Eszter Debreczeni: The Future of Work and the Augmented Enterprise: How to prepare together to thrive in the age of Artificial Intelligence?

1. HOW TO PREPARE TOGETHER TO THRIVE IN THE AGE OF ARTIFICIAL INTELLIGENCE? THE FUTURE OF WORK AND THE AUGMENTED ENTERPRISE: People Analytics Conference, 9 December 2022 Eszter Debreczeni Partner – AI-Ready Organization and Culture PHI Institute for Augmented Intelligence – 2022 – All rights reserved

2. Love is in the AIHR... Founder and CEO Partner – AI- Ready Organization and Culture Corporate HR Leader 2000 2017 2021 e s z t e r . d e b r e c z e n i @ e s t h r a . c o m e s z t e r @ p h i . i n s t i t u t e E s z t e r D e b r e c z e n i - L i n k e d I n Budapest Munich PHI Institute for Augmented Intelligence – 2022 – All rights reserved

3. OUR STORY 166 cities from all over the world Berlin 3 Bucharest 3 Delhi 3 Los Angeles 3 Seattle 3 Mississauga 4 New York 4 Bangalore 5 Dallas 5 Norristown 5 Sydney 5 Toronto 7 Budapest 12 Who we are What do we want Where are we from PHI Institute for Augmented Intelligence – 2022 – All rights reserved

4. AGENDA PHI Institute for Augmented Intelligence – 2022 – All rights reserved • Setting the stage • Welcome to the Age of AI – The Era of Exponential Changes WORK – WORKFORCE – WORKPLACE ORGANIZATION - ENTERPRISE • Connecting the dots - With embHRacing Responsible AI in the Augmented EnterprAIse WHY important, HOW to do it well Maturity matters HR and AI intersections Why NOW - The EU AI Act • Let’s get ready!

5. SETTING THE STAGE • The context, the examples come mostly from the medium/large enterprise perspective and have a major HR/People function focus – plus having the AI_Ready organization as a North Star in mind • There will be a People Analytics in start-ups session later at the conference FROM TO Why PA/AI are important How to do it well Data-enabled AI-fueled Tool(s) Impact Inward View – Functional Excellence Both internal and external intelligence Productivity - Innovation Competitiveness – Customer centricity - Compliance Survival modus Thrive – Learn from the best Wait and see Prepare and drive Today’s intention PHI Institute for Augmented Intelligence – 2022 – All rights reserved

6. WELCOME TO THE AGE OF AI AI is proven has proven itself for business AI is the fuel of the augmented enterprise AI adoption revealed a broad set of new risks High reward-High Risk –High Complexity The state of AI in 2022--and a half decade in review | McKinsey December 2006 us-ai-institute-state-of-ai-fifth-edition.pdf (deloitte.com) – 2022 PHI Institute for Augmented Intelligence – 2022 – All rights reserved

7. THE ERA OF EXPONENTIAL CHANGES WORK – WORKFORCE - WORKPLACE* ORGANIZATION / ENTERPRISE *Due to time constraints, we won’t go into details about the workplace, and hybrid-work PHI Institute for Augmented Intelligence – 2022 – All rights reserved

8. FUTURE THE NEW WAY OF WORK Source: https://www.idc.com/promo/future-of-x/work “Organizations are waking up to value focus” “Are you working for work’s sake or creating value?” https://www.mckinsey.com/capabilities/people-and- organizational-performance/our-insights/in-pursuit-of-value- not-work Oct 24, 2022 PHI Institute for Augmented Intelligence – 2022 – All rights reserved

9. How will we redesign work to enable talent to flow as seamlessly as possible while enabling its perpetual reinvention? How will we re-envision the talent experience to meet talent where they are and on their own terms? How do we prepare leaders, workers, and HR systems for this new world of perpetually upgraded work, while continuing to build sustainable employment practices? REDESIGNING WORK FOR VALUE CREATION https://www.mercer.com/our-thinking/career/work-design-4-0-and-what-we-can-expect-next.html • Understand how digitalization and automation will transform work • Start with the work (current and future tasks), not the existing jobs. • Combine humans and automation. • Consider the full array of human work engagements (employment, gig, freelance, alliances, projects or alternative work arrangements). • Allow talent to "flow to work” versus being dedicated to fixed, permanent jobs. “Redesigning work in your organization in a meaningful and sustainable way allows you to navigate new ways of working with much more agility and efficiency. 1 2 3 PHI Institute for Augmented Intelligence – 2022 – All rights reserved

