• The CHRO role’s complexity and internal challenges deter many from aspiring to it, despite its critical importance. This highlights the need to address these barriers to attract and retain top HR leadership.
• Additionally, the CHRO role has evolved from heading HR to a business leadership position with expanded scope, including ESG, digitalization, and a complex stakeholder landscape.
• There are five challenges that CHROs indicate inhibit their success in the role. These include power, politics and unpredictability, lack of legitimacy, a lack of belonging, inheriting and navigating historical HR leader failures, and perception that CHROs “serve” at the CEO’s discretion.
• A change is required in how CHROs are developed. We propose a three-pronged approach that considers the ecosystem needed for CHROs to be effective.

The CHRO role is notoriously difficult and complex, leaving many CHROs feeling ill-equipped and unprepared. Politics, a complex stakeholder environment, and Board dynamics are some challenges new CHROs face. For many, this makes the role unappealing. 

Only 40% of senior HR leaders say that they have the ambition to move into the CHRO role, while senior HR leader turnover is reported to be significantly higher than in other C-suite roles. Contrary to what many believe, this is not a symptom of the role’s demands — more often, it is due to significant internal barriers that CHROs face.

In this article, we draw on our latest research to discuss the current reality of CHRO careers, how the role changes, and the unique challenges we must address to set the role up for success. 

The reality of the CHRO role: Changing expectations and scope

The CHRO role has significantly changed over the last decade. Even before the pandemic, the CHRO scope changed to include the inclusion of environmental, social, and governance (ESG) as a critical strategic priority. Similarly, the digitalization of HR and the rising importance of board oversight on people matters have significantly impacted the role’s focus.

Beyond the evolution of the scope and responsibilities of the CHRO role, the reality of talent in CHROs highlights significant challenges. Recent rates show that the turnover (14%) within top HR roles is higher than in other C-suite roles.

Similarly, the internal promotion rates for CHROs are much lower than their C-suite counterparts, at only 57%. This signals that the CHRO role is not set up for success within the business and requires urgency in developing CHROs for the future and addressing the symptoms of underlying challenges.

5 challenges inhibiting the success of the CHRO role

CHROs state that they experience five barriers to success:

Barrier 1: Power, politics and unpredictability

By its nature, the CHRO role is at the heart of complex relationships and organizational politics. This results in CHROs spending significant time and effort managing relationships across the organization and navigating politics. To make this practical, CHROs often spend more time navigating organizational demands rather than focusing on activities that lead to strategic HR impact. 

When reflecting on their careers, many CHROs say that they felt ill-prepared to work with the Board and C-suite, and managing conflicting agendas and dynamics contributed to their feeling of being an imposter within the C-suite.

Many CHROs share that they don’t feel fully prepared for the role. As many as 41% of CHROs advanced from the HRBP role, with 29% moving into the role from outside of HR. This means that CHROs enter the role with varying skill sets and exposure, which might not always align with the role’s expectations.

Barrier 2: Lack of institutional legitimacy

The CHRO role is often not given credibility within the organization, holding very little power and autonomy. In some organizations, this is explicit – the CHRO is not seen as part of the executive leadership team. In others, the role is included at face value but holds no real influence or power. CHRO decision-making power and autonomy are often diluted at the C-suite level, which contrasts the expectations that CHROs hold of the role.

CHROs impact business, society, and people. However, once they enter the role, they struggle to build trust and credibility with leadership, often feel isolated and not part of the C-suite, and struggle to manage overwhelming expectations and decision-making responsibilities. This leaves many CHROs feeling disempowered and needing more agency to drive the strategic HR agenda.

Barrier 3: The CHRO role is lonely

CHROs report that being elevated into the CHRO role often brings a sense of loneliness and lack of belonging. On the one hand, the CHRO is considered the people leader of the HR function and represents business leadership in meetings. On the other hand, they do not feel fully integrated into the business executive team. This leads to dissatisfaction with the role, with only 52% of CHROs reporting that they are satisfied with their careers.

Chief Human Resources Officers also experience little support in their roles, resulting in burnout, disengagement, and often premature exits from the profession. This poses a significant risk to the readiness and availability of experienced CHROs. Many CHROs remark that being the ‘outlier’ in the C-suite (treated differently than other functions) and advocating for the HR function and profession creates a challenging and lonely environment, which was not anticipated in the role.

Barrier 4: Carrying the burden of HR’s past

Thirty-eight percent of CHROs progress into the role through upward advancement and promotions. While this leads to solid business acumen and an understanding of the organizational context, it often diminishes HR’s credibility and ability to transition into a C-suite leader. “Growing up in the business” brings with it the responsibility of carrying the history of previous HR leaders while also being seen as part of historical failures.

Where HR has been established as a successful contributor under a strong leader, new CHROs carry the burden of being measured against their predecessors and continuously compared to them—which is especially true if the new CHRO grew within the business under the leadership of the previous incumbent. Even though this is not unique, given the intimate stakeholder relationships that successful CHROs hold, it often makes it difficult for new incumbents to establish their brand.

Barrier 5: A perception that CHROs “serve” at the CEO’s discretion

The relationship between the CEO and CHRO contributes significantly to the role’s success. This relationship also often dictates the accessibility of the CHRO in terms of key strategic discussions and its critical role in managing board dynamics.

Unlike the relationship between the CEO and other C-suite executives, there is a close link between the perceived credibility of the CHRO and the CEO. CHROs mention that working for a CEO where they align with the values and ways of work significantly contributes to their own career decisions. 

To put this practically, a CHRO is 2x more likely to leave the role following a CEO transition, with the likelihood of this churn increasing to 54% within the first 24 months. 

Given the changing nature of the CHRO role, the current CHRO talent development approach cannot overcome these challenges. Similarly, the impact CHROs can make is lessened because of institutional factors inhibiting their performance. These challenges and changing expectations set the stage for the future CHRO profile. They will significantly influence the development of a healthy and sustainable CHRO talent pipeline.

What should we be doing to create a healthy CHRO talent pool?

We need to change how we develop CHROs. Traditional upskilling will not be enough. We propose a three-pronged approach that considers the ecosystem needed for CHROs to be effective.

Individual level

CHROs must reflect on their skills and experience to identify gaps and proactively address them to build confidence to prepare for the role. Beyond the required skills, CHROs also have to demonstrate clarity in their belief system and how this impacts their professional identity.

This is essential for making tough calls, navigating ambiguity, and remaining true to purpose. Self-awareness is essential in any leadership role, but for CHROs, the ability to reflect and make sense of their strengths and limitations is even more critical.

Organizational level

The organization plays a key part in creating an environment where CHROs can thrive. On the one hand, this requires clearly defining the contribution and expectations of the CHRO role and giving it appropriate decision-making authority.

This means legitimizing the role, its positioning within the C-suite, and its power and influence. It also requires a proactive approach to CHRO succession planning and feeder pool development to ensure the role’s readiness and continuity.

Profession level

Beyond the organization, the HR profession as a collective also needs to address past perceptions about why the HR profession exists and the type of work it is responsible for. The baggage of the past often impacts the credibility of the CHRO or even demotivates individuals from entering the profession in the first place.

Also, the profession needs to establish communities of support, coaching, and mentorship to ensure that CHROs receive tangible support in transitioning into the role and navigating the loneliness of the profession.

 A call to action

The scarcity of qualified CHRO talent poses a real threat to organizations’ capacity to cultivate sustainable workplaces in the future. The hurdles confronting the CHRO role demand innovative solutions, as current strategies prove inadequate. HR cannot solve this challenge on its own. It will require a concerted effort that will include multiple parties changing the current perceptions of the role, its value, and the credibility of those who step into the responsibility. 

