The New World of Human Resources and Employment How Artificial Intelligence and Process Redesign Is Driving Dramatic Change

Human Resource Management and
Organizational Behavior Collection
The New World

of Human
Resources and
Employment
How Artificial
Intelligence and Process
Redesign is Driving
Dramatic Change
Tony Miller
The New World of
Human Resources
and Employment
The New World of
Human Resources
and Employment
How Artificial Intelligence and
Process Redesign is Driving
Dramatic Change
Dr. Tony Miller

The New World of Human Resources and Employment: How Artificial
Intelligence and Process Redesign is Driving Dramatic Change
Copyright © Business Expert Press, LLC, 2019.
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First published in 2019 by

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Abstract
Artificial Intelligence (AI) will change the world as we know it within
only a few years. Its most significant impact will be on our Human Re-
source (HR). What is AI and what’s made it significant are contained in
this concise book. The book has a wide readership and will provide for
many organizations the catalyst for swift change to take strategic advan-
tage of what AI has to offer.
In this book are some of the HR processes that can be changed today,
suggestions on what’s available, and some resources you may wish to use.
The evidence so far is that many HR functions have not developed AI
strategies, in a false belief that AI is in the future. But it’s here and it’s
happening, and the change is expediential in its growth; we are in the
change window for a massive paradigm shift, now is the time for immedi-
ate action.
The arrival of cognitive deep learning in AI will herald a massive para-
digm shift in employment. The change is happening now. At the forefront
of the change will be the human resource. This book is the catalyst for
change many HR functions will need. Advice on progress with AI and
specifically HR processes that will be most directly affected are contained
within this concise book.
This is truly a golden opportunity for human resource profession-
als, organizational designers, business managers, business students, and
workforce planners.
Organizations that act, and act fast, will be the beneficiaries of the AI
revolution.
Keywords
algorithms; artificial intelligence; automation; bonus; change; change;
cognitive learning; compensation; deep learning; Generation Z; human
resources; iGen; organizational design (OD); paradigm shifts; poor per-
formers; process re-engineering; recruitment; robots; talent; talented; un-
employment; Universal Basic Income (UBI); workforce planning
Contents
Chapter 1 What Is Artificial Intelligence and What

Is Its Impact Going to Be?..................................................1
Chapter 2 Human Resources—On the Front Line
for a Change....................................................................11
Chapter 3 How AI and Process Redesign Will Impact
on Organizational Structures and Reducing
Headcount— Rightsizing Your Organization...................43
Chapter 4 Aligning HR Processes with AI—Productivity
Measurement and Performance Appraisal.........................55
Chapter 5 Automating Training Needs Analysis and Training
Evaluation........................................................................79
Chapter 6 Digital Footprints and How They Can be
Used to Upgrade Recruitment and Succession
Planning—The End of Testing?........................................85
Chapter 7 Pay and Rewards..............................................................99
Chapter 8 New Skills Needed to Manage This Massive
Paradigm Shift from Traditional HR To Artificial
Intelligence focused HR.................................................105
Chapter 9 Useful Formula and the Productivity Dashboard............109
References............................................................................................121
About the Author.................................................................................125
Index..................................................................................................127
CHAPTER 1
What Is Artificial
Intelligence and What Is Its
Impact Going to Be?
Historical Development
Unprecedented changes are happening in the world of work. What is of
particular interest is, they are all happening at the same time.
We have the most significant advancement in artificial intelligence
(AI) Figure 1.1, which is now working, and it is beyond our full compre-
hension. What is staggering—this has been happening dramatically since
2014. It is causing a massive paradigm shift that is irreversible, and it will
change life and work, as we know it forever. To put this into context, if
one looks at the development of humankind from 9000 BC to date, what
we see in the past few years is expediential growth (Bauckhage 2017).
The development of the gross world product has outstripped anything
that has cumulatively happened before—and it has happened dramati-
cally fast.
Three predictions that were quoted by Bauckhage:
By 2027 every process will be managed by A.I. (Bauckhage 2017,

University of Bonn, Germany)
By 2027 70% of all S&P companies will have disappeared.

(McKinsey 2016)
60% of all professions will be affected by automation. (McKinsey

2016)
2 THE NEW WORLD OF HUMAN RESOURCES AND EMPLOYMENT
Where are we now?
Every step had to be written in

Programing a computer code– massively time
consuming
The computer learns by

Machine learning algorithms, and can learn by
itself
The deep learning

Deep learning algorithm allows the
computer to learn and
solve problems we don’t
understand; it’s ability
seems amazing with no
apparent limitations.
Figure 1.1 Significant development steps
If you do not have a strategy for AI already, you need to activate one
now. Progress is moving so fast that organizations cannot afford to wait;
changes will not wait—for sure.
AI has come to the fore because of three significant factors.
1. The first is what we refer to as Big Data. We now can manipulate

vast quantities of stored data and with these data can produce pre-
dictive outcomes. What’s been in the press often is, how our digital
footprint is now being used. From the moment you ever switched on
a computer, mobile phone, or tablet or used a credit card, data have
been recorded, stored, shuffled, packaged, and sold by companies
such as Axiom. Big Data is now available to all.
2. The next is affordable high-powered computing. Processing speeds
and storage have increased, and the prices of computing have dra-
matically dropped. We now have quantum computers, some of
which allow free access.
3. The final is the emergence of deep learning systems. These are sys-
tems that start to learn by themselves using cognitive learning—no
need for old-style programming.
WHAT IS ARTIFICIAL INTELLIGENCE 3
The formula then is
BD + HPC + DLS = AI.
You will hear the term neuro networks being used quite frequently
these days; so, here is an attempt to explain what they are. In Figure 1.2,
here we have the straightforward mathematical computation an input,
weighting and addition, then that gives us a mathematical output.
AI, particularly deep learning, develops things further and has made
rapid strides in a relatively short span of time.
In AI, we connect many layers of neurons; in fact, today we have mil-
lions of these as paired inputs and likewise a multitude of outputs. Deep
neural networks are vast and very complicated; the big breakthrough that
happened recently is that these networks now have cognitive ability to
process; this has caused a dramatic improvement and change. It can be
called self-thinking. The program automatically alters the weighting and
keeps self-adjusting until it achieves predetermined outcomes Figure 1.3.
The person credited for this is probably Geoffrey Hinton, the company
who has been most instrumental in exploiting this GOOGLE.
To instruct AI and to get it to solve problems, we use algorithms. An
algorithm is a detailed series of instructions for carrying out an opera-
tion or solving a problem. In a nontechnical context, we use algorithms
Mathematical neuron
INPUT
X1 Weighted
W ADDED OUTPUT
W
X2
W
X3
Figure 1.2 A mathematical neuron

Hidden layer Hidden layer Hidden layer

INPUT
OUTPUT
Figure 1.3 Deep neural network
in everyday tasks, such as a recipe to bake a cake or a do-it-yourself

handbook.
AI system computers use algorithms to list the detailed instructions
for carrying out an operation. For example, to compute an employee’s
pay check, the computer uses an algorithm. To accomplish this task, ap-
propriate data are entered into the system. What makes this particularly
efficient is that, various algorithms can accomplish operations or problem
solving easily and quickly.
However, it is important to note that a programming algorithm
is not a computer code. It is written in simple English (or whatever
the programmer speaks). It does not beat around the bush—it has a
start, middle, and an end. In fact, you will probably label the first step
start and the last step end. It includes only what you need to be able to
carry out the task. It does not include anything unclear, or ambiguous
(Study.com 2018).
There are breakthroughs in every area of business; the finance indus-
try, for example, has found that AI is a better and safer way to do trading.
The Different Types of AI

When you decide to use AI, it is better if you confine yourself to your
business needs rather than getting embroiled in the technologies that AI
offers. Only then can you get the best results. For organizations, there are
three main categories.
Process Automation
Process automation is probably the easiest to understand and is the au-

tomation of digital and physical tasks. These are typically back-office
administrative and financial activities. Process automation could also
involve robotic processes and automation technologies This approach is
probably the least expensive and most accessible to implement as far a
computing is concerned it is the most simple. This can be done using
current technology now. In an example from Davenport and Ronanki
(2018), NASA used process automation to look at its human resources
(HR). In the HR application, it found that 86 percent of the transactions
were completed without any human intervention. HR professionals need to
pay attention to this advancement made by NASA.
Cognitive Insight
This is the second most common area of AI and the area that potentially
will have the most impact on HR and the way that we work. This process
uses algorithms to detect patterns in vast volumes of data and interpret
their meaning. When this is coupled with deep learning, AI has the po-
tential to take off to great heights. Cognitive insight is mainly referred to
as deep learning, and in applications where this has been used, the results
have been nothing short of amazing.
AI and deep learning are rapidly growing and expanding into every
area of business. A qualified doctor, who is a specialist in cancer diag-
nosis, may take 2 or 3 hours looking at X-rays to diagnose correctly the
symptoms that the patient may be suffering. Using deep learning, the
same work can be carried out using AI in .03 of a second. AI is becoming
more accurate than a diagnosis of a panel of doctors, and is improving
every day.
AI is also being linked to robotics; we have seen this with self-driven
cars. But the reality is on the West Coast of America. Large articulated
trucks have been using this system for years. So, we have here a combina-
tion of AI and robotics on a scale never seen before.
The sheer size and scale of what’s possible is incredible. Fox Conn
used to pay its workers $2.50 an hour. But it was cheaper to replace
the workers with Fox Bots (small AI Robots); a decision to change over
to this system resulted in AI Fox Bots replacing 40,000 people in their
Chinese factory (Diamansis 2017).
Other predictions are it is estimated that 47 percent of U.S. labor is
likely to be replaced by automation (F.com 2017).
Cognitive Engagement
This is where AI technology is used to interact with us humans. Ex-

amples are where organizations have a customer interface, which is
entirely driven by AI. Intelligent agents are available 24/7 to help cus-
tomers and provide them with correct information. The medical tech-
nology giant Beckton Dickinson in the United States is using lifelike
intelligent agent advertiser Amelia to serve as an internal employee
in its helpdesk for IT support. SE Bank recently made Amelia avail-
able to customers to test its performance and the customer response
(Davenport and Ronanki 2018). But, it is also a fact that such agents
are not being effectively used by some organizations mainly because of
conservatism and misunderstanding of how beneficial this technology
can be.
In our personal lives, we seem to have already embraced Apple’s Siri,
Amazon’s Alexa, Google Assistant, and Microsoft Cortana, all of which
are forms of AI.
AI Today and Case Studies

Today, AI is very advanced; let me quote from Prof M Kosinski to buttress
this to stress point.
Computer algorithms, deep learning models are now way too

complicated for humans to understand.
AI will impact every facet of our lives for those of us in HR. But for
this to happen, we need to make effective changes to our business strate-
gies in order to prepare and manage this paradigm shift adequately. This
change is happening now. For HR professionals, there has never been
such a big challenge and opportunity. Some assistance to use AI may be

sought from the following:
• Google Tenser Flow. It is the AI software that Google uses, and it is a

library of information that is available for free. Google is devising plans
to run 80 percent of all the world’s AI applications on this platform.
• Tenser Flow is currently being used by the U.S. Army (Summerlad
2018).
• Facebook has open-sourced its neural network libraries.
• Microsoft has open-sourced its computational network tool kit.
• The new-age Quantum Computers is now available, and some
companies like D Wave are allowing free access to this.
• In August 2018, Apple became the first trillion dollar company in
the United States (Gurman 2018).
• In China, they are currently producing $5 chipsets that give AI
enablement (Diamansis 2017). China is leading the world in AI
start-ups.
Russian President Vladimir Putin, in a CNN interview, made the fol-

lowing comment:
‘Artificial intelligence is the future, not only of Russia, but of all

of mankind,’ Russian President Vladimir Putin said. ‘Whoever be-
comes the leader in this sphere will become the ruler of the world’
(Gigova 2017).
Algorithms feed AI; this is an entirely different technique that is used

for problem solving today. This year, we have seen people solve challenging
problems in the field of medicine without having any medical background or
experience. This is the uniqueness of algorithms and deep learning.
The following is a quick definition of an algorithm:
An algorithm is a detailed series of instructions for carrying out an

operation or solving a problem. In a nontechnical context, we use
algorithms in everyday tasks, such as a recipe to bake a cake or a
do-it-yourself handbook, as mentioned earlier. (Study.com 2018)
AI and Some Case Studies from IBM Watson

Case 1
Crédit Mutuel
Crédit Mutuel has trained IBM Watson to help its client advisers provide
customers with quick and comprehensive information on a whole set of
offerings, from car and housing insurance to a range of savings and invest-
ment products. “It is impossible for our customer advisors to know all of
our 200 products. So we provide them with tools to have the right informa-
tion for the right client,” said Mathieu Dehestru, Head of Transformation,
Marketing and Big Data at Crédit Mutuel insurance. “Watson gives more
time to our client advisors, so they have more time for client relationships.”
Thanks to its Watson-powered e-mail analyzer and its four virtual as-
sistants, Crédit Mutuel is enriching interactions between client advisers
and customers. Watson has made it possible to find the right answers to
problems 60 percent faster. It helps deflect and address 50 percent of the
350,000 daily e-mails received by the bank’s client advisers.
Watson has absorbed over 600,000 pages of documentation, from re-
ports to correspondence. The machine-learning model has been continu-
ously updated to be able to analyze a higher volume of records.
Over 80 percent of Crédit Mutuel employees have adopted Watson
for their day-to-day work. Earlier, these employees used to spend 80 per-
cent of their time researching problems and 20 percent fixing it. Now,
Watson has reversed this trend.
Case 2
Woodside
Before Watson took charge, Woodside’s engineers spent up to 80 percent

of their time trying to uncover possible solutions or hazards, and only
20 percent of their time on the actual engineering work. With Watson,
the time spent on researching has been reduced by 75 percent, because
Watson enables easy access to decades of wisdom and learning built up by
Woodside’s employees.
Case 3
Korean Air
Korean Air has a year’s worth of historical maintenance records for hun-
dreds of aircraft in its fleet. However, until recently, this vast amount of
critical data was virtually unsearchable. This meant that maintenance
technicians had to diagnose and fix issues without being able to tap
into or interpret implications from valuable past learning and courses
of action.
Watson ingested structured and unstructured data from multiple
sources, including technical guidelines, nonroutine logs, technician notes,
inventory, troubleshooting time and material cost data, and in-flight in-
cident history.
Watson Explorer, using Natural Language Understanding, and ad-
vanced content analytics have enabled previously hidden connections
that now help maintenance crews to diagnose and solve problems more
quickly, with more confidence. Further, if an issue occurs in flight, the
cabin crew can report it immediately to ground operations. Watson will
access data from similar issues in the past and compare this information
against technical guidelines including necessary materials and fixing time.
Maintenance technicians fix the issue on the ground and enter their ac-
tions into the system to add to Watson’s knowledge.
With the help of Watson, maintenance managers can also identify the
trends of issues in each season and can take these insights to the original
equipment manufacturers for improvement. Over 200,000 maintenance
cases per year are addressed 90 percent faster.
Korean Air needs their over 2,000 maintenance employees to be able
to act faster. When Watson delivered actionable insights on the root
causes of problems and their solutions, Korean Air shortened its mainte-
nance defect history analysis lead times by 90 percent.
The maintenance employees can now see patterns of defect and failure
on equipment quickly so as to take preventive steps in their work. Such
preventive measures also allow them to spend more time getting people
places on time in their fleet and to work to keep their 25 million pas-
sengers happy.
To conclude this chapter, here is an exciting quote from Elon Musk:
‘I am quite close, I am very close, to the cutting edge in A.I. and

it scares the hell out of me,’ said Musk. ‘It is capable of vastly
more than almost anyone knows and the rate of improvement is
exponential’ (Musk 2018).
CHAPTER 2
Human Resources—On the

Front Line for a Change
Reality
Everything we have seen about AI points to an underlining issue—less
people and a 24/7 approach to all work. Employers and governments
are faced with the task of finding a balance between how to deal with a
problem and what to do with surplus employees. It sounds simple, but it
is very complicated. Change cannot be halted, and the drive for maximiz-
ing AI is now unstoppable. This is a challenge for government and not
for HR
The Massive Impact for Employment Numbers

There are currently four factors that will make the biggest changes in
our lifestyle and the way we work (Figure 2.1). We have already looked
at AI. The other issues that will impact human resources include aging
workforce, hours of work, and universal basic income. AI, robotics, and
process redesign will all vastly reduce the need for people in all organiza-
tions worldwide. Now, here are some points to consider (Miller 2018):
The Aging Workforce
The first is to do with an aging workforce. In the West and Far East, the
aging skilled workforce is becoming a big problem. Today, governments
realize that pension funds are insufficient, and therefore, the trend across
the world is to raise the age of retirement. Retiring at 70 has been pro-
posed and looks like being implemented. In the United Kingdom, one
suggestion is to raise the retirement age to 73 before 2020.
UBI
Less Hours
Masive Artificial
Change Intelligence
Older
Workers
Figure 2.1 Massive change
In the United States, 16.6 percent of the population will be over 65 by

2020; in Germany, it will be 21.6 percent (Roth CBS).
In Japan, people aged 65 and above account for 51.7 percent of the
workforce—including women (Nikkei Asia review 2016).
The following are three critical factors about age and employment:
• Governments are probably unlikely to be able to support the aging

workforce.
• Employers have invested a lifetime of training and education on
senior employees—why let them go?
• The massive increase in robotics complements an aging workforce
perfectly.
Work opportunities for youth do not look good, the evidence for
which can be seen everywhere. Fresh graduates end up working in coffee
shops or taking up other low-paid semiskilled work. A big challenge for
employers will be Generation Z or i Gen as they are known. This group
will be discussed later in the book.
Human Resources—On the Front Line for a Change 13
Fewer Hours of Work
Thanks to the rapid advancement of technology, like the use of robotics,

combined with the aging workforce, working hours are getting reduced.
For example, Germany’s workforce has successfully negotiated a 28-hour
working week. (Financial Times 2018)
If the use of robotics and AI is accelerated, it will also give employ-
ers the opportunity to rightsize their organizations, also bringing massive
financial benefits along with it.
Rightsizing is already becoming an essential management tool and for
a good reason.
Universal Basic Income (UBI)
What is universal basic income (UBI)? It is a model for providing all citi-
zens of a country or another geographic area with a given sum of money,
regardless of their income, resources, or employment status. The purpose of
UBI is to prevent or reduce poverty and increase equality among citizens.
UBI is also known as just basic income. According to the advocacy
group Basic Income Earth Network (BIEN), the essential principle be-
hind basic income is the idea that all citizens are entitled to a livable
income, whether or not they contribute to production, and irrespective
of the particular circumstances into which they are born.
BIEN lists the following five defining characteristics of basic income:
1. Periodic: Distributed in regular payments

2. Cash payment: Distributed as funds rather than, for example, vouch-
ers for goods or services
3. Individual: Each citizen (or adult citizen) receives the payment,
rather than each household.
4. Universal: All citizens receive the payment.
5. Unconditional: Recipients are not required to demonstrate the need
or willingness to work.
In the most common UBI implementation method, equal periodic

payments are made to all individuals and the tax system ensures that funds
are returned to the system from those with higher incomes. Usually, the
amount is gauged for subsistence: enough to take care of the individual’s

basic needs but not enough to provide many frills.
UBI is one example of a guaranteed income model. The main alter-
nate model is a guaranteed minimum income system, sometimes called a
basic income guarantee, which involves varying needs-based supplements
designed to ensure that all citizens have enough to live on.
Recently, UBI has been in the news as the proposed way to support a
workforce displaced by automation. Musk, Zuckerberg and many others be-
lieve that robots and AI-enhanced software may replace most human labor in
a not-too-distant future; this scenario is sometimes called the robot economy.
Critics of guaranteed income argue that such an automation-based
system would be too expensive to implement and would create a disin-
centive to work. Proponents, on the other hand, believe that it could be
cheaper in the long run, considering the effects of poverty, and that, fur-
thermore, it would promote creativity and entrepreneurship among those
freed from the struggle to work. (Murphy 2018)
Who Is Driving UBI?
The people leading this push toward UBI are names that you would recog-
nize—Mark Zuckerburg owner of Facebook, Travis Kalanick co-founder
Uber, Elon Musk, former CEO and owner of Tesler, and the late Stephen
Hawkin, also from Silicon Valley, and Sam Altman, owner of Y Combinator.
Why Do We Need It?
The rapid advance in the use of robotics and AI, particularly deep think-
ing, will change the face of employment, as we know it by 2020. The
unemployed and the unemployable will increase, unless the world is pre-
pared to accept a rapid increase in crime and discord.
Are People Happy at Work?
Are people happy at work? No. The figures for the United Kingdom and
Germany seem very similar; 33 percent of the population are not happy
at work. If this surprisingly high figure is the same worldwide, it would
be a big boost for UBI advocates.
What Do the Figures Look Like, and Are They Viable?
The cost of UBI is often misunderstood and greatly exaggerated. A simple,

