Does HR have no role to play in one of the fastest growing segments of the economy?
The last decade has seen remarkable growth in Uber, Airbnb and other pioneers in the 'sharing economy' (so called because, on the supply side, they allow individuals and groups to make money from underused assets). These firms also form a vital sub-set of the 'aggregator model' (adopted by e-commerce enterprises that don’t produce goods or services but use technology to provide customers with aggregated information about goods or service providers). It is also fruitful to view these businesses as 'disaggregators' in comparison to the traditional competitors in their sectors as they have found innovative ways to unbundle some of the costly combination of resources, methods and regulatory compliances and reassemble only the bare essentials in a far less costly fashion.
For the rest of this article, I will use uberized as a generic descriptor for all firms that approximate this business model. Some of the cost penalties or overheads uberized firms avoid include:
- Investments in dedicated fixed assets
- Recruitment and training of permanent employees
- Regulatory demands
- Complacency arising from tenure
- Having to overcome conventional barriers to entry
- Corporate overheads (including those of support services like HR)
Does the last bullet point mean HR has no role to play in one of the fastest growing segments of the economy?
Hyper-frugal Resourceful HR (HRHR)
HR in many large corporates has followed the classical trajectory taken by established incumbent businesses. As Clayton Christenson describes it, they "focus on improving their products and services for their most demanding … customers, they exceed the needs of some segments and ignore the needs of others". Established Incumbent HR (EIHR) has not only kept on doing more and more for a smaller and smaller proportion of the value-adding population of employees, it has fattened itself to the point of obesity along the way. While this narrowly focused contribution with ever-widening budgets goes unnoticed in the myriad overheads of a large corporation, it becomes glaringly obvious when HR has to justify its existence from a zero-base where it currently doesn’t exist in any meaningful form. This painful slimming of HR’s established incumbent form while exercising to provide support to a huge array of people not bound by conventional employment contracts is the real challenge facing HR in the uberized parts of the economy. How should HR face up to this demand? The simple answer is, HR will have to jettison all the ballast it has picked up over decades and acquire a leaner (but far less mean) form.
What will this hyper-frugal but resourceful HR look like? What can it bring to an uberized table? Let’s examine a few examples.
Though we are using uberization as a generic descriptor for the business model, in many ways Uber is atypical. The basic qualification for selecting Uber associates, a driving licence, is issued by the state authorities after a set of tests conducted by them. Not all businesses have this luxury and must independently check capabilities before permitting associates to access their platform. This will certainly be the case with software developers such as the ones Wipro hopes to tap through its recent $500 million acquisition of cloud services company Appirio. Even among cab aggregators, given the spate of bad publicity they have garnered after their drivers have misbehaved (or worse) with customers, the need for screening tools beyond simple driving proficiency is evident.
HR will have to jettison all the ballast it has picked up over decades and acquire a leaner (but far less mean) form
The first contribution HRHR can make to uberized businesses is thus in designing a cost-effective set of selection protocols. Most of these will be psychometric instruments to judge varying levels of professional competencies, special skills, interpersonal capabilities and biases as well as predilections for unsocial or dishonest behaviour.
Compared to EIHR, there is no HR offering that will undergo greater weight reduction than training. Because associates will be expected to pick up all or part of the cost of the training they undergo, they will scrutinize its benefits thoroughly before committing their money or diverting their time (which could have otherwise been used for earning) to it. Out of the window will go all those number-of-training-days metric padders such as the convoluted 'Leadership Lessons from Chanakya' type of program! Equally eliminated will be those barely disguised junkets to campuses just on the outskirts of Paris and the spiritually charged experiences delivered by the promoter’s pet pundit for helping employees find their inner selves. When training has to be sold to individual associates who are paying with real cash from their pockets or from their earning-time, HR’s abilities to anticipate training needs and find the most effective yet frugal delivery are likely to be tested as never before. Training that is likely to survive this crucible will, more often than not, be revenue and productivity enhancing skill augmentation, in large part delivered remotely.
Compliance and Collective Bargaining
"We are satisfied that the supposed driver/passenger contract is a pure fiction which bears no relation to the real dealings and relationships between the parties." This was part of the scathing judgement delivered by employment tribunal judges in the UK, on 28 October, 2016, while ruling that Uber drivers are not self-employed and should, therefore, be paid the "national living wage". This is not the place to delve further into this and similar judgements delivered against the Uber claim that its drivers are not its employees. Suffice it to say that, as ever larger sections of the workforce operate through uberized platforms, the nature of the contract between the platform operators and the people they engage will come under close scrutiny for compliance with labour legislation.
The first contribution Hyper-frugal Resourceful HR can make to uberized businesses is in designing a cost-effective set of selection protocols
A few months earlier, Uber entered into an agreement with the International Association of Machinists and Aerospace Workers union to create an association for Uber drivers in New York and establish a forum for regular dialogue and to afford them some benefits and protections. The drivers were enabled to appeal decisions by Uber to bar them from its platform and to have association officials represent them in their appeals. While this agreement stopped short of unionization, no one can doubt which the way the tide is flowing.
It is only a matter of time before the ripples from both these developments reach Indian shores. And, where compliance and collective bargaining loom, can communications, grievance handling and the professionals to deal with all of them lag far behind? It is ironic that, as the EIHR function is pared down to its bare essentials, it is the IR/Admin role, retained from its origins as a Personnel Department, which should reemerge.
Reverse Innovation in HR
Paucity of space and of crystal balls prevents me from projecting the likely form HRHR will assume in other equally vital areas, such as engagement. In uberized businesses there are no conventional supervisor roles. So HR will be unable to hang the entire engagement caboodle around the line supervisor’s. EIHR received wisdom will be similarly upturned in each HRHR sub-domain and the standard delivery model will have to be rethought for all of them.
My erstwhile teacher, Vijay Govindrajan, writes, "Jugaad really means solving a customer problem in the most innovative way when your resources are constrained." He goes on to opine that emerging markets provide the ideal milieu for 'reverse innovation', which can then go on to disrupt markets in the developed world. HRHR is an opportunity to create an HR model with the potential for bringing reverse innovation to conventional sectors of the economy as well as globally. Any takers?