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To be seen as strategic, HR must laser-focus on outcomes

Stacey Harris, Sapient Insights Group
Stacey Harris
Stacey Harris is the chief research officer and managing partner of Sapient Insights Group, where she oversees their industry research work, including the esteemed Annual HR Systems Survey and White Paper, now in its 25th year. Results of the survey debut exclusively at the HR Technology Conference each year.

It’s that time of year. For the last several weeks, my team and I have been diligently crunching the numbers from our 2022-2023 HR Systems Survey. This year, almost 6,000 HR professionals participated, the largest response in the survey’s 26 years—so we’re practically swimming in data.

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I’m eager to present the complete findings in my Friday morning keynote at the upcoming HR Tech Conference. I guarantee some surprises.

While data nerds like me find great satisfaction in wrangling the numbers associated with survey responses, the real work is in analyzing the results, looking for meaningful trends and finding the stories. And because we’ve got years and years of survey data to review and compare to current results, we are uniquely positioned to identify the gradual but important shifts in the HR profession, as well as cataclysmic changes such as those that took place during the pandemic.

Followers of our annual survey know we’ve long placed significant emphasis on outcomes. In fact, ours was the first survey to take an in-depth, year-over-year look at how HR technology, practices and programs impacted HR, talent and business outcomes. We recognized early on that HR needed to move from a transactional focus to an outcome-based focus in order to prove its value to the business and do the kind of work that actually made for a better workplace.

We now know that outcome-focused organizations not only perform better but they also are perceived by business leaders as being more strategic and visionary. In last year’s survey, 46% of respondents said their organizations were perceived as strategic by business leaders. But that number needs to be much higher.

A sure way to achieve a strategic perception is by keeping a watchful eye on outcomes—within your own organization as well as those of your peers—and actively discussing with senior leaders how your work impacted those positive outcomes. In this column, I’ll walk you through how we’ve monitored and assessed outcomes of HR work over the years and offer some top-level advice to help your organization gain the recognition it deserves.

Tracking and analyzing outcomes: An evolution

When Lexy Martin, the originator of the HR Systems Survey, began assessing the impact of HR technology investments over 20 years ago, she and her team quickly started correlating technology investments with financial performance, using publicly available data. The goal was to determine the business value of such investments and provide decision-making support for HR leaders.

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For a while, survey results showed that those companies that aggressively invested in HR tech performed better financially than those that did not. However, by 2014, it was becoming clear that technology investments alone no longer had the same positive impact on financial outcomes.

Reflecting the emergence of business analytic tools, we introduced the category “quantitative HR organizations” to reference HR organizations that supported data-driven decisions through HR practices and technology adoption. These organizations were characterized by the use of business and HR metrics, the availability of multiple data sources, and managerial access to business and HR analytics. Survey results from 2014 found that quantitative organizations had a 79% greater return on equity (ROE) when compared to non-quantitative organizations.

In the 2015-2016 survey, we took an even deeper dive into outcomes. For the first time, we asked respondents for feedback on their HR- and talent-related outcomes with the goal of finding out if outcomes in these areas were improving, declining, or staying the same. (To this day, we use this same methodology to track outcome performance.)

We also introduced new categories to further differentiate how organizations focused on outcomes. “Data-driven” organizations focused on the use of business and HR metrics to assess performance; “talent-driven” organizations prioritized their focus on HR outcomes; and “top performers” focused exclusively on traditional financial metrics.

This was also the first year we looked at the strategic perception of HR. While 66% of data-driven organizations were perceived as strategic, only 41% of organizations in the other two categories were seen as strategic partners.

See also: Investments in HR tech: Show me the money!

In the subsequent years, we’ve continued to look at how various factors (company size, region, industry segment, general focus) have influenced the percentage of HR organizations perceived as having strategic value.

But, although there have been some differences depending on how we sliced and diced data, the aggregate results have largely remained flat for the last five years. From 2018 to 2022, the needle hovered between 44 and 45%. Despite all of the talk about HR having “a seat at the table,” the data showed that more than half of organizations were not considered to be strategic business partners.

Moving from wishful thinking to reality with HR strategy

In early 2023, we introduced the “55 by 25” campaign—our commitment to helping 55% of HR organizations gain recognition as being strategic business partners. Central to our advice is a focus on monitoring and measuring outcomes across HR, talent and business. Just as conversations between CEOs and CFOs are all about data, the conversations HR leaders have with business owners must be data-based.

However, merely generating data isn’t enough. It’s hugely important to prioritize your focus on the outcomes that matter most to your company. What might be critical to one CEO will not be top of mind for another. What is financially feasible for a large enterprise might not be realistic for a small company.

This is why we recommend customized outcome dashboards for every HR organization. In addition to supporting data, you need to put those numbers into context—explaining the stories behind them and correlating the actions and decisions behind them to the actual results.

We also urge HR leaders to adopt a big-picture, visionary view when it comes to outcomes. Too often, there’s pressure to achieve specific numbers—such as revenue generated per employee or the cost of benefits per employee—without regard to the long-term impact on business.

Strategic HR organizations must support business outcomes in a sustained manner and avoid hasty, reactionary decisions whenever possible. Leaders must trust their data-drawn insights and be prepared to explain the potential impact of every workforce-related decision.

Strategic HR: Teams must be laser-focused on outcomes

The reveal at HR Tech

I’m honored to wrap up this year’s HR Tech Conference. As always, I’ll be sharing the latest “voice of the customer” findings that rate various applications and vendors in terms of customer satisfaction, implementation success, replacement plans and purchase plans.

I’ll also be discussing how different implementation models stack up when it comes to meeting expectations. (The accompanying chart previews our findings.) And I’ll provide a detailed look at where AI is in the real HR world.

However, I believe the identified trends associated with the HR profession are just as important to the conference audience. So much of what we read, hear and even act on is based on opinion and conjecture rather than what’s actually happening in the real world. This year, almost 6,000 HR professionals have taken the time to give us input on all aspects of HR; we need to listen to what they tell us.