“back-of-the-envelope” estimate of the net cost of a UBI is set at about the of-
ficial poverty line: $12,000 per adult and $6,000 per child with a 50 percent
“marginal tax rate.” These back-of-the-envelope calculations present a much-
simplified UBI scheme meant not as a practical proposal but as a method to
obtain a ballpark estimate of the cost of UBI in isolation. Even with simpli-
fying assumptions, these figures are several times more accurate than many
common but exaggerated estimates. Key findings of this study include the
following. The net cost—the real cost—of this UBI scheme is $539 billion
per year: about one-sixth of its often-mentioned but not-very-meaningful
gross cost of about $3.415 trillion. The net cost of this UBI scheme is
• less than 25 percent of the cost of current U.S. entitlement

spending,
• less than 15 percent of overall federal spending, and
• about 2.95 percent of Gross Domestic Product.
The average net beneficiary is a family of about two people making

about $27,000 per year in a market income. The family’s net benefit from
the UBI would be nearly $9,000, raising their income to almost $36,000
(Widerquist 2017).
The Need for HR Strategy Now

AI will have a massive impact on employee numbers, because for the
first time since the Industrial Revolution, the numbers of employed will
significantly decrease (Figure 2.2). This trend is likely to continue, and it
seems irreversible.
HR has functioned for many years, but it has not been a part of any
strategic thinking group. Now is the time to change that. HR must em-
brace strategy as it is the crucial organizational tool for implementing
change. AI will require many strategies to be agreed and put in place in
the immediate future. HR needs to be the catalyst for this change. If you
examine the traditional model; Vision to action. HR will have an active
and critical role to play at the top four levels of the process (Figure 2.3).
Employees numbers before and

after A.I.
BEFORE
AFTER
Figure 2.2 Impact on employee numbers
Often, the directors’ views are sought at stage 3 (strategy formula-

tion) by others who are responsible for the central strategic plan. In some
instances, business professionals are presented with a completed strategic
plan and then required to produce their operating plans for the next year
or two.
With so much potential and knowledge, it defies logic that profes-
sionals are not involved in this process, right from the concept stage of the
vision. Evidence shows us that in many organizations the business profes-
sional’s function is viewed as a “process” and not thought of as an added
value component of the organization. To change that perception and to
gain access to the crucial point in the decision-making process is vital.
Involvement in stages one to seven does mean having a much more
comprehensive view of the business areas and being able to contribute
with real added value concepts.
Working at the strategic level is a vital requirement for professional
functions if they are genuinely going to be seen as an added value. The
challenge is gaining enough credibility to get involved in the process at
the early stages.
The whole process of having a vision and turning it into individual
actions can be broken down into seven levels.
HR's role in the four key levels
Level 1
Vision
15 - 20 years
Mission
Level 2 10 - 15 years
Strategy
Level 3 5 - 10 years
Operating Plan
Level 4 1 - 2 years
Department Plan
Level 5 1 year
Team Plan
Level 6 1 - 12 months
Individual Plan
Level 7 1 - 12 months
17
Figure 2.3 HR’s role at the four critical levels
The “hill of vision” is perhaps the quickest way to see the overall pro-
cess. Depending on where you are in the organization and whether you
are a “contributor” or “actioner”, you will have a different view of “the
future”. The larger the organization, the more significant the challenge
to ensure everyone understands what the vision and mission are of your
company. It has little to do with whether the organization is in the public
or private sector; the communication challenge is still the same.
It is often the case that employees at level seven cannot see the wood
for the trees. If that is the case, then how can they fully contribute to the
organizational objectives?
The “hill of vision” therefore is a reflection on how different groups
within the organization see “the future”. A brief description of the Vision
and Mission follows after which we will examine the all-important strat-
egy and its sibling, the operating plan.
The Vision (Level 1)
It is what it says it is; a hope, concept, or direction about the future. Usu-
ally, one sentence encapsulates the future.
The Mission Statement (Level 2)
The Mission Statement should give every employee a clear understanding

of values, targets, and output expected. Mission statements are, therefore,
not so easy to produce. If they are too long, their meaning and purpose be-
comes unclear; if they are too short, they sound similar to a vision statement.
Unfortunately, most of the corporate mission statements are not effec-
tive. They consist mainly of pious platitudes such as “We will hold ourselves
to the highest standards of professionalism and ethical behavior.” They often
formulate necessities as objectives; for example, “to achieve sufficient profit”.
This is like a person saying his mission is to breathe sufficiently. A
mission statement should not commit a firm to what it must do to survive
but to what it chooses to do to progress. Nor should it be most prominent,
best, optimum, and maximum; for example, one company says it wants
to “maximize its growth potential”, another “to provide products of the
highest quality”. How in the world can a company determine whether it
has attained growth potential or highest quality?
To test for the appropriateness of an assertion in a mission statement,

determine whether it can be disagreed with reasonably. If not, it should
be excluded. Can you imagine any company disagreeing with the objec-
tive “to provide the best value for the money”? If you cannot, well it is
not worth saying.
What characteristics should a mission statement have?
1. It should contain a formulation of the firm’s objectives that enable

progress toward them to be measured. To state objectives that cannot
be used to evaluate performance is hypocrisy. Unless the adoption
of a mission statement changes the behavior of the firm that makes
it, it has no value. The behavior of a Mexican firm was profoundly
affected by the following passage from its mission statement (Miller
2017a):
To create a wholesome, varied, pluralistic, multiclass recreational
area incorporating tourist facilities and permanent residences, and
to produce locally as much of the goods and services required by the
area as possible, to improve the standard of living and quality of life
of its inhabitants.
2. A company’s mission statement should differentiate it from other
companies. It should establish the individuality, if not the unique-
ness of, the firm. A company that wants only what most other com-
panies want—for example, “to manufacture products efficiently, at a
cost that helps yield adequate profits”—wastes its time in formulat-
ing a mission statement. Individuality can be attained in many ways,
including that in which a company’s business is defined.
3. A mission statement should define the business that the company wants
to be in, not necessarily is in. However diverse in its current business, it
should try to find a unifying concept that enlarges its view of itself and
brings it into focus. For example, a company that produces beverages,
snacks, and packaged goods and operates a variety of dining, recre-
ational, and entertainment facilities identified its business as “Increas-
ing the satisfaction people derive from the use of their discretionary
time”. This suggested completely new directions for its diversification
and growth. The same was true of a company that said it was in the
“sticking” business, enabling objects and materials to stick together.
4. A mission statement should be relevant to all the firms’ stakehold-

ers. These include its customers, suppliers, the public, shareholders,
and employees. The mission should state how the company intends
to serve each of them; for example, one company committed itself
“to providing all its employees with adequate and fair compensa-
tion, safe working conditions, stable employment, challenging work,
opportunities for personal development, and a satisfying quality of
work life”. It also wanted “to provide those who supply the material
used in the business with continuing, if not expanding, sources of
business, and with incentives to improve their products and services
and their user research and development”.
Most mission statements address only shareholders and managers.

Their most serious deficiency is their failure to motivate nonmanagerial
employees. Without the commitment from these employees, a company’s
mission has little chance of being fulfilled, whatever its managers and
shareholders do.
A mission statement should be exciting and inspiring. It should mo-
tivate all those whose participation in its pursuit is sought; for example,
one Latin American Company committed itself to be “an active force
for economic and social development, fostering economic integration of
Latin American countries and, within each country, a collaboration be-
tween government, industry, labor, and the public”. AI will require most
organizations to rewrite their mission statements.
Strategy (Level 3)
The strategy is the key to it all. Over many years it has become apparent
in organizations that those who contribute to control and execute the
strategy have the power. Strategy is a level three organizational tool and
is the critical element for specifying what needs to be done, Why it needs to
be done, and When it needs to be done; AI will not wait for you, but it will
overtake you—get started quickly.
Strategy is usually focused on business growth, improved produc-
tivity, increased shareholder value, a more significant market share, and
higher-quality technological innovation.
All of these factors will eventually make up the business plan and how
it will be executed. This is the critical, pivotal point of any business, be it in
the public or private sector. It is surprising that many business profession-
als have very little presence in the area of strategy and one wonders why?
It is probably because strategic thinkers in any organization are few,
and these few are very senior in the organization and tend to be focused
on “the big picture”. Their association with others on strategic matters
is generally limited to those who have a significant role in determining
bottom-line results. This is, of course, the big challenge for us. How do
we get into the loop? How can we be seen to be a business winner and be
fundamental in contributing to bottom-line results?
The first step is to understand strategy fully and to be able to dem-
onstrate how and where actions impact on the real business objectives.
The advent of AI in our organizations offers a unique and challenging
opportunity.
Operating Plan or Business Plan (Level 4)
In the organization, this is where the how people reside, those who can
put the strategy into action and who know what areas of the business will
benefit most from AI. Sometimes it is a wise move to involve these people
in the early stages of your strategic thinking to get buy-in and commit-
ment for when implementation will follow.
Use of an HR Strategic Schema
How to get started? Strategic involvement in HR seems the inevitable

development of this critical function.
To date, many HR professionals have found increased difficulty in
trying to get to grips with current HR strategic models.
Most of their design, although well-meaning, are oversimplistic and
in the main do not provide the amount of critical information needed to
collect and produce high-level strategic information.
This tool is focused on providing you with a complete map for not
only putting together the HR strategy but also ensuring full integration
with the business requirements.
Before getting to grips with the map, let’s spend a moment looking at
timelines for the formulation of HR strategy. There are three timelines we
need to be aware of.
First, what we can learn from previous experience looking retrospec-
tively at what we have done.
The second strategic timeline relates to current issues and informa-
tion, which needs to be resolved in the future. The third and most crucial
timeline is that of the future. It is only the future that we have control of;
from a strategic viewpoint, it is the most important.
Often this timeline comprises both retrospective and current issues.
Most businesses today use a model of some sort to ensure continuity
and for putting strategic plans together.
As well as using these strategic models, each partner will have a checklist
of what to look at and report on for the future in their next strategic plan.
The map included here gives a checklist of some of the most critical
HR areas to examine and use to see if there needs to be a specific inclu-
sion in your strategic plan for those items. Having worked through the
checklist and drawn up the strategic plan, you can see from the map that
there is then the strategic mix; HR strategy does not stand on its own. AI
will affect every area of every organization.
It is part of a far more complicated strategy, as it has to integrate with
the corporate strategy of all of the other business partners.
It is, therefore, extremely likely and from my experience inevitable
that HR strategy will need to be sometimes reworked before it is ready for
full integration into the overall business strategy.
Use of an HR Strategic Schema

Our HR map, may, at first sight, seem very complicated (Figure 2.4).
It is in three parts, Strategic Input, Strategic Output, and Business
Plans for Action.
All of the business partners input their strategic requirements in the
form of PEST, 5 FORCES, and their strategic requirements into the strate-
gic mix. The latter is precise to the strategic partners’ function.
On the map, you will notice that we have highlighted the areas that
are the specific function of the HR professional. This offers you a great
checklist when looking at putting your AI strategy together.
Figure 2.4 The HR strategic map
23
We hope that this will help you with the requirements needed to for-
mulate your HR strategic plan.
The specific input for HR into the strategic plan takes the form of the
following 10 indicators:
What actions are necessary in the future?
These 10 subject headings provide a sound basis for an organization’s
input needed from HR. The headings provide the initial HR input for the
first part of the strategic input.
Strategic Input
Strategic input consists of all three strategic models, PEST, 5 FORCES

and MILLER
PEST
The PEST analysis is a long-range tool. It is used to identify the following:
Political/legal issues
Economic
Social trends and changes
Technology—innovation and change
5 FORCES
5 FORCES tracks the following:

Competition among existing firms
The threat of new entrants
The threat of substitute products or services
Bargaining power of customers
Bargaining power of suppliers
MILLER
The MILLER model looks at organizational maturity over time.

Organizations grow as productivity increases with time, but this hap-
pens up to a point, after which the organization goes into decline. At
that point, the organization typically employs too many people, is too
procedure-bound, and does not produce enough output.
The position of the organization or department is found by using a

questionnaire that gives a plot on the MILLER curve.
Reengineering
Process re-engineering is critical to formulate AI and to maximize its ben-

efits. Almost every existing HR process will have to be changed. Every
process will need to be re examined to make sure it’s integrated for AI
Will the re-engineering impact on any of the following in an
organization?
People—Will we need to change the number of people we employ to

fit the new process? What is the value of the saving if AI is applied?
Process—This is the physical process. How we implement the process
change and how it will be carried out. What is its value before AI
and after?
Structure—This is the organizational structure needed to support
re-engineering and either people, process or changes brought
about by the indicators in the MILLER model. What organiza-
tion design to you need to transition to? This will defiantly happen
within organizations in the near future. Choices of design—either
symmetrical, asymmetrical or people-centric.
Future Requirements
Pay—What pay levels are likely to be in the marketplace? What do we

need to do? What are the financial projections? Although there will
be fewer, but high-value people, the rates of pay will rocket.
Rewards—Are the allowance and benefits scheme competitive, what
actions are needed to change? What are the costs and the real value
to the individual and the organization? Would rewards be better
consolidated into either higher pay or bigger bonus schemes? Are
we paying for knowledge or performance?
Bonus—projected cost. Is the scheme right for our business - are we
getting the productivity we need? If the bonus scheme is to be
changed then what is the cost, projected productivity improvement
and an indication of our position against our direct competitors.
Workforce Planning and Trends
These need to be predictive trends that will cover factors such as sickness,
inclusion, productivity, demographics, skills shortage, turnover, longevity in
employment, speed to competency, or organizational shape. The big factor
will be workforce reduction, which is likely to commence on or before 2020.
Planning
Succession—key personnel succession plans, desirable succession

plans. Development—trend/cost—speed competence, speed to
performance, training needs.
Emergency—There needs to be contingency plans for people in an orga-
nizational emergency. Involve retired people, universities, and other
resources.
Relocation—Owing to AI.
Trends
WORKING from HOME—What are the current trends and how

they will impact on organizational structure, pay and conditions,
and productivity?
AI—as described in Chapter 1. It is essential to get to the big pic-
ture. AI is best when applied as a holistic tool, not when it is just
a bolt-on for bits of processes, no matter how attractive that may
look in the immediate future. The biggest challenge will not be
with the AI but with employees’ limitations in understanding it.
It’s not A.I. I’m worried about its Human Group stupidity. (Howard
2017)
UBI—Universal Basic Income referred to at the beginning of this
chapter.
Performance/Competence and Reliability
Task—business performance trends via a Monte Carlo simulation,

staff turnover, project approach impact on productivity, initiatives
to improve productivity, competent trends projected, competency
strengths and weaknesses by the department.
Individual—competency/performance trends
Team—introduction/expansion of teams/team types and productiv-
ity-projected gains
Alignment
Culture—Will the progress with the alignment of the corporate cul-

ture template meet the strategic objectives and the final strategic
requirements of your AI strategy.
Job retention—effects of job retention in the future for critical people,
market trends, change in organizational shape, use of talented de-
velopment techniques, and so on.
Job security—techniques needed to give employees security and con-
nectivity with the organization. May include share options, devel-
opment programs, long-term contracts, and so on.
Actions
Training—training budget required for future, the anticipated investment

(ROI) on training, training efficiency relating to productivity, training
efficiency relating to competencies and its automation, external and
internal trends that affect training. This whole process can now be
automated (Chapter 5).
Please note that it is advisable to train your staff in AI and not to
bring in consultants. There are many platforms where you can do this
online such as Fast.AI (Howard 2017).
Education—educational standards required for the future, need to in-
vest in education and second degrees; the link between educational
standards and performance at work.
Development—career development needed for the company; internal
and external trends in development; development strategies for
succession planning within the company.
ROI figures for development and effectiveness to be integrated fully
with AI.
Survey
Employee—surveys relating to the difference between the current state

and future state of corporate culture.
Managers—surveys with the managers of the company to check cul-
tural alignment and satisfaction with the working environment in
the company; any actions that may be necessary to take for the
future.
Customers—internal and external
The Strategic Mix

The next stage is where the business provides its requirements (Business
Partners Input), and during consultative meetings, the HR strategic plan
needs to be put into alignment with the overall business requirements and
needs to reflect a total picture of what is required.
This approach avoids the embarrassment of HR going to the strategic
table with no ideas and nothing to offer. It also clearly shows the business
that HR is playing the role of a clear strategic thinker and is able to devise
and propose strategies that are genuinely strategic.
This map has been in existence only for a month, and already HR
managers are reporting that other areas of the business are keen to draw
up identical maps showing their specific strategic inputs.
Strategic Approval
Once the strategic blend has been completed, final plans can be made and
submitted for approval. Once approved, the task of turning strategy into
action commences.
Strategy Into Action

There are many ways this can be done. Using the six S method seems to
work best for HR strategic plans.
Each HR strategic action will need to be translated into a strategic action
plan with what resource and cost. Then, these plans can all be integrated into
a comprehensive HR business plan for the short, medium, and long term.
Constructing HR strategic action plans gives one the perfect tool to

upload all of the plans into one integrated process using something like
Microsoft Project Manager. The entire strategic plan of the business can
then be run and operated as a major project with all the discipline re-
quired for a significant project. Speed is needed now.
Creativity
Specifically referred to twice on the strategic map, creativity needs to excel

during strategic planning.
The whole process of the strategy gives us a unique opportunity to
be creative in the way that would write and carry out our strategic plans.
Competitive advantage indeed will not be achieved by copying or
following what we have done in the past. AI will demand new thinking.
In such a fast-changing world, we should focus our attention very much
on improvement, or, what is more exciting, doing things entirely differently.
A straightforward idea to follow is the FACE approach not only to in-
ternal customers but also to external customers. It is perfect for AI think-
ing (Miller 2017a).
The FACE principle requires us to deliver processes and concepts that
meet its requirements. These are as follows:
F.................................................
A................................................
C...............................................
E...............................................
Fast, accurate, cheap, and easy.