10. WORK DESIGN - USE CASE Source: https://www.imercer.com/Portals/0/uploads/Global/pdf/Mercer-Work-Design-Brochure.pdfesign (imercer.com) Deconstruct jobs • Analyze the tasks and activities that underpin jobs and workflows. • Identify tasks that are best suited for automation or redeployment to alternative talent. • Smart analysis shows how your choices will impact work in your organization Redeploy tasks • Determine which task delivery can be enhanced through automation or other means including gig work, internal talent marketplaces, outsourcing, shared services and more, and understand the impact on your organization. Reconstruct work • Create new jobs and workflows based on the new work options. • Discover the skills you need for more efficient and sustainable operation. What type of automation? • Robotic Process Automation • Cognitive automation • Social robotics What role will automation play? • Augment human work • Transform human work • Substitute human work PHI Institute for Augmented Intelligence – 2022 – All rights reserved

11. SHIFTING TO SKILL-BASED WORK DESIGN Source: https://www.deloitte.com/content/dam/assets-shared/legacy/docs/Deloitte-Skills-Based-Organization.pdf What do you believe is the best way to organize work to create value for workers and the organization? PHI Institute for Augmented Intelligence – 2022 – All rights reserved

12. WORKFORCE – WHY SKILLS MATTER? What benefits do business and HR executives hope to see from a shift from jobs to skills? Source: https://www.deloitte.com/content/dam/assets-shared/legacy/docs/Deloitte-Skills-Based-Organization.pdf PHI Institute for Augmented Intelligence – 2022 – All rights reserved

13. Data, People Analytics and AI are the cornerstones of modern workforce planning INTELLIGENT WORKFORCE PLANNING Internal sources of intelligence • Business Strategy Documents and Plans • Business Leaders • Recruiting/Sourcing Team (Including Candidate Surveys or Focus Groups) • Learning and Development – Skills • HRIS Data • Marketing insights • Finance Data • Employee (Survey, Focus Group) • Government data • Available public or applied research • Advisory companies • Labor market data providers. External sources of intelligence Source: Gartner for HR Sources of Workforce Planning Intelligence PHI Institute for Augmented Intelligence – 2022 – All rights reserved

14. „Organizations are increasingly placing skills, rather than jobs, at the center of the way work gets done” According to a global Deloitte survey of more than 1,200 professionals (1,021 workers and 225 business and HR executives around the world – Released in 2022 WORKFORCE – SKILL-BASED APPROACH https://www.deloitte.com/content/dam/assets-shared/legacy/docs/Deloitte-Skills-Based-Organization.pdf Technical abilities (or hard skills) Human capabilities (such as emotional intelligence) Potential (including latent qualities, abilities) Adjacent skills may be developed and lead to future success) Indeed, we see the word coming to encapsulate what makes workers unique individuals with an array of skills, interests, passions, motivations, work or cultural styles, location preferences and needs, and more... PHI Institute for Augmented Intelligence – 2022 – All rights reserved

15. AREA FROM TO USE CASES Deploying skills to work Role-based vertical and horizontal moves based on the job experience Using AI to match skills to work and teams—inside or outside of the organization • Mastercard: matching employees to high-priority tasks anywhere in the org. After manually matching in 2020: scale up the initiative by implementing an AI-powered talent marketplace. • IBM: uses AI to suggest optimal sales teams based on skills and other attributes of people, predicting win probability based on team formation. Performance management Recognizing and promoting people based on job performance Recognizing and promoting people based on skills development and weaving it into performance discussions • Tenable Cybersecurity firm: usng AI tools to analyze videos and score sales representatives on personality, coverage of key topics, and more; managers can harness the data for coaching and performance development. Career and Development Job-based vertical/horizontal moves based on job experience and learning assigned or suggested based on one’s job and career path AI-powered suggestions of career paths+opps anywhere in the org based on skills, adjacent skills, interests, potential, personalized learning, development, reskilling opportunities suggested based on skills and skill gaps • French insurance financial services firm: they developed a virtual career assistant that uses AI to mine employees’ skills and interests to determine their most suitable jobs—and where training could help them pursue new opportunities. SKILL-BASED SHIFTS – USE CASES Source: https://www.deloitte.com/content/dam/assets- shared/legacy/docs/Deloitte-Skills-Based-Organization.pdf Find additional use cases in the Appendix PHI Institute for Augmented Intelligence – 2022 – All rights reserved

16. • Dolbysorround (high purpose- high human – high tech) decisions • Ecosystems way of thinking • „Boundariless“ - opportunities and challenges • Network Mindset • Shifting focus – formal, informal, value-adding reality THE FUTURE (PRO)OF ORGANIZATION PHI Institute for Augmented Intelligence – 2022 – All rights reserved