The post CHROs Are Failing and It’s Our Fault: 5 Barriers to CHRO Career Success appeared first on AIHR.

• In this article, we focus on the important role of HR in executing business strategy, underscoring its strategic contributions to overcoming common organizational challenges.
• We discusses three major obstacles companies encounter in strategy implementation—translating strategy into tangible action, execution is a people problem and how the success of a strategy requires constant adjustment—and how HR can address these to drive impactful execution.
• The piece redefines HR’s function from being primarily operational to becoming a core strategic player that is critical in setting and executing business strategies, and how HR can drive impact in the organization at various levels, through strategy process, people, and their own skill set (self.
• Expanding upon the core competencies within the T-shaped HR Competency Model, we explain the concept of Execution Excellence, and how HR professionals can master seven behaviors to foster effective strategy execution across the organization.

For the last decade, HR has focused on elevating its strategic impact in response to changing organizational demands. In fact, organizations that actively involve HR in the strategy process encounter less people and financial risks associated with high turnover, inadequate resourcing and diminished productivity. 

But this requires relieving HR’s operational or administrative burden to play an active role in setting strategy and strategy execution.

In this article, we argue that HR’s biggest impact is how it enables the organization to execute its strategy and explain how the HR function can capitalize on this role. Through this lens, we redefine HR’s role as a strategic contributor essential for business success.

Common challenges in strategy execution

To become a strategic partner, HR must help the organization execute its strategy and realize its goals. As a department that enables the organization to operate, HR has a critical role to play in strategy execution. 

To understand this role, it’s important to consider three typical obstacles organizations face in delivering impact through strategy and how HR can remove these.

Obstacle 1: Translating strategy into tangible action

Getting people to execute a plan is much more difficult than devising a smart strategy. In the words of John Doerr, one of the pioneers of OKR goal setting: “Ideas are cheap, execution is everything”.

Research by Bain found that up to 40% of strategy value is lost in poor execution. CEOs across 400 organizations of various sizes and maturity list strategy execution as one of their top challenges; specifically the failure to implement strategy plans.

Creating a strategy is often the responsibility of the core executive team that has the business acumen and know-how to shape the future. However, strategy execution relies on interpreting and translating strategy and then getting it done. This is enabled through timely decision-making, which shifts the dial in the right direction. It relies on several people doing the right things aligned to the defined direction. 

Obstacle 2: Execution is a people problem

The biggest challenge in strategy execution is aligning everyone’s efforts and helping them accomplish the organization’s most important work, according to an HBR article titled ‘Execution is a People Problem, not a Strategy Problem’.

This requires belief in a shared vision, understanding the organization’s goals, and motivation to contribute to these. It also requires the right skills and capabilities to deliver on this vision. Strategy execution fails when employees do not feel a sense of ownership in their contribution to the strategy or when efforts and skill are misaligned. 

On an organizational level, the right people must be deployed at the right time at the right place. This is achieved through effective workforce allocation, offered growth opportunities that align with the organization’s long-term vision, and a culture that promotes performance and impact. 

Obstacle 3: Successful strategy execution requires constant adjustment

Too often, strategy execution only extends as far as defining a tactical execution plan. Successful strategy execution goes beyond a tactical plan – it relies on aligning and integrating resources, processes, and practices. When integrated seamlessly, strategy can turn into action, with all elements of the business working towards a shared goal.  But successful execution also requires ongoing agility and refinement.

This is where goal setting becomes crucial. Clear, measurable, and achievable goals provide a roadmap for execution. They act as guideposts, helping employees understand what needs to be done and how their efforts contribute to the larger strategic vision.

In an agile business environment, practices must be iterated, and goals must be adaptable. This means making decisions based on a variety of different data sources and a willingness to iterate and adjust plans as new information comes to light and new technologies and business models emerge. This flexibility to adjust where needed ensures successful strategy execution over time.

HR as a strategic contributor to overcoming these challenges

While HR has made great strides in securing “a seat at the table”, there is still an opportunity to play a more active role in strategic planning and execution. In most organizations, strategy is still defined by the core leadership team and HR is only involved in strategy execution when it comes to defining the people strategy. 

To some extent, HR credibility has largely been built on its ability to monitor strategy execution. Practices such as performance management and strategic talent management ensure that adequate resources are in place to deliver on strategy. 

However, HR as a function is uniquely positioned to deliver an even greater impact earlier in the strategy process: 

• The HR function is, by its nature, cross-functional and cross-collaborative. To deliver HR services and solutions, efforts have to be coordinated with many other functional areas such as finance, technology, marketing, and compliance. This cross-functional orientation and established stakeholder relationships are critical for broader strategy execution. 
• HR is skilled at cascading strategy and facilitating goal-setting. As a business enablement function, HR strategy follows business strategy and is measured through aligned metrics. These mechanisms reflect one of the key requirements of successful strategy execution, which can be leveraged for business strategy execution.
• HR is best positioned to mobilize and align people to execute strategy internally. This is done through strategically aligned practices but also through communication, the development of leaders, and driving a high-performance culture. As a business partner and people advocate, HR can directly influence and align people within the organization to deliver on strategy. 

Defining HR’s role in strategy execution

HR has a crucial role to play in strategy execution, which extends beyond just the CHRO accountability and contribution.

Based on the positioning of the function, the practices it influences, and the skills of HR practitioners, we believe HR can make an impact at three levels — through the strategy process, people, and their own skill set (self).  

1. Impact through the strategy process

The impact of HR in the strategy process is foremost realized through making strategic execution a people problem. This requires a deep understanding of the strategy, knowing the levers that help to realize the strategy, and prioritizing the actions that create the greatest impact.

Integrating and aligning HR practices to reflect the overarching business priorities is critical to strategy execution. This breaks down siloed execution and ensures cross-functional alignment towards the same goals. This includes performance management, talent management practices, and reward and recognition. Alignment makes strategy execution part of how work gets done in the organization, shaping a culture of execution. 

Strategic workforce planning and evidence-based, data-driven decision-making are key to ensuring the business has the right skills to deliver on strategy. Technology, data, and scenario planning expertise is critical for delivering impact through the function. Yet, these are the same capabilities that HR organizations often struggle with.

2. Impact through people

To achieve these outcomes, HR professionals must master how to deliver impact through others. This applies to individual contributors but specifically to HR leaders who are responsible for managing and leading teams and projects. This requires entrusting and enabling others to deliver impact. To do this effectively, we believe there are 7 behaviors to successfully master as an HR professional delivering impact through others. 

Delivering impact: 7 behaviors to master

Successfully mastering these seven behaviors will help HR professionals deliver impact through people.

Developing leadership competencies is frequently neglected within HR, disproportionately focusing on technical skills and expertise. As HR professionals, knowing how to deliver through others is critical for strategy execution. Whether this involves cross-functional collaboration, leading HR teams, or playing a role in aligning people towards the same goals, these competencies are critical for HR professionals to master. 

3. Impact through self

Finally, HR cannot drive execution excellence as a function when individual HR professionals don’t apply the same principles to their work. Whilst business acumen is critical for understanding the business context and commercial impact in strategy creation, execution excellence translates strategy into action.

The Execution Excellence competency focuses on the way HR delivers impact by getting things done. In our T-Shaped HR Competency Model, we define this through three broad dimensions. Each dimension specifies how strategy is executed through the individual.