Also, I am reminded of the late Peter Drucker’s advice to always ask
the question “Would the roof cave in if we stopped doing this altogether”?
Challenging the foregoing processes is the way forward for change, mainly
when thinking of what you are trying to achieve with AI.
We must make sure as a strategic partner that we do not create pro-
cesses or activities that significantly take energy away from the business.
That means radically re-examining many processes and trying to either
abolish them or modify them so as not to take up valuable human capital
time and effort. Our quest as HR professionals must be to energize and

focus the human capital on maximizing its potential and therefore achiev-
ing a significant competitive advantage. Active and creative strategic pro-
cesses are a significant step in the right direction.
This strategic map has been produced following many requests from
HR professionals around the world (Miller 2017b).
It is not intended to be a map that you follow doggedly, but as a guid-
ance to you if you have difficulty in pulling all of the necessary strings
together for strategic planning.
If you have difficulty in your organization with strategic planning,
then other departments may find this process equally of use and you, in
turn, can use your professionalism to explain its virtues and the advantage
of using such a tool.
Putting Strategy Into Action—Tools Needed

The 6 S model
Strategy
Shared Skills Style Staff Structure Systems

values
The framework used here is the Miller/Sporlein model. This was

developed by the author and a German Manager and was a significant
modification of the McKinsey 7S Framework. In that framework, organi-
zational actions or outcomes were divided into seven categories—each as
important as the other. The key to success was ensuring all of the compo-
nent parts were effectively achieving or contributing to the overall goals.
The Miller/Sporlein model (Figure 2.5) suggested that the key driver
would always be the strategy, which drives or influences the six subsequent Ss.
The framework looks as follows:
The “driver”—the “strategy”—is self-explanatory. The other tables
used are as follows:
Shared Values—This is the culture of the company, the invisible glue

of values and beliefs that bind the organization.
Figure 2.5 The 6 S Process
Skills—The skills needed to carry out any new strategy. These skills
may be needed by your staff or may have to be imported via con-
sultants for a special project.
Style—The management style needed to ensure that the strategy is
implemented. This needs to be in harmony with the requirements
of the shared values.
Staff—Have you sufficient people, too many, right caliber? and so on
Structure—Is the structure of the organization proper to carry out the
needs of the strategy?
Systems—Will the existing systems (computer) and processes support
the requirements that the previous six Ss will demand?
From a business professional’s perspective, there are points of focus for

compiling a company’s strategy.
1. Past—Designing strategies to rectify existing problems or shortfalls

of a company.
2. Present—Designing strategies that are strategic enablers for others’
strategic ideas.
3. Future—Compiling strategies that are proactive and will provide
proactive added value.
Whatever the strategic aims, using a framework to explore all the pos-
sibilities is a process that will give structure to your thoughts for the stra-
tegic plan and the resulting operations plan/budget that is needed.
Having used the strategic framework, the ideas can be worked on and the
plan produced. The underlying thoughts when producing your input should
be “Is this added value?” and “How will I measure the success of my work?”
There needs to be a liaison with all the key players when strategic
plans are produced.
This simple model is worth remembering when doing any of your
strategic planning. It is easy to find expensive solutions to everything; the
trick is to spend minimum amount, cause minimum disruption, and get
maximum effort.
Triple W Objective Setting © This system was designed by the
author. Recognizing that managers and supervisors did not get SMART
objectives, he used knowledge from his strategic mapping process to come
up with triple W objective setting.
The Basic Concept
Most objectives are a result of strategic requirements, and strategy focuses

on three main areas—What needs to be done, Why it needs to be done,
and finally When it needs to be done. That applied and you get all you
need to set very clear and easy-to-understand objectives.
The Process
The first W is the What, what is it that needs to be done, or what is it that
needs doing.
This needs to be spelt out so that it is clear to understand. So let’s practice:
To improve productivity in the back office by 20 percent this

year (that is before the triple W process).
What Is Required:
• To increase the number of case files dealt with by 20 percent a month,

that is 50 extra, 600 extra in a year
• The work is to be locked into a project program on our Microsoft office
management system showing all the deliverable dates and number of
extra files processed—the exact numbers to be shown for each month.
Why: Without the why, the person doing the objective will never fully
understand the context of the objective and why; if the person has this
information, he or she may be able to produce a better way of doing it.
• For our company to be competitive, we must increase our volume but

without incurring any extra costs, such as more workforce.
• The timing will be crucial as the sales force has precise targets to achieve
and this will directly affect our workload commencing on the 1st Oc-
tober this year. Everyone should be aware that this is a priority as it is
a key element of our strategy.
Finally, the When: It is critical here to be specific. Don’t just give

an end date. Anyone who has managed projects will tell you that that is
asking for slippage. So, take time to break the objective into manageable
chunks. Dates given should be by day, month, and year. Where figures are
involved, try not to use percentages but exact numbers—this will avoid
confusion or any misunderstanding.
• This objective fits in with the department strategy for continuous

improvement and innovation by demonstrating its efficiency im-
provements over the next 5 years.
• The plan for achieving this is required for outline approval by the 2nd
April 2015 and must be agreed upon and approved by 1st May 2015
• The first batch increase is needed by 1st October 2015 (50 files),
and the total objective is to be completed showing the 600 extra
files by 1st October 2016
One of the greatest assists to performance improvement in any busi-

ness is using this system to ensure that things get done on time and within
budget.
Managers and supervisors only require a short but focused piece of

training to be able to do this—remember that there is a vast difference
between the managers saying they can do it and the reality of well-written
objectives.
You may be wondering in the Triple W objective method why there is
no explanation of how to do it. With today’s workforce, people are bright
enough to work this out themselves or to find out. If they take the objec-
tive on board and work out how to do it, then they will be more commit-
ted and accountable for the outcome as it is their idea. This simple but
effective approach indeed does produce results and more importantly gets
a lot more commitment to action.
Background to Strategic Action Plans
This background is an important document to ensure that projects are

well-defined, focused, and most importantly, meets organizational re-
quirements. The strategic action plan states:
• What is to be achieved
• What will be covered
• A plan of how and when each item is to be delivered
• Risks that might be associated with the delivery
• Dependencies—whom are you dependent upon to make things
happen
An essential aspect of the document is that it is in a standard format

and needs approving both before and after delivery ensuring that the end
customer or sponsor gets precisely what they are expecting.
Each part of the project needs a strategic action plan and each has its
strategic action plan project manager.
Timing—A first cut of the Strategic Action Plan is to be ready by...

Sponsor—The customer/sponsor for each of the Strategic Action Plans
(that is you)
Methodology—Initially, all concerned will produce their project plans
and timelines.
Help on construction of the plans can be sought from..............

When completing the strategic action plan, it is essential to stick to a

standard methodology as all strategic action plans will need to be inte-
grated eventually.
Front Cover
• Quality Plan for “project name”.

• Project Manager
• Version
• Version Date
• Date Approved
(Note: The version numbers should be in decimal points until ap-

proval. When this is determined, then it becomes Version 1.)
Scope
What the plan is going to achieve, what will be covered, and also what is
excluded?
Deliverables
Each project will have many tasks, which together provide the compo-
nents for the total project. Each manageable task or group of tasks will
make up one of the project deliverables. In this section of the Quality
Plan, it is essential that all of the deliverables be identified. When you
have a team of people working on your project, you will need to assign
specific deliverables to the appropriate person.
Plan
The deliverables need to be translated into timelines so that the Strategic

Action Plan can be tracked together with all the other plans and activities
during the project.
Risks
As with any project, there may be risks, which unless addressed will ad-
versely affect either the quality or timeliness of the project. These need to
be identified so they can be addressed.
Dependencies
Specific areas of your project will be dependent on other people in the orga-
nization helping you. It may be that there is a specific action needed before
you can action specific critical tasks—these need to be included in the plan.
Sign On
The customer/sponsor will sign the strategic action plans collectively. This
will happen when he or she is sure that all the elements are in place and
that the total plans provide the solution.
Sign Off
Once the project is complete, the customer/sponsor will sign off the
documentation only when all the deliverables have been delivered to the
agreed specification.
Strategic Action Plan—Example
Training needed for new working procedures and software Project

Manager:
Russ Edell
Version.10
Version Date 5-22-15
Date Approved __________
Scope
To develop, test, and deliver a training program for new loan counselors,
processors, their team leaders, and Finet Direct managers; to create cor-
porate awareness through the training of Finet customer suppliers and
their staff (vision only).
This Training Program Will be Directed Toward Four Major

Product Areas
1. 30/15-year fixed conforming loans (and all other Desktop Origina-

tor products).
2. 30/15-year Federal Housing Administration (FHA) loans

3. 30/15-year Veterans Affairs (VA) loans
4. Equity lines of credit
Excluded from this Strategic Action Plan is the training of support

personnel. A training program for these positions may be developed at a
later time depending on needs yet to be determined.
Deliverables
The overall objective is to produce a training program that will train existing
and new loan counselors, loan processors, and their leaders to staff the best call
center in the world.
1. Design and build a training facility with the following attributes:

a. 13 workstations—12 for trainees, 1 for the instructor. Worksta-
tions will be identical to workstations used in the work place.
In the call center, both in hardware and software, but under no
circumstances are they to be able to access the call center pro-
grams. (Exact specifications to be provided by the Systems Stra-
tegic Action Plan.) Also, some of the high-tech items will be
required to enhance the training.
b. The training facility needs an open area in addition to the worksta-
tion area to facilitate noncomputer group training. MIS 7-25-15
2. Record existing loan counselor/customer conversations for review by
Performance Advantage. RE 5-23-15
3. Complete a need analysis to define the requirements of some of the
training blocks. As of this time, the projected training blocks would
be as follows:
a. Finet culture and team building
b. Relationship selling
c. Product knowledge for 30-year fixed conforming loans and all
other Desktop Originator Products.
d. Telephone usage and predictive language
e. Team leadership and coaching techniques
f. Putting it all together “One day in the life of a call center”. RE
5-23-15
4. Complete a need analysis to define the requirements of the software

training blocks. As of this time, the projected training blocks would
be as follows:
a. Use of Point software
b. Use of Desktop Originator software
c. Use of Loan Prospector software
d. Help/script pop-up screen utilization
e. Product underwriting guidelines RE 7-12-15
5. Set up Terms of Reference (measurement requirements) (For
example)
1. Total calls versus total sales
2. Letters of praise
3. Phone matrix
4. Competency matrix
5. Referrals RE 6-6-15
6. Define Core skills (For example)
Point software
Desktop Originator software Loan Prospector software
Telephone usage and predictive language Accuracy of documentation
Product knowledge RE 6-27-15
7. Investigate the use of Brightware software for use in the Service Cen-
ter. RE 7-3-15
8. Develop a total training program with specific objectives and phases
to ensure that, at the completion of training, the loan counselors,
loan processors, and their leaders and managers will obtain a basic
designated performance level on the basis of the terms of reference
and core skills.
RE 7-25-15
9. Develop lesson plans and a testing program to cover the content
developed in the training program. RE 8-8-15
10. Test the training program in a remedial mode using the existing staff.
RE 8-15-15
11. Revise the training program on the basis of feedback received from
the existing staff. RE 8-29-15
12. Test the revised training program using the appropriate people. RE
8-21-15
13. Recruit the first class of 12 trainees. RE 9-4-15

14. Train the first group of potential team leaders. RE 9-19-15
15. Train the first class of 12 trainees with the participation of the team
leaders. RE 9-26-15
16. Develop training modules for other product areas, FHA, VA, and
equity lines. RE 10-5-15
17. Use portions of the above-mentioned training modules to articulate
the vision of Finet to Finet managers, Finet customer suppliers, and
their staff.
18. Implement the use of video, CD-ROM, and other high-tech train-
ing enhancements.
19. Train other individuals to deliver training when needed.
Risks
1. An adequate training facility may not be available, which would sig-

nificantly reduce training efficiency.
2. Point software may be so primitive and user-unfriendly that it in-
timidates and discourages the new trainee, making it impossible to
achieve the desired goals.
3. Technology group is unable or unwilling to provide the support
necessary to set up help/script pop-up screens in the required time
frame.
4. Technology group is unable or unwilling to provide the support nec-
essary to set up product underwriting criteria screens in the required
time frame.
5. There are not enough qualified potential team leaders.
Dependencies
1. Need the technology group to approve specifications and set up the

computer portion of the training facility.
2. Need the technology group to design and implement help/script
pop-up screens and timing flags (wake-up calls).
3. Need the technology group to design and implement underwriting
criteria screens.
4. Need the technology group to set up a phone system to record ex-

isting loan counselor/customer conversations to be used by Perfor-
mance Advantage in Predictive Language study.
5. Need Performance Advantage to analyze existing loan counselor/
customer conversations using Predictive Language techniques to de-
velop the content for help/script pop-up screens.
6. Need Dr Tony to provide recruitment policy and procedures.
7. Need Dr Tony to provide loan counselor and team leader salary and
remuneration policy and procedures.
8. Need Nick to provide content for parts of the training.
9. Need Peggy Ann to develop the content for product underwriting
guideline screens.
10. Need Peggy Ann to provide product knowledge information.
11. Need Sara/Dr. Tony to provide Russ with Predictive Language
training.
12. Need Dr Tony to provide a cultural template for use in the develop-
ment of the training program.
13. Need the CEO to provide the vision portion of the training at the
beginning of each training session.
14. Need the team leaders to participate in the trainees’ training.
Signed for ________________ ________________

Implementation Nick Steinmetz VP Sales Date
Approved by ________________ ________________
Jan Hoeffel CEO Date
Approved by ________________ ________________
Wayne Repich COO Date
Signed for ________________ ________________
Completion Nick Steinmetz, VP Sales Date
This Process Works

This end-to-end process works. When used by HR, it quickly becomes
the norm and adopted by other areas of the business. Displaying the chart
(free from the website) provides a signal to all that you have a process that
is easy to follow and clearly shows the input that HR has as a strategic
partner.
When actioning strategic plans, the methodology shown in this chap-
ter suits our purposes. Very often we must get things done through oth-
ers in the organization and those people do not work directly for us; the
strategic action plans get everyone on the same page, and the project plan
that is made from the 6 S model helps keep everyone on track.
Some companies use Strategic Action Plans (SAPS) at appraisal time
and get the person being appraised to complete one for each objective
they have been set. This produces very good results and gets better com-
mitment from the employee.
CHAPTER 3
How AI and Process

Redesign Will Impact on
Organizational Structures
and Reducing Headcount—
Rightsizing Your
Organization
The History of Traditional Organizations

It was in 1760 that Adam Smith set out the ideas that would shape busi-
nesses. He made the first symmetrical designs for how an organization
should look and designed the first modern organizational structure; it
was first used in 1771 by a company called Arkright in Cromford in the
United Kingdom. Then, it was adopted by a factory called Smedley in
1784 which is still going—officially known as the world’s oldest factory.
Then, the structure was adopted as the model for success by other com-
panies worldwide, and surprisingly this structure for organizations is still
very much in evidence today.
Smith was also responsible for the new business titles of Supervisor
and Manager and for the recommendation that the ideal span of man-
agement would be 1:7. This was appropriate in 1760. Despite the tech-
nological and education revolution since 1760, there is still a belief that
people require close supervision and must be managed.
These two factors—old organizational design and 1760 supervision—
have condemned us to the productivity and efficiency problems we have
today. So, why do so many managers and supervisors still want small ra-
tios of control? The reason is that it is less work for them and requires less
skill; but it then begs the business question—what do we pay managers
for? It is estimated that 95 percent of existing businesses are still struc-
tured on the design principles of 1760 and the pioneering work of Adam
Smith, that is, in regard to the capability and type of work undertaken
(Figure 3.2). This is still the predominate design in the world today as
it is easy to do. But AI will decimate this kind of organization as it is so
inefficient.
The Current Types of Organizational Design

Symmetrical Organizations
It was in 1760 that Adam Smith set out the ideas that would shape
businesses. He made the first symmetrical designs for how an organiza-
tion should look and designed the first modern organizational structure
(Figure 3.1); it was first used in 1771 (Smith 1776).
1 1 1
1
5 10 50
2
25 100 2500
3
125 1000
4
625 10,000
5
3125
6
15,625
7
Figure 3.1 Symmetrical organizations
Then, this structure was adopted as the model for success by other
companies worldwide, and surprisingly this structure for organizations is
still very much in evidence today.
This design has been subject to some semi changes, delaying and cre-
ating the flat structure that is the most widely used (Miller 2014).
HOW AI AND PROCESS REDESIGN WILL IMPACT 45
Asymmetrical Organizations
The Asymmetrical principle does not stick to the same ratios of supervi-
sion, but has different ratios for different levels and parts of the business,
depending on the role, capability, and type of work undertaken. It is a
much better and commonsense approach to organizational design and will
always work where the organization employs smart people. It is difficult
to pinpoint when this design first became used, but p robably in the late
1960s. The design has many advantages as it allows parts of the organiza-
tion to have a very flat structure, while other parts are more in line with a
Smith-type setup. This type of structure would be well-suited to organiza-
tions that decide to phase in AI over 2 to 5 years. The organization design
could then be adjusted according to the pace of AI implementation.
Asymmetrical
CEO
Support
services Operaons Engineering
Director (1) Director (1)
Director (1)
Producon
Managers Packing Design team
(10) Managers (5) leaders (4)
Figure 3.2 Asymmetrical organization
People-Centric Organizations
It is hard to believe that the founders of a people-centric organization

were all connected with the IT business and were nearly all scientists or
IT engineers.
The start of the people-centric organization happened perhaps by
chance and was a spin-off of the way William Shockley worked. Shock-
ley was simply a brilliant man. He has been credited with revolutionary
work on the transistor and later on advancing semiconductors. Shockley
coinvented the transistor, for which he was awarded the 1956 Nobel Prize
in Physics.
Shockley’s attempts to commercialize a new transistor design in the

1950s and 1960s led to California’s “Silicon Valley” becoming a hotbed
of electronics innovation. In his later life, Shockley was a professor at
Stanford. Thus, over the course of just 20 years, a mere eight of Shockley’s
former employees who formed Fairchild semiconductors (named after its
financier Sherman Fairchild) in Silicon Valley, California, later gave forth
65 new enterprises, which then went on to do the same.
What Shockley had started was a new way of doing things and a new
way of running efficient organizations on the basis of a people-centric de-
sign (Figure 3.3); whether this was a design formed by analysis or by need
we will never know—but the success of Silicon Valley speaks for itself.
People centric
Section
leader
Section Nominal Section

leader leader leader
Section
leader
Figure 3.3 The people-centric design
The founding companies using this form of organizational design
• Shockley Transistors 1950s

• Fairchild semiconductors 1957
• Intel 1968—founded by Robert Noyce and Gordon Moore,
perhaps the first company to offer stock options to all its employees
and have the flat organization as we know it today
• Microsoft 1981
• Apple 1997
• Google 1998
• Facebook 2004 (America’s first trillion-dollar company)
The people-centric organization is so different and is based on the

concept that the organization should be designed and structured to get
the best from the type of people it employs instead of designing a typical
organization either symmetrical or asymmetrical and making the people
fit the organization. If you are wondering if this works, take a look at the
stock value of the companies mentioned.
The epitome of this design is Google. The organization was created
to support those who would work in it—right from the start. The design
was specific to meet the personality profile of Technological Engineers.
What a change; instead of getting people to fit an organizational de-
sign, first deciding what people are needed (by profile) and then creat-
ing an entire organization to support that ethos. The design first became
apparent in 2001 with the appointment of Eric Smitt as the new CEO.
Google has always been good at recruitment (a lesson we should learn
from) because they had always valued people with high SAT scores and
high grades from the best colleges and universities. You cannot graft on
mental horsepower, so it is best to make sure you get it when you recruit.
The new Google organization had been created new, different, very
functional, and almost free of bureaucratic rules which are endemic in
symmetrical organizations—the skeptics, of course, said it would never
work—look at the track record of Google. This design innovation was
quick to be copied by Apple, although the world at large has failed to
capitalize on this type of organizational innovation.
The future of organizational design will become a combination of
asymmetric and people-centric designers when re-engineering existing
organizations will be subjected to a hard time, as all the existing managers
will fight the change. The day of the conventional manager being essential
to an organization has now reached a plateau. Many managers realize that
their days are numbered, and soon their numbers will inevitably decline.
When designing the organization or redesigning an existing organiza-
tion, remember that today people are educated to a very high standard;
overmanage them, and you will never see them reach their potential.
Overmanaged people often find work tedious, and this creates a discon-
nect between the management and the workforce. This will become very
apparent and will work against the organization if for any reason the
organization has to change quickly.
To conclude—be bold with the organizational design, try not to use
the past as a benchmark, the most significant strength organizations have
is the untapped potential of the employees—use the organizational design
to capitalize on this.
Others were quick to jump on this innovation, including Bill Noyce
Intel, Bill Gates Microsoft, the late Steve Jobs, all of whom are what we
refer to as Generation X. Later Generation Y liked this design very much,
and it became the hallmark design for Silicon Valley companies. Some
examples would include Google, Facebook, Air B and B, and Uber. If
you were to adopt AI entirely, it would be the perfect design for those in
Western countries, in the Middle East, and in the far East. Asymmetric
organizations may be the better choice.
Dr Tony Miller first coined the phrase “People-centric” at the Balkans
HR world summit in 2012.
Ratios
It is amazing how little progress was made between 1771 and 1980. Dur-
ing this period there was only a slight improvement in supervisory ratios
from 1:7 to 1:8. The significant changes happened in the 1990s. With
the worldwide introduction of the Internet, and better school and uni-
versity education, we suddenly had a far more intelligent workforce. Su-
pervisory ratios throughout the organization started to change, and we
started to see companies operating at 1:15, 1:20 and in the late 1990s
some companies with ratios of 1:50. A continually improving talented
and better-informed workforce makes all of this possible.
Gone were the days of getting information only from your line
manager or supervisor, because the Internet had revolutionized the way
that we learn and access information. The World Wide Web provided a
learning tool for everybody. Also, the universal use of television widened
people’s horizons internationally.
The world is now (more or less) stable, and the global economy
is fully established. The world has become one big supermarket. The
breaking down of international barriers to travel has meant we have
seen a mass mobilization of workforces on a truly international scale.
With such a well-educated international workforce, we must ask the
question, have we maximized the organization regarding how people
are managed? For the majority of the organizations, the answer must
be “No!”
This is an area where we must excel if you are looking to get a strategic
advantage; then the whole area of how people are supervised and man-
aged needs to change.
There is an interesting correlation between intelligence and supervi-
sion. Intelligent people seem to need little if any supervision, whereas
others seem to be a little better than their forebears back in 1771. The
only thought you need give this is if are you dealing with predominantly
unintelligent people in the organization; or have you recruited and maxi-
mized on getting the best of the best? If the latter is the case, then you
have every possibility of making a substantial contribution to improv-
ing organizational efficiency and at the same time maximizing employee
satisfaction with the work that they do. This choice will be made for
you—there will be little room in the AI organization for those who do
not produce.
As I have indicated before, the manager and that type of role has
indeed reached its zenith, and it was in the late 1990s that the inspi-
rational leader replaced the manager. Although these sound like very
fancy words, they are two different jobs, both of which can be allocated
to a specific time in history. The role of the manager reached it zenith
in the late nineties. Since then the real requirement in successful orga-
nizations is to recruit and retain leaders at the five critical levels in the
organization.
To recap, organizational design for company structures will be deter-
mined by the amount of AI and process redesign you chose to do. There
is also a cultural element when it comes to spans of control—for the
people-centric organization in Western cultures and in other parts of the
world, the asymmetric design would seem to be better.
How to Calculate How Many People You Need—

