At the ReimagineHR summit in London on Wednesday, Brian Kropp, HR Practice Leader at CEB (now Gartner), led a benchmarking and discussion session with over 150 chief HR officers, almost half of whom manage businesses with over 10,000 employees. The group shared their thoughts on the growing challenges heads of HR face today, and one theme remained constant throughout the conversation: change.
1) Disruptive Trends Changing the Pace of Business
As heads of HR look forward to 2018, the number one priority for many in the room will be change management. One HR executive, for example, said her organization’s major challenge currently was in managing multiple, overlapping acquisitions that were doubling the size of their workforce practically overnight—and both the pace and intensity of that form of change will only increase. Historically, organizations would make one acquisition and then wait several years before the next. Over the past several years, however, organizations have begun to face acquisitions or mergers one after another. Today, however, many businesses are struggling as they confront multiple changes at the same time.
One consequence of this, as another head of HR pointed out, is that organizations can no longer manage change using the same strategies they learned through their previous experiences. Every change is different, deserves its own unique response, and must be dealt with as if it were the first time the organization was doing it. There is no “one size fits all” approach to change.
2) Drivers of Change
When we asked the CHROs in the room which trends were most affecting how work gets done in their organizations, one stood out from the rest: digitalization and advances in workplace technologies like automation and artificial intelligence. Concerns about this trend, as an executive from a major European company noted, typically focus on how they will affect manufacturing workers, but many HR practitioners fail to think about the administrative or corporate support roles, such as payroll management, that do not add significant value and can be easily automated.
As Deutsche Bank’s Chief Executive Officer John Cryan put it in a recent interview with the Financial Times, employees of the bank should embrace their “revolutionary spirit” as those among them who already work “like robots” will soon be replaced by actual robots, and large numbers of jobs will be cut as a result of this technological transformation. The risk is that unlike previously, where new technologies affect a segment of the labor market, allowing for organizations to readjust and learn from past experiences, digital disruption is now affecting all roles across the board at the same time, effectively removing the recovery time for people and businesses.
Another HR executive, however, said that the risk of being made redundant applies not only to employees, but to businesses as well, with new technologies allowing for new business models that can upset entire industries: think technology-enabled platform models like Amazon and Uber. With the amount of change that digital disruption is bringing, not just to the workforce, businesses must be involved in a wider philosophical and policy debate about the impact of this disruption on society, social welfare, and wealth distribution.
3) Is HR Ready For Change?
The short answer is no. When asked whether they agreed that their current HR function’s operating model sufficiently drove business outcomes, half of the HR executives in the room said they either disagreed or strongly disagreed. One in four were neutral. Not a single person strongly agreed.
Why is this the case? As an explanation, one head of HR at a non-profit organization pointed to HR’s historical inability to drive business value. Now that HR has a seat at the table, HR functions are able to look into processes, diagnose them, and propose solutions, but many HR leaders are still unable to effectively drive business outcomes because they lack both the data analytics capabilities to do so, as well as a mindset to lead HR as a function that is driven by the bottom line, rather than a support function fulfilling compliance-related duties.
The final benchmarking question concerned where heads of HR planned to focus their investments to ensure that their function could effectively address changes to their workforce and how work is done in their organization. The responses here were decidedly mixed, with just over one-quarter of the room saying technology, the same percentage saying relationships, 18 percent saying processes, another 18 percent saying people, and the remaining 11 percent saying structure. The diversity of answers here illustrates that there is no consensus on how best to address the challenges facing HR today, but is also unsurprising, as the HR challenges organizations face are far from uniform.
While most heads of HR do not have faith in their current HR model’s ability to drive business outcomes, the investments to come will not be focused on turning the model on its head. Instead, the focus will be on changing and enhancing the function’s capabilities to produce business value through technology, relationships, processes, and people. As HR leaders look forward to 2018, they must think carefully about where to place their bets, and how those investments will help them lead their teams through an environment of constant change.