Last week I read an article about how a lot of people hate marketing and it made me remember how that function has undergone an amazing transformation in the past few decades.
It used to be that marketing was this group inside your company that spent a ton of money, and it was a bit unclear of where that all went. Hence the cliche “Half the money I spend on advertising is wasted; the trouble is, I don't know which half.”
As a result, they weren’t all that trusted. CFO’s tried to limit their budget, CEOs/Sales were consistently frustrated with marketing, and they were in general not as high up in the power structure of your typical company.
Fast forward to today and marketing is one of the most powerful parts of any business. They have tons of resources, discretionary budget, the internal juice to try new initiatives, etc.
Why did this happen? Over the past few decades, we stopped wondering which half of our marketing spend was going to waste, and started focusing on new streams of data that told us what was working and what wasn’t.
Instead of a billboard campaign with nebulous ROI, we could tell which clicks led to which conversions, referrals, higher LTVs, etc.
With this deeper understanding, it made sense to have more resources in marketing - if we can figure out how to increase click through rates (CTRs) on our facebook ads by .05%, we can save $1 million next year! So, let’s do all we can to increase CTRs!
New talent flooded into marketing (data scientists, finance gurus, product and engineering), and the existing professionals either upskilled or faded into the horizon.
The next evolution in PeopleOps
Last week I was on a podcast and the host asked me for predictions. I‘m always happy to speculate on the future and made two: 1) social media is our generation’s cigarettes, and 2) in 10 years the extreme under resourcing of HR departments today will be looked back on as insanely dumb.
I don’t think many people would argue that (unfortunately) HR departments are mostly thought of as cost centers that don’t drive a whole lot of value to the overall business. There are exceptions to this rule, and many of them are in organizations where HR has been rebranded to People Operations.
PeopleOps has different responsibilities in general than HR, gets paid more, and has more of a “seat at the table” than HR has traditionally. Most PeopleOps leaders I talk to do a lot less lamenting about the budget they can’t get or the initiative no one will trust them with.
If you read our blog/newsletter, you’re probably one of these people whether your title is HR or PeopleOps. And, you may already be convinced that this evolution is happening.
The counter argument is that, we just went through a 10 year bull market where unemployment was insanely lower for years. HR was more important than ever and should’ve changed a lot, but it really didn’t transform.
The same conversations are being had - whether it’s a Head of HR needing a year to get buy in from the CFO to get an ATS, or a company that needs to hire expensive third party recruiters to augment an underperforming TA team.
So, if extremely low unemployment and massive innovation across most businesses didn’t lead to a transformation in HR, why do I think we’ll be in such a different place in the next 10 years?
The answer is analytics and ROI
Marketing changed so much because all of a sudden you could measure the return on investment from your efforts. Increasing CTRs through better copy, finding and exploiting new channels, driving higher conversions throughout the funnel via automation - more input led to a lot more output that was super measurable.
Imagine if all of the efforts in People were as easily tied back to a hard return on investment that the rest of the business could appreciate. Would you have to fight for budget? Would you need to spend a year convincing someone that you needed a basic system like a modern ATS? No.
While it’s been incredibly hard to measure the ROI from many HR efforts historically, it’s now getting a lot easier. In fact, we’ve put together a bunch of ROI calculators for lots of different HR initiatives that previously seemed hard to measure.
Some companies have dedicated People Analytics teams to measure this. Those same data scientists that were going into marketing for the first time 15 years ago are now trickling into HR.
Some HR Tech vendors now have analytics that are ROI focused - your cost per hire changed by X, your time to fill changed by Y, your retention went up Z.
And, we’re seeing more and more People leaders who understand this stuff. Some are coming from the outside (a Harvard Business School student told me last month that three of his sectionmates want to go into HR!), and many are PeopleOps pros who are upskilling in this new paradigm.
People are most companies’ largest expense each year, and largest asset. McKinsey, Google, and Goldman figured out a few decades ago that it made a lot of sense to invest in PeopleOps to maintain their advantage. Newer (mostly tech) companies have figured out the same thing.
Now, it’s simply a matter of time before every insurance company, fast food chain, construction firm, etc has analytical People leaders driving measurable results.
Just think about the ROI from: increasing 90 day retention a few percent, ramping sales hires 2 weeks faster, hiring more 10x engineers, aligned comp plans, etc. The ROI from each is massive (much higher than increasing CTRs!), and now measurable. You just need the right systems, and the right people.
The future of People Ops
What this means is that it’s a great time to be in PeopleOps! We’re getting more internal juice. And, we’re making a greater impact on our organizations and employees as a result - it’s a virtuous cycle.
If you’re a talented business person, there are more opportunities than ever to jump into the People function. If you’re in HR, there are so many ways to expand your skill set to match this new paradigm.
It’s also more broadly a great time to be in the HR Tech ecosystem. Shorter sales cycles from more sophisticated buyers means better funded companies that have better products. The rising tide lifts all ships!
I hope this post wasn’t derogatory to any HR practitioners out there. The function has been under-resourced, overworked, and overlooked for too long. The work everyone has done collectively has laid the groundwork for this shift in power where everyone can benefit.
I’m actually feeling very optimistic that many of the HR people in my network will finally get the recognition they deserve, while also getting a larger opportunity to make a dent at their firm - how about you?