This CRF research report published in December 2020 explores the future of HR in a challenging business context characterised by disruption on an unprecedented scale, fast-paced technology-driven change and social, political and demographic upheaval. The report should be of interest to HR Directors, Reward Directors and other HR professionals.
The business context for organisations today is ever more challenging, characterised by disruption on an unprecedented scale, fast-paced technology-driven change and social, political and demographic upheaval. It is in this context that we investigate how HR Directors and their teams can define HR’s future agenda, purpose and focus. The Covid-19 pandemic has accelerated changes we were already experiencing, forcing organisations to rethink their strategies, reconfigure their operations and change working practices at speed. It has allowed an organisation’s HR Talent to play a central role in shaping the response and to demonstrate its essential contribution to business success.
The core purpose of HR – to support the business in building the people and organisation capability to deliver its strategy and create sustainable value for its stakeholders – remains constant. However, HR’s agenda needs to reflect the business and wider social and political environment. Significant factors include increased competition, the impact of massive technological change, demographic shifts, the drive to sustainability and the changing role of the organisation in society, all of which present opportunities and risks for HR.
CEOs expect HR Directors, Reward Directors and other HR professionals to act first and foremost as business leaders. They should play a critical role in preparing the organisation for business transformation and developing leadership capability, focus on organisational effectiveness, productivity and performance, and develop capabilities to support new business strategies and drive innovation. However, in practice many HR functions fall short of this ideal. Often, HR is insufficiently engaged in the commercial realities of the business, pursuing an HR-driven rather than a business-focused agenda.
The HR team should be at the heart of the strategic thinking and decision making. While it may not mean HR always has to be instrumental in deciding which strategies to pursue, it does mean that HR should influence strategy development, provide information to the executive team and the board to shape strategy discussions, build a deep understanding of what the strategy is, and make sure the people strategy is anchored to that of the business. HR can be particularly instrumental in bringing a cross-enterprise perspective to strategy discussions and assessing the feasibility of strategic options.
Delivering competitive advantage requires not only a compelling strategy, but a high-performance organisation. One that has a winning culture and a capable, motivated and engaged workforce. HR needs to work on both developing the organisation and the people who work there. Developing the people without improving the environment within which they work is likely to lead to sub-optimal results. HR needs to become expert in organisation design and development and use these skills to build the organisation’s capacity for innovation, agility and managing change.
HR’s core deliverables around attracting, retaining and developing talent, managing and improving performance, developing leaders and delivering core operational services, remain the main focus. However, HR’s role is also being shaped by changing expectations around the role of the organisation in society. Debates related to purpose, identity and inclusion, concerns for mental wellbeing, sustainability and ethics are determining the purpose and role of HR.
HR technology is changing at a rapid pace. It is becoming more intuitive and user-friendly, and enabling people functions to offer a cohesive end-to-end employee experience. In a competitive talent market, employers are increasingly looking to differentiate their employer brand. They are deploying techniques such as design thinking and human-centred design to bring rigour and customer-centricity into the design of the employee experience.
The changing shape of the workforce is bringing new challenges for HR Directors and their teams. The remit of HR jobs is changing. Working out how to effectively manage a remote workforce, reskill employees whose roles are displaced by technology, balance ‘gig’ and permanent workers, and prepare for a future where humans and robots work together, are all questions HR needs to be equipped to resolve.
HR professionals will need to adjust as their role, contribution to the business, and use of technology evolves. While the prevailing model in most large organisations has to date delivered benefits in terms of efficiency, HR will need to explore new ways of organising with agility to meet the changing needs of the business. HR should continue to upskill in business acumen, strategic consulting skills and project and change management.
There is a tendency for HR to be attracted by the latest thinking or ‘best practice’, or to over-engineer solutions which are of uncertain commercial benefit. As HR maps out its future role and agenda post-Covid, it’s essential to focus on the ‘important’ rather than the ‘interesting’ and to subject initiatives to rigorous scrutiny before implementation.
The Covid-19 pandemic has provided a platform for HR to demonstrate its value in serving the business and supporting the workforce. In many cases, HR has enhanced its standing and will be well positioned to build its profile and credibility as it maps out the future agenda.
The full version of this report is available here.
CRF are an HR membership organisation, and sister business to the HR search firm, Strategic Dimensions. To discuss CRF membership please get in touch.