On the final day of the CEB’s ReimagineHR summit in Washington, DC, last Friday, dozens of heads of HR and other HR executives gathered to discuss the future of the Chief HR Officer role. A panel of heads of HR, including Julie Gravallese of the MITRE Corporation, Arielle Meloul-Wechsler of Air Canada, and Pascale Meyran of Michael Kors, made their best predictions about the ways in which their jobs will change and the new challenges that will face CHROs in the coming years. Here are some of the highlights from that discussion:
CHROs Are Being Called Upon to Protect Their Organizations’ Reputations
The proliferation of social media allows crises of any magnitude to impact the brand of an organization. In addition to the external damage this can cause, employees become frustrated if they feel their organization is not defending them. Heads of HR will have to enable their employees to be brand ambassadors, promoting the reputation of the organization with a heavy social media presence. In an era when corporate scandals can develop quickly and generate misinformation, employees need to be equipped with quick facts with which to defend the organization on any platform.
The Magnitude and Frequency of Change Will Be a Continuous Challenge
With entire industries being disrupted on a daily basis, employees will need to show tremendous stamina and resilience to manage change in the long term. Heads of HR need the emotional intelligence to recognize when change becomes overwhelming and which employees are unable to keep up. Continuous change can scare employees who see an uncertain future in the news every day, and heads of HR will be expected to listen and show empathy. It is important to be transparent with employees and tell them that change is expected, even if the final nature of that change is still unknown.
In today’s business environment, digitalization is reshaping organizations from top to bottom and HR is taking on a new role as a strategic partner rather than an order taker. Our latest recruiting research at CEB (now Gartner) presented to attendees at the ReimagineHR summit in Washington, DC, on Wednesday, looks at the confluence of these two trends and encourages recruiting leaders to adapt to the digital enterprise by shifting from a service mindset to a leadership mindset. This means moving from fixed to continuous planning, from a responsive hiring process to a predictive hiring process, and from business-focused job design to a candidate-focused approach.
The end result of these three strategic changes is decreased cost-per-hire, reduced time to fill for new roles, and an increase in recruiter productivity. CEB Recruiting Leadership Council members can read our full study, Recruiting for the Digital Enterprise.
There are external forces driving the urgency of this shift: Businesses are rapidly evolving their products, the way they deliver them, and the processes that support them. Along with increased talent mobility, this has led to increased volatility of hiring needs and greater uncertainty. It’s time for recruiting to take charge.
Many HR executives are understandably worried about the effects of making such a bold change to their organization’s recruiting strategy. Let’s take a look at some of the most common questions we get from recruiting leaders when it comes to making that transformation from serving the business to leading talent acquisition:
When it comes to what CEOs want from HR to help drive business value, one of their main demands is that HR help communicate the value of talent to investors, whether that means Wall Street or a lone philanthropist. At a breakout session at last week’s ReimagineHR event in London, Brian Kropp, HR Practice Leader at CEB, now Gartner, explained that the reason CEOs want this help is not because investors believe in making employees happy for its own sake, but because they are increasingly acknowledging that talent is a leading indicator of business performance and growth. Below is an overview of some ideas HR leaders should think about when approaching this opportunity:
The Growing Value of Talent
According to PwC’s annual CEO survey, the percentage of CEOs concerned about the availability of key skills as a business threat to organizational growth has risen from 46 percent in 2009 to 77 percent in 2017. This year, CEOs identified “human capital” as the second most important investment to make to capitalize on new business opportunities, ahead of “digital and technology capabilities.” Various trends, from new technologies to demographic shifts, are uprooting the core assumptions of how companies and industries operate. In our analysis of earnings calls from 1,600 of the world’s largest publicly traded companies, we found that words like “change,” “transformation,” and “disruption” have become commonplace. (CEB Corporate Leadership Council members can see the full range of insights from our Investor Talent Monitor here.)
In a recent earnings call with Volkswagen, Chairman and CEO Matthias Mueller said that “Volkswagen needs to transform. Not because everything in the past was bad, but because our industry will see more fundamental changes in the coming 10 years than we have experienced over the past 100 years.” Highlighting the value of talent is becoming one way in which organizations can gain the trust of their investors that their business still has what it takes to outperform a rapidly changing, volatile market. Jean-Paul Agon, CEO of L’Oreal, mentioned in their earnings call that they were going through a “digital transformation” whose success “stems from our very decentralized agile approach in execution with a significant investment in talent.” Conversations like these are only growing, and investors are pushing for more. Private equity firms are even taking matters into their own hands, appointing executives to oversee the talent strategies of their portfolio companies.