Including Rightsizing
No matter what your humanitarian view might be, AI and process re-
design will mean you need a lot less people. You can agonize over this as
much as you like, but it is inevitable.
The old way of doing this used to be downsizing.
Downsizing is a term used in workforce planning for altering the struc-
ture of the organization significantly. It is usually done to both symmetri-
cal and asymmetrical organizations at a period (mid-stage two) in the
MILLER organizational maturity chart. Downsizing is a risky business as
it involves taking out whole layers of management. Downsizing usually is,
but not always, preceded by doing business process re-engineering.
The key to successful downsizing is to remove layers of management in
the organization by finding out the answer to a straightforward question:
Where in the organization is the work done?
Although the question sounds simple—it is often not that easy to find in
the organization. Every layer is claiming, “This is where the work is done.”
Once you have established the truth, then you can go about removing
the layers and completely restructuring the organization by delayering.
Benefits (UK example)
• 28 per cent improvement in productivity

• Less management
• Improved worker satisfaction scores
Rightsizing is now the preferred option.
The rightsizing exercise is always interesting to do as it gives you a reality

check on the size of the organization. This is essential for AI and should
be done before any AI or process re-engineering is done. This gives you an
insight as to what’s possible at the start.
Rightsizing is quick; often from design to implementation, it can be
done in 4 months. Compare this with downsizing, which is done in 1 to
2 years.
How to Calculate the Rightsize of Any Organization—

The Math Involved
Step 1
In the organization we are using for an example (a real
organization in Europe), we have 3,000 employees. All the
work is done every year—so, how many hours are worked?
(Miller 2017c)
Most CEOs and CFOs will come up with the same
answer.
Working hours per week 40 × weeks in a year
52 × Number of workers 3,000 = 6,240,000 hours.
So, we have an assumption that our 3,000 employees
are doing all the work and we pay for them, and it takes
6,240,000 hours.
Step 2
To get a more accurate figure, we know that we need to
calculate work done by using Prime Working Days formula
Prime Working Days (PWD)
PWD 226 days × Hours worked per day 8 hours × Number
of employees 3,000 = 5,424,000 hours worked. This is a
significant difference from our original assumption.
Step 3
As in all organizations, there are other lost time variables. In
our test company, we find for each employee.
Average time lost through sickness 10 days per year
Average unauthorized absence 5 days per year
Average for training/ conferences 12 days per year
TOTAL extra time lost 27 days per year per person
Revised PWD 226 – 27 days = 199 days
Actual hours worked in our company
Days 199 × Hours per day 8 × employees
3,000 = 4,776,000 hours
Step 4
As we know, employees are in three categories—poor
performers, average performers, and talented.
We also know from an extensive survey done in 2016

how much work they do.
In our organization
17 percent are talented total 510—they work 6.4 hours a day
61 percent are average performers, total 1,830—they work
4 hours a day
22 percent are poor performers, total 660—they work 1 hour
a day
It is critical for all AI predictive calculations that you
know in your organization the percentages of workers in the
three categories and how many hours they work in a day.
Talented PWD 199 × hours worked per day 6.4 × number
of employees 510 = total hours worked 649,536
Average PWD 199 × hours worked per day 4 × number of
employees 1,830 = total hours worked 1,456,680
Poor performers PWD 199 × hours worked per day 1 × number
of employees 660 = total hours worked 131,340
Total hours worked per year 649,536 + 1,456,680 + 131,340
= 2,237,556 Hours
Step 5
We now know all the work done in our organization was
done by 3,000 employees working 2,237,556 hours, although
we are paying them for 6,240,000 hours.
The question the management team must address
is precisely how many hours a day do you expect your
employees to work. In our company, it was decided that all
employees should work 7 hours a day.
Therefore, if PWD is 226, the final calculation would be
as follows:
a. 226 Prime working days × 7 hours a day = Hours
each employee is expected to work every year 1,582
b. Now, we are going to divide our hours per year for
each employee into our actual total hours worked
to give the number of employees needed to run our
company
2,237,556
---------- = 1,414 rightsized figure. Actual number

currently employed 3,000
1,582
In this exercise we have established that our company can be run using a total
of 1,414 employees—this is an absolute minimum. In reality, just over 2,000
people were needed rather than the 3,000 who were currently employed.
When it comes to removing people from the organization, the poor

performers go first, followed by the lowest performing group of the aver-
age performers.
It then gets very complicated. Gen X will have the most experience,
together with Gen Y, so do you keep the oldest people capitalizing on all
the investment you have put in them? This is a route many organizations
have taken, redesigning work so they can maximize the older workforce.
In 2010 Harvard produced a case study of BMW (Loch et al. 2010) it is
a superb example of where the accommodation of older people improved
productivity, reduced sickness, and reduced the defect rate in production
to zero.
The age problem facing organizations is further compounded with
what to do with Gen Z, also referred to as iGen. By 2020 they will ac-
count for 24 percent of the available workforce (Park Communications
2018)—exactly where do they fit in the new AI process re-engineered
organization?
CHAPTER 4
Aligning HR Processes
with AI—Productivity
Measurement and
Performance Appraisal
Productivity
How to measure productivity and do an appraisal of employee perfor-
mance? Align all the HR processes with an AI seamless approach, and
you will achieve these twin goals. In this chapter, we will look at gathering
productivity information and how we best use the performance appraisal
tool as a catalyst for productivity, innovation, and change. We will also
explore its motivational ability.
To look at AI and productivity, we must first understand the three
components that make up productivity and how to best use them to our
advantage (Figure 4.1). AI needs to link and improve them all, productiv-
ity being the first. (Davenport and Ronanki 2018)
Performance
appraisal
interview
Business
improvement
A.I.
Deep
learning
Compensation Trainingand Succession

and bonus Evaluation planning
Figure 4.1 AI and performance appraisal systems

Figure 4.2 Processes that add to organizational

efficiency
Sustainable productivity = Competence + Performance + Reliability
Understanding the Ingredients (Figure 4.2)—Competency

How to Measure It
The topic of accurately measuring and valuing competencies has

eluded both line managers and HR personnel for years. The numer-
ous books to explain competency frameworks have done nothing
but to add complexity and confusion to what is a straightforward
concept.
What are the competencies and how are they structured?
ALIGNING HR PROCESSES WITH AI 57
The concept of having a competency framework was to enable orga-

nizations to benefit from a uniform approach. Competencies are a key
observable behavior. They are critical words in that short statement—
the first is key when allocating competencies to a job the focus needs
to be on the key competencies. The first and most dramatic mistake
organizations make is to allocate as many competencies as possible to
cover every single item of work. By so doing, it makes the task of mea-
surement unattainable. But, if organizations are practical and focus on
what competencies are critical or key to a particular job, then the task
of measurement and doing training needs analysis become attainable
and realistic.
The second important word in the definition of competencies is
behavior. We can see, measure, and improve behaviors as they consist of
skills, knowledge, and experience.
Having a proper competency framework provides organizations with
three essential outcomes. Competencies provide us with
• quality assurance
• conformance to standards
• doing things in a safe and legal way.
Without such standards, it is easy to see how mismanagement seeds

economic downturns. The economic downturn a few years ago is a classic
example.
The abuse and misunderstanding of how competencies work has
meant that in many organizations their overcomplicated approach has
significantly reduced productivity. In an attempt to rectify this, we
have set out from scratch how competency frameworks should work
as they can be a positive contributor to productivity and more im-
portantly have credibility with the business users. Regardless of what
approach you take or which model you use, simplicity and clarity of
approach are essential if you are to maximize your investment in your
employees.
To get the most from a competency approach, managers need to
fully understand how competencies work and why they are essential.
From practical experience, it comes down to each employee having no

more than eight competencies, with six being the average. Key competen-
cies are the ones that make the difference.
To make this clear, there is a complete worked example.
The first is an illustration of how a team leader competency is con-
structed. The smallest elements are seldom individually rated, and train-
ing for these parts typically occurs on the job.
The competency unit is of key interest as this is what we measure and
provide training for as need arises.
The all-important units and their relationship to the competence.
The organizational requirement of competence is essential from the
viewpoint of a training needs analysis. Although competence impacts
every individual, the requirement for competence has already been
scoped, approved, and funded at the corporate level. Therefore, although
competencies appear to be an individual training need, they are indeed
part of the organizational requirement that guarantees and gives confor-
mance to organizational standards.
From a training needs analysis point of view, competencies are chal-
lenging, especially when they do not quite match a training course or
a packaged solution. Identifying the appropriate training to achieve a
higher level of competency is subject to broad interpretation.
Before embarking on an exploration of training needs, minimum
and maximum standards need to be set for the competency framework
within your organization. Although it is unlikely that you know, right
off, the minimum, average, and maximum competency levels required
in your organization, these data are essential when you conduct your
training needs analysis. For example, if the minimum competency level
is 50 percent, the average competency is 70 percent, and the maximum
competency is 85 percent, then you can identify the priority for the
training needs analysis resulting from the competency level of the in-
dividual. This is typically recorded at performance appraisal, which is
discussed later.
Let’s look at the example (Figure 4.3). The competency is a team
leader. Each page is a unit. You will soon see how this fits in with the
schema.
Team Leader
Elements Units COM PETENCY

TEAM LEADER
Delivering results
and Quality
Analysis and
problem solving
Communicating
and influencing
Leadership
Figure 4.3 How competencies are structured
Competencies
Competency
Unit Definition Anchor
Delivering Directing effort to Ensures satisfactory team delivery of defined
Results and the achievement goals, overcoming most problems within one’s
Quality of objectives own area of specialization
Analysis and Analyzing Evaluates available information, reaching
Problem-Solving information decisions on the basis of key facts and
effectively and practicality of solutions
drawing sound
conclusions
Communicating Achieving Prepares the case fully, stressing the benefits
and Influencing understanding to be gained and inspiring confidence in one’s
or gaining own views
acceptance
of ideas and
proposed action
Leadership Getting the best Monitors progress toward achieving clearly
from others defined shared objectives, provides feedback,
support, and encouragement to individuals on
specific tasks
Unit One—Delivering Results and Quality

Definition: Directing effort to the achievement of objectives
Anchor: Ensures satisfactory team delivery of defined goals, overcom-
ing most problems within one’s own area of specialization
Positive Indicators—Elements Negative Indicators
• Monitors progress of individuals against • Does not monitor progress against
their targets; encourages achievement clear targets
• Tackles bottlenecks/backlogs in the • Delays taking decisions until forced
system, and looks for ways to clear these to do so
quickly • Avoids taking responsibility for one’s
• Refers issues upward quickly to get action own work and that of others
• Continually reassesses priorities to focus • Turns immediately to others for
energy most productively help in resolving situations; does
• Consults external specialists to resolve not persist in trying to resolve
problems outside one’s own specialist problems
area rapidly • Fails to respond immediately to
• Gets “all hands to the pumps” slippages within the project
• when dealing with priority, or • Delivers work that will need
• “emergency” situations amendment or further effort later on
• Adopts a flexible approach to work; • Pursues avenues of interest not set as
is prepared to commit extra effort a priority
whenever necessary • Repeatedly finds reasons why tasks
• Takes immediate action to rectify could not be completed on time or
slippages to the desired quality
Unit Two—Analysis and Problem-Solving

Definition: Analyzing information effectively and drawing sound
conclusions
Anchor: Evaluates available information, reaching decisions on the
basis of key facts and practical solutions
• Utilizes past experience to make • Takes information at face value; does
standard checks on the reliability of not cross-check facts
information • Pays attention only to those
• Gains as much information as possible facts that suit one’s own position
from a variety of sources on which to or preferred course of action or
base a decision interpretation
• Always seeks out facts rather than make • Makes decisions on the basis of
assumptions or guess subjective opinion or hearsay;
• Considers the trade-off of risk versus gain doesn’t investigate the situation
when coming to conclusions oneself

• Bases decisions upon statutory codes of • Values speed of decision making
practice where they exist far above careful deliberation even
• Bases solutions on the objective facts, not when the time is available
on subjective opinion
• Considers full implications and benefits of
recommendations for the company
• Devises objective business case to support
recommended changes to procedures that
have caused complaints and subjective
criticism
Unit Three—Communicating and Influencing
Definition: Achieving understanding or gaining acceptance of ideas

and proposed action
Anchor: Prepares carefully, stressing the benefits to be gained and in-
spiring confidence in one’s own views

• Prepares facts in advance of meetings • Delivers an unstructured
• Considers full impact of proposals before argument
putting them forward for consideration • Makes up arguments when
• Talks in a positive manner to inspire one’s own case is questioned
confidence • Presents in a flat and
• Anticipates likely questions and prepares monotone fashion
counterarguments • Gives way quickly when others
• Keeps the message simple; states the facts and raise counterarguments
objectives • Loses interest if an agreement
• If unsure of the details, commits to finding out is not forthcoming
for the next meeting • Uses jargon or technical terms
• Answers questions directly others may not understand
• Clarifies the needs of other parties in meetings • Loses patience with those
• Persists in putting forward argument who do not appear to
• Uses graphics in a presentation where possible understand the argument put
• Explains the logic behind changes forward
Unit Four—Leadership
Definition: Getting the best from others
Anchor: Monitors team morale, provides feedback, support and en-
couragement to individuals on achieving objectives
• Sets realistic but challenging goals by breaking • Maintains distance from staff
down overall targets/objectives • Works on an “us” and “them”
• Makes time available to staff to share basis
expertise/knowledge • Is destructive when giving
• Conducts regular meetings to review staff negative feedback; uses
individuals’ performance authoritarian approach, is
• Conducts quarterly appraisal meetings that sarcastic or punitive in making
focus on development and potential for comments
progression against objectives • Does not communicate
• Gives negative feedback in private; points out successes to the team
implications of the approach taken • Does not make time available
• Conducts regular team meetings to to staff
communicate information/review team • Fails to praise work well
progress and team goals and to praise successes done; takes the excellent
and build team spirit performance of staff for granted
• Identifies training needs of staff and supports • Expects others to be motivated
with training opportunities as a matter of course; does
• Regulates the workload of staff; doesn’t not make active attempts to
overburden them motivate the team
• Gives staff clear instructions as to what is • Adopts a controlling approach;
required on tasks, and to what standard does not encourage staff to take
• Ensures team members are fully briefed on task ownership of their work
plans and the background • Offers no support for personal
• Provides constructive feedback to help development
individuals overcome problems or improve
their performance
• Understands what motivates individual
members of staff, e.g., pay, career progression
Measuring Competency Levels and Getting the Best from Training
What’s the competitive advantage of this approach, for example, focusing

on measuring only units? First, we need to be realistic about setting
organizational competency standards in line with the key competencies.
In Figure 4.4, the minimum competency standard is set at 50 percent
(Miller 2017b)
Competency
Maximum standard
85%
Company required
ave. 70%
Minimum standard 50%
Figure 4.4 Setting competency

standards
In other words, management should not recruit anyone below this

minimum requirement. The company standard is shown at 70 percent
(Figure 4.4). Any employee falling below that competency score should
automatically get training. Once an employee reaches 70 percent (de-
pending on the job), then he or she is said to have attained the required
employment standard. As 90 percent of all training will come from these
data, training needs can now be automated into our AI system. The soft-
ware now exists to do this, and both competence and performance can be
accurately recorded and translated into precise training needs. This will
save time and, of course, cost.
Key points about competencies:
• Competence guarantees quality, safety, and conformance to stan-

dards. A lack of competency standards in organizations undoubt-
edly contributed to many of the financial failures.
• Measure what matters—the units from critical competencies only.
• Set up standards—minimum, company standard, and top-end
competency scores.
This will clarify your organization’s competency levels, strengths, and

weaknesses. To make this a success, you need to involve all of the senior
managers to get not only the buy-in from them but also a good under-
standing of how the competency system works.
How to Measure and Automate Performance Data

