When CHROs contemplate the balance of 2016 and look into next year, naturally their thoughts turn to how to better attract, retain, engage and reward people – and often, technology is a large part of that.
Looking more closely under the hood, new research from The Hackett Group says of the top planned HR transformation initiatives for the near term, six out of 10 are focused on technology and analytics.
With that in mind, Harry Osle, The Hackett Group’s Global HR Advisory Practice leader and principal, says that while his firm’s research yielded some very interesting findings, perhaps the biggest surprise is that HR continues to struggle on those key talent management issues, especially those around enabling business strategy execution and aligning workforce strategy with business strategy – long the holy grail among CHROs.
“Both of these issues have been around for a while and directly correlate to a company’s HR operational excellence and business partner model,” Osle explains.
The Hackett Group’s research, The CHRO Agenda: Continue to Close Gaps in Critical Capabilities Through Transformation, uses feedback gathered from executives at nearly 180 large companies in the US and abroad, most with annual revenue of $1 billion or more.
Osle says the survey found HR leaders agree that the future effectiveness of their organizations depends on improving their use of technology, including analytics. Benefits of this digital transformation include the ability to:
- Provide data-driven insights that help improve corporate agility
- Manage talent more effectively
- Assist managers in evaluating and supporting their employees
- Make day-to-day life easier for employees by streamlining administrative tasks.
But the main stumbling block is money. HR organizations report barely any change in budgets (3.7% growth) and staff (0.1% reduction) in 2016, meaning many have to self-fund digital transformation initiatives.
As Osle notes, the survey found that many HR organizations are poorly positioned to support strategic and operational objectives. For example, key areas rated as “highly important” by the business score low on HR’s ability to address, and are strong initial focus areas for HR’s digital transformation.
The issues with the biggest readiness gaps include:
- Improving the development of executives who can lead in a volatile business environment
- Adapting talent management strategies and process to deal with changing business needs
- Enabling successful business strategy execution
- Dealing with shortages of talent and critical skills
- Aligning workforce strategy with business strategy.
“Top performers have long understood the role that technology plays in HR, and most companies are now realizing that digital transformation is critical,” Osle says. He adds that getting there requires using technology to improve efficiency and effectiveness, developing the ability to analyze data to gain insight, helping the company adapt to changing talent and staffing needs, and becoming more customer-centric.
“Top performing, world-class employers are three times more likely than their peers to have an explicit HR technology strategy,” he says.
The importance of analysis
The most agile HR organizations are focusing on becoming more information-centric, learning to leverage data to drive analysis, planning and recalibration.
“World-class HR organizations focus more heavily on this than typical companies, and make two to three times greater use of predictive modeling,” Osle says.
It’s critical that HR make connections between what they’re learning from their internal HCM systems and what’s happening in the external market, he explains. In today’s market, analytical abilities are a “must-have skill set” throughout the HR organization.
In essence, HR practitioners must be able to use data to drive insight and turn that insight into intelligence and an improved delivery of HR services. In addition, HR can enable managers through technology and data, getting a better understanding of who their top performers are, where problems with productivity, efficiency, and effectiveness are emerging, and how to better coach and train employees.
Following the customer
Finally, top HR organizations are following the business lead by using technology to become more customer-centric. World-class HR provides 50% more on-demand access than typical companies, making it easier for employees to handle day-to-day administrative tasks and providing them with analytics that can help them be more successful.
Scott Leuchter, Global People & HR Transformation practice leader and principal at The Hackett Group, says it’s “disconcerting” to realize significant skills gaps remain within HR. He explains that gaps in forecasting for the future workforce lessen HR’s ability to support many of the areas that are business critical.
“By increasing their overall knowledge, skills and capabilities in these areas, HR has the opportunity to strengthen alignment with the business, better understand their needs, and become more proactive in solving the human capital dimensions of business issues,” Leuchter says.
Asked for any predictions based on the 2016 survey results, Osle says employers who have invested or will heavily invest in HR technology and operational excellence will create platforms to drive greater efficiency and effectiveness.
He also has this bit of advice for CHROs: Digital transformation is a key foundational element in driving agility, but enabling best practices through a digital transformation is critical.
“In other words, don’t go through a digital transformation without leveraging practices that others use to drive greater impact [efficiency or effectiveness],” he says. “Learn from others and don’t start with a blank sheet of paper.”