18. RAI became a fundamental competitiveness cornerstone and a conscious strategic advantage chosen by global winners. It is proven to boost directly WHY RESPONSIBLE AI 94% of C-Suite executives agree now that doing AI responsibly will produce greater ROI for shareholders. • revenue • product quality • talent attraction and retention • customer satisfaction • brand reputation • and trust PHI Institute for Augmented Intelligence – 2022 – All rights reserved

19. We define Responsible AI as a cutting-edge repertoire of • Mindsets • Capabilities • Frameworks • Principles • Policies • Toolsets • Processes to ensure that AI systems are developed and operated responsibly to achieve transformative business impact while maximizing benefits and minimizing risk and harm for the enterprise, society, and planet. WHAT IS RESPONSIBLE AI These are all beyond technology and have a great extent of Organization-Culture–People relevance PHI Institute for Augmented Intelligence – 2022 – All rights reserved

20. Responsible AI (RAI) means an AI adoption strategy that is built with all business opportunities in mind that can enable a leap forward from “the proof-of- concept limbo” to seamless, continuous execution designed to elevate internal resources to build long-term capabilities while harvesting low-hanging fruits minted and executed with the thoughtful choice of long-term protection against potential governance, compliance, and ethical landmines, risks, backlashes, and losses. HOW TO DO RESPONSIBLE AI WELL PHI Institute for Augmented Intelligence – 2022 – All rights reserved

21. START WHERE YOU ARE – AS ORGANIZATION/1 Digitization Digitalization Digital Transformation Artificial Intelligence The digital transformation continuum PHI Institute for Augmented Intelligence – 2022 – All rights reserved

23. START WHERE YOU ARE – AS ORGANIZATION/2 The 8 dimensions of growth Transforming the organization to unlock the potential in AI requires a balanced approach: technological and organizational dimensions are equally important. The 6 stages fulfilling the potential of AI The 6 stages help to set the perspectives of the way forward in both AI-related and organizational growth potential. PHI Institute’s AI-maturity Model PHI Institute for Augmented Intelligence – 2022 – All rights reserved

24. THE OTHER SIDE OF THE COIN “For every 1 dollar spent on technology, there are another 9 to 10 dollars needed in organizational design and employee training” Erik Brynjolfsson Stanford Digital Economy Lab Director PHI Institute for Augmented Intelligence – 2022 – All rights reserved

25. START WHERE YOU ARE - AS PA TEAM https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/how-to-be-great-at-people-analytics The best people analytics teams may take one step back for every two steps up, but their trajectories are always upward. PHI Institute for Augmented Intelligence – 2022 – All rights reserved

26. „Asking the right questions and getting the right frame can – before you get more advanced forms of analytics on it –bring a fact-based and broader lens to make sure we’re having the right conversation.” Bryan Hancock Partner at McKinsey and Company PHI Institute for Augmented Intelligence – 2022 – All rights reserved

28. HR AND AI - INTERSECTIONS FOR IMPACT HR AND NEW WORK READINESS Reinventing the HR/People function and the Way of Working • AI solutions in the HR Function (beyond Data-driven HR) • AI solutions in Digital Workplace, Employee Experience New Work How can I augment my HR Function and how do I apply AI in the world of work? KEY QUESTION: TALENT READINESS Individual and organizational capability – skill based • AI Talent and AI(age) ready talent) – hiring, developing, retaining • Re-skilling, Upskilling How do I develop long- term organizational capabilities, that enable us to succeed in the Age of AI? ORGANIZATIONAL READINESS Augmented Organizational Intelligence, futureproof org design and unleashing the value-creation of running AI- adoption initiatives • AI Readiness • AI-Ready organization and culture/mindset • Thoughtful. AI-enabled organizational design (automation/augmentation) How to extend our collective intelligence, build thoughtfully futureproof organizations, and maximize the success of AI adoptions? PHI Institute for Augmented Intelligence – 2022 – All rights reserved

30. The EU AI Act will have significant implications for companies wishing to use AI in their HR work. The goal is to enforce the legally compliant (non- discriminatory) use of AI WHY NOW? CALL TO ACTION: THE EU AI ACT Unacceptable Risk High Risk Limited Risk Minimal Risk Prohibited Permitted subject to compliance with AI requirements and ex-ante conformity assessment Permitted but subject to information/transparency obligations Permitted with no restriction The Act | The Artificial Intelligence Act PHI Institute for Augmented Intelligence – 2022 – All rights reserved

