The Hackett Group’s 2017 HR Key Issues report had much to reveal about the state of the profession – and the challenges and opportunities it faces in the near future. Based on a survey of executives from more than 180 large international companies, the report paints a picture of HR at a turning point in its history.
Never have the expectations from HR services been so high. When asked about the impact of digital transformation, 69% of HR executives predict that it will fundamentally change the talent needs of the business, and in the same time, represent an opportunity to deliver step change in HR performance, costs, quality, and cycle times – amongst other things.
As far as business executives are concerned, access to critical talent is seen as a major and growing risk for the business, progressing by 20% in 2017 compared to 2016, at the same pace as cybersecurity
However, HR functions will not be granted additional budget or staff: companies expect the function to cope with the forecasted 4% to 5% growth, but with slightly declining headcount and operating budgets (-1.6%)
So how can HR support the business in the process of digital transformation – while re-inventing itself to deliver value-add services, in a fully self-funded manner?
To overcome this challenge, HR executives must leverage new technology. Fortunately, many understand this already. 80% of HR executives expect mainstream adoption of digital transformation technology, including SAAS HCM platforms deployment, mobile computing, social media collaboration and analytics by 2020.
But this vision of the future could be far too optimistic, as only half of the respondents have defined their HR digital transformation strategy – and amongst those who have, only half believe they have the means the budgets and the competencies to deliver it.
In this context, HR will need to be realistic in the initiatives launched, and make sure that the broader business prioritizes its efforts, and that they get appropriate support from external partners – or other functions in the company – to deliver the initiatives that they do not have all the skills for.
This year’s study also highlights a relatively long list of development areas for HR teams. For example, HR executives feel that their teams are not agile enough in addressing changing talent needs – specifically when these have to do with innovation, digital transformation or improving the customer experience.
As for the function’s own capability developments, HR Executives realise that their teams are not ready to implement and benefit from analytics capability, nor are they able to measure the function contribution to business value, or agile enough in their ways of working to rapidly changing business needs.
Looking outside and learning from others
In order to improve, it is clear that HR needs to look outward and partner closely with the business to be able to align and serve its wider objectives. As for the new capabilities, like analytics and performance management, HR should build as much as possible on other functions experience.
Finance have been investing in better performance management and analytics in recent years, and most of the approaches and tools can be shared/re-used.
Global business services (GBS), which is the next evolution of shared services, involves the integration of governance, locations, and business practices for all shared services and outsourcing activity for various business services functions such as finance, procurement, HR, and IT. GBS is an exceptional strategic enabler of business performance, enabling companies to deliver cost-effective and flexible service and operational excellence.
Consolidating the basis
On the positive side, this year’s study indicates that HR functions have made progress in integrating a workforce component in the company strategic plans.
HR executives also feel that the function is better at managing/reducing costs (and without hindering effectiveness) and at deploying HCM SaaS platforms.
A complimentary version of the research is available for download, following registration.