Performance is raw output, how much we do. Performance is measured in
many ways, including the following:
• Speed
• Time
• Efficiency
• Unit cost
• Volume
Most companies are overstaffed by 15 to 20 percent and, of course,

by a much higher percentage in the public sector. Published figures in late
2009 by the UK government showed that there were 50 percent too many
people in the public sector, and specifically in the Public Health Service.
It was reported by McKenzie consulting in September 2009 that 1 in 10
employees in the health service could be dispensed with. In a survey of
public sector employees in September 2009, 89 percent felt that budgets
and public spending were managed inefficiently.
What kind of performance is expected should be made very clear in
the contract of employment, although companies should seek legal coun-
sel in this regard as employment law statutes vary geographically on this
issue. On the other hand, performance levels above those required should
be locked into a bonus or reward system. If the original criteria are cor-
rectly set, it should be difficult for employees to do more in the same
time, since in theory, they are working at their optimal level. So, you will
need to make the decision—bonus or overtime—but not both.
Performance expectations (above required performance) should be
established during the performance appraisal and updated throughout
the year.
Measuring of Performance can be done in three different ways; these
are approached depending on the type of business you work in, the coun-
try you are employed in, and finally the culture of the company or orga-
nization that you are part of.
1. Performance measured by time worked. This works well if you have

managers who do manage. Also, certain cultures are very work fo-
cused and when they are at work—work hard. This mainly applies
to China where hard work by the hour is part of the culture. In 2016
a survey was carried out in the Middle East to determine how many
hours people worked. The following results were obtained:
Talented workers—17 percent worked 32 hours a week
Average worker—61 percent worked 22 hours a week
Poor performers—22 percent worked 5 hours a week
I have displayed these data in many (non-Asian) countries, and very
few people seem surprised about the results, particularly those in the
public sector.
2. Performance through individual target setting. This is a real winner,
but it carries with it a big warning. Properly set and monitored tar-
gets with big bonuses produce massive results, provided
a. that at the end of the year, the bonuses are not subjected to a
forced ranking.
b. that the bonus must be subjected to the average competence and
reliability scores being achieved.
c. that the bonus is directly aligned with organizational achievement.
3. Performance through team target setting. This has very much the
same criteria as the aforementioned, but uses a Hopper Bonus scheme
where all participants (The Team) need to meet the score requirement
for competence and reliability before any bonus can be earned.
Companies that take their eyes off of this soon find themselves in real
financial difficulty. There are three approaches to get performance; each has
its advantages and disadvantages. The first is self-motivated staff—these em-
ployees are painstakingly recruited and know what needs to be done. They
require little motivation or supervision and work whatever hours are needed.
They are typically rewarded via some form of share/stock option scheme.
The second is the managed workforce—employed but not trusted.
Management runs a strict and inflexible routine. In this instance perfor-
mance is achieved by hours worked, the manager taking responsibility for
prescribing work and making sure it is done within the time allocated.
The third and most abused is the setting of objectives and stretch tar-
gets. The old-style managers are not good at doing this and are constantly
undermined by having forced ranked bonus schemes determining who

gets what bonus at the end of the year. A consistent theme in perfor-
mance—it must be measured.
Regardless of which of the three schemes you use, the approach for
measurement is the same as for competency. Management needs to set
minimum company standards and top-end figures for performance.
As with competency (quality), no bonus or additional payments should
be made for anything below required average standard. In fact, if required
performance is not achieved, then employees’ basic salaries ought to be
reduced. Check this out carefully as it may not be legally possible, although
I think it is morally right. All of this highlights the need for adopting thor-
ough recruitment practices; for getting guidance on this, look at how good
Google are at this—and look at their bottom-line performance figures.
You may be wondering why productivity is not 100 percent on our chart.
Well, two very separate components affect this. The first is time. In a 38-hour
week—no one can work 38 hours—we have PT&C time plus a lunch break.
So at best the working week will be only 34 hours of available time.
Poor overall performance is then compensated for by the managers
who demand more staff, resulting in overstaffed organizations.
Gathering performance data is, of course, done at performance ap-
praisal. We use the same process that we do for competency information
shown in Figure 4.5.
Performance – pre set standards
Maximum standard 80%
Ave. 75%
Figure 4.5 Setting performance

standards
Now what’s important is that both competency and performance are

now on linear scales 1 to 100 perfect for AI to pick up at a later date.
Reliability—What Is It? How to Measure

and Improve It
Reliability is a dimension of value that is very rarely measured by workforce
management. So, what is reliability and why should we take it seriously?
We already know the costs of an employee and what that cost is per day. We
also know the cost of an employee per hour. Reliability is a measurement
of whether or not that person works for the hours that he or she is paid.
Unreliable people tend to commence work late, often leave early, and
have a remarkably high level of unsubstantiated sick leave.
The two critical areas for us to focus on are sickness and unsubstan-
tiated days off (either from uncertified sickness or other reasons). The
terminology makes this authorised or un authorised absenteeism but the
global tile used is reliability. Why we need to get on top of this issue is that
it cost lots of money directly and hurts employee morale indirectly. That
is why measuring reliability is increasingly an essential factor in workforce
management and reporting the cost of unreliable people is a significant
business cost factor.
When a public organization in the United Kingdom was investigated,
it was found that employees were shown to have had 895,000 days off
(was this sick leave?). With 50,000 employees, that equates to each em-
ployee having 17.9 days off on average every year.
Fortunately, mathematically it is now possible to calculate by indi-
vidual, section, or department the direct cost of reliability. This can also
be projected using our predictive workforce management tools showing
the cost over 5, 10, and 15 years. For all organizations this figure is so
significant it cannot be ignored.
For example, if one person comes to work late every day (just
30 minutes) and has 14 uncertified sick days in a year, then what is the
cost in reliability for this employee for 1 year?
£46 × 0.5 × 0.226 = £5,198
£46 × 8 × 14 = £5,152
Total cost = £10,350

If 20 percent of our 3,000 strong workforce fall into this category,

then the real cost per year is
600 × £10,350 = £6,210,000
So, for our three-time scales of 5, 10, and 15 years, that is:
5 × £6210,000 = £31,050,000
10 × £6210,000 = £62,100,000
15 × £6210,000 = £93,150,000
From work on reliability carried out over many years, these are
very conservative figures. If this does not grab your attention, then do
the calculation on the basis of A City Councils figures: 17.9 days off
each year for each of the 50,000 people. An AI system would never
have allowed this to occur; there is a lot to be said for automated
processes.
Measurement of reliability − new tools = great results
When gathering data, we use formula 2 and then the figures are con-
verted into a linear scale (Figure 4.6), so that we can correlate them for
other comparative work.
Using your facts you can now do a benchmark to find out how reli-
able your employees are and what’s the cost to the organization. It’s man-
agement’s job to rectify the fault if you have a big issue here—not yours.
You have identified the problem, costed it out, and provided the manage-
ment information on the cost to the organization. Ongoing monitoring
will make this a key human capital measurement factor.
It would be prudent to come up with a figure of where you expect the
organization to be on the chart—100 percent is not realistic.
Thus in 2017, using an existing but old formula (the Bradford for-
mula), we have mathematically adjusted the output, so that the output
Figure 4.6 0-to-100 scale set against Bradford

formula scores
runs on a 0-to-100 scale, with the indicators showing when counsel-

ing is needed, when a first verbal warning is given, when a first written
warning is given, when the next written warning is given, and when a
final written warning and dismissal is given. AI will, of course, do this
automatically.
Reliability, with competence measurement and productivity mea-
surement can now be measured as one integrated system, AI will
integrate and report on the results. The data are fed into this program
and the appropriate actions to be taken are displayed to the manager,
so that there can be no oversight, slippage, or forgetfulness to take
action.
As I mentioned before, reliability is one of three key indicators,
which together equal productivity. It is essential that any decisions on
increments, bonus, allowances, or promotion be taken only after viewing

the total picture. Very often reliability is not taken into account during
interviews or for selection and promotion. Poor reliability has a marked
effect on other employees’ motivation to such an extent that it severely
impacts on organizational efficiency if it is left unchecked.
The value of time and people—essential calculations and information
The cost of poor reliability is enormous not only in straight financial
terms, for example, in the matter of paying an employee’s salary, but also
in regard to missed deadlines, slippages, and low-quality work. Therefore,
I am sure you can see that reliability is a crucial indicator and essential for
our dashboard.
Can poor reliability be identified?
Significant evidence exists that likely poor reliability can be shown
using personality profilers.
Other research has been carried out in regard to the impact of job sat-
isfaction and absenteeism on an employee, and there seems to be clear evi-
dence of positive correlations between high-frequency absenteeism (many
short absences from work) and dissatisfaction in the job.
This further shows the importance of doing regular staff satisfaction
surveys to ensure and measure the relationship between absenteeism and
the staff satisfaction scale. This is so important that it features on our
dashboard productivity indicator scale.
Projections of lost time through poor reliability
Using formula 2 (referred to in Chapter 9) and the appropriate soft-
ware, it is possible to get a linear numeric score (0 to 100) that shows reli-
ability. Then by modeling the data using a Monte Carlo–type simulator,
you can project the reliability factor 5 to 10 years into the future and also
what the financial costs will be to the organization.
As we have seen before, we now have the data on a 1-to-100 scale,
which is perfect for our transition to AI (Figure 4.7).
Aligning Performance Appraisal for Future Needs

with AI and Other HR Processes
Ask any professional HR manager about the benefits of performance ap-
praisal and you will hear all the normal attributes—a good development
Figure 4.7 The productivity components
tool, essential to determine training requirements, a vital tool for motiva-

tion, ideal for gathering data, for setting performance objectives, and for
measuring employee competence, and a tool to justify bonus and rewards,
and so on.
The final comment is generally that it is best practice.
Ask the same question to a senior line manager, and the response will
usually be very different.
The majority of managers seem to have the view that appraisal time
does not justify the result. This is a conflict of opinion, and so who is
responsible for the output and added value of the appraisal system?
Who has responsibility for the performance appraisal?
If you decouple measurable output from performance appraisal, then
most HR professionals will put their hands up to owning the process.
However, once the term measurement output is mentioned, then the
responsibility for the process and the output seems to transfer quickly to
line management.
With performance appraisal being the single most significant tool for
objective setting and performance measurement, how can it degenerate so
quickly into an organizational orphan?
In the vast number of performance appraisal systems that are in place,
it is inconceivable that so much can be spent on a process that delivers so
little yet is still viewed as best HR practice.
This is due to a common myth that best practice must always produce
best practice results. If it is best HR practice, then perhaps any HR bonus
should be calculated on added value measurable output from the system.
As the process is a shared responsibility with the line management, the
output must form the basis of a shared key performance indicator.
Before you sign up to this being a good idea, you need to read on and
see what is involved in getting benefit from this system.
Severe defect in most appraisal systems
The operating fault of most current systems lies not just with the process
and lack of accountability for bottom-line results but with a far simpler
issue, an issue that is cheap, quick, and easy to remedy.
After speaking with over 1,000 HR professionals worldwide from a broad
spectrum of industries, it became evident to me that in the majority of cases
the focus on appraisal makes positive, measurable outcomes impossible.
The consensus seems to be that once the appraisal system is installed,
after the first year a pattern of how the appraisal runs becomes evident.
The actual time spent doing the appraisal seems to vary to within plus or
minus 15 minutes, the mean tending to be 1 hour in duration. What is of
great interest is how that time is used.
It seems that the majority of the appraisal time is spent reviewing the
previous year activities. In fact, the figure quoted amounts to a massive
80 percent, that is, 80 percent of the time is spent on looking back on
performance against objectives and identifying training needs and other
factors that should not be discussed at a performance appraisal. We term
this the rearview mirror effect (Miller 2017a).
The fault with this approach is that nothing can be done about the
past or past performance—what’s past is history, nothing will change
what’s already happened.
The only thing managers can plan for and be successful with is the
future. This obsession with the previous year’s performance and activi-
ties is the single biggest reason for the failure of appraisals. Therefore,
the rearview mirror approach is not compatible with today’s fast-moving
dynamic business approach.
Such a strong past focus leaves only 20 percent of the appraisal time
for future focus. It is, therefore, not surprising that objectives are poorly
set and little, if any, real measurement of performance is planned or takes
place. Because of this, managers are unwittingly setting their staff up for
failure.
This effect of setting employees up for failure is genuine and costly.
Training is then identified on the basis of failure or weaknesses.
When an employee fails, the feeling of failure, or of a job not well
done, pushes motivation down and hangs like a shadow of doom till the
next appraisal, so training (usually the cure-all solution) is prescribed on
the basis of a failure that happens probably 9 months before the appraisal.
Training then identified at appraisal goes through the system, and it
can be 6 months before it takes place.
To recap, in this example, a total of 15 months elapsed time has been
taken to rectify a past mistake or shortfall and provide a solution, in this
case, training. This retrospective approach to appraisal makes no busi-
ness sense and could easily be avoided by taking a different approach.
HR managers, line managers, and indeed managing directors, seem to be
unaware of the real cost of an appraisal system.
If the appraisal is the most critical goal-setting tool an organization
has, then we must be confident that it will yield a good return on in-
vestment and add value. So, let’s examine the cost of an appraisal for a
company employing 5,000 people with an average employee unit cost of
£46.00 per hour.
For each appraisal
Appraiser’s time preparing 0.5 hrs × £46 £23.00

Appraisee’s time preparing 0.5 hrs × £46 £23.00
Appraisal time for appraiser 1 × £46 £46.00
Appraisal time appraisee 1 × £46 £46.00
After the appraisal—completing documentation

appraise 0.5 hrs × £46 £23.00
After the appraisal—talking and reflecting
appraise 0.5 hrs × £46 £23.00
HR processing time for each
appraisal 5 hrs × £46 £23.00
Subtotal £207.00
3,000 employees × £207 £621,000.00
Also, it would be fair to add the cost of misdirected training identified

from appraisal. This could be as high as 70 percent of the training budget,
the cost of which would need to be added to the calculation.
In our example, we have a cost to the business of £621,000—to get
just a simple return on investment, we need to get every year £621,000 of
measurable bottom-line benefits. Can your appraisal system deliver this
type of performance?
If you go beyond return on investment to seek added value, then it
would be reasonable to expect to see a 20 percent added value every year.
In other words, every year the system is in place we should expect to see
minimum measurable benefits of £745,200. Can your system deliver this
type of business performance?
What needs to change to produce real advantage from performance
appraisal?
Producing real results from appraisal, be it development, competency
improvement, or business performance, is achievable by merely changing
the focus and emphasis of any traditional appraisal system.
The only thought any manager should have at appraisal is “How can
I set this person up to be successful?” With that thought clearly in mind,
the rest should be straightforward and fully managed by AI.
Time reviewing the past (which we cannot change) should be reduced
to 20 percent of the appraisal time—looking forward, setting SMART or
WWW objectives, and discussing success should be our prime and only focus.
At least 80 percent of focused attention must be for success in the future.
If for any genuine reason an employee (appraise) is unable to meet an
objective because of a lack of skill, knowledge, or experience, then some
form of action, perhaps training, needs to be arranged before the date of

the start of the objective.
This is a critical step that needs to be taken if an employee is to be
successful—training first before meeting an objective. New focus = new
results.
Once objectives have been set and agreed, the measurement of results
must be an ongoing, a regular, and a scheduled activity—after all, is this
not the basis of why we employ managers? This measurement must take
the form of an ongoing and performance-focused interaction between
appraise and appraiser.
The focus on everyone being successful should be the manager’s over-
riding aim. This is not easy with difficult and challenging employees, the
lazy, and the unengaged. A good manager should apply the same tech-
nique to everyone—change will happen only when trust and credibility
have been established (Miller 2017a).
Is Appraisal a Motivational Tool?

Is appraisal a motivational tool? Just ask yourself, will employees be more
motivated by failure—the old rear mirror approach; or will employees
be more motivated by success in an environment that breeds success; the
forward success-driven approach.
Motivational success through appraisal can be measured. Do some
statistical analysis such as measuring sickness levels before adopting the
new approach and then examining the sickness levels after. Also, look at
staff turnover both before the adoption of the new system and after. Staff
satisfaction surveys are also a useful indicator. Where does 360-degree ap-
praisal fit with the new model?
Three hundred and sixty-degree appraisal is yet another shining ex-
ample of what is believed to be best practice. Does it work?
How much does it cost to run the process? Is it going to be of any use
in the AI world?
The term motivation is often wrapped in with the benefits of appraisal.
If the appraisal is an essential motivational tool, then managers need help
to get the new approach right.
Performance against agreed targets needs to be measured and dis-

cussed throughout the year, with success celebrated as appropriate. Then,
when the next round of appraisals starts, the majority of employees will
be confident in the knowledge that you are focusing on making them suc-
cessful. Success breeds success.
Most managers have difficulty with setting measurable perfor-
mance targets. Although this is a vital part of the job, it is seldom
tackled with much enthusiasm. Short workshops on setting specific
objectives are an excellent way to start, using the SMART process to
help them focus.
Another good investment would be a briefing on the value of coach-
ing and using Management by Walking About, which is an excellent tool
to keep ongoing involvement in place.
A key input factor for managers’ and supervisors’ bonuses should
be based on the percentage of performance achieved during the year.
By linking directly to pay, the incentive is created to make things
happen.
Organizational Benefits
Changing the focus for appraisal is a case of everything to gain and little
to lose.
In AI terms, performance appraisal correctly focused is the hub for
most HR activities.
Some of the organizational benefits that should be seen include proj-
ects delivered on time and within budget, reduced absenteeism levels, im-
proved staff morale, reduced training budget, a more agile organization,
and lower staff turnover in the long term.
The process will clearly identify poor performing managers, supervi-
sors, and employees, and will enable a definite and measurable impact on
the bottom-line to be seen.
Although this might seem appropriate only to the private sector,
many of the benefits mentioned do map very nicely into the public sector.
There should also be a change in the way HR is viewed, as this gives a
clear indicator that HR is adding value by using business skills to enhance
business performance.
Individual Benefits
Connectivity has become an issue in the United Kingdom, with surveys

showing that staff increasingly have low connectivity with their employers.
As the new appraisal focus is based on shared responsibility for suc-
cess, there will be a greater feeling of inclusion and the possibility for
building long-term connectivity.
Rewards based on measurable performance are also fair and equitable
and will be seen as such.
Those showing potential through improved performance will be the
first candidates for development, training must take on a new and specific
role that is directly linked to achieving business objectives, which is a pre-
requisite for talented people. Finally, there will be an overall view that we
are doing the right thing and something that is worth doing—because it
is measurable and taken seriously.
The AI Impact
AI can run almost all of this process. The two critical requirements for
productivity coming out of Appraisal are Performance scores and Com-
petency scores. The former is the main feed into an AI-run bonus scheme
(discussed later in Chapter 7). Competencies determine training needs
allowing Training Needs Analysis to be fully automated (Chapter 5). AI
will also be able to manage continuity of the process and will adjust any
rouge scores. These scores are like to come from appraisal where the man-
ager gives higher scores for favored employees or training courses as a
reward.
Doing this seems very simple and it is. What AI will significantly add
is much tighter control of the process and intrinsically link this process
directly with training, evaluation, calculation of Return on Investment,
and pay and compensation.
Many HR functions have some of these data, but I have yet to see it
work seamlessly. It is a perfect fit for process redesign and for using AI.
Often a missing link will show if a performance appraisal adds value
(Figure 4.8). This would be a smooth operation for AI, and the flow of
useful management information would be truly beneficial.
Performance
appraisal
interview
Business
improvement
A.I.
Deep
learning
Compensation Trainingand Succession

and bonus Evaluation planning
Figure 4.8 The appraisal big picture
Is performance appraisal a motivational tool—sickness levels are a

good indicator of staff happiness and motivated staff—the correlation
would also be managed seamlessly by AI.
CHAPTER 5
Automating Training Needs

Analysis and Training
Evaluation
Training Needs Analysis—The Old Way. You Could

Not Make It More Complicated if You Tried!!
Uncover Performance Gaps
Gaps in performance are sometimes referred to as front-end analysis. But

since the advent of competency frameworks, nearly all of these old pro-
cesses are now redundant, along with the use of Fish Bone Diagrams,
meta-analysis for training, and DIF analysis (difficulty, importance,
frequency).
When to Conduct a Training Needs Analysis—The

Old Approach
Proceed with a training needs analysis (TNA) if you have identified that
one of the root causes of an existing performance gap stems from a per-
former’s lack of knowledge and/or skill. After all, if performers don’t know
or understand a concept, they have to be educated. The identification of
this root cause calls for an education or training solution, and TNA is the
first step to get you there.
A TNA itself is a conglomeration of multiple subanalyses; which ones
you will need to conduct will vary by situation and the amount of prior
knowledge you have. Subanalyses may include the following:
Audience Analysis—an examination of the target audience charac-

teristics, such as geographic location, prior knowledge, existing
skill set, age, interests, and so on.
Job Analysis—the breakdown of a specific job function into its
respective duties and tasks, as well as required skills, knowledge,
and competencies.
Task Analysis—the breakdown of individual tasks into their respec-
tive steps, required tools/inputs, and timing.
Content Analysis—a thorough review of any material, resources, and
input from subject matter experts about what is included in the
training.
Environment Analysis—a close look at the work environment that
will help determine what can and should be replicated in the learn-
ing setting.
Media Analysis—a determination of what delivery media make sense
given the content, audience, and design constraints.
Cost–Benefit Analysis—an analysis of the return on investment
(ROI) expected from the training.
Automating all Training Needs Analysis

for Competency-based Training
We have already discussed this issue in Chapter 4. You would need to do
some process redesign before you start applying AI. The concept is to au-
tomate TNA and training evaluation fully. This process has dumbfounded
training departments for decades; even now most training functions take
a long time to do TNA, and their best attempt at evaluation has been to
use the Kirkpatrick model designed in 1954 (Miller and Brelade 1997).
The organization needs to set standards for the minimum, average
levels required in it. This sets the parameters for scoring competencies. In
Figure 5.1, we can see that the organization has set a minimum standard
and an average. This is quite common, but this needs to be decided for
your specific organization.
Once the standards have been set, the line manager will award scores
for each competency on a 1-to-100 scale during the performance ap-
praisal. This is easy to do, as the line manager is the only person who
Automating Training Needs Analysis and Training Evaluation 81
Competency
Maximum standard
85%
Company required
ave. 70%
Figure 5.1 Competency approach—New method
observes the behavior of employees throughout the year. The definition

of a competency is
A key observable behavior.
Once the score is allocated, if the number falls below 70 percent, it

will automatically indicate that training is needed (whatever method you
use).
The process is then fully automated; a request is generated and then auc-
tioned. It’s so straightforward—no need for consultation, discussion—fix the
training, which is in line with that competency. The amount of work that this
will save in the area of training functions is massive. Also, as you will know
the unit costs for the four categories of training (AI will do this), you have
an exact record of cumulative expenditure. Likewise, if the training is for the
next financial year, the system will automatically be able to build the budget.
Fully Automating Training Evaluation

for Competency-based Training
The line manager will, of course, do an evaluation. This is the only person
who observes the employee on a day-to-day basis, and will be able to see
improvement. At the next appraisal, the amended score is entered for a
particular competency. The ROI will be automatically calculated as it is
based on the difference in scores.
For example, if an employee was identified as having a score of 60

percent in the area of decision making, he or she would automatic-
ally go for training on decision making. The course content would al-
ready be included in the competency specification, so AI would merely
cross-reference and fit the person to an appropriate course. Then later in
the year during performance appraisal, the manager would enter the new
score. Let’s say the score is 71 percent; the difference will be calculated
automatically and a financial benefit produced (ROI).
Every year one will be able to see how much total financial value the
training function has added to the organization. It is modern technology
that has made this possible.
What to Do with Performance Training?

