What the HR revolution will look like for your business

Part one of this article put forward the case for change in our industry: a reorientation and renaming of what we call “human resources” today is needed. This evolution is critical to ensure it is future-fit, with its purpose and output aligned to the needs of the business and the people who work within it.

Here, I discuss the radical transition of the HR function that is required and refer to a couple of recent papers by McKinsey and the Josh Bersin Research Academy, which both support this makeover.

Closing HR’s capability gap

McKinsey states that “HR business partners (HRBP) lack the skills and time to keep up with the latest HR developments” – this is unsurprising in the volatile world of business today and the increasing pressure of having to do “more work with less”.

I referred to the expanding expectations being placed on the HR function in part one: rapidly evolving consumer and employee expectations; the adoption of new technology and AI; the growing importance of wellbeing, diversity and inclusion in the workplace; as well as managing increasing geopolitical unrest and risk. Each is creating significant work and placing new pressures on the HR function, as well as exposing interesting opportunities.

HR must seek to close its capability gap and evolve into the business-critical function it needs to be – supporting business transformation efforts; driving an “experience” focus for candidates, workers and leaders; digitising and productising HR’s work where relevant; and introducing meaningful data and workforce intelligence for the business and its leaders to use. Closing this gap will transition HR from being constantly reactive to being in the driver’s seat, evolving the HR function and supporting the business in its transformative phase.

Your HR transformation will look different to other HR transformations, and that’s great

While I’m set on the need for HR as a discipline to rebrand and transform its purpose and function so that it’s future-fit, I’m also firm on the fact that one company’s HR transformation won’t mirror another company’s similar evolution.

McKinsey’s paper on the new HR operating model cites some of the major internal challenges that HR teams are navigating right now, such as post-COVID-19 working models, remote leadership, majority Millennial workforce, shifting expectations of work and business, and the skills crisis. These are all apparent for most HR functions today, but the impact of each of these challenges will be felt more or less depending on the company, its size, the industry in which it operates, its products/services/customers, and other influences. Basically, one organisation’s pain point won’t be another’s.

The paper identified eight “innovation shifts” that chief human resource officers need to prioritise. These include agile principles, maturing the employee experience, re-empowering frontline leaders, offering individualised services, and others.

The innovation shifts that take priority will determine the new HR operating model the organisation transitions to, and McKinsey goes on to identify five to choose from: Ulrich+, Agile, Employee experience-driven, Leader-led, and Machine-powered. Each of these models is underpinned by two core elements: strong data and user-friendly, highly reliable service. Quite a bit for any HR department to work through alongside their operational deliverables.

How these insights can be applied operationally

I resonate with McKinsey’s proposal to “productise” HR services because the introduction of “product management” mindsets will significantly improve the design and impact of HR services. Too many HR systems and programs have historically been implemented based on process/efficiency rather than user experience and human-centred design. However, this will be a new skill and muscle for the function to develop. As part of this evolution, HR professionals must make tech and data part of their DNA; it will no longer be something that can be “outsourced” to HRIS or people analytics teams.

What say you, Bersin?

So, we know where McKinsey stands on what an HR transformation looks like and with that in mind, how does Josh Bersin’s perspective align or differ?

Bersin obviously concurs that change for our function is needed and needed now. But rather than focusing on changing the HR operating model, Bersin is proposing the introduction of an entirely new HR operating system. He identifies that individual HR practices will no longer work independently, tech and data are integral to every domain of HR, and HR professionals must now be deep experts and hybrid and broad in their skills. In alignment with McKinsey, he goes on to say that the foundational aspects of HR now need to be reinvented, and companies can no longer copy best practice models; they need to build a model bespoke to their business.

How to apply these insights to build your transformation

The next five years will be critical, and failure to do so will jeopardise HR’s position and relevance in the future. You may find the concept that our function faces redundancy alarming, but this period is also an exciting time for us to evolve and reposition the function to support business success.

The elements that HR teams can get right to navigate this transition are:

1. Clear space in your HR function to allow the time and resources your teams will need to navigate this revolution.
2. Identify the capability gaps in your HR function and develop strategies to close the gap through hiring, cross-functional mobility, upskilling or reskilling.
3. Rebuild your HR operational model and make it bespoke to your business. Best in class is now what works for your business, not what another company has done that works for them.
4. Recognise how essential good tech and data will be to the HR function, build it into your framework and make upskilling and reskilling the right people part of this shift.
5. Talent mobility within HR will be essential. Build out your business’s talent mobility model from HR during this period of reinvention.

The function will deliver value to its full potential only by defining an appropriate “HR north star” that is future-fit and aligned to business strategy and priorities, but some hard questions have to be asked, and answered, before it’s too late.

The naming of the function will emanate from this north star and help to crystalise and galvanise expectations for the function itself. Remember, perception is reality, and we no longer want a perception based on an outdated and archaic view of work.

Human resources is dead. Long live… (well, that’s up to you!)

Gareth Flynn is the founder and managing director of TQSolutions.