The HR Transformation Story: How are Companies Developing the HR Department of Tomorrow?

From the five characteristics of an HR department that’s future ready to the four-question blueprint that shows the way, this article is all about the HR evolution story that’s being written. Where are you?

If you run a poll in your organization to determine the department that is the most agile, that contributes significantly in terms of overall market strategy and which is indispensable to serving customers, a random guess says the answer may not be HR.

Which is at odds with the purpose of this domain – making the most of talent and helping employees generate value.

Employees are expecting an experience at work

Human Resource has been misunderstood. Both in terms of the objectives an HR department needs to achieve and the role it must play in uniting employees and management.

But things have finally started to look up. The trends of agile HR and consumerization of HR are key steps in the right direction.

Human Resource is gearing to move away from biased decision making, bureaucracy and hierarchy to evidence based HR, abolition of the chain of command and creating a space where talent innovation comes naturally.

Companies are busy developing the HR department of tomorrow. Let’s take a look at what that entails and how the transformation can happen.

The Evolution Story of HR

Dr. Dave Ulrich takes us on a fascinating journey detailing the progression of HR.

HR started out as the department responsible for executing the administrative side of hiring and firing employees. It filled out forms, kept records and managed the conditions of work. Nothing ground-breaking but a piece of the operational puzzle nevertheless.

Then came the concept of process and productivity. Companies began to look to their HR departments to develop and enforce best practices that would make labour management simple and optimize the output of employees.

Next it was the turn of strategy. Human Resources had to step up and go from being a repository of “what employees need to do” to being the force that fosters loyalty, catalyses positive change in workers and identifies leadership potential to ultimately fulfil the business vision. The much-publicized talent war has only added impetus to this drive.

It all starts with a talent mindset / Credit: hbswk.hbs.edu
It all starts with a talent mindset / Credit: hbswk.hbs.edu

Traversing this landscape, we halt at today. The now when HR is being challenged the most. It is no longer enough to find people who fit pre-defined roles and to position a company as the ideal employer.

HR evolution and the message
HR evolution and the message

HR departments must have an outside-in approach where they pick and groom candidates with the view to create desirable outcomes for external stakeholders like customers, investors and even the larger community based on their issues and needs.

Top 5 Characteristics of a Future Ready HR Department 

1# HR is no longer pleasing the boss

It has re-adjusted priorities and is intent on improving employee intimacy. Human Resources professionals should not be viewed as snitches who have the ears of the management. They must be allies focused on improving performance. The era of fixed jobs has just about ended.

Today candidates should ideally be evaluated for cultural fit, more than certifications or rigid standards of prior experience. In this setting HR departments provide a framework of feedback and performance appraisal that ultimately leads to better role fit and enhanced output. A future-ready HR department has people who at heart are employee champions.

2# HR is challenging the accepted

Challenger sales reps perform better than relationship builders or hard workers. HR personnel need to imbibe some of these qualities. HR must be in possession of accurate performance data and the analytics power to mine insights from the pool. Based on these insights, it validates or refutes strategies suggested by the management because ultimately execution relies on the prowess of talent and making the most of talent is a big piece of the HR pie.

3# HR is comfortable with man-machine collaboration

Since Human Resources by default deal with human beings, the question has always been “Who is better – man or machine?” The HR domain of the future is different. Professionals need to realise that machines may not have the empathy of humans, but they are useful for certain aspects of efficient operation like automating repetitive tasks and removing unconscious bias from decision-making. Instead of viewing HRMS platforms as restrictive, the general bent should be to leverage its capabilities, entrusting it with tasks like leave management and investing the time saved in more worthwhile pursuits.

4# HR is Organisational Network Analysis savvy

Organisational Network Analysis (ONA) is the need of the moment as authority gets decentralised and workforces become distributed. ONA says HR needs to look beyond teams and consider the networks of teams spread across multiple touchpoints of a business. Visualising the interconnections comes with several advantages. First, it is easy to identify talent across networks of teams and companies may be able to think outside the box to fill positions in-house. Second, knowing who has leverage in several teams results in a quick transfer of strategy from one part of the operation to another, without massive push-back.

5# HR is transparent

Can transparency be quantified? Probably not. But open, candid internal communication certainly paves the way for transparency. There are several characteristics of this sort of communication:

  • It is real time
  • It is complemented by self-service capabilities so that escalation is limited to real priorities
  • It is “real”. This means the good news with the disappointing updates

HR tools with communication analytics, integration with team messaging platforms like Slack and convenient directories are upping the ante.

Can Your HR Department Get There?

The answer is yes. And the blueprint is guided by four key questions which give us some factors to work on and a set of criteria to meet.

Q1. How should our HR department be organized? Research shows that there is a direct correlation between a company’s growth and it’s HR department. Single focus businesses and start-ups can get by with the support of a line-manager and a comprehensive HRMS platform. When the number of employees hits the critical mark of 50, the consideration of a fully-fledged HR department becomes a reality. To be succinct, HR organization needs are largely influenced by the trajectory of the businesses they will serve.

Q2. Which HR practices must be improved? There are a number of buckets into which these practices are sorted. There are practices around hiring talent, staffing and generating value with employees. There are practices around performance management and compensation. And there are practices around communication. It is important to map where each bucket/body of practice is at, where it should be and the resources needed to make the transition a reality. This reflection assists prioritization as well.

Q3. What kind of people does our HR department need? There are 18 distinct personas driving the HR of tomorrow. While having all 18 is a luxury, most well-staffed and progressive teams should include a challenger (or change agent), the employee champion, the specialist and the administrative expert. Stephen Bevan’s project sums up the traits of these individuals:

Priorities for HR professionals, from 'Next generation HR: Part two' by Stephen Bevan (2016)

Q4. What do we need to measure? At the end of the day iteration is the zeitgeist of the HR of the future. Metrics have to be identified, measured and then diligently analysed for intelligence that can drive change. A well-rounded HRMS platform with a user-friendly interface removes the inhibition around data mining. When this data focused stance is adopted by HR departments, fear of failure is no longer a deterrent. Each failed project teaches something new and HR finds itself more agile in the process.

Human Resources may have joined the game late but an increasing awareness of the long way ahead is expediting its evolution. Companies are transforming how they view HR, people and workforce generated value to play catch-up. And the results will be evident over the next decade.

 

Ilona.

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We at CakeHR, HR software company, stay on top of the latest HR trends as it is important for us to know what are the challenges and opportunities our customers are focusing on, so they can leave the management of HR data and day-to-day errands to CakeHR. The time-off, calendar, employee data and reports’ management and production are CakeHR’s currently more popular functions, however, we are about to add brand new vital and exciting modules to the existing ones – timesheets, onboarding and performance management, just to name a few!