Between 95 and 98 percent of all training in the West and the M iddle
East is competency based. Out of this percentage, not much is
performance-based training. Performance based training is all about out-
put: where the output is doing more, or doing the same work but for
less cost. There are only about thirteen performance-based courses I can
recall (Figure 5.2), and these at the moment need a proper TNA and pre-
evaluation before training takes place. What competency-based training
should do is that it must add significant financial value. At the moment
this type of training is always manually evaluated
AI will be able to do competency-based training in its entirety as part
of the integrated training process (Figure 5.3).
Performance-based training
• Managing projects to deliver ahead of target and

within budget
• Predictive workforce planning
• Re-negotiating existing contracts
• Train the trainer—to achieve more training in-house
• NLP for sales staff
• Converting cost centers to profit centers
• Setting and managing performance targets
• Innovation thinking to reduce operating costs
* Commitment budgeting to deliver
agreed budgets within or under budget
Figure 5.2 Performance-based training

Figure 5.3 Process map before AI
83

Bonus for training functions can be very quickly linked to how much
ROI these functions generate every year.
AI would also be able to rank vendors of training on the basis of the
ROI of the training they deliver, moving away from the concept that if
the delegates like the trainer, then the course must be right.
There will also have to be significant amendments in how training
is provided mainly for Generation Z or iGen. Z or iGen (Miller 2018).
The Changing Face of Training. White paper Google Scholar it is unlikely
that the traditional classroom lecture–type training will be suitable for
this group as it will make up 24 percent of the available working popula-
tion by 2020. (Workforce (2017) Will Millennial’s and Gen Z Rule the
Workforce by 2020?)
CHAPTER 6
Digital Footprints and

How They Can be Used to
Upgrade Recruitment and
Succession Planning—The
End of Testing?
Existing Recruitment Processes—Upgraded

The process approach to interviewing has been well established as a very
successful tool (Figure 6.1) for organizations for use either in the public or
in the private sectors (Miller 2017d; Budnick, Kowal, and Santuzzi 2015).
Figure 6.1 Professional recruitment process
A process approach helps avoid most of our problem areas and also
the underlying issue that managers, in the main, recruit only people they
like. That like is often made up of the most amazing preconceived ideas
that would not survive any rational audit. The process approach is a way
of having a standardized format across the organization and ensuring con-
formance to standards.
The process approach may need to be modified to fit individual, orga-

nizational needs, and that is your choice.
The process consists of nine sequential steps—each essential to the
whole objective of recruiting talented people.
Comments from recruiters are that testing and profiling take a long
time. Employers have commented that many recruiters they employ are
not qualified to do either of these two steps. The same comment, I sus-
pect, applies to most recruitment agencies.
It is here that AI will come to the rescue. In this section, we will look
at our process map step by step and examine each stage, looking to see if
using AI can do it.
Step 1: Gathering Information
The first step is about examining the job description and establishing if it
is up-to-date. This part of the recruitment process is supposed to be done
every year by the line manager or whenever the performance appraisal is
carried out.
Job descriptions seem to vary vastly, from just the briefest of outlines
to detailed documents, which specify how performance is to be measured.
Whichever description you have, one thing is critical either at this first
stage or at stage two—you must find out the key criteria for the job. This
criterion is the essence of what’s critical for the person to have or display
when he or she is in the post. It is ultimately the line manager’s responsi-
bility to provide this information and keep it updated.
Depending on where you are in the world, this goes by different
names:
• Key criteria
• Critical behavioral qualities
• Deal breakers
• Key competencies (Rowe 1995).
Step 1 can be completed by AI including ensuring that checking job

descriptions are up-to-date—this will be linked to the performance ap-
praisal tasks.
DIGITAL FOOTPRINTS 87
Step 2: Writing the Advertisement Using Essentials and

Desirables (Key Criteria)
Step 2 is where we list the key criteria, which should be available in the job
description. As mentioned before, this is sometimes referred to as the key
competencies or deal breakers. We list these in two columns; Essentials and
Desirables. This makes it easy for prospective candidates to see what’s needed
clearly and at a later stage make the job of writing interview questions easier
and more precise. It also gives us a template to do very precise short-listing.
This part of the selection process is very important as it sets the basis
for the psychological contract between the organization and its potential
employee. It is the first and basic idea that the candidate gets of what will
be expected of him or her throughout his or her stay in the organization.
Essentials Desirables
• Chartered or Certified Accountants or • MBA from Times-published top 20
Only CPAs need apply universities
• Minimum of 9 years’ experience in a • French-speaking and writing
similar industry
• English, Swiss/German written and • Current European driving license
spoken
• Management of a similar-size function
• Use of any significant database-driven
accounting software system, such as
Oracle, SAP, SAGE, Sun, or similar
• Full understanding of Swiss government
financial regulations and IFRS
• Management of the organization’s
budget cycle
• Can demonstrate successful matrix
management
• Managing teams
You need to state any other information that the candidate needs
to be aware of—where to get more information. Have the closing date
shown and always ask for a current passport type photo with the power
sentence “All short listed candidates will be tested”.
Step 3: Prewritten Interview Questions
AI can currently do all of this, including prewritten interview questions.

Short-listing Step 4
This is the first chance we get to see the response from our work to date.
If we have done an excellent job, we should not have many applicants, but
those who have applied will be of excellent quality. Nevertheless, there is
always a high possibility of having applicants who may overestimate their
abilities or try to fake some of the Essential and Desirable skills. There-
fore, it is crucial that applicants are required to attach proof documents
(e.g., certificates, diplomas, and so on).
This is the first stage of the process where bias can happen. Neverthe-
less, one has to keep in mind that these are entirely illogical arguments
and should, therefore, not play any role in the final selection.
Today’s laws will get you into court very quickly if you do not have
robust and bias-free procedures in place. It is also a critical requirement
to have a current photograph of the applicant—one that conforms to
passport requirements.
AI can do all of this, including outline checking of qualifications
(Refer to digital footprints later in this chapter), and it will be completely
bias-free.
Step 5: Testing
Step 5—testing. Can AI do the testing for us, and can it provide test re-
sults for succession planning? The answer is yes.
Why Do We Do Testing as Part of Our Process?
We know that internationally there is a widespread falsification of quali-

fications. This has been well reported in both the HR press and in inter-
national papers. One of the biggest and most widely reported was that of
Dr Obarni. Employed without any testing, he administered a fatal dose
of painkiller to one of his first patients who visited him and then fled the
country to avoid prosecution. It transpired that he had a history of unfor-
tunate medical incidents, and after a BBC investigation, it was found that
it is likely he had never qualified as a medical doctor.
Some of the falsifications of CVs are done in such a manner that it
would take private detectives months to detect them. Even if a fact on
a CV is true, like someone having a degree on a specific topic, there is

always the issue of how fresh and up-to-date his or her knowledge is. We
could examine CPE points, but have we the time, and could we trust
them?
What we are trying to establish with testing is can candidates do what
we want them to do at the level they will be working and in their specialist
area within our organization? This applies to all levels of the organization
and for all but the most simple of jobs (Miller 2017d).
About Testing and Its Development
Psychological tests have been shown to be among our most powerful aids
to the crucial problem of selecting and developing people at work. Some
researchers have shown, for example, that significant increases in the gross
national product could result from the more widespread use of tests in
selection. Testing shows us what someone can do today—it will show
how the applicants compare not only to each other but also to an external
benchmark referred to as a norm group. This can be formed either by oc-
cupation or by country data.
Tests are now well established and a part of the business selection pro-
cess. Most of the top-performing world-leading companies make use of
testing both for selection recruitment and for succession planning.
Tests are now used for all types and levels of job selection, from the
unskilled factory worker to senior management positions. Most of this
use tends to be in larger organizations, apparently not only because they
employ more staff, but also because they more readily appreciate the dif-
ficulties of obtaining top-quality employees (Miller 2017).
What Is a Psychometric Test?
An occupational test is merely a psychological test used in the world of

work. There have been numerous attempts to define what a psychological
test is. One definition of a test is as follows:
A standardized sample of behavior which can be described by a

numerical scale or category system.
Psychological or psychometric tests aim to maximize objectivity by

standardizing test conditions, instructions, time, content, scoring, and
interpretation. All quality tests require that you (the tester) be quali-
fied—this is enforced by both the British Psychological Society and its
American counterpart. Quality tests can be purchased, administered, and
interpreted only by qualified staff.
Psychometric tools can be divided into two broad categories, and
these are knowledge-based and person-based tests (Figure 6.2).
Figure 6.2 The structure of types of tests
1. If we examine knowledge-based tests first—for our needs in re-

cruitment work application— they measure ability, aptitude, at-
tainment, and most importantly, competence. These tests conform
to the same design principles which are reliability, validity, stan-
dardization, and avoidance of bias. The tests all have right or wrong
answers, and the final score is often compared with a norm group.
This ensures that you select not on the basis of the current test
group but on the basis of the industry norm at the level for which
you are testing. The tests run in strict examination conditions and
are always timed. This applies to web-based or pen/pencil face-to-
face testing.
2. Person-based tests, the other form of testing, are not widely used in
industry and commerce but have a strong following with academics.
These include IQ tests and others, which aim to measure general
intelligence.
There are all sorts of tests you can use. The skill of the professional
interviewer is to use only reliable tests that are valid for the job at hand.
Testing materials are best purchased from reputable suppliers, some
of which are as follows:
• British Psychological Society

• Saville and Holdsworth (SHL)
• The Test Agency—Hogrefe
• The Psychological Corporation
Recently, it has been widely accepted by psychologists that ability and

personality testing should be measured separately. There is no clear evi-
dence that personality and ability are linked, and as a result, we have seen
testing getting much more focused on work-related ability and knowl-
edge, while personality profilers have improved and focused entirely on
personality and how this affects one’s behavior in the workplace, despite
one possessing skills and abilities.
It is critical for good recruitment that branded tests are used, and it
would be advisable to use materials only from bona fide suppliers. This
is because such suppliers will have taken care to check that all the valid-
ity and reliability trials have complied with the British Psychological So-
ciety and American Psychological Society requirements and are entirely
defendable in case of litigation
All of this was true and accepted by psychologists up to 2017. But
what happened after that? AI—deep learning—changed everything.
From the first time you switched on a mobile phone, logged onto a
computer, or used a credit card, you started to assimilate what is termed a
digital footprint. Every one of us has one of these things; every time we use
a smartphone, I pad, P.C. laptop, or credit/store loyalty card, we are add-
ing to our footprint. This footprint can be accessed by algorithms (deep
learning) from which we can access all kinds of information. For example,
we can quickly deduce how clever you are, what books you have read,
which university or college you have attended, and so on. So, we have
this footprint that will show us very quickly just how smart you are and
what your specialty is.
What Your Digital Footprint Reveals (Figure 6.3)—

This Could Be the End of Testing
AI will also be able to cross-reference all of the data to make sure that the
candidate whom we are interviewing is not either exaggerating or tell-
ing outright lies. This is an excellent example of cognitive deep learning.
Whether this process will replace conventional testing, it is yet to be seen,
but I would ask you to keep an open mind. The providers of traditional
testing material and also recruitment agency personnel have a vested in-
terest in keeping what already exists. From the demonstrations on testing
Figure 6.3 The digital footprint

via deep learning I have seen so far, I can say that they are very impressive
and, of course, they will get better (Kosinski 2017).
With AI, we also have the means to send out regret letters to those
who fail to comply with our requirements. This part of the interviewing
process is, of course, used in conjunction with performance appraisal for
selecting people within the organization when we are looking at succes-
sion planning at different levels. Not only will we have the external digital
footprint but also the footprint that has been created while people have
been in the organization and using our technology.
This sort of technological advancement scares some people, but it is a
natural progression of all that has happened. It is we who have benefited
greatly from using what we already have and know—all made possible by
deep learning AI.
Your Digital Footprint and Personality Profiling

Personality Profiling Step 6
Personality profiling is a unique tool for the recruiter. It gives us an op-

portunity to get a reliable picture of someone’s personality and therefore
their fit into the job we have on offer. By finding about a person’s per-
sonality, the recruiter can gain insight as to how such a person will react
in a situation of enormous pressure. Moreover, the candidate’s behavior
can indicate whether he or she will be a fit for the organization’s overall
culture.
Why Do We Need This?
It is not rocket science—people whose personality is in line with their

job will be happier and should, therefore, produce better results. Now
we have the very instruments to measure personality accurately, and as
personality changes very little during one’s lifetime and especially adult
life (Costa and McCrae 1997), it is a great predictor of future behavior in
the organization.
It is surprising that the use of personality profilers is not being greatly
encouraged by universities to check that the degree and career someone is
pursuing is going to be in line with one’s personality profile.
Personality profilers give us the opportunity to see if the person ap-

plying for the job does, in fact, have a complementary personality for the
type of job he or she is applying. This is related to job fit and is not the
same as ability.
Progress of Personality Profiles up to 2017
Today’s top profilers are accurate and of immense use for recruitment,
promotion selection, and development. However, there is a note of
caution here: there are thousands of profilers who are available—most
of them are not personality profilers but type indicators. Type indica-
tors are designed to put you neatly into a pigeonhole—you are one
of these or one of those. They do not fit our requirements for inter-
viewing, and many would not pass the test if they were challenged
for relevance. Their attraction is that they are quick to do their job
and cheap, and in the main they cannot be used by highly specialized
personnel.
What Profilers Should We Use?
For the recruitment of someone up to a supervisory level, the most fre-

quently recommended test is the NEO known in America as OCEAN
and the rest of the world as NEO short for NEOAC or the EPI Eysenk
Personality Inventory. Both contain about 60 questions and, in particular,
the NEO is very fast to score. AI is now using the NEO as the personality
questionnaire of choice. This is sometimes referred to as the BIG FIVE.
For more senior personnel recruitment, development of succession plan-
ning is the most appropriate choice. Some of the best tools for it on the
market are as follows:
• NEO-PIR
• SHL OPQ32 (expensive)
• MPA (very new)
• Cattell 16PF (rather old)
• Holden HPI—sometimes tricky if feedback is needed
• Hogan scales (HPI, HDS, MVPI)
All of the profiles listed, and this is not an exhaustive list, require the
user to be qualified, either through the supplier or through the British or
American Psychological societies.
The business issue seems to be that there are not enough qualified
people to run a profile at recruitment or for succession planning, and it
takes a lot of time and money to do. I have included, in the following
paragraph, an explanation of one of the most popular and well-known
profilers. In the United States it’s referred to as OCEAN, and in Europe
as NEO, short for NEOAC.
Costa and McCrae’s Big Five NEO and NEO-PIR Costa 1997
The direct inheritors of the Eysenck and Cattelltian traditions are the
Americans Costa and McCrae, whose work in the 1980s and 1990s re-
vived the world of personality theory and testing. Working within the
psychometric trait tradition, they settled on three and then five dimen-
sions of personality. Now called the five-factor approach or five-factor model
(FFM), there is now broad agreement on the approach/model, including
between those who adopt the lexical approach—that is, those who look
at natural language and the relationship between common terms for per-
sonality traits (Goldberg, 1992). Indeed, there is an active psycholexical
tradition in personality theory that attempts to recover the basic dimen-
sions of personality through analysis of natural language. Researchers
have found convincing evidence, across various different languages, of
the emergence of similar factors that are analogous to the Big Five. What
they have not done, however, is to look at the association between person-
ality traits and work outcomes. There are vigorous critiques of the FFM,
but these have not reduced its popularity among personality researchers.
Costa and McCrae (1985) argue that there are five basic unrelated
dimensions of personality. These are Extroversion, Neuroticism, Agree-
ableness, Conscientiousness, and Openness to Experience. According to
the researchers, each individual’s personality can be described as com-
binations of the traits mentioned previously. Each of the Big Five is a
spectrum of these traits and everyone has some trait or the other in some
degree. For example, someone high in extroversion can be characterized
as an extrovert and someone very low in it as an introvert. All individuals
have different personalities because these are made of unique combina-

tions of the traits.
The second body of research compares the NEO-PI, as the question-
naire is called, with other measures. A third, perhaps the most crucial,
topic of applied research examines the validity of the measure—that is, to
examine what the test scores predict. The test has been applied to various
sorts of fields.
However, it is in the field of work that organizational behavior re-
searchers have become most interested in the FFM. It has proved to be
a robust and reliable measure. For instance, relating the NEO-PI factor
scores with four supervisor ratings, adaptive capacity, task orientation, in-
terpersonal relations, and overall rating, they found that, whereas the cor-
relations between conscientiousness and all four ratings were significantly
positive and between extroversion it was so with three out of the four (not
the overall rating), neither Openness to Experience nor Agreeableness was
related to any of the ratings.
What is clear from this literature is that, whereas some personality
dimensions are good predictors of job proficiency, not all are. This is for
at least three reasons. First, quite logically, different traits relate to dif-
ferent behaviors and, if a trait is unrelated to a particular occupational
behavior, it is unlikely that the two are correlated. Thus, high neuroticism
seems related only to negative behavior at work, such as absenteeism, but
not to such things as productivity. This was the point made so clearly
by Robertson and Kinder (1993). They showed that if there were good
theoretical reasons to suppose certain specific traits (from a large battery)
were related to specific, measurable work outcome variables, the validity
coefficients were around 0.20 but could rise to 0.30.
What Exists Now and What’s Coming

Now, back to AI and our deep cognitive learning. Our lifetime digital
footprint can give a holistic picture of our personality over an extended
period. There are some fascinating facts about the accuracy of personality
profiling using AI. The process of personality profiling using AI provides
us with a report that maps well to our prominent five personality profilers.
The information provided is, therefore, served in an acceptable format

for those used to using traditional personality profilers. Because the AI
profile information comes from our digital footprint, that is, our person-
ality information, it is much broader than ever before. The personality
information can tell us what books you read and your sexual orientation,
and can indicate your political intentions. The information available to
us is infinite. Sticking with the personality profile, just how accurate is it?
Recent Studies done at Stanford University in America and subse-
quent studies have shown that (Park et al. 2015) that is the algorithm in
deep learning just looking at your Facebook likes, will show what can be
accurately predicted.
11 likes—the algorithm will out-predict your work colleagues

100 likes—the algorithm will out-predict your family and friends
250 likes—the algorithm will out-predict your spouse.
Want to try this for free www.applymagicsauce.com