1. Action Orientation involves effectively planning and organizing activities to achieve specific goals and objectives, while also being accountable for the results. It encompasses the efficient use of resources, both personal and within an organization, to create meaningful outcomes. Additionally, it includes the capability of human resources (HR) professionals to adapt to changes and manage uncertainties that are common in their work environment.
   
2. Problem-Solving involves the methods HR professionals use to approach issues and make decisions. It requires making sense of various information sources and effectively conveying the core idea. This also requires navigating contrasting viewpoints and finding a practical way forward. Lastly, it requires an awareness of the broader business context to interpret data and make informed and timely decisions. 

3. Interpersonal Skills refer to how HR professionals engage with others to deliver impact. Building and maintaining relationships with stakeholders and fostering collaboration are critical skills to drive impact through others. Clear communication and persuasion are critical to ensure others are aligned and informed. Finally, genuine empathy and cultural awareness in these interactions are key to creating an inclusive and supportive atmosphere for others to deliver. 

Taking action

As organizations become increasingly complex and more fast-paced while facing technological and social shifts, effective strategy execution is more essential than ever. The question is no longer if HR has a role to play in strategic execution, but rather on how we can ensure our actions create strategic impact. 

As a partner to the business, HR has the unique opportunity to enable strategy execution through actions that lead to impact backed by sound decision-making. This requires a renewed focus on execution excellence as a core capability of the HR function.

The post How HR Can Drive Impact Through Execution Excellence appeared first on AIHR.

With its cross-functional view of the organization, the HR function can play a key role in preparing the business for the future of work.

But are HR professionals equipped to step up?

To answer this question, we conducted research to assess the current state of the HR function and explore its readiness for the future. The findings provide valuable insights into what HR needs to successfully guide organizations.

The research at a glance

Our State of HR research draws insights from three data sources. This multi-faceted approach allows us to understand the current state of the HR function, the evolving skill sets of HR professionals, the pathways of HR careers, and the challenges and opportunities shaping the future of HR.

Challenge 1. Insufficient investment in HR

The HR function has grown significantly in the last five years, but it still has some catching up to meet its anticipated growth of 10% by 2030.

HR falls behind other functions

While the global HR profession has grown by 8% in the past five years, in the US, this only represents a 2% share of all employees, placing it behind Marketing (7% share of employees), Operations (9%), and Administration (15%). HR is consistently smaller in size compared to other functions. 

HR investment and growth

According to a recent Lattice report, over half of HR teams remain the same size, while 14% are decreasing their headcount in 2024. This indicates there is little focus on increasing HR headcount despite an increase in the scope of HR. We also see this in our data, where the headcount investment in HR remains steady at 2%.

HR is predominantly represented in cities

Despite 80% of the workforce being deskless and frontline workers outside of head office environments, HR functions are concentrated in larger metropolitan areas. In the US, the size of the HR function reflects the size of the cities’ working population, which leads to less representation in factories, branches, and distribution hubs.

START NOW

Reposition HR operating and resourcing models

• Redesign HR operating models. Align HR operating models with organizational growth and complexity, not just workforce size. Doing so will allow for more impactful HR service delivery and adequate investment in HR resources to fuel business growth and performance.
• Embrace technology. Integrate automation and AI into HR processes to streamline transactional tasks. This allows HR professionals to refocus their time and attention to deliver at scale.
• Distribute HR teams: Align HR teams with the organization’s geographic footprint. This could change the perception of HR as solely a headquarters function. It also enhances visibility and fosters closer collaboration with employees and business units.

Assess

Strategically assess the size and composition of your HR function to ensure a diverse skill set and determine how the function can be optimized.

Execute

Establish HR functions close to the frontline – tap into geographically dispersed talent pools outside cities and elevate HR beyond a ‘head office’ function.

Challenge 2. HR has a diversity dilemma

Current diversity gaps within the HR functions and their implications need to be recognized. Organizations can then address and build a more inclusive, representative HR workforce that is well-equipped to serve a diverse employee base.

HR’s overrepresentation of women

Women make up 68.2% of the HR function in the US, which is significantly higher than the broader workforce. This overrepresentation trend is consistent globally, highlighting the dominance of women in HR.

Diversity within HR 

Diversity in HR is not representative of the overall population diversity. In the US, the HR function is predominantly white (67.5%). Hispanics are proportionately underrepresented in HR roles, in contrast to their 19% presence in the population. 

Youthful HR workforce

Around 60% of HR professionals fall in the 20-40 age range, indicating a relatively young workforce in the HR function. Overall, the HR function represents a relatively homogeneous group.

Imbalance in senior roles

Most HR professionals (57%) hold junior or entry-level positions, while senior roles still lack representation of minority groups. This could potentially limit diversity based on the small number of positions at this level.

START NOW

Prioritize diverse talent pipelines and eliminate barriers to entry

• Assess talent pipelines. Actively pay attention to your talent pipelines, where you are sourcing talent from, and the current market perceptions of the HR professional. Similar to what you do for business, you require a diverse sourcing and development strategy to enable the next generation of HR talent.
• Break role stereotypes. HR needs strong leaders and associations to break role stereotypes and become outspoken advocates for the profession. This will showcase the diverse skills and profiles needed for a successful HR team.

Assess

Assess the diversity of your HR function – determine to what extent this represents the overall population and the skill sets required.

Execute

Define career progression in the HR function and transparently communicate and support this within your organization.

Challenge 3. Mismatched skills and requirements

Today, HR professionals face evolving skill requirements driven by the increasing complexity of the operating environment. This includes the need for business acumen, change management, data literacy, and technology integration. Surprisingly, job postings by organizations don’t reflect these changes.

Prioritizing generic HR skills

Our findings show that the number of job postings requiring data and digital skills has steadily increased, indicating shifting requirements. However, generic skills such as administrative tasks, effective communication, and compliance are still overrepresented in HR job postings.

A mismatch between business needs and HR skills

The skills required by organizations versus those listed by HR professionals reveal a clear misalignment, specifically in leadership, management, and training-related competencies. Our “State of HR Upskilling” report highlighted this gap. CHROs’ top business priorities did not align with the existing skills of HR professionals, which are primarily centered around traditional HR responsibilities like workforce administration.

START NOW

Define and implement a holistic HR competency framework that is future-focused and business relevant

• Define and communicate what ‘good‘ looks like: Translate modern competency models into practical job descriptions that align with how businesses perceive the value of various HR roles. 
• Redesign HR roles: Redesign HR roles to meet evolving business needs, integrating modern skills like digital and data as core components of the HR professional profile. Help businesses understand what good HR looks like in practice through work design as well as internal change and communication efforts to shift expectations.

Assess

Strategically evaluate the HR skills required to ensure successful HR delivery in the future.

Execute

Adopt a research-backed HR competency model and translate these competencies into job requirements and skills development priorities.

Challenge 4. Lack of confidence in critical business skills

The HR function is shifting from its traditional administrative role to a strategic and business execution approach, but it still has much progress to make.

This transformation is crucial for HR professionals to effectively contribute to overall business success. However, challenges like a lack of confidence in business and financial acumen and digital skills indicate a need for further development and empowerment of the HR role. This is essential to realize HR’s strategic potential fully.

Hesitancy in applying business acumen skills

Our data indicates that, while HR professionals view themselves as business partners, only 64% feel confident in translating strategy and aligning HR priorities. Additionally, they are less likely to use financial data for HR decision-making.

