Breaking the Old HR Mold: It’s Time To Redefine HR

Background

The early 2020s saw many shifts in the ways we work. Artificial intelligence, the drive towards sustainability, digital adoption, and skills shortages left many HR professionals feeling unprepared for what was required of them. 

And the rate of change has been unprecedented. Accenture’s Pulse of Change: 2024 Index analysis found that over the past four years, across six factors — technology, talent, economic, geopolitical, climate, and consumer & social — the rate of change has risen sharply by 183% and 33% in the past year alone.

While AIHR’s research showed that almost 60% of HR professionals feel they need to catch up in digital and data development, and only 21% believe they have the core skills required for the future of work. Our recent State of HR report also indicated that data and digital data rank the lowest for the activities in which HR professionals prefer to be involved.

Positively, 90% of HR professionals are optimistic about how the future world of work shifts will create new opportunities for HR. HR is uniquely positioned as the epicenter of the organization and plays a key role in equipping the business for the future by influencing leadership, organizational design, digital adoption, and new practices related to AI and sustainability. HR has an unprecedented opportunity to harness technology, uncover new talent pools, and deliver meaningful impact.

However, to achieve this, the HR profession must redefine its impact, how the HR function is positioned and operates within the organization, and how the HR professional develops and contributes to the organization.

Where we are going: Global megatrends shaping the future of work

Markets and businesses do not operate in a vacuum. Short-term trends shape the way we work, and longer-term megatrends change the world and how we operate within it. We believe these megatrends will have the largest impact on economies, organizations, and individuals over the next decade.

1. Labor markets and demographics will continue to impact the workforce

Labor market changes will challenge HR in finding and retaining the appropriate talent and skills organizations require to succeed. Advances in healthcare mean that people are living far longer, and they do not want to—or cannot afford to—retire at 65.

Late-stage career shifts will become commonplace, posing a challenge in creating new opportunities for those entering the job market, and younger and older workforces from vastly different generations and life stages will need to work side by side.

This multi-generational future workforce will impact employee value propositions, employer brand, and employee experiences. At the same time, sluggish economic growth and growing levels of youth unemployment are triggering discontent, social unrest, and talent migration. Climate change and the ongoing refugee crisis stemming from conflicts will also continue to impact talent migration and skills availability.

2. Organizations are facing a global skills crisis and skills shortages

Organizations across the globe are competing for scarce skills and resources despite population growth and localized unemployment.

The ‘West to Rest’ shift complicates this challenge further. The economic growth of China, India, and Japan means Asia will be home to three of the world’s largest economies by 2035. This will impact trade, skilled labor demands, and market dynamics. These shifts will influence the availability of talent pools in specific markets and industries, leading to workforce skills challenges and a lack of a ready talent supply.

3. Technology is becoming more human

It took less than 12 months for Generative AI to completely reshape the way people work. AI will continue to integrate into all aspects of work, and navigating this transition, job redesign, and staying on top of other technological advancements will be top priorities for HR professionals.

Governments began imposing AI regulations in 2023. Against a backdrop of growing calls for ethical and responsible AI adoption and ever-increasing data privacy concerns, we can expect more laws to be enacted. HR must adapt its practices to this new reality. For example, the EU AI Act imposes significant fines on organizations if AI-integrated recruitment practices are found to be biased.

Beyond AI, innovations like virtual reality, blockchain, advanced machine learning, and the adoption of 5G technologies will also continue to influence how HR operates and delivers solutions to organizations.

4. Our relationship with work has changed

For decades, different professions have evolved and adopted new, ‘modern’ ways of working, but nothing could have prepared the world for the accelerated shifts triggered by the global COVID-19 pandemic and the Fourth Industrial Revolution. 

Technology and digital transformation have progressed far enough for remote and hybrid working to be possible, and the experiences of the pandemic led to a notable shift in employer-employee dynamics. The early 2020s were characterized by movements like quiet quitting, bai-lan, and the anti-work movement. Expectations around better work-life balance, more flexibility, choice, and autonomy have become the norm.

Individuals expect a more significant say in why, how, and where they work, aligned with what employers can offer. Attracting talent within this landscape requires refining employer value propositions and innovative operational approaches, such as four-day work weeks, flexible scheduling for frontline workers, and embracing concepts like job-sharing and triple peak days into workforce management strategies.