This is just from Face book; we can also get a good indication from
what you write, for example, e-mails www.IBM/Watson/developer/cloud/
personality-insights.com is such a product
However, deep learning can sample everything and is so incredibly
accurate.
The latest research and yet to be published is looking at how deep
learning can read someone’s face and from that derive one’s personality.
Although this is work in progress, already the deep learning algorithm
can accurately distinguish introverts from extroverts by merely looking
at a photograph. Our digital footprint appears to be the very best source
of data for reporting on not only our intelligence but also our personal-
ity traits to a seemingly very high level. The future in this one area alone
seems so exciting with so many possibilities, and like all deep learning
applications, the results are almost instantaneous.
Step six-personality. Can AI provide us with accurate personality profil-
ing? On the basis of the evidence to date, the answer is yes.
Profiling information is also essential for promotions, succession
planning, development, and teambuilding.
Step 7 Rechecking Prewritten Questions
There is not much to do here, but it does give you the time to check
through each of the criteria and make sure that all the knowledge-based
questions make sense. It is at this stage that the questions are written on
the marking sheets, and it must be clear who is asking the questions for
each set of criteria. It is preferable if the professional interviewer starts
off the questioning and the line manager asks all the probing questions.
Questions need to be scored at the end of each question; so it is 10 points
for a perfect answer regardless of how many probing questions are asked
(a maximum of 4 per question). Do not be tempted to add in obvious
questions. Stick specifically to questions from your Essentials list.
If any amendment is made to the interview questions by either the
manager or the HR Professional, it would be a good idea to run them
through AI if nothing else—to check no bias has crept in.
Step 8 Interview Arrangements
This is an HR activity and is best done professionally; you might be think-

ing why don’t we do the whole of the rest of the interview by AI. It is a good
question, but at the moment I do not think that society is ready for it. There
is a strong social understanding that when one applies for a job, a senior
person, the organization will interview you. It might seem old-fashioned,
but it is very much a social norm. Interviewing is more than selecting the
right person for the job; it is also a massive PR exercise. You want good
people to come to the organization and you want them to feel part of the
organization. So to get inclusion, a face-to-face interview, is desirable.
Step 9 the Interview
Our deep learning AI is capable of speech, sight, hearing, and writing,

and the possibilities of getting AI fully integrated into the face-to-face
interview are becoming real now. However, for reasons that I previously
stated, this integration might be one step too far just at the moment.
In this chapter, we have explored what AI is capable of. By any yard-
stick, it is incredible that all of the processes we have discussed so far
are interlinked because what we find out in one process will help us in
another. This is indeed a seamless integration.
CHAPTER 7
Pay and Rewards
The Automation of Pay and Bonus Systems to Provide

a Transparent Reward System—The Shift from Paying
for Knowledge to Paying for Results
We have seen in Chapter 5 how we use the performance appraisal system
to gather data; you might well say what’s new; well, in fact, a lot.
AI will be able to gather the three component parts of productivity
and present them for Pay and a Bonus reward and select only the per-
formance element for Bonus. The other two elements, Competence and
Reliability, will work in balance as a preventer to bonus if the minimum
scores are not correct.
If this system is set up correctly, it will be initially self-funding, with
no need to put artificial caps or restrictions on top performers. In the new
labor market, there is going to be fierce competition for employees who
have the right profile and skillset in the world of AI.
If we take our three inputs, then automatically it will slot employees
into the following categories:
Poor Performers—no bonus and may face a corrective action

procedure
Average performers, who could be in the lower end of the bonus
structure
High Performers, who could earn up to 800 percent over basic salary.
You need to remember when you are looking at this system that you
could be dealing with rapidly decreasing numbers of employees. The peo-
ple who will go first are the poor performers.
Worked Example
If we look again at the figures discussed in Chapter 4, each of the con-
tributors to productivity has preset minimum figures a target score.
Competency
Competency score. For employees to be eligible for bonus, their compe-

tency score must be 70 or above. Those who have their scores manipu-
lated by managers so they can have training, as a reward will find that they
have been deselected from the bonus scheme for scoring under 70.
Special provisions would need to be made for fresh graduates and col-
lege leaver’s as their competency entry score will not be high. They would
get a percentage of the rate of the job until they were competent at 70
percent. Balancing all of this would be easy for an AI system.
Performance
Managers will need help here to set stretch targets and to measure them
accurately. There will be undoubtedly more engagement from most em-
ployees, as they will realize the critical importance of getting high scores.
Managers may be better using the (2011.dashboard) method of target set-
ting rather than using SMART objectives. Progress on performance needs
to be monitored on an ongoing basis to ensure good results are achieved.
To join the bonus scheme, the minimum score we have set is 75 percent.
Once the qualifying figures are reached, the only driver for the big
bonus is Performance (Miller 2010).
Reliability
Reliability, specifically sickness, is a complicated issue. The Bradford for-

mula software seems to have got it almost right and allocates a weighting
depending on the type of sickness and whether or not it’s supported by
medical certification. What it is good at doing is picking up and applying
a significant penalty for odd days off that are uncertified.
On the reliability chart, you will see we have a converter to convert
Bradford scale scores onto a linear 0 to 100 score.
Pay and Rewards 101
On our pro former, for presets on sickness, the target attendance

is 95 percent. As with performance and competency, if you are below
95 percent, you do not qualify for a bonus (Figure 7.1).
Productivity has pre set minimum figures; a target score
100%
Competency Performance – pre set standards
95%
Ave 75%
Company required ave. 70%

0%
Reliability
Figure 7.1 Presetting your target scores
Teams
When structuring a bonus system for teams, precisely the same process can
be used; only the team will collectively have to meet the criteria. Managers
should have their bonus linked to their team’s performance but must also
meet the minimum scores themselves. AI systems will enable you to have
multiple-type bonus systems in the organization. This is particularly im-
portant for asymmetric designs where to optimize different departments
different schemes can be used. HRs who follow traditional practices would
like everyone to be on the same scheme, but the variables are limitless in
the future and will be more in tune with business needs (Miller 2017d).
The score would then be used to place you into the right category for
basic salary and bonus (Figure 7.2).
Also, AI would keep track of all the training costs you accumulated,
and with your ongoing and updated digital footprint would be able to
select you for the following:
• Removal
• A lower-level job
• Sideways move
• Promotion at the same level
• Slotted for a succession plan
Fu prais
BONUS PAID AS A PERCENTAGE OF

ap
lly
SALARY
me l
as
a
300 + %
ua
ble
nu
26 % – 800 %
me
ric
all
&my
10 – 25 %
295%
ea
su
red
f
rom
5 – 10 %
240%
Minimum Reliability level 95%
Prequalification scores
Minimum Performance level 75% before any bonus
Minimum Competency level 70% entitlement
Figure 7.2 How the data feeds bonus schemes
All of this would be done without bias or previous baggage from your
time in the company
What’s Going to Happen to Generation Z or iGen as

They Are Referred to?
There is some confusion as to who Generation Z are. Some believe that
this group comprises those who were born after 1997; if this is the case,
some have already entered the work base. This group is sometimes re-
ferred to as millennials, but this term can cover a wider band of people like
Generation X and Generation Y. So, for our present purposes, it is best to
keep these bands out and confine ourselves to Generation Z. This group
is also referred to as iGen (Workforce 2017; Figure 7.3).
So, what we know about this group of people and the data about
them are not particularly flattering. It is commonly believed (Sinek 2017)
that this group is suffering from bad parenting. This has been brought
about by some of the following factors:
1. Their parents have repeatedly told them that they are unique and as
such have grown up to have more or less whatever they ask for.
2. They have grown up in a schooling system that has rewarded them
even if they failed. This is made people who have failed feel worse
Pay and Rewards 103
Figure 7.3 The generations
and people who have succeeded have realized that they have had the
same reward as those that failed. Some people failed in schools where
they were given medals. In the cold light of day, in hindsight, this
situation is ridiculous.
3. They are also the first generation to grow up in an entirely tech-
nological world. As such, it is the first generation to expect instant
gratification like instant shopping, instant rewards, instant likes on
social media, and so on. If they want to watch a movie, it must be in-
stant, if they want to date, dating online is instant. So, these instant
expectations will transfer to the workplace where they will expect
instant gratification, instant promotion, instant success, and so on
and so forth. We all know that is not the reality of the workplace.
The evidence is that this is the first group of people who are genuinely
comfortable with multitasking and with using available technology to get
results. Despite this comfort level, the evidence is that this group is not
happy. It has a high suicide rate, some of which is linked with drug over-
dose and a propensity to drop out. Depression among this group is high.
There is no doubt in my mind that this group of talented people has
a lot to offer to society, and they will make up 24 percent of the available
workforce by 2020. This coincides precisely with the main impact of AI
and reducing numbers worldwide. The issue organizations will have to

grapple with if they are to involve Generation Z is how they are best uti-
lized in the new companies that are run with AI.
The balancing act that HR and workforce planners will have to do
now is to accommodate the three generations: Generation X, Generation
Y, and the new intake Generation Z. Overlayered on top of these are the
types of people whom you currently employ: poor performers, average
performers, and talented people. Getting the mix right for your AI-led
organization will be a complicated and vexing exercise. One thing we
are entirely sure of is that employment numbers will start to decrease;
there is no evidence that full employment will ever return. The purpose
of this book has always been to help you get the best out of your exist-
ing processes and to prepare the ground for you to excel with AI. The
complexities of employment, the reducing numbers of people required in
the workplace, and the age balance are all factors that go beyond HR and
must be sorted out by governments. Although governments have actively
been talking about sorting out the problem of mass unemployment, there
is little evidence that anything as yet is happening. The most prominent
proponents of the change are the leaders in Silicon Valley. They have iden-
tified the massive problems that are likely to come with increasing AI and
have been very vocal in their opinions about options like having universal
basic income (USB). USB was described in some detail in Chapter 2.
CHAPTER 8
New Skills Needed to

Manage This Massive
Paradigm Shift from
Traditional HR To Artificial
Intelligence Focused HR
Have You the Right Skillset?

1. There are nine critical skills needed for being successful in the HR AI
future. Rate yourself against these skills and devise for each (if neces-
sary) a plan to develop and improve yourself: Do you have a good
working knowledge of AI—specifically cognitive deep learning?
2. Can you understand basic algorithms and perhaps write them down?
(You do not have to be an IT techy to do this.).
3. Business awareness. Do you know what the key performance in-
dicators are in your organization? Can you calculate return on
investment?
4. Problem-solving. Do you have a range of techniques that you can
adapt to solve complicated issues?
5. Creativity. How do you rate your creativity? Do you use established
techniques to aid the creative process in others?
6. HR-specific professional skills. Are you an expert in HR, in all the
10 critical areas? If not, what’s your plan?
7. Forward planning. Have you got the necessary skills to do forecast-

ing on trends, correlations, and to use predictive data?
8. Professionally qualified. Do you consider yourself to be profession-
ally qualified in HR to be seen as an internal consultant?
9. Project manager. Do you have the necessary skills to set up, run, and
deliver projects on time and within budget?
The HR Job
The greatest asset of today’s HR professionals is the introduction of AI in
organizations.
Internal HR consultants are as follows:

• Employed full time by the organization.
• Likely to understand the overall business better than external
consultants.
• Sometimes more knowledgeable than external consultants. You
should know your business and industry exceptionally well. You
may also have developed an approach or methodology that is
ahead of any external consultancy group.
• Usually part of a specific function—Information Technology,
Training and Development, Finance, Business Development, In-
ternal Audit, and so on.
• Should be aware of the right language and culture of the organiza-
tion. You must know how things work and how to get things done.
• Able to identify yourself with the organization and its ambitions—
as employees you have a big emotional commitment.
• Liable to be taken for granted, or you will lack the credibility of
some external consultants.
• Prone to being too emotionally involved in an organization—thus
perhaps influencing your ability to be truly objective. This will be
a significant issue with AI, and people will be displaced, and in large
numbers
• Internal HR personnel will have to remain in the organizations
and coexist with the consequences of their advice—you will be
NEW SKILLS NEEDED TO MANAGE MASSIVE PARADIGM SHIFT 107
still around in the organization long after the external consultants

have left.
• The HR professional will be able to spread their knowledge and
experience throughout the organization—thus you can enhance
your organization’s overall capability.
Getting to Grips with the Numbers and Types

of Employees
It is essential to do a rightsizing exercise as soon as you join. This will
give you two very useful pieces of information. How many people you
need to run your organization, and secondly, precisely how many Poor
performers, Average performers, and Talented people you have. This data
will be critical when reprofiling the organization and integrating AI into
it. How to do this is referred to in How to Calculate How Many People
You Need—Including Rightsizing section of Chapter 3.
You will need to decide how the organizational mix is made up. You
will have your existing establishment currently as poor, average, and tal-
ented people. They are then split by age Generation X and Generation Y.
Also by 2020, there will be 24 percent of the available workforce of
Generation Z or iGen. Sorting out the organizational balance will be an
exciting process and an essential factor for moving into the AI era.
The Future Is Bright—For those Bold Enough

to Make Things Happen
The world is on a tipping plate. Massive change and unbelievable techno-
logical advancements are here now, and we are in the midst of the most
exciting paradigm shift ever. In this context, HR has a key role to play and
to act swiftly. Listen to those who have the knowledge; many are referred
to in this book. It’s time to excel and to be part of a very different future.
The issue of employment numbers and the future of employment is a
matter for governments to wrestle with and solve. But AI will not wait
(David and Haar 2018).
CHAPTER 9
Useful Formula and the

Productivity Dashboard
Days Worked—Formula 10 Prime Working Days

Formula PWD
In nearly all calculations about work, you will need this calculation
sooner or later (Figure 9.1). How many days do people work in your
organization? Standard reply 365, but it is not true. How many days
do your HR work? The calculation will vary from company to com-
pany; an acknowledged average is 226 days a year. When you use the
following formula, you will need to adjust the figures for an exact fit
for your company.
Figure 9.1 Formula

Days in the year 365 − (Holidays 25 + Public Holidays 10 + Weekends

104) = 226 PWD
The figure of 226 becomes the number of days for productivity calcu-
lations, business expansion, or contraction calculations and the basis for
calculating the employee standard unit cost (ESUC).
You will use this for rightsizing mainly before doing any implementa-
tion of AI.
What Is the ESUC for Days Worked? Formula 5

The ESUC is the basis of all calculations for efficiency, production costs,
and efficiency savings. This is one very emotive figure; once you understand
how it is calculated, then run it past the finance director to get the figure ap-
proved—remember, this is a rough unit cost, it is an average—not an exact
figure. It is good enough for us to do a range of calculations and predictions.
A Worked Example of Formula 5
There is a company that employs 3,000 people with a total salary bill that
includes pay, overtime, car allowance, housing allowance, and all allow-
ances, including medical and any tax contributions. In this example, it
amounts to £125,280,000.00.
You will see on the calculation that the total salary costs are multiplied
by 2. Two is the real expenses we can attribute to every employee training,
electricity, facilities, IT, floor space, company vehicles, and so on.
If you have lots of spare time, you can work this out by looking at the
annual accounts (private sector only), but for simplicity, we use 2 as the
factor. There are a few companies where the factor would be higher, such
as in Google, Apple, Facebook, and so on.
Remember, you are not the company’s mathematics department—
you need working standard figures.
We then divide the top-line total by the number of employees, which
gives us X.
X is then divided by 226 (PWD) to give you the ESUC per day, which
is the actual cost of each employee in the organization.
Useful Formula and the Productivity Dashboard 111
X (£83, 520) ESUC £369 divided by 8 (depending on country)

=
226 to get hour rate £46
Understanding these two formulas 5 and 12 enables you to take a

hard look at what people do in the time they are available for work.
I have heard few comments on calculating the PWD, but the ESUC
always seems very controversial. Often the comment from CFOs is
that it is not the way we do it—my reply is always the same to this
statement—“Well please show me the formula you use”—of course,
there is not one. In any organization with big change programs and AI
is no exception, cost–benefit and market advantage will be to of the
agenda. I suspect with AI it will be so fierce that just surviving might
be a strategy.
How Much Does Appraisal Cost—Formula 6

Performance appraisal is one of the most costly, time-intensive, and dis-
liked processes inflicted upon by employees by HR. Ask HR how much
this process costs—don’t hold your breath while waiting for the reply. The
fact is that a properly run performance appraisal is essential particularly
for workforce planners. It gives us two of our three critical pieces of man-
agement information—competency scores and performance scores. So,
like it or hate it, we need it.
The cost of a performance appraisal for a regular (not 360) appraisal is
TH × TE × ESUC = annual cost of the yearly appraisal,
where TH is the total hours spent including all processing time and
TE is the total number of employees.
ESUC is the unit cost per hour of each employee.
So, let’s examine the cost of an appraisal for a company employing
5,000 people with an average employee unit cost of £46 per hour.
For each appraisal:

Appraiser’s time preparing 0.5 hour × £46 £23.00
Appraisee’s time preparing 0.5 hour × £46 £23.00
Appraisal time for appraiser 1 hour × £46 £46.00

Appraisal time of appraisee 1 hour × £46 £46.00
After the appraisal—completing
documentation appraiser 0.5 hour × £46 £23.00
After the appraisal—talking and reflecting
on the process 0.5 hour × £46 £23.00
HR processing time for each appraisal
0.5 hour × £46 £23.00
Subtotal £207.00
3,000 employees × £207 £621,000.00
Also, it would be fair to add the cost of misdirected training identified

from appraisal. This could be as high as 70 percent of the training budget,
the cost of which would need to be added to the calculation. In our example,
we have a cost to the business of £621,000.00—to get just a simple return on
investment, we need to get every year £621,000.00 of measurable bottom-
line benefits. Can your appraisal system deliver this type of performance?
If you go beyond return on investment to seek added value, then it
would be reasonable to expect to see a 20-percent added value every year.
In other words, every year the system is in place we should expect to see
minimum measurable benefits of £745,200.00. Can your system deliver
this type of business performance?
Performance appraisal is a pivotal platform for our AI activities, pro-
viding you are not using the 360-degree appraisal. Then, the transition
should be relatively smooth.
HR and Training ROI Formula 8

Added value (actual business value created in 1 year) − total cost of activ-
ity = Added value (or loss).
This is a straightforward formula used to measure added value. It is
particularly relevant to workforce planners in the New Workforce plan-
ning arena as the value created is so high that it would be the basis for
making the department a profit center in its own right.
A very recent example would be the BMW.
Value created 7 percent improvement in productivity + reduction in
sickness − the process costs €50,000 = ROI added value
How Many People Do You Need to Run the

Organization? Formula 9
The question most often asked by CEOs and CFOs is how many people
do we need to run the organization?
The question then that needs to be asked is “Is all of the planned work
being completed?” The answer most of the time is a somewhat reluctant
one—but it is yes in most cases. If that is so, then certain assumptions can
be made and the following formula can be deployed to get a gauge of the
right size needed for the organization.
Total staff employed × PWD − (training days and Reliability total
days) = Man days needed to run the organization
The result is one of fact—that is, how many person-days were needed.
There is no suggestion that people cannot be genuinely off from work
when they are authorized as sick or that all training should stop, but the
figure gives you a baseline to work from.
In the Western world, during 2011 and 2012, in many organizations,
right-sized reductions of 20 percent have had little, if any detrimental,
effect on the functioning of organizations.
A full-worked end-to-end example is shown in Chapter 3 (see Section
How to Calculate the Rightsize of Any Organization).
There are lots of missing formulas—most don’t work, many others
have just been replaced with appropriate software packages. One of my
favorite tools as a consultant is the one devised by the late Dr Michael
Hammer—FACE.
Is the tool Fast, is it Accurate, is it Cheap to use, is it Easy to use? This
FACE is an advantageous concept to keep in mind when being part of the
New Workforce Planning. Focus on matters that will make a difference to
organizational efficiency—get the big picture—keep focus at the strategic
level—that is where the significant gains are made.
Background to the Dashboard Concept

The productivity dashboard is a significant leap for HR and is far more
in tune with what is done to produce real organizational results. The first
move in this measurement many years ago was the key performance in-
dicators. They were a good start—but just like competencies, the process
rapidly got overcomplicated as various consultancy companies sought to

sell the system—warts and all. Key performance indicators can, if one is
not careful, work against the total benefit to the organization.
The Three Productivity Indicators
In the previous chapters, we have discussed Competency, Performance,

and Reliability and know that we can measure all three (Figure 9.2). One
of the great strengths of the performance dashboard is that it is put on
display in each department, so you can see at a glance how you are per-
forming throughout the year against the target scores or presets.
Figure 9.2 Productivity dashboard
Staff Satisfaction
To recap:
Competency gives the organization quality, safety, and conformance
to standards.
Performance gives volume, speed, output, low processing cost, and
agility.
Reliability gives attendance, value, minimum headcount, and depend-
ability through stability.
These three measures give us that all-important productivity.

