For many CHROs, managing the HR-board relationships is a relatively new experience, and many report feeling unprepared to meet the expectations set by the board and other executive team members. A further 39% also stated they wish they were more prepared to deal with the board in hindsight.

In this article, we explore the HR-board relationship, focusing on the CHRO’s responsibilities and the skills required for success.

Contents
The role of HR within the board of directors
The challenges that the CHRO faces at the board level
Getting HR-board relationships right: 5 steps
Getting started with the right skills

The role of HR within the board of directors

Externally, shifts in the labor market, economic pressures, and political and social influences have expanded the board’s roles and responsibilities in guiding organizations toward the future. 

Increasing governance oversight regarding executive pay and diversity, increasing demands for transparency, more pressure on performance, and more interest from board members related to executive succession, culture, and wellbeing have demanded more from CHROs regarding their interactions with the board. They primarily engage with the Social and Ethics Committee and the Remuneration Committee, often participating as invitees to address specific questions or topics.

Given the increasing importance of HR, the CHRO’s presence as a regular board member has also been rising. According to the Stuart Spencer Board Index, 93% of the 200 surveyed CHROs regularly attend their company board meetings, with 81% actively involved in driving CEO succession. Additionally, a survey of people leaders revealed that 43% reported an increase in their interactions with the board over the last 12 months.

While representation has improved, clarity regarding the CHRO’s role at the Board level still needs to be improved. Many still perceive the CHRO as a manager of people risks, viewing the position chiefly as focused on legislative and compliance matters, ensuring fair and just labor practices. Similarly, some CHROs are uncertain about how to engage with the board and which topics to present for discussion. 

In our view, the CHRO at the board level is the owner of four distinct agendas:

People strategy and risk agenda

The CHRO champions the people strategy at the board level. This involves helping the board understand the desired employer brand, the business’s market positioning regarding talent and skills, and the primary risks that must be managed to ensure a productive and impactful work environment.

These risks may encompass factors such as the shift towards AI-empowered work, navigating the complexities of remote working, and formulating responses to political unrest that impacts employees.

Talent, skills, and sustainability agenda

The CHRO serves as the custodian of the talent and skills agenda at the board level. Their role is to keep the board informed about approaches to talent sustainability and the attraction, development, and retention of critical skills.

Additionally, the CHRO must assure the board that the organization is actively managing skills gaps and has plans for the succession of critical skills and leadership. This responsibility often extends to involvement in CEO succession and the recruitment of future board members.

Beyond talent and skills, there is a growing emphasis on environmental, social, and governance (ESG) matters. CHROs are becoming key in shaping a culture of sustainability and fostering responsible organizational citizenship within the communities they serve.

Culture, engagement, and productivity agenda

The CHRO clarifies for the board the desired organizational culture, employee engagement, and how current workplace practices contribute to sustained productivity and performance over time.

In this role, the CHRO goes beyond merely reporting on employee engagement surveys and net promoter scores. Instead, the focus is on showing the board how specific HR initiatives drive the desired levels of engagement and culture necessary for success today and in the future.

Workforce diversity agenda

The CHRO promotes the workforce diversity agenda, ensuring the board recognizes that the organization is accessible, representative, and inclusive of talent at all levels.

In this capacity, the CHRO helps the board understand the workforce beyond demographic data, enabling informed decisions related to key workforce drivers such as compensation and benefits, ethics, and policy.

Even though CHROs are welcomed into the boardroom, they still face challenges regarding their legitimacy, misunderstandings of the value of HR, and dynamics between the executive team members who already serve on the board.

The challenges that the CHRO faces at the board level

Research by the global executive search and leadership consulting firm Spencer Stuart indicates that more than 27% of board members come from a financial background. They prefer that boards recruit previous CEO, COO, or CFO individuals as board members.

The board’s composition significantly influences its knowledge and understanding of the HR agenda. A board inexperienced in HR matters may not fully grasp the CHRO’s value, leading to exclusion from critical conversations, derailment when contributing to the four agendas mentioned above, or dismissal of the CHRO’s suggestions.

Conversely, when boards welcome the CHRO and appreciate the topics presented, other executive dynamics often come into play. Some CEOs may view the CHRO as a threat to their credibility, particularly in environments with leadership and culture challenges.

Similarly, the CFO might perceive the CHRO’s efforts to secure investment for people initiatives as leveraging board influence for personal gain or see the discussion on people topics as a distraction and waste of valuable board time.

These scenarios, while extreme, occur more frequently than expected, and HR leaders need to manage these challenges to successfully represent HR at the board level.

Getting the HR-board relationship right: 5 steps

How can the CHRO ensure healthy board relationships while effectively representing the four agendas highlighted above?

1. Setting mutual expectations

First, CHROs must establish clear agreements with the board that align with the four agendas. This involves defining the CHRO’s role at the board level and agreeing on the frequency, cadence, and specific topics requiring more oversight.

CHROs should also use this opportunity to set their expectations for the board, including the type of input they seek from board members.

2. Actively investing in board relationships

Second, the CHRO should actively cultivate relationships with board members outside the boardroom, particularly with the chairpersons of committees related to the HR agenda.

While respecting boundaries, the CHRO must ensure open and transparent communication channels to test specific ideas and manage board expectations outside formal meetings.

We discussed building HR-board relationships with Emmanuel Michael, leadership and career success coach, author, and public speaker. See the full conversation below:

3. Simplifying upwards

As mentioned earlier, many board members lack an HR background. Therefore, the CHRO must simplify, translate, and relate HR information to demonstrate its relevance and value to the board.

Many CHROs view the board as merely another reporting forum for updates and progress discussions. While this is sometimes necessary, it is more important to provide context straightforwardly, enabling the board to connect HR priorities with business requirements.

A highly effective approach for this purpose is to incorporate storytelling and share information using a consistent HR board report format. This creates familiarity and helps board members engage more with the HR narrative.

4. Balancing listening with telling

A common mistake many CHROs make is approaching the board solely to inform them about HR activities rather than also seeking feedback and input.

A strong board offers diverse and often underrepresented perspectives, so the CHRO must balance “telling” with “listening” to maximize the limited time spent with the board. This allows for a productive exchange and effectively leverages the board’s insights.

5. Presenting a united front with the C-suite

Lastly, the CHRO must ensure alignment with the rest of the C-suite on critical matters presented to the board.

This doesn’t mean the CHRO should always agree without question; however, if a debate is likely, the CHRO should communicate their perspective to other executive team members before the board meeting. It’s a delicate balance, but the CHRO should strive to align with other business leaders on crucial topics and perspectives whenever possible.

This approach fosters mutual trust and support within the C-suite during board discussions.

Getting started with the right skills

Transitioning into a board-level role can be a daunting task for many CHROs. However, there are specific skills that can help them actively prepare for this next step. AIHR’s T-Shaped HR Competency Model shows the core competencies all HR professionals need:

Based on the model, CHROs must work on the following skills to succeed at the board level:

• Improving business acumen: Extend your knowledge beyond the organizational context to include insights into macro-market dynamics, megatrends, and industry developments. Stay informed about external events, build relationships with industry partners or bodies, and cultivate a diverse network of professionals to gain valuable insights.
• Active listening and storytelling: Develop the ability to actively listen, interpret information, and use data to tell compelling stories that drive business decisions. Storytelling is not just about visualizing information; it involves connecting the board cognitively and emotionally to what is being presented, ensuring balanced decision-making.
• Managing complexity: This level requires navigating the complexities, including balancing multiple and often conflicting priorities and handling the sheer volume of information that needs to be processed. CHROs can develop this skill by adopting specific frameworks for better analysis and organization, leveraging technology to access information in a manageable format, and increasing their ability to view arguments from various perspectives while recognizing their biases.
• People advocacy: CHROs must be able to manage the balance between building cultures of wellbeing that are also productive and drive performance. They need to develop this skill to represent the people’s voice while also responsibly balancing business priorities.

Final words

Building strong HR-board relationships is essential for CHROs to effectively influence key areas such as governance, executive pay, diversity, and succession planning. What’s more, successfully navigating board interactions can establish the legitimacy and credibility necessary to drive the strategic HR agenda.

The post How To Build the HR-Board Relationship for Organizational Success appeared first on AIHR.

• Based on our work in guiding organizations through implementing an HRBP model, we have determined five critical factors to drive successful partnering across your organization. 
• Criteria 1: The HRBP model is adapted to fit the business context.
• Criteria 2: Business partnering is not just a role but a capability.
• Criteria 3: Structured HR reskilling is implemented in a phased approach.
• Criteria 4: Pro-actively working with the business as a key stakeholder.
• Criteria 5: Rallying leadership around one HR vision.

The term ‘strategic business partner’ is often used to describe the goal and objective of HR today. Several organizations have adopted the HRBP operating model to solidify HR as a strategic partner to the business and increase its value and impact. 

