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What HR Transformations are on the Horizon?

Experts from the Hackett Group explore how digital technology is changing HR.
By: | July 19, 2019 • 9 min read
Topics: HR Technology

The transformative impact of digital technology is just beginning to be felt in HR. No part of the function will go untouched, as it radically alters the types of services offered and how they are delivered. Digital technology provides managers and employees direct access to increasing amounts of information, insights, tools and expertise. To fully leverage digital technology’s potential, HR must rethink its organization structure, processes and roles, and shift its primary focus away from administration and transaction processing to delivering people-management capabilities that drive superior performance. We will be presenting more on this topic at the HR Technology Conference & Exposition® in Las Vegas in October.

Impact on Organizational Structures

Today’s predominant HR organizational model of corporate center, global business services/shared services, centers of excellence and field-based HR will remain for the foreseeable future, at least on the surface. What will change is the amount and type of work each entity performs, including work done through digital technologies and third parties. Smart automation (e.g., robotic-process automation, cognitive computing, chatbots/virtual assistants, etc.) will handle most of the routine workload across HR. (The Hackett Group’s benchmarks show the typical HR organization currently devotes half of its staff and budgets to administration and transaction processing.) This will allow HR to dramatically redeploy staff—far fewer will work in areas such as GBS/shared services, and more will take on high-impact activities, such as talent strategy, HR-program innovation, organizational change, analytics and acting as trusted advisers to senior leaders.

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Below, we discuss each of the main components of the future HR model:

Business partners become truly strategic. Few would debate that HR business partners should handle strategic or high-value activities. But many currently spend much of their time dealing with day-to-day HR issues. In the future, these activities will be largely supported by self-service and digital assistants, as well as operational COEs. These capabilities, fortified by analytics and artificial intelligence, will finally give HR business partners the time, tools and insights needed to productively work with senior leaders to create and implement talent strategies, make the right investments in people, carry out their leadership and people-management responsibilities more effectively, and create successful and sustainable organizational cultures.

Self-service expands to full-service. The concept of self-service will radically change from today’s HR administration-centric model, emphasizing data input and information access to HCM systems, to one featuring direct access to a digital-productivity platform of information, services, tools and analytical insights for the workforce and managers.  Designed for omni-channel accessibility and enhanced by analytics and AI, it will draw on company-wide and external capabilities. For example, employees will have access to personal digital assistants, productivity tools, performance coaching, personalized training and customized career-development guidance. Managers too will benefit from a wide array of tools (real-time feedback apps and digital-coaching aids, for example), helping them perform their people-management responsibilities better.

Global business services/shared services shift from transaction processing to platform management. Today, GBS organizations mostly handle HR transactional and administrative tasks, as well as those related to talent management, such as recruiting and learning administration. In the future, software robots will perform these tasks, freeing up GBS staff to focus on operational platform-management activities, such as programming and monitoring software robots, maintaining analytics engines and algorithms, monitoring service-delivery performance, leading continuous improvement initiatives and implementing new services.  As a result, we expect GBS/shared-services organizations (especially those that are highly dependent on labor arbitrage) to shrink.

Centers of excellence expand scope and impact. COEs will create more digitally enabled capabilities and maximize their impact by assisting with the implementation of tools and programs. Furthermore, their role will change from primary internal source of knowledge and expertise to product manager, overseeing development, selection and delivery of needed programs, tools and capabilities.

COEs will focus on business-oriented themes, such as workforce intelligence, talent development, organizational effectiveness and continuous transformation. For these types of activities, COEs will increasingly support the business directly rather than going through intermediaries.

External providers are seamlessly integrated into service delivery. HR will rely more on third-party platforms and providers, including business-to-business networks, for a variety of operational and strategic services. These will include HR process-as-a-service vendor platforms and offerings, a diverse array of knowledge networks and data collected via digital technologies, including smart devices, such as wearables, smart badges and sensors.

CHROs become enterprise human capital leaders. Digital transformation will increase the importance of integrating human capital strategy and weaving HCM services into the strategic and operational fabric of the business. The most successful CHROs will act as human capital leaders for the enterprise, working with top executives of the business and the board of directors on strategic people issues, such as culture and values, quality of leadership, talent strategy, employee engagement and workforce performance.

Impact on HR Processes and Roles

Digital technologies will have a major impact on the way HR processes and roles are performed. Below, we discuss some of the most compelling examples:

Recruiting and staffing become truly candidate-centric; roles highly specialized. As adoption of digital technologies grows, talent acquisition COEs will shift to techniques used by sales and marketing organizations to attract customers, communicate the employer-value proposition and engage potential candidates in a personalized manner by leveraging demographic and behavioral data. Increasingly detailed data about candidates will fuel advanced analytical analysis. This will help companies better understand the drivers of acceptances and rejections, characteristics of candidates with the best organizational fit and greatest potential for success, and the most fruitful sources of quality hires.