There is much evidence that shows that high levels of staff satisfaction
reflect in low turnover, and often but not always, higher productivity.
Measuring staff satisfaction is, therefore, a critical factor in our dashboard.
A word of caution here—be careful not to be overzealous and overdo
things; Doing a survey once a year should be ample, less, if you are in a
period of rapid change as with AI. Most organizations prefer to design
their own surveys, so make sure you are satisfied that they will give you
the evidence that you need and that the results are available on a 1-to-100
score as previously discussed. If you want to buy a ready-made solution,
you could use one of the more generic products such as the SHL compa-
nies product “corporate culture lite”.
Once the survey has been completed over some years, you could start
doing correlations with its results and see how they relate to the three pro-
ductivity drivers, Competency, Performance, and Reliability. It is unlikely
that Workforce Planning will be involved in doing the surveys, but the
scored results are a critical part of our data collection needed for various
correlation exercises.
Added Value—Formula 8
What is added value? It is the value you can demonstrate above the total
cost. We use Formula 8 HR and training ROI.
AV (actual business value created in 1 year) − total cost of activ-
ity = added value (or loss).
Workforce Planning is the most ideal department for adding value to
an organization, thereby turning it into a profit center; this department
should be closely followed, we hope, by the HR department.
The value is measured in 1 year so that it is directly linked to most
organizations’ budgetary cycle.
The role of HR has to change because of two major developments,
the changing quality of people and a growing need to measure human
capital and to develop that capital into a measurable strategic business
advantage. People are continually improving; we now have higher edu-
cation standards, greater literacy levels, and a high level of competence
with work-related IT. All this makes today’s employee vastly superior to
an employee at any other time in history. Today’s employee, therefore,

needs less management control and less process control to work effec-
tively. Given this backdrop, it is essential that the role of HR changes in
all its facets to reflect the modern-day environment.
Businesses now want an HR department that can add value, rather
than adding substantial costs. The department, in other words, must be
a profit center. Logically, if AI HR is a major player in all things related
to our most significant cost and asset—people—how could it possibly be
a cost center?
The Dashboard chart shown Figure 9.2 sets out to fix the standard for
the current financial year. In the example on the chart, we have the added
value target preset at 20 percent. If this preset was for the entire HR func-
tion, then the added value it would need to show would be a contribution
in one financial year that was 20 percent over total cost. It is up to you to
decide at what level you set the bar, start off at a manageable figure, say 5
percent, and move upward as you gain confidence and success.
In HR functions, workforce planning would be an excellent first
choice to be moved to added value results. If you had involved yourself
intimately with the AI plan, your ROI should be massive.
Process Maps—Business Processes

At some point of time when you are looking at AI, it will be necessary to
do some business process mapping. AI gives us the unique opportunity
to do things completely different. So, it is not about tinkering with what
we have got, it is a rethink of the complete process or even the abolishing
of the process.
Looking at business processes from a re-engineering point of view
gives us the opportunity to go back to a clean sheet of paper with no
preconceived ideas or limitations. Hammer described this process as a
dramatic and radical redesign approach to a process. To do a business process
map is not difficult. Organizations have spent millions with consultants
getting them to do a job that they could quickly do themselves. As this
will be one of the tools you will need to use at some point of time, it is
included in this book, not in any great detail, but enough for you to grasp
the concepts and do it yourself (Miller 2017c).
A business process map of an existing process is merely a snapshot in time.

It is a visual representation of how the process works, not how you would like
it to be. This process is usually mapped out onto paper; you can use Microsoft
Visio software which is straightforward to use and may be better for AI; my
advice is it is always better to work on paper, nearly all the professionals do as
its much easier to correct and adjust. Also, you can see the complete picture of
the process. This is particularly important when you are going to use AI as you
need to be very clear about what the inputs are and what outputs you desire.
The symbols and map are drawn onto a swimlane chart (Figure 9.3), each lane
representing a function, not a person. This is the perfect time to make sure
you have your processes mapped and where you can take advantage of im-
provements before making the switch to AI (Bandey 2018). However, don’t
believe that a half way house is the end of the road, the aim needs to be full AI.
DEPARTMENTS TIME LINE - Example
Administration
& post room)
Finance
Engineering
Operations
Figure 9.3 Swimlane
Remember, once you have your process map, what you are looking for
AI to do is to radically redesign or scrap the process. Don’t start looking
for small incremental improvements that are not what AI has to offer. I
mention this because only too often I see organizations producing pro-
cess maps and trying to impress upon management by saying we have
achieved a 5 or 10 percent improvement in the process, where if they had
redesigned, they would have got 30 or 40 percent.
In this brief illustration, the key points are symbols that represent stages
in the process (Figure 9.4). Moreover, once the process is understood, it is
mapped onto a chart so you can see the entire process as it has happened.
Main symbols
CHECK
ACTION
FILE
DELAY
DIRECTION
Figure 9.4 The symbols
In the example, we follow a simple job of distributing post in a large

office. This process is viewed once or twice, timings and numbers are
taken, and then the process of mapping it starts, so we have a process
map which we have created. When doing this, you need to be careful
that workers do not start working at a superfast rate or missing lunch or
tea breaks to impress you. What you are trying to capture is the truth as
it happens. So, if you have employees who generally stop for a cigarette
break, official or unofficial, it needs to be recorded. We are looking to
capture elapsed time. So, if the process does not finish at the end of the
day, then the elapsed time would be from the end of one day until its fi-
nalization on another day. Once you have practiced this a few times, you
will find it very straightforward to do.
The symbols we use are as follows:
The example we are using is a real company, the details of which are
shown herewith:
Postal delivery process—M. Co. America

Post received 7.30 am in the post room
Figure 9.5 The completed process map
Post opened approximately 250 items per day.

Two people are involved in this operation which takes 30 minutes.
All incoming items are recorded in a book—the book records the per-
son who sent the correspondence, the company, the topic, and to
whom it has been assigned. One person does this task, and it takes
1½ hours to complete.
Items that are difficult to handle are sent to a senior manager in Ad-
ministration who will do the allocation. This can take some time.
But if there is undue delay, the item is usually put back into the
system the next day for recording and then delivery.
When the post delivery clerk arrives, he sorts the mails, loads the post
trolley, and commences the delivery of the mail. Sorting and load-
ing takes ½ hour.
Delivery of the mail by the Post Delivery Clerk to the Four offices
as shown on the swimlane diagram figure 9.3. The time taken for
pushing the trolley from one department to the other is normally
12 minutes. Each item received is signed for 5 seconds taken per
item. When the post clerk returns to the post room, someone later
in the day checks the book to ensure that all items of post have
been signed and accounted for. If there are items for which the
recipient has not signed, then the item is written in the book for
delivery the next day. The postal clerk also prepares a handwritten
note explaining when the item was received and when it was at-
tempted to be delivered.
Don’t forget—the post room staff work 8 hours a day. They will have a
1-hour lunch break and tea/coffee breaks (15 minutes) (Figure 9.5).
This process has been in operation for 10 years, with everyone express-
ing satisfaction.
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Professional Researchers
Treglown Luke, University of Bath
Petropoulou Kelly, University College London
Toni Ann Murphy, University College London
Cui Ling Lay, University College London
Fuling Chen, Wuhan University China.
About the Author
Dr. Tony Miller, MBA, FCIPD, FinstAM, MRSH, MAPS, MBPS,
FILM, is adjunct professor specializing in productivity improvements
through people and Artificial Intelligence (AI). In the past few years, he
has had twenty books published, one of which is in Chinese. Well trav-
eled, he has worked around the world, in 36 countries in the past ten
years, including the United States, and has acted as a specialist consultant
for many top companies. His ability to continually create outstanding
performance through people has resulted in his appearing on TV regu-
larly; he designed a mathematical model to enable any organization to
calculate precisely how many people it needs, essential for any implemen-
tation of AI applications. He is much sought after as a speaker and runs
master classes and management briefings on introducing AI for organiza-
tional improvement.
Index
Note: Page numbers followed by f indicates figures.
Added value, 112, 115–116 analysis and problem-solving,

Aging workforce, 11–12 60–61
Algorithm, definition of, 7 communicating and influencing, 61
Apple, 7 competency framework, concept
Artificial intelligence (AI) of, 57
case studies, 8–10 competency standards, setting, 63f
cognitive engagement, 6 competency unit, 58
cognitive insight, 5–6 definition of, 57
deep neural network, 4f delivering results and quality, 60
development steps, 2f example of, 58–59
historical development of, 1–4 ingredients, understanding, 56–58
HR processes with, aligning, 55–78 key points about, 63–64
impact of, 77–78, 78f leadership, 62
mathematical neuron, 3f organizational efficiency, processes
performance appraisal with, added to, 56f
aligning, 55f, 70–75 organizational requirement of, 58
process automation, 5 structure of, 59f
productivity components, 71f Competency-based training
significant factors of, 2 training evaluation for, 81–82
traditional HR to AI focused HR, training needs analysis for, 80–81
105–107 Content analysis, 80
types of, 4–6 Core skills, definition of, 38
Asymmetrical organizations, 45, 45f Costa and McCrae (1985), 95–96
Audience analysis, 80 Cost–benefit analysis, 80
Axiom, 2 Crédit Mutuel, case study, 8
Basic income. See Universal Basic Depression, 103

Income Digital footprint, 92–93, 92f
Basic Income Earth Network (BIEN) Downsizing, 50
principle, 13
Basic income guarantee, 14 Employee standard unit cost (ESUC),
Big Data, 2, 8 110
BIG FIVE, 94, 95 Employment numbers
Bonus schemes, 101–102, 102f aging workforce, 11–12
Bradford formula scores, 69f, 100 fewer hours of work, 13
massive impact for, 11–15,
Cognitive engagement, 6 12f, 16f
Cognitive insight, 5–6 universal basic income, 13–15
Competency Environment analysis, 80
128 INDEX
Facebook, 7 performance/competence and

FACE principle, 29, 113 reliability, 26–27
Five-factor approach. See Five-factor planning, 26
model (FFM) reengineering, 25
Five-factor model (FFM), 95 strategic input, 24–25
5 FORCES, 24 survey, 28
Formulas trends, 26
formula 10, days worked, 109–110 workforce planning and trends, 26
formula 5, ESUC for days worked, HR strategy, need for, 15–22
110–111 HR role at critical levels, 17f
formula 6, cost of performance HR strategic schema, use of, 21–22
appraisal, 111–112 mission statement, 18–20
formula 8, HR and training ROI, operating plan or business plan, 21
112, 115–116 overview of, 15–18
formula 9, people need to run strategy, 20–21
organization, 113 timelines for, 22
Fox Bots, 6 vision, 18
Fox Conn, 5 Human resources (HR)
Front-end analysis, 79 artificial intelligence, introduction
of, 106–107
Generation X, 102–104 employment numbers, massive
Generation Y, 102–104 impact for, 11–15
Generation Z, 84, 102–104 end-to-end working process, 40–41
Google, 47 future of employment, 107
Google Tenser Flow, 7 getting to grips with employees, 107
internal HR consultants, 106–107
Hopper Bonus scheme, 65 reality, 11
HR strategic action, 28–40 role at critical levels, 17f
6 S model, 30–31, 31f skillset required for, 105–106
basic concept of, 32 strategic action, 28–40
creativity, 29–30 strategic approval, 28
deliverables, 37–39 strategic mix, 28
dependencies, 39–40 strategic schema, use of, 22–28
overview of, 28–29 strategy, need for, 15–22
process of, 32–34 traditional to AI focused, 105–107
risks, 39
scope of, 36 iGen. See Generation Z
strategic action plans, background iGen Workforce (2017), 102, 103f
to, 34–36
training program directed towards Job analysis, 80
product areas, 36–37 Job retention, 27
HR strategic schema, use of, Job security, 27
22–28
actions, 27 Key performance indicators, 113–114
alignment, 27 Korean Air, case study, 9–10
future requirements, 25
HR strategic map, 23f Media analysis, 80
overview of, 22–24 Microsoft, 7
INDEX 129
Millennials, 102 Performance-based training, 82–84,

MILLER model, 24–25 82–83f
Miller/Sporlein model, 30–31, 31f Performance data
gathering, 66
NASA, 5 managed workforce, 65
NEOAC, 95 measurement and automation of,
NEO-PI, 96 64–66
Neuro networks, 3, 4f objectives and stretch targets,
Norm group, 89 setting of, 65–66
performance expectations, 64
OCEAN, 95 performance standards, setting, 66f
Organizational design self-motivated staff, 65
asymmetrical organizations, Performance measurement, 100
45, 45f Personality profiling, 93–97
founding companies using form of, need for, 93–94
46–47 profilers for use, 94–95
future of, 47 progress of, 94
people-centric organizations, PEST analysis, 24
45–48, 46f Process automation, 5
ratios, 48–49 Process maps
symmetrical organizations, 44, 44f business, 116–120, 119f
traditional organizations, history of, Swimlane chart, 117, 117f
43–44 symbols representing stages, 118,
types of, 44–48 118f
Process re-engineering, 25
Pay and rewards Productivity dashboard
bonus schemes, 101–102, 102f added value, 115–116
competency score, 100 overview of, 113–114, 114f
employee categories, 99 productivity indicators, 114
Generation X, Y and Z, 102–104, staff satisfaction, 114–115
103f Productivity indicators, 114
pay and bonus systems, automation Productivity measurement, 55
of, 99 Profiling information, 97
performance measurement, 100 Psychological tests, 89
reliability, 100–101 Psychometric tests
target scores, presetting, 101f knowledge-based, 90
transparent reward system, 99 overview of, 89–90, 90f
People-centric organizations, 45–48, person-based, 91
46f
Performance appraisal Quantum Computers, 7
with artificial intelligence, aligning,
55f, 70–75 Rearview mirror effect, 72
individual benefits, 77 Recruitment processes
as motivational tool, 75–77 advertisement using essentials and
organizational benefits, 76 desirables, writing, 87
severe defect in, 72–75 digital footprint, 92–93
Performance appraisal, cost of, gathering information, 86
111–112 interview, 98
130 INDEX
Recruitment processes (continued ) Symmetrical organizations, 44, 44f

interview arrangements, 98
personality profiling, 93–97 Target scores, presetting, 101f
prewritten interview questions, 87 Task analysis, 80
process approach, 85–86, 85f Traditional organizations, history of,
rechecking prewritten questions, 98 43–44
short-listing, 88 Training evaluation, automation of,
testing, 88–92 81–82
Reliability, 100–101 Training needs analysis (TNA)
Bradford formula scores, 69f audience analysis, 80
definition of, 67 automation of, 80–81
measurement of, 67–70 competency approach, 81f
poor, cost of, 70 content analysis, 80
Return on Investment (ROI), 27, 81, cost–benefit analysis, 80
82, 84 environment analysis, 80
Rightsizing, 50 job analysis, 80
calculation of, 51–53 media analysis, 80
Robot economy, 14 old approach, 79
performance gaps, 79
Self-thinking, 3 task analysis, 80
6 S model, 30–31, 31f Transparent reward system, 99
Staff satisfaction, 114–115 Triple W objective setting©, 32–33
Strategic action plan
deliverables, 35 Universal basic income (UBI)
dependencies, 36 cost of, 15
example of, 36 definition of, 13
overview of, 34–35 driving, 14
plan, 35 implementation method, 13–14
risks of, 35 need for, 14
scope of, 35
sign off, 36 Woodside, case study, 8
sign on, 36 Workforce planning, 115
Swimlane chart, 117, 117f WORKING from HOME, 26
OTHER TITLES IN THE HUMAN RESOURCE MANAGEMENT
AND ORGANIZATIONAL BEHAVIOR COLLECTION
• Conflict and Leadership: How to Harness the Power of Conflict to Create Better Leaders
and Build Thriving Teams by Christian Muntean
• Creating the Accountability Culture: The Science of Life Changing Leadership
by Yvonnne Thompson
• Managing Organizational Change: The Measurable Benefits of Applied iOCM
by Linda C. Mattingly
• Lead Self First Before Leading Others: A Life Planning Resource by Stephen K. Hacker
and Marvin Washington
• The HOW of Leadership: Inspire People to Achieve Extraordinary Results
by Maxwell Ubah
• Leading the High-Performing Company: A Transformational Guide to Growing Your
Business and Outperforming Your Competition by Heidi Pozzo
• The Concise Coaching Handbook: How to Coach Yourself and Others to Get Business
Results by Elizabeth Dickinson
• How Successful Engineers Become Great Business Leaders by Paul Rulkens
• Redefining Competency Based Education: Competence for Life by Nina Jones Morel
and Bruce Griffiths
• Creating a Successful Consulting Practice by Gary W. Randazzo
• Skilling India: Challenges and Opportunities by S. Nayana Tara
• Redefining Competency Based Education: Competence for Life by Nina Morel
• No Dumbing Down: A No-Nonsense Guide for CEOs on Organization Growth
by Karen D. Walker
• From Behind the Desk to the Front of the Stage: How to Enhance Your Presentation Skills
by David Worsfold
• Virtual Vic: A Management Fable by Laurence M. Rose
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BUSINESS STUDENTS Tony Miller
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Artificial intelligence (AI) will change the world, as we know it
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Human Resource Management and

Organizational Behavior Collection

The New World

Dr. Tony Miller

All rights reserved. No part of this publication may be reproduced, stored

First published in 2019 by

ISBN-13: 978-1-94944-302-8 (paperback)

Business Expert Press Human Resource Management and Organizational

Collection ISSN: 1946-5637 (print)

Cover and interior design by S4Carlisle Publishing Services Private Ltd.,

First edition: 2019

Printed in the United States of America.

Chapter 1 What Is Artificial Intelligence and What

By 2027 every process will be managed by A.I. (Bauckhage 2017,

By 2027 70% of all S&P companies will have disappeared.

60% of all professions will be affected by automation. (McKinsey

Where are we now?

Every step had to be written in

The computer learns by

The deep learning

Figure 1.1 Significant development steps

1. The first is what we refer to as Big Data. We now can manipulate

The formula then is

BD + HPC + DLS = AI.

Figure 1.2 A mathematical neuron

Hidden layer Hidden layer Hidden layer

Figure 1.3 Deep neural network

in everyday tasks, such as a recipe to bake a cake or a do-it-yourself

The Different Types of AI

Process automation is probably the easiest to understand and is the au-

This is where AI technology is used to interact with us humans. Ex-

AI Today and Case Studies

Computer algorithms, deep learning models are now way too

such a big challenge and opportunity. Some assistance to use AI may be

• Google Tenser Flow. It is the AI software that Google uses, and it is a

Russian President Vladimir Putin, in a CNN interview, made the fol-

‘Artificial intelligence is the future, not only of Russia, but of all

Algorithms feed AI; this is an entirely different technique that is used

An algorithm is a detailed series of instructions for carrying out an

AI and Some Case Studies from IBM Watson

Before Watson took charge, Woodside’s engineers spent up to 80 percent

To conclude this chapter, here is an exciting quote from Elon Musk:

‘I am quite close, I am very close, to the cutting edge in A.I. and

Human Resources—On the

The Massive Impact for Employment Numbers

The Aging Workforce

Figure 2.1 Massive change

In the United States, 16.6 percent of the population will be over 65 by

• Governments are probably unlikely to be able to support the aging

Fewer Hours of Work

Thanks to the rapid advancement of technology, like the use of robotics,

Universal Basic Income (UBI)

1. Periodic: Distributed in regular payments

In the most common UBI implementation method, equal periodic

amount is gauged for subsistence: enough to take care of the individual’s

Who Is Driving UBI?

Why Do We Need It?

Are People Happy at Work?

What Do the Figures Look Like, and Are They Viable?

The cost of UBI is often misunderstood and greatly exaggerated. A simple,

• less than 25 percent of the cost of current U.S. entitlement

The average net beneficiary is a family of about two people making

The Need for HR Strategy Now

WORKING from HOME—What are the current trends and how

Training—training budget required for future, the anticipated investment