Unfortunately, for many HR functions, the shift to becoming a strategic partner has only been in name, with little changes in the activities or impact of HR. Gartner reports that 82% of HRBPs are not effective at strategic activities. At the same time, various studies highlight reasons such as a lack of capability, supporting structures, and inadequate technology as the root cause. The HRBP title has also become a “catch-all” and is frequently used inconsistently across various organizations, leading to confusion regarding the role’s responsibilities and focus.

The positioning of strategic HRM as a business driver

In the late 1990s, Dave Ulrich’s pioneering work led to the strategic business partner movement in HR. The intention behind this repositioning was to drive increased strategic value to stakeholders, closely align HR priorities with business objectives, and move the function beyond the scope of traditional transactional HR.

The movement to become more strategic as HR included several significant changes: 

• A revised HR operating model comprised of Centers of Excellence, Shared Services, and Business Partners
• The identification of HR as a strategic partner, change agent, employee champion, and administrative expert as HR personas that drive value to business 
• The introduction of the HRBP role with the focus on being more closely integrated with business. 
• New competency requirements for the HR function strongly emphasize business and strategic acumen
• A strong focus on employee self-service supported by technology and operating according to a tiered support structure. 

These changes ushered in a new era for HR, and many organizations have invested in HR Transformation projects to adopt changes to the HR function. However, despite the model being considered the standard today, organizations have still not effectively transitioned their teams to this new reality.

Through our experience helping organizations implement the HRBP model and guiding our clients through successful transformations, we have identified five themes for success when implementing an HRBP model.

The success criteria for transitioning to the HRBP model

Successfully partnering with the business requires more than adopting the HRBP model. Organizations that have successfully become strategic business partners acknowledge the importance of creating an enabling environment that considers multiple levers and tactics. 

We have found that organizations that implement the HRBP model successfully share the following success criteria:

Success criteria 1: The HRBP model is adapted to fit the business context

Based on our experience, HR teams that successfully partner with the business typically adopt a tailored version of the HRBP model that aligns with their business context. This involves structuring HRBPs to mirror the organization’s design, aligning shared services with available technologies, and grouping Centers of Excellence to match key HR strategic priorities. This approach helps the HR function seamlessly integrate with and support the broader business structure and goals.

Achieving a contextual fit within the business hinges on a well-defined and aligned HR strategy. Many organizations don’t embark on the operating model design with a clear strategic intent. They also fail to articulate the future value to the business if the model’s implementation is successful. This impacts business buy-in and support in transitioning to the business partnering model.

Success criteria 2: Business Partnering is not just a role but a capability

The HRBP is often a catch-all term to describe various HR activities. Organizations that successfully become strategic partners effectively differentiate between the role of the HR Business Partner, business partnering as a function that consists of multiple roles within HR, and business partnering as an organizational capability. 

This differentiation creates internal clarity for HR and communicates HR’s value and contribution to the business.

HRBP as a role refers to the revised scope and responsibilities of the professional within the HRBP role, highlighting several new expectations that are different from those in the past. 

These include acting as a strategic advisor to senior leaders, aligning HR strategies with business objectives, and ensuring compliance with HR regulations. Additionally, HRBPs develop and execute programs to enhance employee engagement, analyze HR data for actionable insights, and collaborate with talent acquisition for effective recruitment.

The HRBP also facilitates performance management processes, offering guidance on goal setting, reviews, and professional development. HRBPs coach managers on effective leadership practices and manage employee relations, including conflict resolution and disciplinary actions. They are also crucial in supporting organizational change initiatives and working closely with managers to ensure successful implementation. 

Collectively, the HRBP function refers to a clustering of HR roles that are business-facing and partners with various leaders and managerial teams. This could include the following roles (this will depend on the business structure and subsequent HR model alignment):

• The CHRO as a partner to the CEO and Executive team
• HR Director or Senior HRBPs partnering with Heads of Departments
• HRBPs are allocated to senior managers within different lines of business.

Together, these roles are often referred to as the BP function. The BP function is one of the key “legs” in the Ulrich model, together with Centers of Excellence and Shared Services.

Success criteria 3: Structured HR reskilling is implemented in a phased approach

The proficiency of the HR team’s skills is essential for executing the strategy independently and engaging effectively with the business. This includes fostering a culture of continuous development, proactive succession planning, and cross-skilling to develop broad expertise. It also means that HR career development and mobility have to enable and support the structured development of relevant skills that can be deployed within the business.

Successful organizations intentionally reskill their HR teams aligned to a competency model that reflects the expectations of this new way of working. Our T-shaped competency model is an excellent example of a standardized competency model that can guide reskilling efforts aligned to new ways of work.

Reskilling goes beyond formal education and classroom training and incorporates various learning experiences that build competence and confidence over time. This includes rotations, on-the-job learning, performance coaching, and project-based exposure. Successful organizations focus on a structured learning approach that introduces new competencies over time, ensuring they can be mastered effectively.

Success criteria 4: Proactively working with the business as a key stakeholder

Effective stakeholder management is critical to the success of business partnering. It enables HR to build trust with key partners, ensuring their inclusion in crucial discussions and decision-making processes. This positions HR as a trusted advisor integral to organizational success rather than a decision-making barrier.

Practically, transitioning to the business partnering model implies that some activities that HR has inherited will move back to business. This requires that HR sets boundaries about what the function will and will not do and that points of contact and processes are changed to reflect the model in the ways of working. 

The HRBP model relies on a capable management community. Several of the people’s management responsibilities are moved back to managers, who are the conduits of the relationship with their employees. We mention this because many HR professionals have fallen into the trap of accepting responsibility for bad manager behavior and often intercede as a “faux” manager.

Success criteria 5: Rallying leadership around one HR vision

Leadership within HR plays a pivotal role in driving strategic value and setting the course for HR. A credible and capable leadership team provides support, understands various HR portfolios, and makes decisions promptly and responsibly. This fosters transparency and collaboration within HR and across the organization.

Organizations that successfully transition to the HRBP model have a strong, integrated, and aligned HR leadership team. The team is consistent in their messaging about driving one HR agenda, leaning on each other, and being open to where responsibilities need to shift and change. In our experience, these teams manage to leave “ego” at the door and make collective decisions that benefit all of HR and the business, not themselves.

Take action

Business partnering still holds great promise for organizations. However, successful adoption requires carefully considering the critical criteria outlined earlier in this article.

Whether your organization has already transitioned to this way of working or is considering doing so in the future, evaluating the effectiveness of your current environment is a good starting point. AIHR’s HR Boot Camp can help you take the right step in successfully transitioning to the HRBP model.

The post 5 Success Criteria for Effective HR Business Partnering appeared first on AIHR.

Going forward, HRBPs must be ready to navigate not only the current reality but also future demands. What’s more, they need to address the perception that the HRBP role has not delivered sufficient strategic impact. To achieve that, businesses must prioritize the development of HR Business Partner skills.

In this article, we explore the changing skill requirements of the HRBP, propose an HRBP profile based on our T-Shaped HR Competency Model, and show a three-phased approach to developing HRBPs that are ready for the future.

Contents
The changing expectations of the HR Business Partner
The current reality of the HRBP
Defining the skill set of the HR Business Partner of the future
Adopting a phased approach to developing HR Business Partner skills

The changing expectations of the HR Business Partner

The HR Business Partner role aims to bring HR closer to business, elevate its contribution to a strategic level, and ensure alignment between HR priorities and business goals. This positions the HRBP role as the HR representative in business and the business representative within HR. Often described as “wearing multiple hats”, the role is of a multifaceted nature, facing a variety of demands and expectations.

As business and the world of work change, we see three fundamental shifts in the HRBP role:

• The positioning of the HRBP role
• Its scope and focus
• The future impact of the HRBP role. 

Regarding positioning, the HRBP role will need to address an increasingly complex stakeholder landscape. This will include breaking the stereotype that HR only exists as a “partner to business” but instead becomes a strategic advisor to all, including various employment groups, the Board, and community stakeholders.

The HR Business Partner role will also broaden to include a more market-oriented focus. This expansion involves integrating HR activities with business and market demands and adopting a commercial mindset that aligns closely with evolving market trends.

By doing so, HRBPs will be better positioned to anticipate and react to the dynamic needs of the business. This way, the HR strategies can not only support but also drive key business objectives in alignment with the broader market landscape.

The impact of the HRBP will also shift to become more focused on business continuity and sustainability, ensuring that the business can deliver today and in the future. This can translate into building proactive workforce capability, proactive risk management, and fluid talent strategies to gain access to skills.

We discussed how HR can embrace change and succeed in the future with Jan Laurijssen, HR Evangelist from SD Worx. See the full conversation below:

The current reality of the HRBP

The changing expectations will demand more from HRBPs, and organizations must create an environment that enables HRBPs to perform their role successfully. This includes investing in relevant technologies, equipping HR teams appropriately, and ensuring a clear mandate and legitimization of HR within the organization.