More experienced professionals with 15+ years of experience tend to rate their business acumen higher. However, given the age profile of the HR function, there is a limited number of professionals who reach this level of expertise.

Execution skills still trump digital skills

83% of HR professionals express high confidence in executing operational and transactional tasks. This could indicate the type of work HR professionals are involved in or their confidence in delivering such work.

HR also shows a willingness to adopt digital and use digital tools and technologies in their daily operations. However, this willingness does not always lead to action, as many HR professionals lack confidence in their digital skills and ability to champion digital initiatives.

HR’s skills and impact expand beyond employee engagement

Our data also reveals that people advocacy remains HR’s main focus. However, this focus has expanded beyond building high-performance cultures and engaging workplaces. HR now addresses broader societal and environmental challenges, such as sustainability and key social issues. 

Additionally, HR plays a pivotal role in guiding organizations through moral and ethical dilemmas. Despite these advancements, HR still faces challenges in managing conflicting priorities (29.2%), balancing opposing views (29.3%), and giving a voice to minority groups (30.2%).

START NOW

Reposition the HR function and the contribution of HR professionals through tangible actions

• Educate the business on what strategic HR looks like: Ensure that business stakeholders are aligned on what tangible strategic HR contributions entail and what they should expect from senior HR leaders.
• Clearly align HR’s focus and resources to business outcomes: Ensure clear alignment between HR’s priorities and business strategy and reflect this in how success is measured. Speak the language of the business when discussing HR impact and instill this within the HR function.
• Drive digital adoption within HR: Determine how HR can responsibly adopt and use technology to drive efficiencies and impact. Develop the relevant digital skills and confidence to use and critically think about technology.

Assess

Assess the HR team’s current skills and confidence levels, as well as the ability to deal with the complexity of a strategic environment. Identify where more development or exposure is needed.

Execute

Implement HR governance that incorporates the HR voice in strategic conversations at different levels within the business. Specifically, include HR professionals within the digital and technology conversation while building the general business acumen of the end-to-end function.

Challenge 5. HR career drivers at odds with business needs

Our research into the state of HR careers revealed that HR career motivation and work enjoyment do not match with business realities. Additionally, HR careers are often unplanned and unstructured. 

Career entry into HR is late

72% of HR professionals start their careers before age 30, with only 18% starting in HR as their first or second role. Most HR professionals have experience in humanities, social sciences, or administration before entering HR. 

Career motivation and definition of success

Most HR professionals start their careers in HR because they are motivated by their interest in people and want to help create business impact. 

This is also reflected in how HR professionals describe their personal definition of career success. For 23% of respondents, success means making a meaningful impact on work and society, while 40% define success as their own professional growth and development.

As for their preferred work, 37% of HR professionals want to focus on translating business needs into effective HR interventions, while 24% prioritize implementing HR processes that create a memorable employee experience, the second highest-ranked interest. 

Work enjoyment

On the other hand, compliance-related activities like governance and legislation of people practices are less enjoyable for a significant number of HR professionals (36%). Similarly, 30% of HR professionals rank leveraging data and analysis to uncover insights as their least preferred activity compared to other core HR functions. 

Leveraging HR technologies in collaboration with product owners to drive business impact was ranked as the most enjoyable activity for only 2% of HR professionals, with most indicating it as their 5th or 6th preference. 

HR careers are mostly unplanned

HR careers are often unplanned and unstructured. Many HR professionals stumble upon this career path by chance or opportunity. This unplanned or unstructured approach to HR careers is also evident in how HR careers unfold. As many as 17% of individuals reported their careers in HR don’t follow a distinct path or trajectory. Instead, personal interests, motivation, and opportunities largely shape their career path.

Linear HR career paths persist

Most HR career paths are still traditional and linear in nature, meaning professionals steadily climb the ranks within a specific HR domain (32% of respondents). However, some HR professionals (23%) opt for upward and lateral progression between different HR areas of expertise. 

Around 17% of respondents also indicated that they had gained in-depth knowledge and responsibility within a particular skill set by moving within the broader HR function (17% of respondents). Fewer HR professionals (11%) explore careers that involve transitions between HR and other business functions. In addition, the top three rated factors influencing HR career decisions are centered around professional ambitions, values, and interests. 

START NOW

Revisit and redefine the HR career to ensure a healthy HR talent pool with the right skills

• Upskill, reskill, and cross-skill: This approach allows HR professionals to develop skills through practical exposure and is crucial for robust HR development.
• Structure and formalize career development of HR professionals: Consider structuring HR Academies with a future HR skills focus. Align HR Academies to the requirements of strategic HR operating models and new competency profiles. At AIHR, we believe that HR professionals require T-shaped competencies, and HR Academies can be structured to focus on building these skills.
• Make HR careers attractive: For HR to become a sustainable profession, we need to make the HR career attractive to job seekers, driving HR as a choice of career as opposed to an accidental occurrence. This can only be done if we create more structure regarding early HR careers while making non-traditional career paths more visible and actionable within organizations.

Assess

Assess how HR careers typically unfold within your organization and how this impacts the development of HR expertise.

Execute

Intentionally create structured HR upskilling initiatives to ensure that HR professionals entering into the function are supported and enabled with the necessary skills, regardless of their career entry point.

The bottom line

There is no question that the future of HR holds the potential to make a substantial impact on both organizations and individuals. However, the HR profession must acknowledge and address some of its systemic barriers and challenges to reach this potential. This requires a reinvention and repositioning of the HR profession, HR careers, and the development of HR professionals.

Our research shows that there is work to be done within HR to prepare for future needs.  HR is maturing as a function, and a change is required to move into its next evolution. An evolution where the profession comes into its own and finally finds its voice within and beyond the organization, and drives the change that will impact individuals, organizations, and society into the future.

The post The State of HR: 5 Major Challenges the HR Profession Faces appeared first on AIHR.

• Despite global talent shortages, a large part of the workforce – including groups like caregivers, people with disabilities, refugees, veterans and the previously incarcerated – is willing and able to work but remains unemployed or underemployed. This is referred to as the hidden workforce.
• Biases, stereotypes, and prejudices that permeate organizational decisions play a big role in keeping this hidden workforce untapped. Other factors include a lack of flexibility for individuals with specific needs and outdated employment practices and policies that inadvertently exclude certain talent pools.
• Understanding and addressing the unique challenges and barriers each group of hidden workers faces enables organizations to access this underutilized talent and address looming skill shortages.

By 2030, 2.1 million jobs will remain unfilled in the United States alone. In the last two years, we have seen an exodus of the workforce (such as the Great Resignation) and persistently low unemployment rates across the globe. The impact on economic growth will be significant as there will simply not be enough skilled workers to sustain the economy.

However, it is not all doom and gloom. Amidst this reality, there are workers who are willing and capable of contributing, yet due to various factors, they are unable to participate in the workforce. Estimates say that the size of this so-called hidden or forgotten talent pool is 27 million people in the United States – equating to roughly 17% of the total workforce.

In this article, we explore the hidden workforce and why this remains an underutilized talent pool. We deep dive into five viable hidden worker talent pools and explain why these exist. We’ll look into typical barriers to entry and present practical approaches organizations can utilize to gain access to this talent. 

What are hidden workers, and why are they not part of the workforce?

Hidden workers refer to employees who are either underemployed or unemployed, although willing and able to contribute to the workforce. This includes caregivers, disabled workers, those suffering from long-term illnesses, veterans, refugees, and previously incarcerated individuals. These workers face significant barriers to entry into organizations, as their needs and ability to contribute differ from other, more traditional talent.

