Six HR Transformations For 2023

What’s the wisest way to approach transformation?

Today’s organizations remain focused on digital transformation to enable “a digital-first business.” As part of that, the tools they use and skills necessary for success will change. Meanwhile, individual departments are undergoing their own transformations to improve operational efficiency and customer experience. One of the last departments to transform is HR because the traditional tools are familiar and, historically, HR processes have not changed much.
 

That inertia is becoming unacceptable as the pace of business continues to move toward real-time. More importantly, customers and employees expect HR to provide modern experiences irrespective of how much disruption it may cause to get there.

A best practice for HR transformation is the same as that for digital transformation: it’s best approached as an ongoing process, not an event.

Following are six HR transformations that will become more common in 2023:

#1: HR Will Become More Strategic

HR is rapidly moving from being operational to being strategic, which requires both business and financial acumen. More fundamentally, the CHRO needs to be an active member of the C-suite helping to realize business goals—not just HR goals. They must also understand the company's risks, so they have a realistic view of how the business operates and why.

Traditional HR is also known to cause burnout because administrative work alone can be uninspiring. By transforming HR into a strategic asset, HR professionals can make a positive difference for their company, and their work is more challenging and exciting.

#2: HR Leaders Will Build a Network to Help Facilitate Transformation

For HR to become a more strategic asset of the business, HR leaders will need to  build alliances across the organization and take advantage of internal expertise that can help them accelerate transformation projects. It’s also necessary to leverage information silos with data-sharing capabilities that improve cross-functional efficiency.

Soft skills are always necessary for HR, but they need to be used outside the department since every project will require alignment, support, and investment.

#3: More HR Professionals Will Use Design Thinking

Many HR professionals don’t know what they don’t know, and one of those unknowns is how to understand the organization’s intended future state, because everything, including HR practices and technology, needs to align with it. Not surprisingly, a lot of HR professionals struggle when designing a  future state, so they often pull in consultants to help.

I use design thinking to create a future state because the process allows me to understand a problem from the stakeholders’ points of view. According to the MIT Sloan School of Business, there are four steps to design thinking:

●    Understand the problem
●    Develop possible solutions
●    Prototype, test and refine
●    Implement

I find this process helpful because it fosters greater creativity and encourages brainstorming. It also allows me to understand the implications of any digital transformation that might be happening within the organization, including HR transformation.

#4: CHROs Will Strengthen Ties With the CFO

CHROs will actively pursue deeper relationships with their company’s CFO to sharpen their business and financial acumen. It can take a bit of courage to ask for assistance in the first place, but the payoff is well worth it. Having the CFO in your corner can open your eyes to dynamics occurring in the company, among customers and in the industry that you may not have considered.

#5: HR Transformation Pressure Will Rise

HR can sometimes be risk averse as if it ain’t broke, why fix it? The most important reason to modernize HR is that the traditional business as usual tends not to align with the company’s more digital future state.

Companies have realized that becoming digital-first is no longer an option, so there’s a tremendous focus on that. It’s time-consuming and expensive, but it’s what customers and employees expect.

That digital-first mindset also applies to HR and is forcing HR transformation to the forefront.

For one thing, Millennials and Gen Z were born into a world that is more digital than their predecessors. Since technology is part of the younger generations’ DNA, they expect internal systems to be intuitive. They also have different preferences when it comes to compensation packages and perks.

These young and middle-aged professionals tend to surround themselves with technology in their personal lives, which is why they expect their employers’ software to operate as easily as Google. They’re also more likely to customize an app because they think the software should adapt to them versus the other way around.

The most mature organizations realize all this, and they’ve put HR technology in place to facilitate transformation. Because they were early adopters, they’re already familiar with modern software and how it differs from traditional tools. And, because they’re using intelligent automation to automate rote tasks, they have more time to innovate.

#6: Change Management Will Be Essential

Every time a business changes the way it operates, a fair number of employees may not be on board because there was no change management process in place. According to Gartner’s Workforce Change Survey, 74% of employees were willing to change work behaviors to support organizational changes in 2016, but that number dropped to 38% in 2022.

Effective change management involves “customers” (stakeholders) from the beginning because individuals are more likely to participate in a program or practice that they helped design versus one that was forced upon them.

Some companies have appointed project managers in their HR departments who are change management certified. However, the flip side is that not enough HR professionals are practicing or getting certified in change management skills.

Bottom line

The dynamics of business constantly change as a result of many factors: a shifting competitive landscape, technological innovation and changing customer and employee expectations. To keep pace, HR must transform, and the wisest way to approach transformation is to map the current and future states of the company and adjust HR operations accordingly.

Author Bio

Jamie Aitken is VP of HR Transformation at Betterworks.