Unfortunately, these factors are not in place for many HRBPs. A lot of HRBPs feel they are pulled into transactional work given the lack of infrastructure and resources, and many also cite high levels of burnout. Beyond these challenges, we also need to realistically assess where the HR Business Partners are today in terms of skillset to determine how big the transition will be in the future.

AIHR’s T-Shaped HR Competency Model is based on multiple years of research with more than 20,000 HR professionals and various organizations using it as the standard for their HR teams. For HRBPs specifically, we find the following insights about the current reality of how HRBPs evaluate themselves against the model:

• HRBPs leverage their interpersonal skills and focus on driving execution to create business impact
• HRBPs have less preference and confidence in using data and digital in their day-to-day execution
• Confidence in business acumen is steadily increasing, yet this seems to be developed at senior levels and may not be a focus area at other levels within the organization
• People advocacy remains a reported strength for HRBPs, often also based on the experience and exposure that they have had.

HRBPs highlight their drive to balance business expectations with HR solutions, often stating that they are drawn to the career as they want to help make the business successful.

Delving further into the career of the HR professional, we see that the HRBP role remains one of the leading preparatory roles for future CHROs, even though many HRBPs do not necessarily aspire to move into a future CHRO role.

Defining the skill set of the HR Business Partner of the future

Based on these realities and insights, we used our T-Shaped HR Competency Model to identify and prioritize the behaviors that we believe will be crucial for the HRBP of the future.

These competencies, skills, and behaviors aim to outline the competencies HR Business Partners need to be future-fit and remain relevant: 

Let’s break this down.

Competency 1: Business Acumen

From its inception, the HRBP role demanded business focus and commercial awareness. A strong focus on business acumen formed the bedrock of the HRBP profile and will continue to do so in the future.

Going forward, the HRBP must have greater market understanding and the ability to translate how emerging trends can influence their business. This will naturally lead to more involvement in the strategic processes of organizations. In addition, we firmly believe that scenario planning will become a key area of expertise for HRBPs in the future.

Competency 2: Data Literacy

As organizations become more data-driven, the emergence of evidence-based HR is ushering the field in a similar direction.

The ability of HRBPs to be aware of how and where data can be utilized, how to apply data to business and HR hypotheses, and communicate data in a meaningful and effective way will become crucial. The HRBP of the future is a master data-driven storyteller and is comfortable infusing data across the HR value chain.

Competency 3: Digital Agility

Leveraging technology in the future will be critical to the success of the HRBP. Utilizing technologies to improve individual productivity and knowing how and where to introduce technology into HR practices will allow the HRBP to partner in a more meaningful manner at scale.

As organizations adopt digital collaboration tools and ways of working, the HRBP must also be able to effectively drive the HR agenda using these digital platforms. This goes beyond being an expert in MS Teams or Zoom; it is rather about knowing how to do HR work effectively in a digital world.

Competency 4: People Advocacy

Globally, employees are overwhelmed, and uncertainties related to the future workplace will place increasing pressure on them. HRBPs must master creating organizational cultures that balance wellbeing and productivity, advocating for a healthy workforce to drive organizational performance.

This delicate balance will require HRBPs to advise business leaders on balancing targets with health, all in the name of creating sustainable organizations with workforces that can deliver today and tomorrow. Managing this process will require significant change management, not only in evolving workplace practices but also in the leadership team’s mindset.

Competency 5: Execution Excellence

Execution Excellence refers to how the HRBP shows up in the organization. Specifically for the HRBP of the future, the ability to problem-solve, think systemically about the organization, and a strong drive towards action will be required.

Given the nature of the role, interpersonal skills such as networking, managing conflict, and leading with empathy will remain important. Yet, we see the increasing importance of what the HRBP does and how they do it, highlighting a renewed focus on interpersonal skills.

Specialist competencies

Complementing these core competency domains, we see several specific domains that will increase in importance for the future HRBP.

First, HRBPs will need a thorough understanding of the HR value chain. This will equip them with the foundational knowledge to integrate HR practices and policies into comprehensive business-focused solutions.

The attraction, development, and retention of talent will remain a critical driver of business success. In addition, the future HRBP needs a thorough understanding of talent management, performance management, and compensation and benefits as the foundation of building comprehensive employee experiences.

Given these realities, as a starting point, we need to invest in HRBP reskilling and ensure a continuous and responsible development experience for HRBPs to transition into this expanded role over time.

Adopting a phased approach to developing HR Business Partner skills

Reflecting on these requirements, it is important to be realistic regarding how HRBPs can transition into the future.

As we’ve seen in the past when organizations redefine the role of HRBPs without stipulating a realistic development roadmap for them, the HRBP operating model fails to bring the desired results, and the role itself is seen as nothing more than a title change. 

To address this challenge, we propose a three-phased approach to developing HRBPs, prioritizing the skills highlighted above at different times to increase the fastest route to value.

Phase 1: Entry to the game – By building solid foundations

To ensure the fastest time to value for new HRBPs, there should be a focus on the following skills:

Phase 2: Adding value – By building emerging skills

Once the foundation has been established, the focus should shift towards emerging skills that include the following:

Phase 3: Making impact – By differentiated skillsets

During phase 3, as the HRBP steps towards more senior responsibilities, prioritize the following, considering the potential transition to a future CHRO role.

Final words

As the world of work changes, so too must the scope of the HRBP role. We believe the HRBP role will become increasingly important in a future characterized by AI, increasing skills gaps and talent shortages, and shifting economic powers. As businesses navigate these turbulent waters, they will require HRBPs with the required skill set to guide them.

The post HR Business Partner Skills of the Future: How Organizations Should Develop Their HRBPs appeared first on AIHR.

In this article, we explore the drivers of HR reputation, its influence on our credibility, and the actions required to move forward.

Contents
Why does HR have a bad reputation?
Should we care about the HR reputation?
How to establish credibility to improve HR’s reputation

Why does HR have a bad reputation?

Reputation is the beliefs and opinions others hold based on past behaviors or experiences. For HR, reputation refers to employees’ perception of their satisfaction with HR services, how HR is positioned in the organization, the skills and abilities of HR professionals, and the trust in the HR team.

Four realities currently influence HR’s reputation:

Reality 1: A lot of people have had a lousy HR experience in the past

The unfortunate reality is that many employees have had a less-than-stellar experience with HR at some point in their careers. Whether this has been due to a lack of feedback during a recruitment process, an administrative error when changing employee details leading to lack of payment, or not feeling adequately supported through HR advice.

Some of the criticism is warranted. Similar to functions dealing with clients or customers, HR had to professionalize how it provides services to employees and the underpinning processes and technologies to drive a good experience. However, this is only half of the story.  

HR professionals often get blamed for things that go wrong beyond our control or, even worse, not our responsibility. The fact that HR is seen as a custodian for practices such as performance, talent, and rewards does not imply that HR is the sole decision-maker in executing these practices. Often, the challenge is more related to line managers not being equipped to run people processes effectively, leading to blame being put at the door of HR.

Reality 2: People enter HR from various backgrounds, leading to a lack of baseline skill

HR professionals enter the profession from diverse backgrounds. As much as this is beneficial for the diversity of skills, there is not necessarily a consistent baseline of skills at junior levels of HR teams. This poses a challenge regarding the consistency of HR competence when compared to professions such as accounting, where formal standards and practices guide career development,

Several HR professionals enter from social sciences and education, bringing strengths related to practices such as learning and development. Yet, the basic knowledge of the HR value chain is not there.

Our State of HR report also found that some individuals move into HR later in their careers, bringing a wealth of business knowledge yet lacking basic HR expertise.

“HR has a little bit of an image problem. What really surprised me is how people get into the HR profession. It’s a lot later on average than in other functions such as, say, admin or finance or marketing, or any of the other big corporate functions. People seem to really stumble into HR, so those entries aren’t necessarily as planned as you think”.

Dr Lisa Simon, Chief Economist at Revelio Labs

Reality 3: HR is under-resourced with people and systems

HR is often expected to drive impact while not receiving adequate investment and resources to execute. HR is the function that receives the least investment, with HR headcount not proactively prioritized and lagging behind business growth.

Organizations also often do not invest in HR technologies to support transactional work, leading to many manual processes being executed with too few resources. This can lead to slow responses, high levels of burnout in HR professionals, and dissatisfaction with HR delivery within the wider organization.

“As organizations grow, the problems grow more than proportionally. Now, you have to worry about workforce planning retraining. So, this requires organizational skills at a much larger level. But what we see is that once companies hit a certain threshold, the HR team is not growing at the levels that you would expect, given the challenges that they face.”

Dr Hakki Ozdenoren, Senior Economist @ Revelio Labs

“We need to look at what HR needs to deliver — what are those skills? Sometimes, you need more of a particular skill, depending on where the organization is at. What was interesting for me from the investment conversation is seeing how HR compares to other functions. If you look at marketing and administration, HR is always the smallest little slither of the pie chart.”