The term ”hidden workforce” was first used by Harvard in their research report “Hidden Workers: Untapped Talent”. The report aimed to shed light on how organizations are impeding their ability to identify and access various talent pools. The report highlighted categories of hidden workers and the ways in which these workers are overlooked and excluded from the workforce.

Fast-forward to the present, the hidden workforce is increasing in number, and organizations are still struggling to successfully access this hidden talent. Tapping into the hidden workforce is one of the key HR trends of 2024.

The barriers that keep the hidden workforce untapped

Although these workers are not a homogenous group, they face similar barriers that inhibit their entry into the labor market.

Hidden workers remain underemployed or unemployed due to a number of factors like perceptions, lack of effort and awareness, as well as exclusionary organizational practices. Let’s take a closer look.

Biases, stereotypes, and prejudice

Often, the biases, stereotypes, and preconceived ideas about certain groups of people reflect in the decisions, opportunities, and subjective evaluations of value at the organizational level. These notions typically impact underrepresented, marginalized, or disadvantaged groups, such as ethnic and other minorities.

This is the subtle exclusion of groups who do not meet the “minimum requirement” to participate in the workforce due to lack of opportunities, financial barriers, previous criminal convictions, or health-related challenges. If organizations don’t actively manage these biases, it could easily lead to discriminatory practices, whether intentionally or unintentionally. 

We often see these biases reflected in talent selection and identification decisions. In some cases, these decisions are either not based on objective data or lack contextual interpretation of the data. The unintended exclusion of certain groups through automated hiring practices is another example of this in practice.

Lack of flexibility or accommodation of specific employee needs  

A large portion of the workforce live with long-term health conditions that make regular work conditions challenging to manage. This could include physical health challenges, such as chronic or longer-term illness and disabilities, as well as mental health challenges, such as depression or anxiety disorders.

For these workers, flexibility in work conditions and physical workspaces can alleviate some of these challenges while still providing opportunities for meaningful work and employment. However, without acknowledging these challenges or accommodating the needs of employees, organizations exclude and create barriers that make it untenable for these employees to work.

In some circumstances, employees also have childcare or caregiver responsibilities, such as looking after an elderly or sick family member. These employees require flexibility or specific benefit requirements that align with caregiving responsibilities.

It could also include the need for additional work hours or shifts to create additional income. Without this support, these employees often leave the workforce as a last resort to managing this tension.

Employment practices and policies

Unfortunately, there is a tendency for organizational practices to consistently exclude hidden workers from workforce opportunities. This is either through a lack of awareness and access to these workers or as a result of outdated practices and policies. 

It does not necessarily reflect an unwillingness to include these talent pools. Rather, it points to a lack of awareness of where and how to find and access this talent.

There are also practices and policies that organizations put in place that intentionally or unintentionally exclude hidden workers. The most common display of this is in automated screening and out-selection criteria, which do not consider the minimum requirements of the job. Often, the technology solutions that are intended to lift the operational burden of selection are affected by bias and are inaccessible to many workers.

Organizational policies can also constrain the employment of certain workers, such as refugees, retired workers, and contractors, through rigidity and unnecessary bureaucracy, leading to the exclusion of these workers.

To overcome these barriers to entry, talent management practices have to evolve. Like other talent pools, the hidden workforce needs to be looked at as a talent segment. This implies understanding the composition of the talent pool, how it can add value, and how to redesign talent management practices to access this talent pool.

Accessing the hidden workforce: Five talent pools to prioritize 

The hidden workforce represents a number of different types of workers – each with unique characteristics, barriers, and benefits. We have identified five talent pools that we believe organizations can access as a priority to complement current talent initiatives:

1. The non-permanent worker

These workers include gig workers, contractors, and other contingent workers. They are considered a part of the hidden workforce (sometimes called semi-hidden) due to their underemployment and less visible status in the organization, often resulting in exclusion.

They are not entitled to the same benefits as permanent employees and are not recognized for their contributions.

Similarly, businesses don’t prioritize their development, and instead of broadening their expertise, they are “exchanged” by others who already have the skills. For individuals, this results in disengagement with work and exclusion and negatively impacts employability. For organizations, this means a constant loop of “find and replace,” which is not cost-effective or sustainable.

Strategies to access this talent pool

Firstly, critically consider the skills needed to perform work. If these are scarce skills or core to the business operation, organizations need to consider permanent resourcing. Seagate Technologies unlocked almost 35,000 hours within 45 days of launching their internal Career Discovery Platform.

The platform allows employees to participate in and contribute to projects in addition to their regular (part-time) working hours and roles. This means that instead of sourcing new skills, the company can redeploy and re-utilize internal skills and tap into the previously hidden workforce. 

If there is a need for temporary resources, consider increasing the number of hours that these workers work and include them in other organizational activities and programs usually reserved for permanent employees. This creates a deeper connection to the organization and presents an opportunity for closing the growing skills gap. In turn, this leads to higher levels of productivity and contribution from these workers, who are eager to be part of the workforce.

JP Morgan Chase is a leading bank that provides comparable benefits for their non-permanent workers. This includes retirement benefits and health and disability benefits. The company acknowledges that these workers still have the same needs as regular employees despite their non-permanent status.

2. The retired worker

The share of people over 65 will increase from 10% in 2022 to 16% in 2050. Yet, the retirement age globally only changes slowly, even though the workforce post-retirement are able and willing to work longer.

Unfortunately, due to ageism, retiring workers are often seen as “dead wood” or blocking opportunities that should be allocated to younger workers. Yet, this talent pool offers a wealth of knowledge and experience that they have accumulated over time, which businesses can still employ in a meaningful manner. 

Organizations often undervalue this, as the focus is usually on bringing new skills into the workforce.

Strategies to access this talent pool

Through part-time or flexible work arrangements specifically targeted at retired workers, as well as extended employment arrangements, retired workers can meaningfully contribute and transfer knowledge. Retired workers outside of the organization can also be a useful network and talent pool to tap into for specific projects or assignments.

Aviva is a UK-based insurer who actively supports the “over 50” workforce. Their research revealed that age diversity has the potential to unlock as much as 45% growth in market share for organizations that draw on the talent and experience of all workers, regardless of their age.

In their own organization, Aviva actively promotes age diversity by understanding the needs of their over-50 workforce and aligning their people practices to support and engage these workers. They found that 1 in 6 older workers leave the workforce due to caring responsibilities. As such, they have partnered with external partners and the government to ensure they can provide flexibility for these workers and keep them within the workforce for as long as possible.

Aviva’s approach that supports and encourages age diversity and inclusion not only creates meaningful opportunities for contribution from older workers but also enhances productivity and organizational capability in the longer term. Recognizing the value of this experienced talent pool can be a strategic advantage for employers looking to address skill shortages and promote diversity in their workforce.

3. Refugees and asylum seekers

As migration, wars, and extreme weather conditions displace more and more people, this group of workers has emerged as a talent pool who are excluded and underutilized. 

The perceived burden of employing refugees and asylum seekers frequently outweighs the benefits that these workers are deemed to offer. They also face inherent biases because of their legal status, language skills, and cultural differences. This means that workers with critical and scarce skills are simply excluded from organizations as a result of their refugee status.

In some cases, these workers face exploitation and underemployment, never contributing to their full potential. Typically, they also do not have visibility of the opportunities available to them or do not match the exact requirements of opportunities as these are often different from their home country. As such, they remain unemployed.

Strategies to access this talent pool

Aligning talent acquisition as well as development efforts to the unique needs of this talent pool should be a priority.