An increased focus on human wellbeing has also resulted in societal expectations for more diverse and inclusive workforces. Systemic barriers that have historically limited access to employment for neurodivergent individuals are crumbling.

HR in the future: Redefining the possible

It’s AIHR’s view that HR must strive to become the catalyst that unleashes the potential of people, organizations, and society, creating a sustainable and prosperous world. 

This future will require HR to take an active role in creating impact for all stakeholders, unlocking value across different groups, and fostering a meaningful existence for individuals — while helping organizations to flourish and aligning efforts toward a better future for generations to come.

Shifting to this ambitious future will require a change in what we do as HR and what we believe HR is capable of within the next decade. As a profession, we need to understand how the world of work will change and how this will influence our role and the changing expectations of us as HR professionals.

Shifting perspective: The new future for HR

Future-proofed organizations will be built on the foundations created by HR professionals who understand the value HR brings within the context of new challenges, opportunities, and ways of working; how HR engages with all stakeholders; and how HR is positioned and organized within the business. 

These are crucial elements that HR needs to address, allowing HR to significantly impact people, organizations, and society.

The new HR target audience and how HR shows up 

HR’s value and purpose will encompass the full value proposition of how an organization impacts societies and is impacted by the world; every decision that is made internally has an external factor. 

For “Whom” HR provides value will change, with HR needing to focus on four distinct target audiences:

Target audiences: 

• Employees: Who are the lifeblood of the business and extend the culture and vision of the business beyond the organization into the communities within which they live.
• Leaders: Who make the decisions that shape an organization’s internal and external strategies, guiding the ethical compass of the business.
• Stakeholders: Who have an interest in the success of the organization and in how it creates sustainable value.
• Society: Who are ultimately impacted by what an organization does, either through its positive impact on economies, the environment, and people, or the negative consequences of how the organization behaves and the decisions it makes.

These separate but interlinked groups cannot be viewed in isolation, and HR needs to intentionally craft solutions that address the needs of each of these target audiences.

How HR shows up

Given the different nature of these target audiences, how HR contributes value to each will be different. HR will have to evolve its mode of operation, focusing on four key capabilities:

1. Strategic Impact: This capability is responsible for aligning HR priorities with business strategy and societal considerations. Within this capability, we also see an external market focus that ensures HR practice aligns with the latest trends where applicable to the business, as well as taking the impact of the above-mentioned megatrends into account.
2. Omnichannels of engagement: Refers to the methods HR uses to reach its target audience. The future will consist of omnichannel approaches, enabling HR to reach more people in an always-on, always-available manner. For example, relevant channels could be self-service, service centers, advisory, or face-to-face, depending on the needs of the business and how HR decides to market and distribute its products and solutions.
3. Products and Solutions: An integrated capability that designs and delivers the HR products and solutions implemented through the chosen channels. Products could be practices, systems, processes, or platforms that deliver directly to the end-user. Solutions will be a combination of services, support, advisory, and expertise that tailor products to the needs of different stakeholders. Products and Solutions work together in an integrated manner and include a data-informed implementation focus. In practice, this capability will blend generalist and specialist skills in alignment with our perspective of a T-shaped HR professional.
4. The HR Technology and Data capability: Encompasses the HR technology architecture and technology infrastructure, as well as the structuring and management of data, its governance, and application. Evidence-based and data-led practices are core to all HR activities, and as such, this capability delivers insights into all other HR capabilities.

Evolving the current HR function to mature these capabilities in the future will be an important stepping stone to meet the needs of employees, leaders, stakeholders, and societies. Change is never easy, and we need to reflect on what would happen if we do not change as HR and continue on our current path.

What if HR does nothing?

HR’s inaction amid the far-reaching societal and economic changes will not only limit the profession and the careers of HR professionals, who will enter the field without the right skill sets, but there will be far-reaching consequences for society, organizations, and individuals.

Society

If AI is irresponsibly adopted, the result will be massive job losses, exacerbating high levels of unemployment and social unrest. Without clear strategies and roadmaps in place to develop the skills organizations will need in 2030 and beyond, an economic decline, fewer available jobs, and companies struggling to survive will be inevitable.

Organizations will also continue to source talent from the same places, excluding the same groups of people and entrenching current systemic barriers to equality. The status quo is socially, economically, and environmentally unsustainable.

