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10 min read

The Future of Human Resources

Jun 7, 2019 8:00:00 AM

In the past half-century, the role of human resources has changed drastically. Today, across industry and geography, HR is tasked with creating an agile organization, combatting the skills and talent gap, regulatory compliance, and improving employee engagement and the employee experience. Considering human resources began as a personnel operations center in the 60s, that’s a huge evolution.

In this post, we’ll provide an all-encompassing rundown of how human resources is leading digital transformation globally, including an explanation of new artificial intelligence technologies that are transforming HR to be a strategic business partner.

HRPillar1

Gatekeeper of digital transformation

In the last decade, we’ve seen unprecedented opportunities for information sharing, digital reinvention and crowdsourced transparency, and that’s increasingly empowering workers worldwide. To remain competitive in this fast-paced and rapidly changing environment, global organizations must see HR management as more than just a personnel center; It’s the facilitator of digital transformation.

Today, HR can create a competitive advantage for their organization by establishing digital literacy in the workplace, helping create operating models conducive to the future of work, and attracting and retaining top talent. Of course, this is easier said than done.

HR is expected to lead digital transformation in organizations worldwide, and over 65% of 1,200 HR executives surveyed by KPMG believe that HR is already undergoing a radical digital transformation. That being said, just 40% of HR leaders have a digital work plan in place at the enterprise or HR level.

Clearly, HR departments around the world feel pressure as digital innovation continues to radically transform the way organizations work and structure themselves.

Digital HR management and organizations of the future will have embraced innovation and experimentation. As companies become less siloed and more transparent, and as the employee base continues to shift towards digitally savvy veterans and digital natives, HR transformation becomes more urgent.

70% of HR executives recognize that workforce transformation is one of their top priorities, but only 37% feel confident in their ability to achieve their goals by integrating cutting-edge technologies like artificial intelligence (AI) and workforce analytics.

HR transformation today

In the 20th century, HR was largely focused on process design and process excellence; enterprise resource planning (ERP) implementation; selecting cloud vendors for ease of use and scalability; and building employee self-service portals for day-to-day operations.

Previously tasked with filling vacancies, lowering employee rates and handling the hiring, letting go and promotion of employees (e.g., business as usual), HR leaders are now expected to help their organizations overhaul their traditional siloed structures to refresh the workforce and workplace. This includes:

  • Optimizing employee engagement and career growth
  • Digital solutions that increase workplace productivity
  • Selecting vendors based on technologies that scale HR and empower employees
  • Building employee experience platforms with innovative, company-specific solutions

The demand for transformative digital HR is so ubiquitous that some HR departments are trying to reinvent themselves internally with hackathons and rapid design groups aimed at producing minimally viable products (MVPs) for new pilot HR management programs.

Top Challenges Named by HR Executives Surveyed

HRPillar2

 Source 1. Accenture, "Igniting HR for Strategic Business Partnerships," 2018

However, digital HR management requires digital technology expertise; Cloud-based HR personnel systems are not sufficient to stay competitive. HR leaders must rethink digital transformation solutions in the context of their workflows. And a new generation of technologies are already leading the way.

The exciting benefits of intelligent automation

A new wave of digital technologies can improve business processes, employee engagement and the employee experience. More importantly, intelligent automation is ideal for tackling highly process-driven operations.

Intelligent automation harnesses the power of AI and cognitive technologies to understand processes and challenges, and automate complex business rules and decisions, requiring greater judgement.

Apart from significant cost savings, businesses worldwide leverage intelligent automation to extend organizational convenience and control through expanded self-service. In turn, this allows employees time to concentrate on more engaging and meaningful work.