Ikea recognizes that hiring refugees is a smart business decision. Not only does it contribute to achieving the UN Sustainable Goals, but it also leads to higher productivity and reduced turnover. In the US and Australia, turnover rates are 73% lower for refugee employees. What’s more, hiring diverse employees increases innovation, morale, and engagement while driving social responsibility.

The furniture retail giant has made this commitment visible through their dedicated skills program in partnership with government councils. They provide employability and language skills workshops and placements to gain exposure and build an employment record, with the aim of absorbing them into the workforce.

To successfully hire refugees, organizations require flexibility or contextual evaluation of qualifications and skills to avoid unfair discrimination during selection. They can recognize this group’s transferable skills and reskill them to fully integrate into the business. This may require dedicated upskilling programs and an investment in this talent pool. It also means extending support beyond just employment (counseling, legal support, financial advice, and housing) to set these workers up for success.

4. Neurodivergent and differently-abled workers

Neurodivergent workers are individuals who have non-typical social preferences and ways of learning, communicating, and perceiving the environment. These include individuals with conditions such as ADHD, autism, and other neurobehavioral challenges. Differently-abled workers represent individuals with physical impairments or disabilities, which could impede their physical and mental abilities to a greater or a lesser extent. 

Historically, these workers have been excluded from the workforce where stigma exists around these conditions, or organizations have simply been unwilling to make the necessary accommodations for these workers. There is also a lack of understanding and misconceptions about these workers, resulting in inaction. 

Strategies to access this talent pool 

This talent pool often faces barriers to entry into the workforce. This includes hiring practices that are not aligned with the needs of these workers. For example, traditional interviewing practices create anxiety for some neurodivergent candidates. In these situations, their interview performance may not match the desired performance level, resulting in their de-selection.

Dell is considered a progressive employer in seeking out and employing neurodivergent workers. They have adjusted and aligned their hiring practices to accurately assess the potential of these individuals. This reflects flexibility and inclusivity, ensuring that neurodivergent workers receive an equal opportunity to gain access to employment. Through this approach, they have employed some of the best minds and talent in the industry.

Ensuring that hiring practices are not exclusionary also means sensitizing and educating hiring decision-makers to reduce bias and stigma.

Brownies and Downies was born out of a need to see more neurodivergent representation in the hospitality business. They employ people with intellectual disabilities in their coffee shops, which has expanded across Europe. This challenges the conventional idea that people with disabilities can work in sheltered employment environments. Instead, they can be contributing members of society and the economy. A commitment to diversity has to be reflected in the workspaces and work arrangements available to these individuals.

The Restaurant of Mistaken Orders in Tokyo is another great example of a business exclusively employing individuals suffering from dementia to provide them with gainful employment.

5. Reentry workers

Reentry workers represent individuals who rejoin the workforce after an extended period of absence. These workers include formerly incarcerated individuals, parents, employees returning from career breaks, and long-term unemployed workers.

They have skills that can be developed or deployed in organizations but are undervalued and excluded. In the case of reentry workers, many barriers relate to the effort associated with reintegration into the workforce.

Parents who have taken a leave of absence due to caregiving responsibilities often return to the workforce in entry-level positions to “get their foot in the door again”.

In turbulent economic conditions, many workers are affected by layoffs, often resulting in long periods of unemployment despite efforts to gain employment. In these cases, hiring practices deem career breaks as de-selection criteria and, therefore, exclude these individuals from the process.

Existing skills and transferable skills are ignored, and we see previously skilled workers underutilized across various industries and roles.

Strategies to access this talent pool

Goldman Sachs has launched a “Returnship” program specifically designed for individuals rejoining the workforce after an extended period of absence. They value the experience and diversity of returning workers and employee individuals despite resume gaps. They offer a six-month paid program across various business divisions to upskill and reintegrate these workers. 

Timpson is a UK service retailer that specifically employs formerly incarcerated individuals. About 12% of their workforce either has a criminal record or has been directly recruited from custody. While there are some complexities that the business has to manage, they recognize the potential of this workforce, as well as their responsibility as an employer to make a positive contribution and impact.

Based on their success, many other employers in the UK are following their example – systematically breaking down stigma and barriers for these workers.

A final word

Skill shortages continue to be a business challenge for HR professionals to solve. Our conventional ways of looking at talent pools and our traditional talent management approaches are no longer sufficient. The hidden workforce has the potential to change the talent landscape if we are willing to move beyond current practice, bias, and barriers.

Awareness of these barriers is the first step towards change, but organizations need to take tangible action to shift towards a different future. For HR, this presents a significant opportunity to transform our practices and drive true diversity and social impact.

The post Unveiling the Hidden Workforce: How To Tap Into Its Potential appeared first on AIHR.

• There are three crucial tipping points that will shape the future of talent management. These include (1) a responsive and reactive approach to talent management, (2) little consideration of how careers are changing, and; (3) it cannot be the catch-all practice of the past. t
• In its current state, talent management will not rise to future challenges. Only 13% of HR leaders rate their talent management practices as ‘excellent,’ while 70% of HR leaders rate their organization’s ability to address their talent needs as ‘mediocre.’
• We propose four shifts for talent management to move into the next era of work that will be characterized by AI, labor shortages, work without boundaries, and workforce ecosystems.

It is estimated that the global talent shortage will continue to rise to an 85 million person shortfall by 2030. This could lead to over $8 trillion loss of revenue, placing further strain on the economy. Talent management has never been more critical for organizations than now. In fact, 78% of business executives rank talent management as high on the business agenda.

Yet, to date, talent management has done little to ensure that organizations can access, nurture, and retain the talent they need. We see this in low engagement rates, high turnover and attrition, and over 50% of employees browsing for opportunities outside of their organization. Our approach to talent management has not evolved to meet the demands of business and the complexity of the labor market. This calls for a critical review of our talent management practices and making the necessary shifts to remain relevant in the future. 

This article will reflect on the evolution of talent management over the past few decades and the turning points that have led to this evolution. We also critically examine traditional talent management approaches’ current pitfalls and limitations. We also propose a way forward to shift the dial in response to the changing talent landscape.

The evolution of talent management

Since the Second Industrial Revolution, talent management has been critical to business success. This evolution can be viewed as four eras that are loosely aligned to how organizations developed with environmental and economic changes.

Era 1: Establishing headquarters and office-based skills

The origins of talent management can be traced back to the Industrial Revolution when labor moved into factories and administrative support became necessary. This resulted in the creation of headquarters and a need for new skills.

Companies soon realized a lack of office-based skills and executive roles, prompting them to acquire smaller businesses for their managers and executives. This led to the emergence of talent management with a strong focus on filling vacant roles through external talent.

Era 2: Predictable leadership development

As external talent pools started depleting, the focus of talent management shifted towards talent development. Organizations started implementing plans to build sustainable talent pools for the future, reducing the reliance on external hires for senior positions.

The emphasis also shifted internally to forecasting talent and creating career paths for long-term employees in line with this predictability. Talent acquisition was only focused on lower levels leading to gaps at the senior and executive levels, as the talent landscape became more unpredictable.

Era 3: The war for talent

In the 1980s, high levels of market competition and a short supply of talent led to organizations competing for talent externally. Organizations became flatter and jobs became broader, with employees taking control of their careers due to uncertainty about continued employment.

The infamous 1997 McKinsey article on the “War for Talent” highlighted the need to compete for knowledge-based talent. However, this focus on winning talent has overshadowed the importance of accessibility to talent. It’s crucial to ensure a steady flow of access to talent pools, even if they are not owned permanently (e.g., gig workers).