Dr Marna van der Merwe, HR Subject Matter Expert at AIHR

Reality 4: The current perception of HR stems from its history as an admin function

When discussing HR reputation, we also need to consider the history of the function and its origins.

Even though HR today has evolved into a very different contributor than 100 years ago as part of the labor movement, many individuals still hold on to the “hiring and firing” perception of HR.  HR is often seen as representative of line management and as the “No” people in the room, acting more as a hindrance than an organizational enabler.

When reviewing these realities, feeling despondent as an HR professional is tempting. HR professionals often grudgingly accept these realities, and they do little to eradicate these misperceptions. Instead, they become numb to the criticism and usually see it as part of the job.

Given this mindset, it begs the question: Should we be concerned about the reputation of HR? Is the nature of the HR role one that will never be seen in a positive light?

Should we care about the HR reputation?

Stakeholders are selfish about their needs and less concerned about HR’s value to the broader organization.

For example, line managers are pushing HR to recruit faster for their roles, which might mean less focus on a critical candidate evaluation. Employees want HR to be responsive to their queries, while this inevitably means that they are not attending to others. Executives want HR to focus on culture, engagement, and talent succession without necessarily playing their part in shaping these practices.

These expectations position HR between a rock and a hard place. Pleasing one stakeholder inevitably leads to disappointing another. In many instances, HR is a thankless profession – never receiving recognition for a job well done but receiving criticism when things don’t go according to plan.

HR professionals must let go of the idea that positive feedback is the only success metric. Many HR teams measure their success through high levels of satisfaction with HR services, the achievement of positive eNPS scores, and positive stakeholder feedback.

However, the real success of HR should be measured differently and in line with the business outcomes and impact, not against the subjective perceptions of various stakeholders.

Strive for credibility not affirmation

We would argue that HR needs to strive for credibility rather than affirmation. Ulrich coined the term “Credible Activist” as one of the essential qualities of successful HR professionals. Let’s break this definition down:

• “Credible” refers to an individual who can be trusted, has influence over critical stakeholders, and earns credibility through their ability to contribute and add value to their stakeholders.  
• “Activist” refers to the ability to proactively advocate for their stakeholders’ requirements while keeping the business’s overall intent in mind.

The balance between credibility and activism is essential, as a lack of activism leads to HR professionals who have a lot of knowledge yet cannot translate it into real value. Inversely, without credibility, activism leads to HRBPs not being taken seriously, even though they might have good ideas.

As you can see, nothing in this definition is about HR being “liked” or that a positive rating from a business leader measures our value. Building credibility is highly dependent on managing the perceptions and reputation of HR within the organization, leading back to our initial challenge – HR has a bad reputation.

We discussed the state of HR, its reputation, and the future outlook with Lisa Simon, Chief Economist at a workforce intelligence company Revelio Labs, Hakki Ozdenoren, Senior Economist at Revelio Labs, and Dr. Marna van der Merwe, AIHR’s HR Subject Matter Expert.

How to establish credibility to improve HR’s reputation

HR needs to take several actions to establish credibility and improve the reputation of their function.

1. Shift stakeholder expectations of value

Stakeholders perceive HR based on their previous experiences with the function, and how HR has historically been positioned within the organization. More than 60% of business leaders still see the role of HR as administrative, with many not being educated to expect something different from HR today.

The top priority for HR must be to clarify stakeholder expectations of the function and align the value HR offers with business outcomes.

2. Legitimize the HR function within the business

For HR to change the perceptions of the past, the function needs to be legitimized. Legitimization means the positioning, power, and authority of HR within the organization. Not including HR in crucial strategic decisions or excluding HR from business activities creates a perception that HR is only there for reactive administrative work.

As a starting point, HR needs to work with the business to clarify the HR mandate and positioning within the organization. This could require education on new HR capabilities that the business might not have been exposed to, as well as demonstrating other case studies of how HR has contributed to similar organizations.

Even though this is difficult, the HR leader needs to have a candid conversation with the CEO about the role of HR, its mandate of operations, and how it should be positioned within the business. This can only happen if there is an existing relationship between these parties — if not, then building a relationship of trust should be the first step towards legitimizing the business.

3. Set clear standards and target experiences of HR solutions and products

Employees act more like consumers and evaluate HR products and services similarly. HR needs to set transparent service standards about the employee experience that are reasonable to expect.

Utilizing data to demonstrate how HR is meeting its commitments is also important. Here, stakeholder feedback and satisfaction metrics can be valuable. However, they must be measured against a benchmark of set criteria, not individual employee opinion.

The business and HR should agree upon acceptable standards. HR should also benchmark their processes and practices against the market.

4. Share HR success stories and visibly show progress

HR professionals are too humble about their contributions and rely on others to ratify their value.

As an output of setting clear expectations, organizations also need to give HR “permission” to share its impact and not be afraid to claim their contribution. In the past, there has been a narrative that HR is in the background, and its contributions are less visible and deemed less important than those of other teams.

Several factors influence HR results, but using data and metrics, both quantitative and qualitative, can enable HR to drive informed conversations on the function’s performance.

5. Build the skills and competencies to equip HR professionals to deliver

While the expectations of HR are changing, the skill set has not necessarily evolved. 

Skills related to data literacy and digital agility are still lacking, and many HR professionals still report higher confidence in interpersonal than business-related skills. Requirements for HR skills are not clearly articulated, often leading to a mismatch between available skills and the organization’s requirements.

At AIHR, we believe that HR professionals need to be T-shaped and build both breadth and depth of skills to be effective in the future world of work.

6. Balance the investment in HR with the desired impact

Similar to any other business function, if HR is expected to drive strategic value, execute at scale, and provide services to a complex workforce, it requires the right structure, skills, and systems investment to make that a reality.  

As a first step, HR can establish the same financial discipline as any other business function by collaborating with finance to gain a deeper understanding of financial forecasts, budgets, and operational costs. Creating a baseline and demonstrating the spending and impact of HR is essential for facilitating robust conversations about future investments.

HR also needs to work with the business to develop robust business cases where investment is required. For example, when considering implementing an ERP system, the business case should clearly show the required return on investment and the anticipated savings or value gains and provide a clear financial roadmap to obtain these investments.

Over to you

We can no longer ignore HR’s bad reputation. HR leaders need to take action by becoming credible activists for the profession, being respected for their contribution, and educating stakeholders on the role and impact of modern HR practices.

As the role and scope of HR continue to change, organizations need to ensure that they clarify expectations and set HR teams up for success.

The post HR Has a Bad Reputation: 6 Actions To Improve HR Credibility appeared first on AIHR.

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.

The post Breaking the Old HR Mold: It’s Time To Redefine HR appeared first on AIHR.

New legislation, such as the EU AI Act and the New York AI Bias law, has drawn attention to AI’s risks to HR. Organizations must approach adopting AI solutions responsibly to reap their full benefits.

In this article, we discuss an AI Risk Framework that can be used to evaluate the trustworthiness of AI technologies, specifically focusing on applying the framework to recruitment.

Contents
The current state of AI in recruitment
Using the AI risk framework to responsibly adopt AI in recruitment

The current state of AI in recruitment

Applicant Tracking Systems (ATS) pioneered the use of AI in recruitment with a critical focus on enhancing the quality and efficiency of recruitment practices.

With the emergence of generative AI, the applications of AI within recruitment have dramatically expanded. This advanced form of AI goes beyond streamlining processes to focus on driving higher levels of personalization, advanced predictive analytical insights predicting candidate success, and a reduction of bias in hiring decisions. 

Organizations such as Electrolux, Cigna, and Kuehne and Nagel have all reported significant gains in productivity, quality of output, and impact of HR by adopting generative AI.

Businesses can apply generative AI throughout various stages of the recruitment process:

We discussed AI in recruitment with Qasim Asad Salam, CEO and Co-founder of Remotebase, a company that helps organizations hire remote software developers. You can watch the full episode below:

There are, however, risks associated with using generative AI in recruitment, and many cases of irresponsible use have made HR professionals reluctant to experiment. Risks related to privacy, bias, and candidate trust have led to questioning the ethics of using GenAI for recruitment purposes.

Many HR professionals report that they are unsure of how and where to apply AI, raising concerns about privacy and data security as the main barriers. Our research at AIHR indicates that many HR professionals experience a sense of inaction, needing to learn how to get started with AI or how to evaluate the safe utilization of AI systems. 

Using the AI risk framework to responsibly adopt AI in recruitment

Organizations that want to adopt AI in recruitment and other areas of HR responsibly need to take a systematic approach. That way, they can address ethical and legal considerations, as well as enhance the strategic and operational effectiveness of AI initiatives within Human Resources.

The framework below, adapted from the National Institute of Standards and Technology and the World Economic Forum, highlights the essential criteria and questions that can be used to evaluate the trustworthiness of AI systems.

