In today’s business environment, chief human resource officers (CHROs) must align their human capital strategy with the business strategy to accelerate growth while creating a culture that embraces diversity and inclusion. This requires HR leaders to understand the links and levers between business strategy and human capital strategy and ensure that their HR priorities directly support business goals and objectives while also creating an engaging employee experience.
Many CHROs and their HR function continue to make impressive strides, but our research suggests there is still vast opportunity to position HR as a strategic partner and value driver. While 70 percent of CHROs say that human capital and talent management are among their top-five business priorities, nearly 70 percent of HR’s time is still spent on administrative and operational activities, diminishing capacity for focus on strategic talent priorities. We see four imperatives for HR leaders.
- The demand for strategic support from HR has never been greater. Building HR business partner (HRBP) capability focused on strategic business partnering, organizational effectiveness and developing talent strategies is critical.
- The rapid shift to hybrid working accelerated by AI and digital transformation across the entire organization has become paramount. HR operations must evolve to deliver an employee experience that spans both the virtual and physical worlds.
- Centers of excellence (CoEs) must continue to develop talent and HR solutions to support new ways of working and ensure they are delivered more quickly in an agile way.
- HR teams of today require a fit-for-purpose structure and appropriate governance mechanisms to keep pace with today’s business needs. Now is the time to formally break down the silos created by traditional structures so that HR can improve organizational effectiveness by delivering end-to-end solutions for the business.
HR has clearly demonstrated business value, and HR leaders’ ability to serve as a true business partner has now become a common expectation from the C-suite. CHROs must now design an HR strategy and governance framework that aligns with the business, meets the needs of employees, and is agile and easy to integrate and deploy.
While a wholesale change may not be necessary, HR operating models must evolve to create both capability and capacity to improve employee engagement and deliver on the intended employee experience in a hybrid workforce environment. Additionally, HR must align with the business on the appropriate balance between driving business performance and a sharpened focus on the employee experience.
The evolution of HR
| Traditional challenges: |
Today’s solutions: |
| Inability to react quickly to a rapidly changing business environment |
Deploy agile teams for critical initiatives, organization events, and as an ongoing community of expertise |
| Technology as the only enabler |
Enable HR through leadership, governance, HR capability, technology and analytics |
| Fragmented and siloed HR programs, processes and teams |
Integrate across HR to deliver end-to-end people solutions |
| HRBP role that has not delivered on its promise |
Make the investments needed to enable HR business partners to become talent and organizational strategists |
| Programs and processes designed from the inside-out to deliver efficiencies for HR |
Design from the outside-in to deliver a differentiated employee experience |
| Internally focused with emphasis on traditional HR needs and business expectations |
Externally focused to understand and align with the business, market and customer needs |