In Brief: Robotic Process Automation and Intelligent Automation

HRPillar3

Source 2. Accenture, “Putting Intelligent Automation to Work for Federal,” 2018

According to Accenture, compelling benefits of intelligent automation include:

  • Accuracy: Reducing the risk of transactional errors improves data accuracy and data-driven decision making overall
  • Speed: Drastically reduce process cycle time, significantly improving outcomes and satisfaction
  • Service continuity: Predictability, dependability and continuity of service from 24/7 digital assistants that can handle spikes in demand
  • Greater processing efficiency: Reducing the cost of transaction processing by up to 80%
  • Ease of use: Simple implementation, configuration and maintenance via an intuitive interface
  • Workforce agility: Respond to fluctuations in demand with instantaneous changes to capacity, at a fraction of the cost of traditional models
  • Scalable infrastructure: Decouple resource costs from process volume to simplify operational scaling, enabling organizations to refocus resources on key areas of expansion, organizational change and increased capacity

Finally, strategic focus is arguably the most compelling benefit of intelligent automation. By delineating rules or knowledge-based decisions from those requiring greater judgment or analysis, you can optimize talent while simultaneously affording a better employee experience.

Cloud-based transformation

A growing number of HR leaders are embracing digital technologies for a more agile workforce. Consider PwC’s Annual HR Technology Survey findings; 75% of the companies surveyed have at least one HR process in the cloud; 40% of respondents have moved core HR management systems to the cloud; and 26% have plans to in one to three years. 

Initially, large organizations with complex requirements, like international payroll, were hesitant to move core systems to the cloud, fearing the technology wasn’t mature enough. Over the past decade, however, this has changed. More and more, businesses are moving core systems to the cloud in droves.

Top Motivations to Use the Cloud for HR Processes

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Source 3. PwC, “Human Resources Technology Survey,” 2017

Transforming attracting & retaining talent

Top talent is a major organizational efficiency kicker. So much so, McKinsey & Company claims superior talent can be up to eight times more productive.

But a serious skills shortage gap may thwart businesses high expectations to hire in the fastest growing sectors. And Gartner's latest Emerging Risks Survey should be alarming; Global talent shortage is now the top emerging risk facing organizations, outweighing both “accelerating privacy regulation” and “cloud computing”. 

While technologies like artificial intelligence and machine learning are increasingly leveraged to improve HR functions, intelligent automation combines AI with automation, enabling machines to understand, reason and act, independently, or with human assistance. And by understanding both processes and their variations, IA offers a more efficient way to modernize and streamline sourcing, attracting and retaining superior talent.

Despite the candidate experience being the first phase of the broader employee experience, just 15% percent of global business leaders surveyed by Deloitte believe their companies do an “excellent” job cultivating and monitoring long-term relationships with prospective talent

In this year’s Global Human Capital Trends survey, Deloitte asked respondents to rate their recruitment functions, finding only 6% believed they had best-in-class processes and technology. At the same time, 81% considered their organizations’ recruitment processes standard or below standard.

More and more, technology is disrupting HR, and today’s talent acquisition systems are evolving toward cognitive capabilities, including artificial intelligence (AI), machine-to-machine learning, robotic process automation, natural language processing, predictive algorithms, and self-learning. The latest Bersin™ research on talent acquisition says optimizing technology is one of the recruiting function’s biggest opportunities. Consider, digital assistants guiding candidates through the application processes, while simulations confirm skills to analyze whether a candidate will succeed.

Top Emerging Risk Facing Organizations

HRPillar5

Source 4. Gartner, “Top Five Risks by Overall Risk Score,” 2019

Improving the employee lifecycle

Nondiscriminatory and fair employee compensation is a top concern for employers across the globe, fundamental to the employee experience and intelligent automation can transform payroll, benefits and compensation into strategic processes.

Performance reviews are important. The process shows an organization is interested in and committed to their employees. 

In fact, CEB analysis says, performance reviews are valuable for employee retention. And when they’re happening, job search activity by employees goes down by 13%. This is significant because global talent shortage is now the top emerging risk facing organizations. 

Yet, according to Gallup, only 14% of employees strongly agree their performance reviews inspire them to improve

For many organizations, year-end performance reviews are a major source of displeasure for employees and managers alike. So much so, there could even be a crisis of confidence in the way businesses evaluate employee performance. And in 2015, one of the largest companies in the world, Accenture, scrapped them altogether, favoring a more fluid system where employees receive timely feedback from managers on an ongoing basis.

