In the rapidly evolving business landscape, where talent is scarce, employees are empowered, and transformation is the norm, a company’s human capital has become the most crucial competitive advantage. This means HR is now at the helm, steering companies into the future.
HR’s role has expanded beyond basic recruiting, payroll and compensation. Today, HR needs to attract the right talent, develop skills quickly and at scale, reward and recognize desired behaviors, cultivate a winning culture, foster an inclusive environment, support productivity and wellbeing, create an irresistible experience, promote effective leadership practices and continuously redesign work, jobs and organizations. HR today, unlike the personnel function of the past, is a profession of design, consulting, technology and data.
From back-office function to critical business driver
The evolution of HR has seen it move from a back-office function focused on administrative tasks to a strategic partner that plays a vital role in shaping business outcomes. This shift has necessitated a move away from the traditional service delivery model towards a more integrated and holistic approach, which we call Systemic HR™.
Systemic HR views the organization as an interconnected system, with HR playing a pivotal role in aligning people strategies with business objectives. This approach enables HR to address business problems holistically, leveraging talent intelligence to determine the most viable solutions. It also emphasizes the importance of employee experience, with HR technology initiatives focused on creating a superior employee experience rather than just improving HR efficiencies.
Studying the craft of HR
Today, we are witnessing a paradigm shift in HR towards a more integrated and holistic approach. So, what does this mean for HR? And where do companies stand?
We studied the world’s largest data set on the HR function, with over 1,000 companies globally that cover 26 million employees and their 107 HR strategies and practices; 12 definitive guide studies across all areas of HR (TA, L&D, DEI, EX, rewards, leadership, org design, HR technology and much more); 92 HR capabilities of more than 9,000 HR professionals; and data from our study partner LinkedIn from 7.5 million people, millions of job postings, 250 HR jobs and 400 HR skills.
The depth of the problem
Here’s what we concluded from this research: While systemic HR is indispensable for the future, most organizations are still stuck in legacy approaches, struggling to adopt leading practices and strategies. Specifically:
- Only 22% measure HR success through business success metrics
- Only 17% of companies have a process to prioritize resources for problems
- Only 15% of companies believe their HRBPs can redesign work or organizations
- Only 11% of companies practice design thinking to build and deploy solutions
- Only 7% have a formal professional development program for HR teams
- Only 4% have a well-defined strategy for AI in HR
Overall, only 11% of companies have systemic HR organizations, but those far outperform their competition financially, delight their customers, innovate better, and create outstanding results for people.
Pacesetters in systemic HR
How can companies advance toward systemic HR? There are many elements to consider, and pacesetter companies are leading the way in implementing systemic HR practices, showing others how to advance.
- Creating a business-aligned HR strategy and measurement system: NewYork-Presbyterian Hospital has established a people strategy that aligns with its business strategy. The organization is focused on improving the talent pipeline, especially in clinical areas, developing skills and capabilities for digital, AI and technology; and redesigning care teams for improved patient experience.
- Breaking down COE silos: LinkedIn is integrating the talent acquisition and L&D COE, bringing together HR capabilities and creating more closely aligned HR functions. This approach of a combined “talent COE” is a hallmark of companies moving toward systemic HR.
- Changing the operating model: TomTom transformed legacy COEs into problem-solving HR teams with a laser focus on supporting the company’s transformation. Guided by data and analytics, the teams can now address the most critical business problems through full-stack HR capabilities, breaking down domain silos.
- Elevating the CHRO role: Australian global real-estate company REA Group has added two critical capabilities to the CHRO role: employee communication and environmental, social and government (ESG), amplifying the importance of the CHRO.
- Redesigning the role of the HR business partners: LEGO is focusing on skilling HRBPs in change management, organization design and business acumen to support their roles as senior consultants to the business, building full-stack capabilities.
- Deeply understanding problems: When SAP aimed to solve the pay equity issue, the HR team didn’t just give increases to people who were underpaid. Instead, it determined where the inequities came from and worked across various domains in HR to provide systemic solutions.
- Applying a systemic approach to problems: In response to declining customer satisfaction and financial performance, Taj Hotels changed the performance management program to reward every employee for the team’s collective success, leading to increased employee engagement and improved financial results.
- Using human-centered design approaches: IBM uses design thinking in HR. When a new problem occurs, the HR leadership team assigns an agile team of HR specialists, line leaders and software engineers. They build a prototype solution, leading to innovations like IBM’s cognitive career coach and cognitive pay advisor.
- Leveraging a flat, agile organizational structure for HR: Australian telecoms company Telstra moved to a completed agile organization structure for the entire business, including the HR function, eliminating hierarchies and breaking down silos.
- Strategically introducing AI in HR: Walmart developed an AI copilot to navigate a wide range of associate and manager questions, ranging from “I need to take the day off tomorrow” to “I need to hire a store representative.” By leveraging AI, Walmart is not only automating administrative tasks but also generating insights that drive strategic decision-making and improve the employee experience.
Systemic HR is here, and it’s indispensable for the new reality of work. Every company will need to reinvent its HR function to this model, and we at The Josh Bersin Company are launching an ongoing initiative to support you.
Join us in our global launch webinar of the Systemic HR Initiative: Tune in to our upcoming webinar, “The Evolution of the HR Function: Systemic HR™” (11 a.m. PST Dec. 14). For members of The Josh Bersin Company, we offer industry studies, collections, reports, tools, case studies and advisory sessions, including our Definitive Guide to Human Resources: Systemic HR™ and Galileo™, the world’s first AI-powered HR assistant. Join the Josh Bersin Academy to build your own full-stack HR capabilities and participate in discussions with 40,000 practitioners on how to progress toward systemic HR.