Era 4: Skills shortage and fire fighting

In the past decade, work, workforces, and workplaces have been disrupted, but talent management has not kept up with these changes. Most organizations are stuck in a “war for talent” mindset, even though the challenges they face have evolved. Instead of proactive planning, talent management has become a reactionary response to skills shortages. Short-term tactics are used instead of long-term planning, and talent pooling and succession planning are only used to fill gaps. This fragmented approach leads to reactive measures and firefighting to deal with economic and organizational pressures.

3 tipping points that will shape talent management

Exploring the evolution and current state of talent management reveals three crucial tipping points that will shape the future of talent management: 

Tipping point 1: Reactivity is not a winning talent management strategy

Talent management has become responsive and reactive, especially in uncertainty. Even though the future is uncertain, we should become more proactive in predicting and managing the demand and supply of talent. Talent management should shift from “things to do” to “strategies we employ” to sustain and enable the business into the future.

Tipping point 2: Talent management and careers deliver one human experience

Talent management has evolved mainly without much consideration of how careers are changing or how talent management practices and decisions impact careers. Careers have become self-directed, boundaryless, and focused on increasing employability.

This means that talent is seeking opportunities to contribute, learn, and access meaningful experiences. The talent experience has to be top of mind in how we think about talent management practice implementation to deliver these experiences. At the end of every process, decision and data point, there is an experience impact that either supports or diminishes our talent supply.

Tipping point 3: Talent management cannot be the catch-all practice of the past

Talent management has become broad, diluted, and a catch-all practice. Over time, we have responded to skills shortages and labor market pressures by trying to become “more” instead of “better.” This has led to talent management practices being reduced to talent management activities and talent management as a function expanding to integrate efforts to attract and retain talent.

To ensure a holistic talent experience, we must redirect our efforts to integrate and align practices internally and foster a talent mindset across the organization. These tipping points reflect the need for change in how talent management is positioned, the activities we prioritize, and how practices are integrated and aligned to deliver a meaningful talent experience while becoming more intentional about our boundaries.

The future of talent management: 4 shifts needed to rise to the challenge

In its current state, talent management will not rise to future challenges. Only 13% of HR leaders rate their talent management practices as ‘excellent,’ while 70% of HR leaders rate their organization’s ability to address their talent needs as ‘mediocre.’ We propose four shifts for talent management to move into the next era of work that will be characterized by AI, labor shortages, work without boundaries, and workforce ecosystems.

1. Talent management needs to reclaim its identity

To refocus and redefine boundaries, we must look at our purpose critically, why we exist, and how talent management contributes to business outcomes and sustainability. This includes internally clarifying our beliefs about talent and talent management, as this sets the tone for how we operationalize talent management and the boundaries we put in place. 

Practically, this means that a clear talent philosophy has to be defined, which addresses the talent needs that have been identified and reflects the internal values and culture of the business, as well as the desired career experiences. 

This guiding philosophy is the litmus test against which all talent activities are measured. If our philosophy indicates that the term ‘talent’ is reserved for high performers, then we need clear talent segmentation activities that differentiate these groupings. Similarly, if everyone is considered ‘talent,’ we require inclusive career practices that lead to advancement. While neither approach is right or wrong, there must be clarity to a best-fit solution for the organization and its requirements.

For example, Starbucks believes that baristas are critical to the business’s success, as they directly deliver the customer experience. The company believes that baristas are a key talent segment to manage. This clear definition of talent reflects what the business needs to achieve and what it prioritizes in its talent management approach. Aligned with this belief, they offer great benefits to both their full-time and part-time baristas and have focused development efforts to upskill and retain this talent.

2. Talent management has to become more proactive

Much of what hasn’t worked in talent management is a result of reactivity. We might not be able to predict the future, but we can anticipate it. Workforce and scenario planning must be non-negotiable inputs into our talent management strategy. If we can reasonably anticipate how talent demand and supply will change, we can better respond with appropriate strategies. 

Practically, using data and technology to support and inform talent management decisions is critical. Talent management has to be a data-driven and business-focused practice to remain relevant. 

Microsoft has already shown great initiative in this area. With more than 120,000 employees, the organization harnesses the power of data and technology in its workforce planning to recruit and redeploy skills and use data to drive its talent management practices forward. As a result of this proactive, data-driven approach, Microsoft has multiple early career programs aimed at nurturing the talent required within the organization in the future. 

3. We need to ditch the maturity models

We have become obsessed with achieving predefined levels of maturity in talent management. It sounds counterintuitive, but if we want to move forward, we have to shift from aiming for a desired level of maturity to getting better at making calls about what is fit for purpose. 

Ultimately, organizations are only interested in a talent management approach that meets their needs and gives them a competitive advantage. This does not require the most sophisticated practices, technologies, and channels but rather an approach that delivers impact. 

This approach might look different for different organizations. Non-traditional talent management practices, such as skills-based approaches, deconstructing of jobs, and non-traditional talent pools, are necessary and viable alternatives for some to include in talent management. For others, more traditional strategies are the best fit.

This shift also implies that we have to continuously monitor and measure the impact of talent management and link this to business outcomes; reaching the benchmark will no longer be an indicator of success.

Apple’s “lean” talent management approach is a good example of ditching a maturity model to focus on an approach that delivers business impact. To drive innovation and encourage creativity, the company frequently shifts teams, has no pre-defined career paths, and changes the scope of roles and responsibilities of individuals. This approach has reinforced the culture of innovation and high performance, leading to product innovation.

4. We need to acknowledge the human experience

Organizations that get talent management right are strategic in their approach, targeted in their execution, and intentional about the experiences they create. There has to be close alignment and integration of practices that deliver on the talent experience, such as learning and development, career management, performance management, and employee experience. 

Booz Allen Hamilton is an American professional services firm with an innovative approach to creating meaningful career experiences through talent management practices. They have implemented an alumni program specifically focused on harnessing the value of returning talent.

To build future-ready skills, they partner with learning providers to collaboratively build these skills. They also have redeployment and referral programs that actively manage and support careers while creating access to talent – all of which create an authentic and memorable employer brand externally supported by an aligned internal lived employee experience. 

It’s time to shift

As organizations grapple with uncertainty and complexity, talent practices must adapt. Business leaders are looking toward talent management to ensure that organizations can deliver on their strategic intent, show shareholder value, and remain competitive in an increasingly constrained economy. 

With data and technology opportunities, we are primed to advance talent management meaningfully. This doesn’t mean we must do more in talent management to show our value. Rather, we must start doing less with more intention and invest our efforts aligned to business priorities.

The post The Future of Talent Management: Urgent Tipping Points and Shifts Needed to Succeed appeared first on AIHR.

• Digital transformation and innovative technologies require HR teams to increase their digital proficiency. 
• Building digital HR capability can help close the digital HR maturity gap. 
• Three components are critical to build digital HR capability successfully: (1) digital users, (2) digital integration, and; (3) digital experimentation. 
• We examine how the HR team of a financial institution identified areas for HR to enhance their digital HR capability while further supporting the business’s digital transformation strategy through the people agenda.

The new digital reality

Emerging technologies and the digital transformation of organizations are creating a new reality for HR. Beyond just the automation of manual processes, HR has an essential role in driving the organization’s digital agenda by digitizing the employee experience, fostering digital skills, and building the business’s digital capability. 

