Perhaps one of the hottest topics in human resources right now is HR transformation, with good reason.
At a time when labor markets are so tight, talent strategies have become more critical than ever to organizational success. Companies are relying on their human resources departments to enable business strategies through human capital management. It’s a big and continuing shift in the role of HR, taking it from being a functional tool for building and maintaining a workforce to becoming a strategic partner in creating and achieving business goals.
In short, companies are expecting their HR departments to deliver more value than ever before.
“The future of HR is horizontal, working as an integrated enabler, ensuring that all key decisions are made with people and skills considerations top-of-mind across the business, rather than operating as a standalone vertical,” writes Danny Ferron, people advisory services consultant at EY.
But what exactly does it mean to go through a human resources transformation to deliver that kind of strategic value?
HR transformation is a strategic change to the role of human resources
HR transformation is complex. A common (and flawed) perception of such a change is that it is accomplished solely by implementing HR technology and taking a seat at the table with other business leaders. While both of these actions are key elements in the transformation of human resources, by themselves they do not define a successful change.
True HR transformation is about positioning human resources as a business partner in the organization in such a way that ensures all people-related initiatives align with business goals. For HR to deliver maximum impact, it “needs to be integrated with business, and business needs to be integrated with HR,” writes Jeremie Brecheisen, senior managing consultant at Gallup.
To accomplish that integration, HR and business leaders spearheading the transformation must ensure it is built within the context of business needs in order to add the value that organizations require to achieve their goals. That will require executives to “blur the boundaries” between themselves and department leaders and to exchange information that allows for the creation ecosystems of “mutually dependent relationships to share value,” according to a McKinsey report on HR’s role in building organizations of the future.
This level of transformation allows HR to strategically advise organizations on business goals. Specific examples of the value that human resources departments can provide to the company include:
- HR can advise as to what is happening in the business world, such as detecting employee vulnerability to poaching based on stock price changes or layoffs.
- HR can advise as to whether the company has the talent capabilities to move into proposed new industries or sectors.
- HR can provide insights to the business side as to how work should be done (in-person or remote) and whether certain work should be done by machines or people.
Accomplishing this level of transformation requires meticulous planning on the part of HR leaders and senior management. When creating a transformation strategy, keep these essential elements in mind, as they are crucial to the success of the transformation.
Tips for a successful HR transformation
Embarking on the HR transformation journey is daunting. It’s a monumental change for your company and your people, and you will undoubtedly come up against some challenging obstacles. The good news is that you can plan and prepare for the changes before you start the process.
1. Prioritize people in the transformation
People are the key element to success in an HR transformation. Without the support of the people across the entire organization, the effort is doomed to fail. But getting them to go along with such a major shift won’t be easy because people are often resistant to change.
To get everyone more comfortable with the new role HR is going to play at the company, take a people-centric approach to the planning process. Approach the transformation from the perspective of your people so you have a better understanding of how to not only guide them through the change but secure their support for it.
“By starting culturally where your employees are, you can be deliberate and intentional about building a plan that provides the communication and support they need throughout the process,” writes Amie Deak, former senior advisor at Inflexion Advisors.
To that end, ask your employees questions, address their concerns, and solicit their feedback. Most importantly, be transparent throughout the process, explaining what, why, when, and how things are changing. That way employees stay engaged in the process and are willing to change their mindsets to adapt to the change.
2. Secure leadership buy-in
Successful change starts at the top, so transformation must be driven by senior management. It’s imperative that you not only secure the support of the C-suite but that you cultivate these leaders into champions for the change. As advocates for the process, executives can lead by example and guide people to embrace the new HR culture.
To ensure you have the right level of support from executives, they must be included in the process from the start. Successful transformation requires collaboration among leaders across the company in order to make the transformation feel like partnership. Solicit input, listen to ideas, and answer questions. In doing so, you will secure buy-in from top level management and the C-suite for the transformation process.
3. Adopt the right technology
Smart use of technology is also a vital part of HR transformation. Going digital should not be targeted as the defining metric for a successful transformation. Implementing technology should be seen as the means to an end of creating a more strategic role for HR in the company.
“Change is not driven by technology but rather enabled by technology,” writes HR technology adviser Soumyasanto Sen, author of “Digital HR Strategy: Achieving Sustainable Transformation in the Digital Age.”
Carefully consider what software will help you meet your transformation goals: choosing the wrong tech will hinder progress. The right tools will ensure a smooth transformation process and should accomplish the following:
- automate and streamline all manual data processes.
- reduce time to hire to near zero, largely eliminating interviews.
- use AI to create better candidate and employee experiences.
- allow HR to follow through on inclusion and diversity goals.
- hire the right people for the right jobs.
4. Create a plan for transformation
The biggest mistake you can make is not creating a strategic plan for transforming the role of HR. “In an HR transformation, many leaders shortcut their planning and move right to action,” writes Paul Rumsey, senior vice president, and HR Chief of Staff at Atrium Health. “Planning must remain a required step of all transformations and needs to cover purpose, stakeholders, success criteria, and then deliverables.”
An HR transformation strategy needs to include:
- Goals for the transformation, including HR departmental and greater business goals. This requires you to have a complete understanding of your company’s needs.
- A list of stakeholders and their roles in the process. This includes people from the C-suite, the HR team, and people from other departments with insights to help build the strategy and guide the transformation.
- A communication plan for how to communicate with stakeholders and what information to disseminate.
- A step-by-step guide for the transformation process, including the tools and processes for each relevant stakeholder in each step.
- Measurable success metrics that are developed based on your goals.
Such detailed planning is essential to the success of your HR transformation efforts. “Without proactive planning, the HR transformation will likely fail,” Rumsey writes.
5. Let data guide the transformation
As with any major organizational change, data needs to be the guiding light throughout the HR transformation.
Your HR department should already have access to a wealth of people data relevant to your workforce. As Eric Vidal, adviser at TalentCulture explains, data-driven HR departments collect: people data, such as demographics and skills; program data, such as project outcomes and workforce training; and performance data, such as performance ratings and pulse surveys. All of these data points provide crucial information on the talent side of a business.
When that data is combined with other strategic organizational data points, the combination can help you identify opportunities for transformation and allow you to measure the impact of those efforts. And that’s the key to capitalizing on the power of analytics and ensuring successful outcomes — taking HR data to drive business results beyond HR.
Transforming human resources is no longer something only progressive companies are doing. The decision to entwine talent strategy into overall strategy has become an essential element in future-proofing organizations of all sizes as everyone competes for high-quality talent in tight labor markets. Each company’s journey through the HR transformation will look different, but the end result — the integration of talent into business decisions — is the same.
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