Using these questions, organizations can determine the level of risk associated with implementation:

• Acceptable Risk refers to instances where the risks are known and controls are in place to mitigate them. For example, there are controls in place to mitigate selection bias during sourcing reporting on demographic variables.
• Mitigation Required highlights instances where further controls must be implemented before considering adoption. For example, a process needs to be implemented to review AI decisions over a period of time aligned to critical job requirements.
• Unacceptable Risk refers to instances where, regardless of the controls, the potential for harm is significantly more than the perceived benefit. For example, where AI will cause harm due to its recommendations and predictions.

Importantly, these characteristics are interrelated, and when evaluating AI risk, they must be examined in relation to each other. Organizations will have to make trade-offs to ensure responsible adoption and effectively manage the risk of using AI as part of their recruitment practices.

Putting the model into practice

Our hypothetical company, TX Energy, is a large manufacturing business focused on developing solar power energy systems. They have grown significantly, and the workforce has grown substantially over the past three years. They are considering implementing new GenAI technologies into their recruitment process to achieve the following benefits:

• Proactive sourcing of highly critical talent, such as engineers
• Conduct interviews with high-volume recruitment applications such as customer service
• Drive predictive analytics better to understand the success criteria of potential implementation consultants.

Using the framework above, TX Energy assesses the risk and trustworthiness of the solution as follows:

Following this thorough analysis, TX Energy has decided to adopt the AI solution, initiating a 3-month pilot program. This preliminary phase will test the previously outlined controls, aiming to effectively mitigate the identified risks.

This strategic approach ensures that potential challenges are addressed in a controlled environment, paving the way for a smooth transition to a large-scale implementation upon successfully completing the pilot.

Final words

We are still only at the beginning of the AI revolution in HR. As organizations adopt AI more extensively in recruitment and beyond, they must have a solid foundation to evaluate the trustworthiness of AI systems and use them responsibly.

AI provides significant opportunities to HR professionals, but it’s important to balance benefits with a responsible adoption approach that considers the risks associated with these technologies and enables organizations to make informed decisions regarding their use.

The post AI in Recruitment: Managing the Risks for Successful Adoption appeared first on AIHR.

Let’s take a look at what the future of employee experience is and how organizations can overcome the challenges that prevent them from fully capitalizing on its benefits.

Contents
The current EX reality in organizations
6 challenges that stop companies from getting value from EX efforts
Challenge 1: EX is everything and nothing – there is no clear definition
Challenge 2: EX is a thing to do – not a way of doing
Challenge 3: EX is not for everyone
Challenge 4: EX is seen as a data exercise
Challenge 5: Limited investment in EX maturity
Challenge 6: EX is not measured at different levels
The Employee Experience Value Driver Model

The current EX reality in organizations

The current EX reality is one of paradox.

On the one hand, organizations have demonstrated the value of EX by showing its positive impact on productivity, employee engagement, retention, and performance. These businesses recognized EX’s value and embedded its principles deeply within their HR frameworks, showcasing a clear commitment to fostering a vibrant and productive workplace culture.

Conversely, the journey towards fully integrating EX into organizational DNA has proven challenging for others. There are even speculations about an impending “EX-recession” as companies contemplate dialing back on EX investments amidst a shift towards a more employer-dominated market.

However, neglecting EX will be a detrimental mistake for organizations. The repercussions of such a decision—ranging from tarnished employer branding and diminished employee productivity to a decline in retention rates—could have a profound and adverse effect on overall business performance.

The reason for businesses passing up the opportunities EX brings is often the critical obstacles that prevent their EX initiatives from reaching their full potential.

We discussed the current and future employee experience with Ben Whitter, EX author, speaker, and coach. Watch the full interview below:

6 challenges that stop companies from getting value from EX efforts

Challenge 1: EX is everything and nothing – there is no clear definition

Many organizations face a common challenge in clearly defining EX and understanding its value proposition.

This ambiguity can lead to EX embodying the characteristics of the department that initiated it. For instance, when HR leads the charge, EX is often perceived purely as an HR initiative. If spearheaded by an analytics team, it’s viewed as a technology-focused endeavor concerning people analytics. Similarly, EX might be seen as just another project when driven by a change management office.

This lack of a precise definition carries the risk of EX becoming overly broad, trying to be all things to all people, which dilutes its focus.

Instead of fostering a way of thinking that promotes a cohesive and holistic employee experience, this ambiguity leads to fragmented and disconnected activities. These may create memorable moments but fail to offer a comprehensive approach to EX, thus diminishing its potential impact and leading stakeholders to question its value.

Challenge 2: EX is a thing to do – not a way of doing

The transition of EX from project mode to a core organizational capability is a significant hurdle for many companies.

Initially, due to constraints like limited resources, EX often begins as a focused project aimed at enhancing a single aspect of people practices, such as onboarding. This narrow approach can inadvertently cement EX as a transient “task” rather than a foundational element of the organization’s culture and strategy.

A recent report highlighted that just over 50% of EX teams focus solely on EX, with the majority of organizations adding EX to already overburdened team members with other responsibilities.

For EX to evolve and truly add value, organizations must embrace it as a comprehensive mindset that permeates all aspects of people management and workplace experiences. This means shifting away from viewing EX as a series of isolated projects to integrating it as a fundamental perspective—a lens through which every decision about people’s practices is viewed, designed, developed, and delivered. 

Achieving this level of maturity requires a deliberate effort to embed EX into organizational culture, ensuring it influences all facets of employee interaction and engagement.

Challenge 3: EX is not for everyone

Unfortunately, EX tends to focus predominantly on professional service or desk workers in many organizations.

Frontline employees, who often face unique challenges related to the size of the workforce, location, and working conditions, receive considerably less attention regarding EX initiatives. This oversight is particularly regrettable since the essence of EX is to foster inclusivity and improve the work lives of all employees, not just a more accessible minority.

Integrating EX strategies into the practices affecting frontline staff can bring substantial advantages to the business. These benefits include enhanced productivity, improved employee performance, and deeper commitment.

Achieving these outcomes requires a broader, more inclusive approach to EX that recognizes and addresses the specific needs and challenges faced by frontline workers, ensuring that EX initiatives are truly comprehensive and benefit the entire workforce.

Challenge 4: EX is seen as a data exercise

The push towards evidence-based HR and the incorporation of people analytics has significantly benefited the EX domain. However, some organizations have overly fixated on the quantitative aspect, neglecting the essence of EX as a comprehensive approach. 

Data plays a crucial role in informing EX initiatives, but it should serve as a means to an end rather than the end itself. EX transcends mere data collection; it’s about utilizing insights to continually refine, guide, and enhance the employee experience over time.

When organizations become preoccupied with gathering data, EX risks being reduced to a passive listening exercise. This approach can lead to an abundance of insights and feedback but results in minimal actionable change or meaningful impact on employees’ lives. For EX to fulfill its potential, it’s essential to balance data-driven insights with actionable strategies that directly improve employees’ everyday experiences, ensuring that the data serves as a powerful tool for holistic and impactful EX development.

Challenge 5: Limited investment in EX maturity

Establishing an EX capability is akin to enhancing any other organizational function. It requires dedicated investment and strategic focus. However, the challenges outlined previously have led to a few organizations adopting a systematic approach to develop their EX capabilities. It’s not easy to secure the necessary expertise and position EX as a key driver of strategic value.

Implementing a step-by-step methodology designed to elevate EX demands a substantial commitment to educating stakeholders and strategically aligning EX within the organization. This is a process that many organizations unfortunately overlook or inadequately prioritize.

Challenge 6: EX is not measured at different levels

The final hurdle in optimizing EX lies in its measurement. Many organizations do not have a comprehensive framework for evaluating the impact of EX, resulting in its value often remaining unseen.

To effectively measure EX, a nuanced, multi-tiered framework is essential. This framework should encompass the operational aspects of EX, the outcomes derived from EX initiatives, and the broader impact of EX on the organization. Each level should address different facets of EX value, providing a holistic view of its effectiveness.

The Employee Experience Value Driver Model

Addressing the common employee experience challenges is both possible and crucial. When approached correctly, establishing a well-defined EX practice can yield significant benefits for the business.

Taking a more integrated approach is necessary for EX to evolve into a strategic asset and consistently deliver its promised value.

