed companies. In some cases, organizations have also lacked the required data or ability to integrate data across sources, or it was too expensive to make such personalization possible.
Technological innovation is democratizing the employee experience. The technology solutions are better and cheaper, allowing organizations to collect more data from disparate sources, gain insights, and create new services. For example, in the future, organizations could offer tailored compensation and benefits to employees based on their local market conditions with the click of a button. By delivering more individualized compensation and benefits rather than grouping them by role, organizations would ensure that employees feel valued and rewarded in ways that resonate with their personal and professional needs.
Organizations will also be able to give leaders, managers, and other employees customized road maps for their professional development by taking into account existing skills, skill gaps, current and future organizational demands, and workers’ stated career goals. Companies will be better able to tailor the employee experience at critical inflection points in workers’ careers—for instance, by offering personalized onboarding communications, customized training programs, and AI-based coaching for individuals and whole teams.
Improving coaching with AI
Furthermore, organizations and their people functions can take advantage of improved data sources and analytics to measure how these offerings affect employees’ experiences and behaviors. These metrics can be used to foster a culture of continuous improvement (see sidebar “Improving coaching with AI”). Managers would receive higher-quality information, allowing them to act as true development coaches. The result for employees may be significantly higher engagement, satisfaction, and productivity.
Introducing personal agents
The next frontier of technologies holds great promise for further personalizing the employee experience. Digital twins or individual personal agents could serve as the point of access and interaction for all of an employee’s work activities, providing real-time assistance around the clock (see sidebar “Introducing personal agents”). READ MORE
by Asmus Komm, Fernanda Mayol, Neel Gandhi, and Sandra Durth, with Jasmin Kiefer, representing views from McKinsey’s People & Organizational Performance Practice.
Source: mckinsey.com
We are pleased to welcome Ann de Grave to the Borderless team as an executive search consultant. Ann joined us on 5 October and brings considerable experience in shaping organisations, leaders and cultures across many markets and industries to our global executive search work.
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