As we’ve observed in our Investor Talent Monitor, 46 percent of the largest public companies talked about issues related to talent during their earnings calls in 2010, but by 2016, this number had topped 60 percent. This should not be surprising: Investment firms and activists have been making the news recently for taking an active interest in companies’ talent strategies, pushing firms for greater gender diversity on boards of directors as well as for firms to publish employee compensation and pay gaps.
At our ReimagineHR summit in London on Thursday, CEB (now Gartner) Principal Executive Advisor Clare Moncrieff led a session on creating a common vision of digitalization for the business and HR. After examining hundreds of trends, our research councils serving chief HR officers and chief information officers have identified six deep shifts in the business environment that will result from digitalization. These shifts should act as the framework for heads of HR to:
- Ensure talent conversations with the line are grounded in business context
- Identify the current talent implications of these shifts, project future implications, and partner with the line and C-suite peers to prioritize and respond to each
- Improve their teams’ business acumen (to underscore the importance of this, 58 percent of HR business partners indicated in one of our surveys that building business acumen was their top development goal in 2017)
(The case studies we link to below are available exclusively to CEB Corporate Leadership Council members)
1) Demand Grows More Personal
As customers seek personalized products that align with their preferences and values as individuals (rather than as segments), companies will rely on digital channels and digital innovations in logistics and customer service to achieve personalization at scale. Customers will continue to expect lower-effort, nonintrusive service.
This could, for example, affect how HR functions look for new talent. Attraction of critical talent now requires differentiated, customized branding and career coaching. Candidates will demand a more effortless, personalized application experience. AT&T approached this shift by creating a more personalized “Experience Weekend” to show the innovation of its brand to campus candidates and make top talent more likely to accept job offers.
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.
Two of the most important trends in HR today are the growing importance of technology within the HR function and its increasingly strategic role within the organization. In fact, a new survey from Paychex finds that these trends are closely linked, Nick Otto reports at Employee Benefit News:
According to the inaugural Paychex Pulse of HR Survey, more than two-thirds of HR leaders at small and mid-sized companies say they have grown beyond serving a traditional administrative function to taking on a more strategic role within their respective organizations. And technology is helping to drive that shift. A growing number of HR leaders (41%) are meeting with their CEO or CFO — or both — on a weekly basis, according to the survey, while close to one-third have access to top management when they need it.
Three-quarters of respondents said that HR technology has enabled them to become more strategic and efficient on the job. In addition, 60% of respondents considered their HR technology to be very effective for payroll, retirement and benefits administration, and time and attendance tracking, indicating they feel that technology is allowing them to maximize their effectiveness when it comes to the administration of critical business functions.
These findings are great news for HR leaders, and not at all surprising; new technologies are driving innovation and disruption in every facet of the working world, and HR is no exception. Technology is a key factor driving the increasing pace of change, which challenges HR to keep the workforce aligned. Furthermore, with digital talent playing an ever more important role in shaping the organizations of the future, a strategy-focused HR function is a vital parter in preparing any organization for a digital transformation.
At the Harvard Business Review, John Boudreau, a research director at the Marshall School of Business and Center for Effective Organizations at USC, highlights the fundamental challenge most HR functions have when it comes to analytics: They are making significant investments, but not getting returns from those investments. The work that we are doing at CEB (now Gartner) has found the same result: More than 70 percent of organizations are increasing investments in talent analytics, but only 12 percent feel like they are getting results.
Boudreau offers up a set of push and pull strategies to improve the effectiveness of talent analytics by making it more “user friendly.” Looking at the pull situation, he lays out the following conditions, which he argues must be present for an analytics program to succeed. The HR function, he writes, must:
- receive the analytics at the right time and in the right context,
- attend to the analytics and believe that the analytics have value and that they are capable of using them,
- believe the analytics results are credible and likely to represent their “real world,”
- perceive that the impact of the analytics will be large and compelling enough to justify their time and attention, and
- understand that the analytics have specific implications for improving their own decisions and actions.
While it’s certainly helpful advice to invest time, energy, and thought into how the consumer of that information will use it, there is still a fundamental problem—alluded to in the third item above—that heads of talent analytics must tackle first, and that’s improving data quality. In fact, poor data quality is the number-one cited reason why talent analytics leaders feel that they aren’t having the impact that they want.