HR’s transformation: the need for speed

Agile organisations need equally agile and adaptive HR departments if they are to compete in fast moving and ever-evolving markets and operating environments. It is concerning to hear then that only one in three organisations are deploying the key components of a high-performing HR service delivery model, according to a new study by the global consultancy Mercer, published this week.

Mercer’s 2017 HR Transformation Study – How HR Needs to Change finds that more than one third (35 per cent) of organisations worldwide employ an HR service delivery model that includes the three components of: centres of expertise; HR business partners; and HR shared services. The successful operation of all three components is an attribute of high-performing HR functions yet fewer than one fifth (17 per cent) of functions plan to change from their existing model.

The study shows that organisations with HR functions that continuously evolve their HR service delivery model, build capabilities among their HR team, and invest in technology perform significantly better than those that do not

Mercer points out that in rapidly changing workplaces, the HR function’s slow transformation does not align with the C-suite’s plans for more change and support. Mercer’s 2017 Global Talent Trends research finds that the majority (93 per cent) of executives are planning an organisation redesign in the next two years with 41 per cent expecting to move support functions to shared services.

“Organisations are making changes to boost innovation and increased agility, which requires a significant culture change,” says Margaret Ruiséal, partner in Mercer UK’s HR transformation business. “HR needs to be well positioned to support these changes and ensure its priorities and practices are aligned to business needs.”

In previous blogs, Rialto has discussed HR’s yearning to be – and to be viewed as – more strategic. While challenging, the current climate gives it the best opportunity to prove itself in this department by truly aligning itself with the business strategy.

Global talent shortages and skills gaps will be among the factors that hold organisations back as we advance further into the digital age and tackling them lies directly at the door of HR. Similarly, culture change and ensuring the organisation has an environment that encourages innovation must fall part of its remit. And, of course, it must adopt technology and use data analytics to lead to more strategic decision-making.

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Mercer’s study finds that organisations with high-performing HR functions have embraced technology and have realised significant results by assessing and applying analytics. Specifically, it finds that they have they achieved better business outcomes, including delivering exceptional customer value (94 per cent), reacting proactively to disruptive change (83 per cent), and driving innovation (89 per cent). Additionally, they are viewed as great places to work (86 per cent) and able to attract the talent needed to excel (91 per cent).

Also by building alignment to key business performance initiatives, HR professionals are well-positioned for value-added roles, Mercer’s study shows: more than two-thirds (69 per cent) of CHROs/executive HR leaders meet with the CEO or COO to discuss business and HR strategy at least twice a month to ensure that strategic alignment.

Ruiséal concludes by saying that there is a significant opportunity for HR to grow its digital presence – and she’s right. But while embracing technology and the data-driven future is critical to the HR function’s and many organisations’ futures, I would also contend that the current uncertain climate offers significant opportunity to raise its profile in general and finally secure the ear of the C-suite.


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