The work involved in recruiting and staffing will evolve into specialized roles devoted to different steps of the process. For example, recruiting-solutions architects will focus on understanding the service required by different customer segments (candidates, employees, managers) and designing the best possible service. Candidate-experience managers will endeavor to create the conditions for successful sourcing, with an emphasis on leveraging social media and maintaining strong connections with the corporate brand. Sourcing-development managers will build candidate pipelines via diverse sources, including non-traditional and skill-specific talent pools (contractors/freelancers, global/regional talent pools).

Learning and development is personalized; roles focus on learning enablement. Digital technology will blur the lines between formal and informal learning methods, making it possible to deliver personalized, just-in-time, context-specific training and learning support. Analytics capabilities will anticipate staff learning needs and suggest the most effective training methods. Insights from analyzing training-participant data will improve HR’s understanding of the drivers of effective training and pinpoint methods that generate measurable improvements in performance.

The work of the learning and development organization will shift to learning enablement and culture development, rather than top-down training-program design and implementation. Professional-development-solutions architects will specialize in areas like leadership or leveraging different training-delivery channels. Employee-development coaches will help employees understand their individual development needs and choose those learning experiences most relevant and useful to them. Learning-module developers will replace “pedagogic engineers,” working under the guidance of solutions architects and relying on new technologies (multimedia, virtual reality, gamification, etc.) to deliver business-critical training modules.

Performance management and employee relations become real-time, social and more human; roles focus on culture and performance. Today’s data-collection methods will be replaced by applications enabling continuous, real-time collection of employee data, including time spent working on different tasks, conversations and networking patterns, movements and even emotions. Employee feedback will be captured as well through automated surveys triggered by different milestones such as post-onboarding, training events, major project completions or work anniversaries, as well as other methods like sentiment analysis. Analytics tools will pinpoint the drivers of engagement and performance and direct tailored interventions as needed.

Workforce agility and innovation leaders will assess overall organization structure, ensuring that groups have the best model to support innovation and agile responses to market changes. Culture- and values-development leaders will monitor and ensure consistency across the entire workplace experience. Other potential organizational-effectiveness roles will include workforce-performance advisor/coaches, change agents and workspace-design experts.

Total rewards is fully digital; roles shift to employee-value proposition. As digital technologies permeate HCM systems, users will perform most total-rewards-related tasks via computer or mobile device.  AI-based analytics capabilities will expand services beyond life-phase reminders and financial guidance to personalized data and recommendations, while digital assistants like chatbots will handle most employee and manager queries.

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Total-rewards professional roles will shift from administration to design of compelling employee-value propositions encompassing the full spectrum of workplace and benefits offerings and designed to suit different employee profiles, even individualized packages. Rewards will expand to include different types of benefits, such as wellness and wellbeing, as well as new and variable forms of employment (e.g., assignments with a fixed duration and specific reward plans). New roles, such as workforce-experience manager, desinger of employment-value proposition and human-capital impact analyst will emerge.

Strategic workforce planning is predictive; roles center on modeling of workforce dynamics. Digital technologies will enable organizations to more precisely know the drivers of skills demand and supply for each workforce segment. Predictive analytics will allow HR to anticipate specific turnover and skills-supply risks, as well as pinpoint favorable supply trends to exploit. Modeling and scenario-based analysis will potentially allow HR to provide valuable guidance to the business and talent-strategy-formulation activities of senior management.

Dedicated COEs will drive better understanding and modeling of workforce skills demand and supply trends, drivers of employee performance and their impact on business results. Workforce business analysts/insight experts will seek to understand workforce-performance dynamics and the links between employee behaviors and business results. Workforce-data-program leaders will be responsible for all end-to-end data-analysis programs, including data manipulation, consolidation and computation. Communication/data-visualization designers will take charge of data presentation and communication to business stakeholders and the associated messaging.

Recommendations

HR organizations must accelerate implementation of the changes needed to meet the demands of enterprise digital transformation, including improvements to HR capabilities, service offerings and performance. The Hackett Group recommends the following actions:

  • Define the future HR organization: What capabilities must HR have, and what contributions will it need to make to succeed in the future?
  • Evaluate current organization structure: What is HR’s current model, and how well is it working? How does it compare to what will be needed to fulfill the future vision of HR? Which areas should be prioritized for transformation?
  • Assess existing HR processes: Are they optimized for today’s demands? What are the key priorities for improvement? To what extent can HR processes be further automated and digitized?
  • Rethink HR roles: What is the current mix of support, professional and managerial roles? How much administrative and transactional work is performed by staff in each job class? What activities can be fully digitized, and how should existing roles be redefined as a result? What high-impact areas are not addressed adequately by existing HR skills?
  • Create an implementation roadmap: What digital capabilities—such as smart automation, data analytics and data governance—should be implemented in the short, intermediate and long term to accelerate realization of the future HR organization?

The HR Technology Conference & Exposition® will be held Oct. 1 through Oct. 4 at the Venetian in Las Vegas.

Tony DiRomualdo is senior research director at the Hackett Group. Franco Girimonte is associate principal at the Hackett Group.

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