The model presented below outlines essential value levers that organizations must prioritize to enhance their EX capabilities. The five levers are designed to guide organizations toward achieving long-term success in their EX initiatives:

• Strategy: There needs to be a well-defined and integrated strategy in place that links EX to the broader business and people strategy. The strategy needs to set out a clear path for EX and determine its focus concerning the most significant areas of impact. It should also clarify how the organization defines EX, what it is not, and how they will measure the impact of EX.
• Structure: The organization needs to implement an EX structure that defines an EX operating model and how it will work with other parts of the organization. EX is a function that has to collaborate with various parties such as Facilities, IT, Operations, and Marketing. A clearly defined EX Operating Model will allow for smoother collaboration and value. Notably, the model also needs to highlight where decision-making will occur and who takes accountability for the EX mandate.
• Skills: The organization requires access to EX-specific skills and invests in building the team’s capability to deliver on their ambition. EX skills are diverse, and a robust talent approach should help organizations understand which skills they want to buy, borrow, build, or bridge to meet the employee experience demands.
• Systems of work: The systems of work refers to how EX work gets done within the organization, specifically focusing on four domains:
  • Process refers to establishing business as usual, incremental improvement, and project processes that guide the delivery of EX activities. Processes require clear accountability and workflows to be efficient and drive a mindset of execution.
  • Technology describes a clear set of technologies such as platforms, AI, and cloud solutions that support and enable EX activities. This will include a future roadmap highlighting new developments and ensuring that EX is integrated into HR and line of business systems.
  • Data refers to how EX data will be collected, stored, accessed, and analyzed to drive evidence and insights-driven EX practice.
  • Governance is about the habits, forums, and routines that need to occur within the organization for EX to be effective. This could include EX operations meetings, incorporating employee experience into the strategy agenda, and quarterly showcases of EX initiatives.
• Stakeholders: Given the integrated nature of an EX function, stakeholder management is paramount to its success. For the EX capability to be successful, it requires a clear understanding of its key stakeholders, ranging from those who sponsor EX at an executive level to the target audiences of the designed experiences.

These domains of EX can only be successful if guided by a strong EX-focused leadership team. This implies a team that understands the value of employee experience, actively champions it as part of business practice, and believes in the underlying philosophy that a great EX makes for a great company.

When all these levers work together, they contribute towards a human and experience-centric culture that drives business value.

You can utilize the model above to evaluate your EX practice’s current health and identify priorities and areas of focus:

Wrapping up

Organizations that invest in employee experience will benefit from improved performance, productivity, and engagement. However, achieving lasting value from EX demands a structured and targeted approach.

The EX driver model equips organizations with a strategic framework to implement the necessary levers for sustained success, ensuring that investments in EX lead to meaningful and long-term value.

The post The Future of Employee Experience: The EX Value Driver Model appeared first on AIHR.

In this article, we will discuss:

• How HR can be established as a force for good that impacts business and society
• The six areas that HR can have an impact in
• Four actions HR can take to get started.

Globally, organizations are already experiencing the future of work. As the external environment becomes more volatile and unpredictable, organizations grapple with challenges that reactive actions can no longer address. Instead, systemic issues and external influences are challenging the sustainability of organizations. 

For HR, this presents an opportunity to make a lasting impact on organizations, societies, and individuals.

This reality requires HR to show up and contribute differently than before. Beyond just strategically partnering with the business, HR has a unique role in addressing issues that impact the sustainability of organizations and society, communities, and the operating environment in which organizations find themselves. As HR professionals, this also means stepping up to the expectations that employees hold us accountable for.

But how can HR be a catalyst for good and still make a business impact? How do we balance performance and productivity with humane and people-centric workspaces? How do we meet the needs of collective communities while still managing risk?

Establishing HR as a ‘Force for Good’

We believe that HR can be a force for good that balances the needs of individuals, organizations, and society to deliver mutually beneficial value. This is not achieved through good intentions and mission statements but rather through taking action and establishing practices that promote and enable change, while holding all role players accountable.

This doesn’t imply that HR is not there to drive business strategy and performance. If there is no business, there is no HR. Instead, we want to promote that HR acts on behalf of individuals and companies to contribute towards building a society that can prosper. This will mean thinking about the broader benefit for all and not only the interests of one.

A ‘Force for Good’ in action

HR holds a distinct position to make a contribution and impact across six wide-ranging areas:

1. Access to work 

Access to equal work opportunities remains a crucial challenge for many individuals. This refers to equal opportunities to work, regardless of background, identity, or circumstances. Exclusion from the workforce is mitigated by legislation to some extent, but in most cases, systemic barriers and biases exclude these individuals. Additionally, the hidden workforce is estimated to comprise 17% of the US labor market, equating to 27 million employees. 

Excluding significant parts of society from the workforce can lead to lower productivity, hinder economic growth, and perpetuate a cycle of inequality across generations.

This begins with rethinking work design and how minimum requirements for job success are determined. Stating that a degree is a minimum requirement for a role already excludes more than 64% of the workforce from the available talent market.

The move to skills-based approaches has shown the possibility of rethinking the concept of work and tapping into more available skills and a broader talent market – not constrained by traditional job requirements. Similarly, assessing hiring practices and eliminating unconscious bias (either through humans or technology) will become increasingly important for HR.

2. Equality and fairness

Beyond access to work, inequality and unfairness transpire in the form of unfair treatment, exclusion, and, most notably, pay inequity. Gender and pay equality continue to be an issue for HR to address. The WEF reports that out of 146 countries, only 68.4% have closed the gender pay gap effectively. 

For organizations, this results in retention challenges for crucial talent and a lack of diversity and inclusion. For societies, gender pay inequality leads to the marginalization of groups and reinforces gender discrimination in work, education, and societal settings. The PwC Women in Work Index highlights that it will take OECD countries almost 50 years to close the pay gap if we continue on the current path. This is not good enough.

Similarly, HR can play a role when organizations employ employees from developing countries to avoid wage exploitation and other exploitative practices (such as recruitment scams and illegal intermediaries). Advocating for fair pay for equal work also means focusing on paying a “living wage” and putting policies in place to ensure job security for these workers, who are often subject to unfavorable work arrangements. This call goes beyond labor legislation in these regions and holds the organization to a higher standard than what is required as a minimum requirement.

3. Human-AI interaction 

The role of HR in guiding organizations to adopt AI responsibly is paramount in creating a society that responsibly works with AI to the benefit of humankind. Beyond the technology and ethics concerns, the role of HR extends to supporting the transition of individuals to work with AI as a companion in work. HR also needs to address employees’ fears of job loss due to AI technology, and creating bridging skills paths to new opportunities has to take priority for the current workforce.

For future generations, we need closer collaboration with grassroots education to develop skills to work in a more fluid, technological, and ambiguous work environment. In the past, internship and graduate programs were only available to large corporations. However, HR should partner with other organizations that make this talent pool accessible to small to medium-sized enterprises through incubation programs and collaborative partnerships.

4. Voice for societal issues 

As the lines between work and life have become blurred, so has the divide between organizations and the communities that they operate in. These communities hold expectations of organizations to show sensitivity to the issues they face and to demonstrate solidarity and support through action. HR will have to take a role in helping organizations find their voice and stance on critical social issues and can no longer remain absent from the public narrative and debate. 

Even though organizations do not need a voice on all matters, HR must help them put practices in place that prove how the organization lives their perspectives. This directly reflects the organization’s culture and values and what its clients and employees can expect regarding pertinent societal issues. Guarding against diversity-washing, HR can ensure that these commitments are authentic and lead to tangible action.

Social issues such as the global refugee crisis and changes brought through climate migration, gender-based violence against women, and human rights violations call upon organizations to take a stance and take action.

5. Human wellbeing 

Our HR Trends for 2024 discussed the productivity paradox and the balancing act between wellbeing and productivity. This goes beyond simply ensuring that organizations can get the most out of employees; instead, it considers the role that decent work plays in the overall wellbeing of individuals.

As organizations grapple with the challenges of driving higher productivity, providing the required supporting structures will become even more paramount. This entails a different perspective on how we speak about wellbeing and how it is destigmatized and incorporated into practice to maintain human dignity and respect.

6. Climate adaptation 

The effects of climate change are already being felt worldwide, including more intense heat waves, rising sea levels, and extreme weather events. This poses new challenges to organizations and the working conditions of employees, in particular for physical laborers. Factors like safety, dignified and sanitary working conditions, and adaptive and flexible work arrangements are critical to ensuring business continuity and economic viability that is not at the cost of employees. 

This will also extend to enabling greener supply chains and working with other stakeholders to act responsibly and reputably. 

Where can HR start

In the past, new ideas in HR have followed a typical hype cycle. These usually start with enthusiastic momentum but falter as HR professionals struggle to demonstrate the business impact and benefit. This also holds true for various Corporate Social Initiatives (CSI) and feel-good projects.

If the HR for Good movement is going to be different, we need to adopt a different approach:

1. Be specific about where HR can contribute in your organizational context: Instead of trying to be everything to everyone, HR professionals should consider the organization’s context and identify the value drivers that will impact their context most. In the past, we have gone too broad, leading to inaction – for this movement, our approach should rather be to focus on small wins that cumulatively lead to more significant changes.
2. Demonstrate the impact by linking to broader ESG initiatives: We need to clearly state the business case of where we choose to focus and how this relates to more general environmental, social, and governance (ESG) concerns within the organization. Using these frameworks helps to ground the work we are doing and reinforces how it integrates with the rest of the organization beyond HR.
3. Make changes that are within the control of HR first: Immediate changes can be made to practices where HR has direct control. Hiring practices, finding new talent pools, and advocating for changing strategies regarding the aging workforce. Similarly, policy changes to HR practice can be prioritized to deliver short-term impact with a specific focus on recruitment, organizational design, and skills practices.
4. Building new knowledge and skills in these domains: For HR to drive change, we must incorporate new knowledge and skills to understand how humanitarian and social organizations operate. This can be incremental over time, but to play our part, we need to be able to understand how these environments work and how to become part of industry bodies advocating for change.

