What is a successful HR transformation in 2024?
How disruptions are a chance to define the new status quo
HR transformation is no longer a buzzword—it’s a business necessity. HR leaders are now at the helm of reimagining work and workforces from the ground up with priorities that include overcoming an unprecedented labor shortage, devising skills-based talent management strategies, and rewriting the employee value proposition.
None of these agenda items are simple tasks, and addressing any of them will include bringing in stakeholders from outside the people management space. But rather than serving as a support function, HR must seize its new role as a strategic partner pivotal to larger business priorities.
Just as the HR function evolves, leaders need to leverage tools that go beyond simple administrative functions. Rather than relying on traditional platforms, visionary HR leaders are harnessing a new generation of AI-powered talent management systems to gain the insights needed to turn their transformation visions into realities. 85% of CHROs believe data is an essential part of their strategy.
What is HR transformation?
HR transformation describes the evolution of the HR function. HR transformation is the process of strategically aligning HR functions, technology, and data-driven insights to optimize the employee experience and enhance HR’s contribution to business objectives.
It is the process of seamlessly adapting and integrating service delivery, talent, and technology into HR strategy to create greater business value—by driving both operational excellence and strategic impact. For HR leaders, it’s about evolving their own role and the HR function to better align people, strategy, processes, and technology with business goals to deliver more impact for all stakeholders.
HR has always been critical to enterprise operations as a function because the department is responsible for workforce planning and performance management, aligning talent strategies with the greater business vision. However, as we move into a more agile world of work, HR transformation is becoming the cornerstone of many business transformations. Now that talent is the greatest driver of competitive advantage—77% of business leaders believe that retaining talent is very or moderately important for the future of their organization—the right approach to HR transformation will make or break business outcomes.
The rise of HR transformation roles
As HR’s role evolves, departmental titles are getting updated to reflect these new responsibilities. In the midst of shifting employee-employer dynamics, cultivating a compelling employee experience is emerging as a priority at many organizations. As a result, titles with “People” front-and-center are on the rise—People Operations Manager or Chief People Officer being two of the most notable additions.
Similarly, the word “transformation” is quickly becoming a mainstay in many HR job titles. Roles like HR Transformation Manager and Vice President of HR Transformation are gaining popularity, underscoring the heavy emphasis organizations are placing on their transformation processes. What these changes in title underscore is that companies are taking transformation seriously, putting resources behind their efforts to modernize their work structures and prepare for the future of work. A recent McKinsey survey shows that out of all companies surveyed with a Chief Transformation Officer, 86% of them came into the company in the past three years.
What are the 6 stages of HR transformation?
While every organization’s change journey will look different, most HR transformations can be broken down into the following six stages, first outlined by Brian Solis.
1. Business as usual
This preliminary stage describes a company in which HR processes, tech, and people are still clinging to outdated solutions and processes. Leadership doesn’t view transformation as a priority and sees no value in changing their ways of working.
2. Present and active
Executives begin to realize the benefits of HR transformation and start experimenting with various visions for their change initiatives. HR employees may be connecting to launch small-scale test projects and successfully implementing technology and process changes.
3. Formalized
This stage occurs when HR transformation is well underway. Projects grow in scope and HR leaders are now experimenting more purposefully and looking to solve specific business problems. Executives may be encountering some pushback from fellow leaders, particularly around budget, as they prepare to successfully transition to the next stage of their transformation.
4. Strategic
By now, multidisciplinary teams are driving the HR transformation agenda and leaders across the organization have bought into your vision. The challenge on the horizon is building an HR transformation roadmap that stretches several years into the future. This means coming up with a strategy that connects HR to every facet of the business.
5. Converged
This stage involves a convergence of your transformation efforts. To maximize the efficacy of your strategy, look for ways to minimize silos and prioritize clear communication to streamline the change management process for your organization.
6. Innovative and adaptive
The work isn’t done once your HR transformation strategy is launched. Instead, leaders must continuously evaluate their initiatives and brainstorm new ways to drive the results they’re looking to achieve. In cooperation with other departments, HR may continue to deploy pilot programs and tinker with components of their strategy in order to optimize it.
Why should HR transformation be a priority right now?
Every business is facing the same crossroads. Leaders need to decide whether they will hold onto old frameworks that are quickly becoming obsolete or embrace new tools and operating models as they reimagine ways of working.
It’s becoming clear that enterprises must rapidly evolve their strategies to thrive in the new world of work. Consequently, HR transformation is a necessity for businesses that are looking to outpace the competition. It offers several game-changing benefits:
1. Position HR leaders as strategic partners
HR can no longer be seen as workforce administrators. HR leaders are now key players in shaping the future of the business by building a new blueprint for successful talent management. Stakeholders across the organization must recognize the value of HR and work in tandem with HR leaders to achieve strategic priorities.
2. Unlock capacity and drive efficiency
A core component of successful HR transformation is shifting to skills-based talent management. When organizations’ talent strategies are rooted in skills, leaders can efficiently access the capabilities they need to get key projects across the finish line and empower employees to achieve their full potential.
3. Enhance employee experience
Workers want more from their employers than ever before and it falls on HR to ensure that these expectations are met. Employees want to see their organizations stepping up and making a difference, taking a stance on societal issues, and providing their people with choice and agency. These asks can only be achieved through an HR transformation strategy that empowers leaders to retire obsolete rules and embrace new ways of thinking.
4 Steps to maximize the success of your HR transformation
At this point, most leaders recognize the importance of HR transformation. Yet, there’s a lot of uncertainty about what it takes to create an impactful strategy.
1. Get leaders on board
HR transformation isn’t just for people in the department; it’s going to impact every business function, so it’s important to get leaders from across the organization on board. Include members of the C-suite in the process from the start and encourage them to share their ideas and offer feedback. By listening and incorporating other leaders’ insights into your strategy, you’ll secure buy-in and ensure your approach aligns with their priorities.
2. Don’t overlook the people powering the transformation
Getting buy-in from leadership is undoubtedly important. But if you want your HR transformation to be successful, you’ll also need to gain support from your employees. To help everyone get comfortable with the new role that HR is going to play at your company, take an employee-centric approach to planning.
Give your employees the chance to ask questions, offer feedback, and share their concerns. And prioritize transparent communications throughout your HR transformation, so that people feel like they’re being included in the process and they know what’s happening next.
3. Set goals that align business priorities with individual aspirations
If you don’t go into your HR transformation with specific goals in mind, you’re setting yourself up for failure. Start by checking in with leaders from different departments to understand what their objectives are and the biggest challenges that are making these goals difficult to achieve. Then, create two sets of transformation goals, one for your department and one for the business at large. Include measurable success metrics that are developed based on your goals and a step-by-step guide for the transformation process.
4. Choose the right technology
Technology isn’t the only part of HR transformation, but it’s an important component that deserves a lot of thought. The right operating system will bring your vision for HR transformation to life, and it can even help you stave off the Great Resignation. Look for solutions that will automate and streamline processes, reduce time to hire and make onboarding more efficient, and move the needle on diversity and inclusion initiatives.
Rather than focusing solely on upgrading HR technology that you already use, it’s beneficial to consider new categories like the talent marketplace. These platforms harness ethically constructed AI to dynamically match employees to projects, gigs, mentoring, and full-time roles. Many leaders are also leveraging skills intelligence tools like Gloat’s Skills Foundation, which create a complete picture of the capabilities your workforce has as well as uncovering any emerging knowledge gaps.
If you’re looking to take your transformation strategy to the next level, check out The Dynamic Organization report to uncover the tools and strategy shifts that top-performing companies are using to gain an edge.