31. MAJOR HR AI APPLICATIONS ARE HIGH RISK!!!! Unacceptable Risk High Risk Limited Risk Minimal Risk Prohibited Permitted subject to compliance with AI requirements and ex-ante conformity assessment Permitted but subject to information/transparency obligations Permitted with no restriction AI for • recruitment or selection of natural persons • making decisions on promotion and termination of work-related contractual relationships • task allocation • monitoring and evaluating the performance and behavior of persons are classified as high risk, as these systems can have a tangible impact on the future career prospects and livelihoods of these individuals. PHI Institute for Augmented Intelligence – 2022 – All rights reserved

32. Dr. Anne Förster Salary Partner Taylor Wessing Düsseldorf „Given the broad definition of AI in the AI Act, which covers all types of algorithmic decision-making and recommendation systems, a large number of HR systems already in use today are likely to fall within the scope of the AI Act. There is hardly a company left that does not use at least “simple” algorithmic decision-making systems in the HR area, such as optimizing job advertisements or analyzing CVs. Therefore, providers and users are well advised - as a lesson learned from the GDPR reform- to carry out a compliance check regarding the HR systems used and their conformity with the AI Act at an early stage.” PHI Institute for Augmented Intelligence – 2022 – All rights reserved

33. Augmented Organizational Intelligence SUMMARY: AUGMENT YOUR FIELD OF PLAY Actionable Objective Insights A conscious choice of using AI adoption as a capability and cultural "test" for designing futureproof organizations via making better business and people decisions Creating real value and impact • in the "rhythm" of your technology and org/culture readiness • in the context of how much we aligned it with the purpose and strategy People Analytics Organisational Design Responsible AI – from Day 1 Beyond compliance with the EU AI Act PHI Institute for Augmented Intelligence – 2022 – All rights reserved

34. GET READY: RECOMMENDED RESSOURCES https://www.weforum.or g/reports/empowering- ai-leadership-ai-c-suite- toolkit https://betterimagesofai.org/ https://course.elementsofai.com / Member of Advisory Board https://swisscognitive.ch/ https://www.gobeyond- project.com/ https://www.nemesventures.com https://www.weforum.org/reports/hu man-centred-ai-for-hr-state-of-play- and-the-path-ahead/toolkit George A. Tilesch was a major contributor to the toolkit Written by George A. Tilesch President of PHI Institute for Augmented Intelligence - with Omar Hatamleh

35. THANK YOU! eszter@phi.institute LinkedIn - Eszter Debreczeni EXCAITED FOR MORE... Contact us: PHI Institute – For Augmented Intelligence

36. APPENDIX

37. AREA FROM TO USE CASES Workforce Planning Annual planning for headcount in jobs Continuous skills-force planning is based on more granularly predicting what skills and work will be needed in the future to determine where to build, borrow, buy, or bot. • Providence Healthcare: Facing a nursing shortage, identified nurses’ particular skills, looked throughout the org for people with the skills to perform any of those tasks, asked those employees to obtain/renew—nursing licenses,to becoming eligible to add some nursing work to their core job. • Global consumer products company: looking to help their supply chain partners forecast skills in support of securing and optimizing the future workforce. As the Great Resignation continues, their supply chain partners’ ability to have a workforce with the right skills is critical to the company. Hiring Hiring based on job experience and education Hiring based on verified skills and adjacent skills more than job experience and degrees • IBM: response to the global scarcity of skilled tech workers by opening fully half of its positions to people with the right skills, notwithstanding degrees or job experience; the company dubs this type of job “new collar.” SKILL-BASED SHIFTS

38. AREA FROM TO USE CASES Job architecture Detailed lists of static jobs based on competencies, hierarchical levels, and careers Flexible work and skills architecture based on a simplified set of fewer and broader roles, and levels based on types of work and skills • Global educational provider: To create greater agility/more fluid work, they structured its job architecture with only 3 distinct layers, identifying and categorizing broad types of work and talent segments into like groups. In defining these: the org took a skills- and- capability-first approach to develop a X- functional and discipline-agnostic understanding of its workforce. Rewards and Recognition Rewards based on jobs, level, and performance, with annual adjustments Skills-based pay and rewards with frequent adjustments as skill and work needs evolve • IBM : AI-based system CogniPay to make pay decisions based on market demand, internal forecasts, attrition data for a skill or cluster of skills. • Global insurer: central pool of data scientists/flexibly deployed, supported by an internal talent marketplace with AI translating the work activities into skills required to perform the work, plus adjacent skills, interest, and capacity. SKILL-BASED SHIFTS

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