Organizations

Closer to home, adequate talent pools will be unavailable to organizations, leading to employee burnout. Businesses that do not—or cannot—adapt to changing legislation (labor markets, remote work, AI and working across country borders) will result in large legal exposure and reputational risks. Workplaces will be unable to support sustainability, wellbeing, and productivity, aggravating internal and external unrest.

Individuals

Without ethical guidance, companies will treat employees unfairly. Poor workplace experiences will lead to demotivated employees, negatively impacting productivity and well-being.

HR

Individuals know that the way we work has changed, and the future holds even more upheaval. If HR does not face these challenges head-on, the entire profession may become unattractive as a career, resulting in a lack of available skills or attracting the wrong skills. 

Ultimately, the HR function could become irrelevant. HR will remain an ‘order taker’, seen as peripheral within organizations instead of being fundamental to guiding businesses and individuals into a more sustainable, equitable, and prosperous future.

How HR will get there: Meeting new and future demands on HR

To meet these new demands, HR will need to redefine how it is perceived and positioned in business. HR doesn’t only need a seat at the table; it needs to be in the inner circle of decision-making within the C-suite and Board. The ability to strategically guide organizations requires five key steps that determine the way HR views itself, operates, and engages with stakeholders.

1. HR must be positioned as a strategic solutions provider

HR will need to move from a “cost center” into an “investment center” by managing organizational reputations; leveraging data and insights to deliver reports, strategies, and solutions that increase productivity and access greater talent pools, and aligning internal organizational values with external societal needs.

2. HR professionals must step outside traditional silos 

HR professionals are often developed to specialize within a specific function or domain. The traditional process perspective of HR has been one of increasing efficiency, driving cost reduction, and streamlining the effectiveness of HR.

Even though beneficial, this approach led to siloed thinking, often resulting in a fragmented and broken employee experience. HR professionals need to learn how to step outside traditional silos and adopt a solutions mindset that integrates various areas across the HR value chain to provide holistic solutions that solve validated problems for stakeholders.

3. HR professionals will need to build new capabilities and skills

Future HR’s professional blueprint consists of five categories that outline what future HR professionals require for success. The first is skill set, which touches on business acumen, data literacy, digital agility, people advocacy, execution, excellence, and functional expertise. 

This is underpinned by mindset. HR professionals of the future will need to be curious. They’ll need to want to deal with complexity and have analytical and problem-solving skills. 

Their professional identity will need to be built on ethics, values, and purpose, and they will need a heart set that includes the courage, self-belief, empathy, openness to experimentation, and resilience that future organizations require. 

Their toolset will need to include technological and digital skills and the ability to operate across time zones and locations. This can only be achieved if HR professionals are comfortable in their identity, guided by an ethical professional compass that holds us to a higher standard. 

4. HR must become attractive as a career

The future outlined in this article is ambitious. It will transform HR into a key strategic player within organizations and beyond. This impact will be felt in societies and economies around the world. To fulfill this role, HR will need to become more attractive as a potential career option.

Many HR professionals “stumble” into HR, as the profession is not positioned as an attractive career option, and various misconceptions still exist about what HR professionals do. We also find stereotypes prevailing as to the “type” of people that pursue an HR career – if we want to build a diverse, competent, and capable HR community, we need to become an attractive career prospect for diverse talent pools.

5. HR professionals must build a strong global HR community

Meeting the challenges of the future world of work calls for a complete transformation of how HR is viewed and its role in individual lives, organizations, and society. This will require more than a few evolved HR professionals and departments. The profession must evolve, with HR professionals and organizations working together to surpass current HR capabilities and expectations. 

HR cannot succeed in isolation — for real change to occur, we need HR communities and networks that transcend beyond one organization. HR professionals will need to tap into the collective wisdom of a global HR community of professionals who bring new solutions to current challenges and set HR up for success in their organization.

Taking the first step towards the future

These changes will take time and will require a roadmap for organizations, HR teams, and individuals that speak to changes in skillsets, mindsets, toolset, and heartset.

The question is whether we are ready, willing, and courageous enough to take this next step. The journey might not be easy, but we at AIHR are committed to supporting HR professionals every step of the way and helping advance the profession by advocating for the future impact of HR, upskilling the HR community to be relevant and successful, and creating a global HR community that can support each other on this journey.