Wrapping up

HR is uniquely positioned to advocate and drive change to benefit businesses and society. Taking up this mantle is no longer optional, as we see employment, climate and safety risks becoming commonplace. HR can be a force for good, but we need tangible and responsible action. 

The post HR as a Force for Good: Driving Positive Change in Business & Society appeared first on AIHR.

In this article, we explore how environmental, social, and governance (ESG) requirements are changing the role of HR and highlight the opportunities on the horizon for HR leaders and professionals as part of the ESG agenda.

Contents
Understanding ESG
How HR contributes to the ESG agenda
Integrating ESG into the HR strategy
How HR can start driving ESG within their organization

Understanding ESG

The ESG acronym stands for three domains of responsibility organizations need to consider in terms of how they conduct their business: environmental, social, and governance.

Environmental

Environmental refers to the impact organizations have on the environment. For example, their carbon footprint, utilization of resources, and adoption of pro-environmental practices.

Case example

BMW Group is using renewable energy at their plants.

• Wind turbines support production at the Leipzig plant in Germany, and hydrogen fuels approximately 130 floor conveyors. The facility is also piloting a newly developed hydrogen-powered burner technology in its paint shop.
• The San Luis Potosi site in Mexico fully powers its operations with CO2-free electricity, thanks to solar panels.
• The Munich site harnesses hydroelectric power from the Lech and Isar rivers to generate electricity for its production needs.

Social

Social refers to how the organization manages its relationship with other parties, including its employees, customers, suppliers, and communities. For example, responsible labor practices, focus on inclusive work, and upholding human rights and safety all relate to the social pillar.

Case example

Nestle, Mars, and Hershey all source cocoa from West Africa, where cases of child labor and forced labor have been an unresolved challenge. Public scrutiny has demanded some of these brands take a more active view on dealing with responsible suppliers and ensuring fair and decent practices.

In contrast, Tony Chocolonely is a brand committed to fair practices and paying fair prices to ensure decent work practices from their suppliers. By their own admission, they are not 100% slave-free but actively campaign and eradicate unfair labor practices from their supply chain.

Governance

Governance refers to how the company is managed. For example, factors such as board diversity, executive compensation, transparency of policy and practice, and ethics are all related to the governance pillar.

Case example

Many companies took to social media to celebrate their commitment to female representation in leadership on International Women’s Day 2023. Meanwhile, Francesca Lawsome and Ali Fensome built a gender pay gap chatbot that automatically extracted publicly accessible data from these companies to assess their commitment to gender equality in the workplace.

This initiative showed many inconsistencies between what companies say and what they do:

• Heathrow Airport posted stories from “Women at Heathrow”. However, women’s median hourly pay is 14% lower than men’s.
• Male employees at the domestic violence charity Refuge were paid 23.9% more than their female counterparts.
• On International Women’s Day, Scottish Widows promoted its services aimed at closing the pension gap. It turned out that they pay female employees 14% less than their male workers.

ESG is about managing risks and making conscious decisions on how the organization engages with the world, acts responsibly as part of the community, and upholds excellent ethical practices. It involves holding organizations to predefined standards and good practice frameworks.

In many organizations, ESG is the sole responsibility of Investor Relations or Sustainability Committees, yet this approach does not deliver tangible results. Traditionally, ESG has been understood from investors’ perspective, highlighting their desire to allocate resources to companies that act responsibly and sustainably. Professor Adolf Berle is considered the father of ESG, and his work in the 1930s set the tone for modern-day practices related to the social responsibility of for-profit corporations.

ESG has to be ingrained across the organization as a way of work that permeates across departments in the culture of the business. Even though some aspects will find a natural home given the areas of accountability and responsibility, ESG cannot be something organizations “do” but needs to become part of what they are.

We discussed ESG and HR with ESG advisor Sakshi Bansal. Watch the full interview below:

How HR contributes to the ESG agenda

Shifting our lens to HR, various matters related to ESG fall within the responsibility of Human Resources. Unfortunately, many HR professionals don’t make the connection, and ESG remains a concept that does not reside within the scope of their function.

Contrary to this belief, HR is already actively involved in ESG in many ways. Here is an overview:

It’s clear that ESG activities are closely linked to the HR strategy. Currently, in many organizations, HR does not actively incorporate ESG activities into the people strategy, often only being involved at an operational level. They are not present in strategic conversations regarding how ESG can be incorporated into organizational culture, practice, and values.

For HR to become more active within the ESG domain, a shift in strategy is required.

Integrating ESG into the HR strategy

There are two different approaches to integrating ESG into the HR agenda. Both have benefits and limitations; depending on the business context, organizations need to make a decision about which will be more appropriate.

Approach 1:  ESG as an independent pillar and area in the HR strategy

In this approach, ESG becomes a dedicated strategic pillar of the HR strategy next to key components like talent acquisition, talent management, and compensation and benefits.

The benefit of this approach is that ESG is articulated clearly with designated objectives and outcomes related to the topic. The limitation of this approach relates to the sense that ESG responsibility only resides with the team that focuses on that pillar. This positioning could create a lack of shared accountability with other functions not actively contributing to ESG. 

This approach might be a good fit for HR teams only starting with ESG initiatives as it allows the opportunity to first incubate skills and knowledge related to ESG. With active collaboration and alignment between different functions, this approach can provide a good foundation for ESG to deliver value.

Approach 2:  ESG as a value underpinning the HR strategy

The second approach sees ESG as an integrated approach where all functions need to contribute to function-specific goals related to ESG. In other words, ESG becomes a shared responsibility.

This approach requires a broader and more intimate understanding of ESG to understand the different contributing factors. It is well suited to organizations that have established the foundational understanding and importance of ESG and allows ESG to be fully integrated into the organizational focus and culture.

The risk of this approach is that ESG is not actively monitored and reported upon as part of operational and strategic progress. If not monitored, this could lead to inaction.

“A significant undercurrent is the belief that ESG is for finance and economics people. Almost as if it does not affect the rest of the organization or the normal working population.  

 

It is like saying, “Oh, like I breathe the air, but the air quality is not my concern.” It’s not possible. If you are living in this world, then sustainability is your concern. It concerns you, your business, your activity, and your job description. And just because the word sustainability isn’t in your job description doesn’t mean that there’s nothing for you to do with it.”

Sakshi Bansal, ESG Advisor

“When organizations go from a 15-person company to a 50 to a 100 to a 500, there are step changes in an organization that need to be reflected in your recruitment, people, and governance strategies. 

 

And these are things that we historically have seen that technical leaders, as great as they are, aren’t able to build a strategy for. You can’t expect your CTOs and CEOs to have the intrinsic know-how to build such large HR processes.”

Sakshi Bansal, ESG Advisor

How HR can start driving ESG within their organization

The following actions can enable HR to build the knowledge, skills, and expertise required to champion the ESG agenda as part of the HR scope.

Action 1: Build knowledge by understanding current ESG frameworks and standards

First, HR must better understand the current ESG frameworks and the standards they refer to. Even though the scope of this article will not cover each of these in detail, the following frameworks are important:

Action 2: Analyze current HR practices and processes

HR teams can analyze current HR practices using these frameworks to assess the strengths and gaps that need addressing. For example, the ILO provides standards and guidelines to evaluate decent work practices.

The next step is to use data and people analytics to better understand the talent pools, inherent biases, and potential barriers to employment within the organization.

For example, a multi-national insurance business used labor data to evaluate their pay equity practices. Over three years, it managed to close the gender pay gap and start reporting transparently on pay.

Action 3: Bring a committee together to discuss ESG

ESG is a shared responsibility, and establishing an internal, cross-functional committee to discuss ESG matters is essential.

Participants of this committee need to include representatives from Risk, Finance, HR, Facilities, Legal, Corporate Social Responsibility, and Operations as a starting point and be empowered to make recommendations to the executive team on improving the ESG agenda.  

Where ESG practices become more advanced, the organization should appoint a Sustainability Officer with a team that actively drives and manages ESG-related matters.

“If CHROs want to find their voice regarding ESG, this is a good time to differentiate themselves. With a sense of transparency, the power of factual reporting, and conveying a clear message, ESG is not about how organizations set themselves up after making money but how they make their money in the first place.

 

This is about the DNA of the organization, the business, the contracts, and what goes into that thought process. These topics are the fabric of both HR and ESG.”