Deloitte’s 2017 Global Human Capital Trends report found widespread desire to change the antiquated practice: 45% of companies believed performance evaluations were not an effective motivational tool for employees, and 41% of companies found widespread manager bias. However, companies were optimistic about the future and committed to redesigning performance management; 79% of executives rate it a high priority, while 38% say it’s very important. This is likely because 90% of the companies that reengineered evaluations saw direct improvements in engagement, 96% experienced simpler processes, and 83% accomplished better employee-manager conversations. 

It’s important that employees understand their successes and failures; This allows them to learn from their mistakes, and repeat wins.

Today’s leading organizations are transforming the performance review processes by leveraging technology as an integral part of the redesign. And modern performance reviews are shifting performance management from an annual evaluation to intelligent tools.

Intelligent automation, across the organization, advances performance. By assimilating cognitive learning and artificial intelligence, intelligent automation creates digitally-enabled, agile enterprises that operate better, faster and more effectively. And by complementing your people, it supports accelerated and intelligent decision-making. 

As shared services aims to raise its profile as a value adding and strategic partner, it’s critical to deliver services that improve performance, reduce risk and enhance engagement. Thus, intelligent automation is changing the very nature of business support services like HR.

Business Executives See Huge Potential for AI to Alleviate Repetitive Tasks

HRPillar6

Source 5. PwC, "Consumer Intelligence Series," 2017

Today’s tools are helping shift performance management from an annual evaluation to an ongoing dialogue, offering flexible goal setting, scorecards, continual tracking and automated, on demand coaching.

Consider, intelligent performance management; Self-service tools guide managers to the correct course of action at each stage of the review cycle, delivering consistent, compliant and complete performance evaluations. Similarly, intelligent automation advances rewarding and recognizing employees. It enables timely feedback around projects, events and initiatives, keeping people engaged outside of the formal review.

Human resources as a strategic business partner

Technological disruption has fundamentally changed the way we live, work and interact. In order to remain competitive, businesses have to adapt, and quickly. As enterprises shift to new business models, there are unprecedented opportunities for HR to play a new and vital role in shaping the visibility of an organization.

Already, HR is thinking strategically and aligning with the priorities of the business. In an Accenture survey, the top challenges for HR executives were the same as those identified by all senior leaders across industry and country, including:

  • Increasing profitability (59%)
  • Keeping up with competitors (49%)
  • Identifying/generating new business (49%)

The essential role of next-generation HR cannot be overstated. While it can transform traditional best practices and cost-savings for the business, the overarching goal is a continuous solution where HR reshapes itself, and the workforce, driving a competitive advantage like never before.

According to the Harvard Business Review, disruption is forcing HR to address the future of the enterprise, the future of the workplace, as well as the future of how work gets done. This includes:

  • Driving innovation and agility through workforce development
  • Helping extend the enterprise with a partnership ecosystem
  • Building an inclusive workforce with many different skills and talents
  • Creating new workforce experiences to invigorate teamwork and productivity
  • Forecasting future capabilities and enabling continuous learning

As HR leaders look to balance increasing customer and employee experience demands with strategic business imperatives, they must redefine traditional operating models, re-imagine service delivery and advance collaboration across the organization.  

Breaking down silos & stitching together larger organizational processes

Organizational agility, innovation, collaboration and productivity cannot thrive in a siloed environment, and this flawed business construct has only been exacerbated by globalization, big data and advances in technology.

Having each function decide what matters most could make achieving incremental gains in individual units easier, yet the overall impact is generally underwhelming and difficult to sustain.

Thus, it should be concerning that research from the MIT Sloan Management Review found just 28% of legacy businesses have successfully digitized, and a little over half still work in silos.

Intelligent automation combines AI with automation, enabling machines to understand, reason and act, independently, or with human assistance. Thus, it offers infinitely scalable levels of efficiency to achieve enterprise goals. And by intelligently automating business processes and the development of critical business insights, HR leaders can spend more time focusing on their business partners and employees.

Are your human resources a strategic business partner? If not, what are you waiting for?

 

Let's transform my HR

Level Insights
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