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HR Transformation – what's changed in 10 years?

In May 2009 the Economist published an article exploring HR Transformation and explaining the progress (or lack of) made thus far.

The article discussed the changing perspective on the role of HR and the growing need for departments to be more strategic and make strategic gains. It was clear that there was far to go. But as 2018 draws to a close, the articles 10 year anniversary approaches, we ask how much have we really moved on since then, and predict what’s next.

HR’s journey from administration to strategic thinking

The article explains the journey HR professionals have undergone since 1995 where the profession was predominantly restricted to an administrative function responsible for people related transactions such as pay, complaints and bonuses. There was a prevailing sense however, that HR were not capable of strategic thinking and would not be able to rise to the challenge. In many cases there was a drive towards bringing external, more general skills into HR positions in order to support this new strategic requirement.

What’s changed?

In 2009 perspectives were starting to change. Businesses were starting to understand the need to value their people, and started to ask more of their HR teams. Rather than simply asking them to undertake people administration in isolation, they began requiring them to have a wider understanding of the business and the impact of the people they were dealing with on a firms strategic objectives. The gulf between the requirements of a business and HR’s ability to deliver started to close has significantly narrowed, but there is always more to do.

What’s next?

In 2019 and beyond this strategic need will only increase. HR has made great leaps and is widely recognised as a strategic player in a business, but more work must be done. In order to be truly strategic, HR must find a way to minimise, even eradicate manual administration and enable their teams to focus on true value add activities. AI and technology will be a great help in this area, but must be used to enable HR to achieve its strategic objectives, and not used as a solution in and of itself. The opportunity to use technology to enhance strategy will present many challenges and it will take savvy business leaders (a group within which we confidently include HR leaders) to navigate the pitfalls to optimise opportunities.

The rise of shared services

Propelled by David Ulrich’s philosophy of segmenting HR into 3 (Shared Services, Centres of Excellence and Business Partners) the creation and dependency on shared services began to rise.

What’s changed?

Since 2009 many businesses have successfully established working Shared Services. However, outsourcing jobs that easily lent themselves to this, didn’t necessarily bring the improvements everyone hoped for and expected. Today, businesses across the country are assessing their Shared Services and looking for ways to improve the quality, efficiency and experience provided.

What’s next?

Employee experience will be a top priority when improving Shared Services, particularly in the Public Sector. Companies will look for ways to increase engagement with HR services and improve the relevance and efficiency of that experience in order to ultimately improve the performance of their people. Again, technology will be a great enabler in this area, but must be approached with caution. Clunky and inefficient processes will not be solved by new technology and businesses must ensure they are carefully considering their needs and redesigning the services and processes required before contemplating enhancement through technology. Those with systems already in place will be looking to review their use of technology and find ways to retrospectively improve the processes it supports.

A never ending quest for transformation

In 2009, the idea of HR transformation was extremely popular. A 2005 survey of US firms by Mercer showed that 50% were mid transformation, 10% were planning to start one that year and a further 23% had already completed a transformation programme. The need and desire was clearly there, yet the process itself was complex, inefficient and often painful. According to the economist approximately 30% of HR leaders lost their jobs to HR transformation with a further 20% to follow, and this was largely due to the trend of bringing external non HR skills into the roles.

What’s changed?

Not much – at least regarding the need to transform itself. The majority of businesses we speak to are still looking to achieve HR Transformation. Indeed, most are looking to start afresh, or improve upon the failed HR Transformation projects initiated in the last decade. The frustrating factor is a widespread denial of mistakes made in the past and a hesitance to learn from others. The need to transform all back office functions, but especially HR is stronger than ever, but how this is could be done has evolved.

What’s next?

Today, the real opportunity lies in Automation of Back Office processes, of which HR plays a significant part. HR Transformation will soon be seen as the intellectual and strategic progress required by a business and the journey with which they pursue them. HR transformation in the former sense (increased efficiency of process and systems) will now be seen as just a tool in a wider drive towards digitalisation and automation – where the real gains can be made.

At first glance, not a lot has changed since 2009. Businesses still speak of Transformation and desire increased engagement and efficiency through this process. However, the meaning and tools used to deliver it have significantly changed. Forward thinking businesses must think beyond traditional HR Transformation and start thinking in two categories:

  1. Automation of Back office process (delivered by leveraging technology) and

  2. Strategic & intellectual innovation (achieved by minimising time spent on back office functions, and instead focusing on business objectives).

The business who updates their definition of HR Transformation and manages to use technology as a tool for achieving their strategic objectives will be the one to succeed in 2019.

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