Sakshi Bansal, ESG Advisor

Action 4: Create a clear stance on ESG matters for the organization to implement

For many, ESG remains a theoretical concept, and they don’t see the practical actions that can lead to a better future. The organization must develop a clear stance on ESG-related matters, defining its focus and priorities in a way that resonates both internally and externally. It’s important to create and clearly articulate the ESG strategy and goals, ensuring that investors, employees, and other stakeholders understand their practical impact.

Internally, within the organization, employees must understand how ESG is incorporated into how the organization operates and what is expected daily to deliver on the internally set goals.

Wrapping up

The HR contribution to ESG practices has to take priority in people strategies and practices going forward. For too long, ESG has not been perceived as a shared responsibility within the organization, and HR has a crucial role in ingraining ESG into organizational culture, values, and practices. 

To do so, HR professionals must educate themselves on the available ESG frameworks and how they can be applied within their organizations to drive action.

The post ESG and HR: What You Need To Know and Where To Start appeared first on AIHR.

We see four megatrends emerging that will impact work. HR will have a critical role to play in creating productive, thriving workplaces: 

• Megatrend 1: The future labor market will be influenced by an aging population, rising youth unemployment, and global talent migration.
• Megatrend 2: Global resource scarcity, including skills shortages and climate change, will affect organizational growth and productivity.
• Megatrend 3: Advances in technology, especially generative AI, are changing how tasks are executed, demanding responsible and ethical adoption.
• Megatrend 4: The relationship between people and work is evolving, with changing expectations in employer-employee dynamics.

The future of work is defined by digital and technological advancements, changing ways of work, and transformation of workplaces, work, and the workforce. The role of HR in the future of work is often a point of debate in these conversations. For some, HR is seen as a vital contributor to guide organizations into the next era of work, while others question the relevance of the function as the future of work unfolds.

At AIHR, we believe that HR will play a critical role in the future of work. We see HR as a key contributor to creating workplaces where individuals want to work and can thrive, organizations that are successful and productive, and a society that is sustainable and prosperous. A starting point for HR in enabling this vision, is to understand the megatrends that are shaping the future of work. This, in turn, informs the transformation that is required of the HR profession to meet this reality.

In this article, we discuss four megatrends that will shape the future of work and how HR needs to respond to guide organizations meaningfully. We conclude with a view on how HR can prepare for this future and the changes required to get there.

Trend 1: The composition of the labor market is changing

In 2023, the global population surpassed 8 billion people, and further growth is forecasted leading up to 2050. Despite the strain on resources, the growing population will also have an impact on the labor market. On the one hand, more people will be available to do the work, yet with current economic conditions, there won’t be enough jobs to support the growing workforce. This lack of opportunities could potentially lead to increases in unemployment, rising levels of social unrest, and increasing levels of poverty.

Medical advancements are significantly extending the life expectancy of the global population. This leads to a discernible worldwide pattern of rising retirement ages as workers extend their working lives and stay economically active for longer. This shift not only facilitates the retention of valuable skills and knowledge but also serves as a crucial safeguard for individuals, addressing uncertainties surrounding the financial security of those facing prolonged retirement periods.

Beyond the aging workforce, a pressing challenge has emerged in the form of escalating youth unemployment. This issue is increased by a disparity between the growing accessibility of education and the insufficient availability of corresponding job opportunities. In areas such as Northern Africa, Southern Europe, and the Middle East, youth unemployment numbers are at an all-time high, leading to social and economic challenges. 

Global talent migration will shape the accessibility of talent in local labor markets. The repercussions of climate change are poised to elevate migration rates, particularly in regions increasingly susceptible to job loss.

Simultaneously, the ongoing refugee crisis adds another layer to the global displacement of labor. In light of these dynamics, organizations must reconsider their employment strategies to address the unique challenges presented by these marginalized groups.

Trend 2: Resource scarcity influencing organizational effectiveness

Global skills shortages are set to increase, straining current talent availability and placing pressure on education systems to rapidly produce more skilled workers. Presently, education and reskilling programs are not producing these skills quickly enough, and organizations are battling to access skills – often leading to specific skills becoming extremely expensive and short in supply.

The landscape of scarce skills is also transforming. A study by IBM identified STEM skills as paramount for the workforce. Fast forward to now, and there has been a notable shift. Behavioral skills such as time management, prioritization, teamwork, and effective communication have risen to prominence, now occupying the top positions, with STEM skills sliding down to 12th.

The World Economic Forum’s Jobs Report (WEF) aligns with this trend, revealing that six out of the top ten skills deemed crucial by organizations are behavioral in nature, focusing on attributes such as creative thinking and analytical thinking. Despite this shift, numerous training programs, especially in tertiary education settings, continue to prioritize technical skills, often neglecting the development of these essential behavioral competencies. 

The influence of climate change on business operations, with its ramifications on raw materials and operational sustainability, presents a challenge in resource availability.

This escalation of temperatures contributes to climate-related disasters such as floods and rising temperatures, influencing organizational practices. This, in turn, necessitates adherence to new regulations and heightened concerns for employee wellbeing.

Trend 3: Advances in technology impacting future work design

Generative AI has significantly altered the work landscape, redefining how tasks are executed. Against the backdrop of mounting demands for responsible AI adoption, heightened apprehensions about data privacy, and the dynamic evolution of AI-related regulations, HR must adeptly align its practices with this emerging reality.

A noteworthy example is the European Union’s AI Act, which imposes substantial fines on organizations in cases where AI-infused recruitment practices are determined to exhibit bias. This underscores the imperative for HR to not only stay abreast of evolving regulations but also to proactively adjust its strategies to ensure fair and ethical AI utilization in various HR processes.

In addition to the transformative impact of AI, HR will need to navigate and incorporate advancements in virtual reality, blockchain, and advanced machine learning into organizations. These technological innovations are set to redefine the operational landscape of HR, requiring an adaptive approach to deliver effective solutions for organizations.

The integration of virtual reality promises to reshape training and development programs, providing immersive learning experiences for employees. Blockchain technology, with its emphasis on security and transparency, holds the potential to revolutionize HR processes such as personnel records and payroll management.

Advanced machine learning, building upon the capabilities of AI, will further enhance the analytical prowess of HR systems, facilitating data-driven decision-making and predictive workforce management.

Trend 4: Changing relationships with work and employment

In recent years, we’ve witnessed a notable shift in employer-employee dynamics. Movements like the anti-work movement, bai-lan, and quiet quitting all point to a growing dissatisfaction with traditional work models and changing expectations from employment.

The COVID-19 pandemic accelerated hybrid and remote work movements, emphasizing the importance of flexibility, autonomy, and choice within the employment relationship.

Looking ahead, we anticipate more diverse work arrangements becoming the norm, where individuals have a more significant say in why, how, and where they work, aligned with what employers can offer.

For HR, this implies a renewed focus on refining employer value propositions and fostering innovative approaches, such as implementing four-day work weeks, flexible scheduling for frontline workers, and embracing concepts like job-sharing and triple peak days into workforce management strategies.

These shifts and changes will impact our approach toward productivity, with the current productivity paradox demonstrating that the last 20 years have not made significant inroads into improving productivity. 

How you can prepare for this future

For HR to guide their organizations to manage the impact of these megatrends, will require a step-change in four specific areas of the HR profession:

1. Reframing operating models and team composition

The current HR operating models need to be adapted to accommodate this new reality of work. HR operating models will need to become more solution-focused, breaking down traditional functional siloes and incorporating new capabilities to meet the demands of the changing workplace.

2. Bridging and upskilling

To equip HR for the future, bridging existing skills with future requirements is crucial. Investing in HR upskilling and incorporating new non-traditional HR skills such as data, digital, and sustainability will become necessary for the relevance of HR professionals. In this article, we highlight the HR professional blueprint of the future and how T-shaped skills will become the norm.

3. Changing perspectives of HR and the value of the function

To successfully transition to the future, HR will require repositioning in terms of the focus, value, and impact of the function. Unfortunately, for most, HR still remains tied to a historical context focused on compliance and risk management, where HR existed solely to protect the organization. 

This reality is no longer valid, yet this perception remains for most people, leading to a devaluation of the impact of HR as well as an inability to attract new talent to the HR profession.

4. A clear vision for HR and roadmap to the future 

Given the challenges and opportunities discussed in this article, we believe HR requires a new vision for the future. A vision that clearly articulates how HR can contribute to the future world of work, reposition the profession’s scope, and provide a practical roadmap to guide professionals toward this future.

Without a clear vision and roadmap, HR will continue on its current trajectory and be unable to guide organizations to a future of opportunity, new challenges, and prosperity.

The bottom line

The HR profession is at a critical juncture, presenting two distinct paths. One path leads to a future where HR becomes a potent force driving organizational success. The alternative route risks relegating HR to a reactive, diminishing role, failing to keep pace with the dynamic workplace landscape.

Embracing the required step-change is not just necessary; it’s the key to unlocking HR’s potential to shape a brighter future for individuals, organizations, and society.

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