However, this can only happen if HR becomes more digitally oriented and proficient. In our recent State of Digital HR in 2023 report, we explored the current reality of digital HR in organizations. A key finding from this report is the widening gap in digital HR maturity between organizations of different sizes. Enterprise organizations are leading the race toward digital maturity, with medium and small organizations needing to catch up. 

Building digital capability can close the gap

Digital HR maturity refers to how digital HR is integrated into the broader business landscape and how HR delivers value to the organization. Contrary to popular belief, research shows that true digital transformation is not linked to the sophistication of new technologies. Instead, it is linked to the ability of organizations to transform their mindsets and culture to embrace and embed digital in how they operate. 

This creates an opportunity to close the growing digital HR maturity gap for small to medium-sized businesses.  It is not achieved by spending more on technology but by building digital HR capability within the organization. And, while building digital capability is certainly not a quick fix, HR can drive this change within organizations through deliberate actions focused on the right priorities. 

The 3 components that build digital capability 

Three components represent the critical success criteria for building digital capability. It includes: 

1. Digital users, 
2. Digital integration, and;
3. Digital experimentation. 

Each of these plays a role in driving digital transformation and maturity in the business. Let’s look at each of these in more detail and see how they contribute. 

1. Digital users

Digital users refer to building a workforce and HR teams aware of technology and digital tools, effectively using technology in how work gets delivered, and having the skills required to do so. Creating digital users, therefore, relies on awareness of technology, access to tools, and developing digital skills.

Awareness

Very often, creating digital users starts with an awareness of the opportunity that digital provides and how it could be used to address the needs of their business. Small and medium organizations often believe that technology only applies to more significant players in the market. Yet, today, with cloud-based technologies and the API economy, numerous solutions are built specifically for small to medium-sized businesses at an affordable price point. 

Digital tools

To build digital capability, digital tools must be used and applied in the day-to-day running of the business. This refers to the technologies, applications, and platforms that are required for the successful execution of strategy. But digital tool sets are not simply about “having” technology. 

For digital tools to translate into digital capability, they have to:

• Be clearly aligned with the digital strategy and agenda of the business
• Be implemented and embedded through a clear roadmap that allows for experimentation, innovation, and iteration; and 
• Outline the digital skills needed for successful use and application.

Digital skills

Digital skills refer to the knowledge, expertise, and aptitude related to digital technologies and data required for success. At AIHR we believe that digital skills encompass the effective use of data to derive actionable insights and inform decisions and priorities, as well as the effective adoption and use of technology and digital practices. 

Depending on the organizational context, what these look like at a technical and proficiency level might differ, but they should be focused on the following:

• Understanding the technologies that impact how work gets delivered;
• Understanding how to leverage technologies to create efficiencies and unlock value;
• Digital dexterity that enables the use of technology;
• Critical thinking about where technology fits, the data that it generates, and how this can be used; and 
• The human-technology interactions that drive adoption and use.   

2. Digital integration

Beyond awareness of technologies, investment, and building the required skill sets, digital integration is needed to sustain the change. This refers to a genuine belief in the value of digital transformation and creating a shared mindset and culture that encourages and advocates for it.

This culminates in a digitally enabled employee experience that enables and supports the moments that matter and employees’ interactions. This ensures that digital transformation is not only a once-off event but receives continuous and longer-term attention on the business and people agenda, creating momentum for change. 

Belief

Belief in digital is often a stumbling block for small to medium organizations, as they do not see the value in investing resources in digital solutions. The short-term pain often experienced when moving towards a more digital way of operating acts as a barrier to building the belief that the new way of working will bring benefits. 

To overcome this barrier, demonstrate the value of technology through tangible use cases and a clear business case. Start small and generate pockets of value that can be scaled to demonstrate greater business value. Generally, small shifts and adoption of digital tools are effective ways of shifting the beliefs held within the organization over time.

A collective mindset

A collective mindset around digital and technology is an essential enabler of digital capability building. A technology-driven culture is strengthened by the organization’s habits, rhythms, and behaviors, making digital not a “thing that we do ” as an organization but “a way of being.” And while this can sound aspirational, culture is one of the most concrete and visible ways to enable digital capability to make an impact. 

Embedding digital into the culture of the organization requires leadership support and sponsorship, aligned people practices (such as recognition, rewards and performance management) as well as visibility on the business agenda. Practically, this means that the tone is set by leaders within the organization, each employee is held accountable for their contribution, and the collective mindset about digital is reinforced by the day-to-day people practices that everyone in the organization engages with.

Digital employee experience

Beyond the automation and augmentation of tasks and practices, driving a digital employee experience is crucial to building digital capability. This means that solutions, practices, and experiences are integrated and optimized through both data and technology. In their day-to-day interactions within the organization, digital should be reflected in the work requirements of individuals, the tools and technologies they have access to, and how they interact with HR practices. 

3. Digital experimentation

To build a sustainable digital capability, we require a workforce that actively experiments to contribute to the organization’s digital transformation. This means having confidence in using digital tools and technologies, having space to experiment and learn, and being empowered to question how things are done to drive innovation. 

Digital experimentation refers to the general orientation, openness to learning, and willingness to innovate and challenge the status quo. For HR, this is arguably one of the most significant shifts required in building a digital capability, as the function typically carries a legacy of compliance and administration.

Confidence

Despite having access to digital tools and technologies, the confidence to use digital technologies is often a barrier to digital adoption and experimentation. Employees see the value and have the willingness and belief to use digital tools. However, they often feel out of their depth, fear making mistakes, and the impact of this on their jobs. Confidence can be built over time through formal training and upskilling mechanisms, but also through creating a space for experimentation, collaboration with others, and an opportunity to raise questions and concerns.

Learning

As with any other skill, practicing and learning over time is the key to mastery and having the confidence to independently apply what has been learnt. The same is true when building digital capability. Learning happens in formalized contexts, peer-to-peer or within communities, and in the day-to-day application in real-world situations. Providing access to a variety of learning opportunities and encouraging self-driven learning ensures that employees own their own learning but also have access to support and resources to build their competence.

Innovation

In this context, innovation refers to active experimentation with digital tools and technologies. This requires both confidence and competence to question the status quo and push the boundaries of how things are done. This means that employees shift from users of technology to digital advocates who are able to spot opportunities for new and more effective ways of working. This also shifts the responsibility for digital transformation from solely a leadership responsibility to a collective focus of the entire workforce who can confidently contribute to this. 

There are simple ways to drive digital experimentation at an individual, team, and organizational level. Here are some examples:

• Individual level: Embed the use of technology in individual KPIs, create opportunities for experimentation, and incorporate digital into personal learning goals.
• Team level: Introduce the use of collaboration technologies in tracking and delivering work and facilitating interactions, share stories of success and failures, and create forums and platforms for shared learning.
• Organizational level: Develop a clear digital strategy and roadmap which is shared across the organization, experiment with remote work and tools that support a remote-first approach, introduce gamification to improve engagement and productivity, and actively apply design-thinking, testing, and prototyping in the development and release of products and services.

Let’s consider a use case to illustrate how a medium-sized organization implemented these three components by taking small, deliberate actions to build digital capability over time. 

Use case: Building digital capability in Bank D&M

The context and business challenge

Bank D&M (a pseudonym for the purposes of this case study) is present in several countries. They employ 2500+ employees, with most of their workforce consisting of sales and service agents. Based on their strategic objective of becoming a digital-first bank, they are implementing various product and process changes to digitize their offerings. 

The organization’s sales and service employees were the most affected by this change in direction, as they are clients’ primary points of contact. For them, it meant working on a new platform, responding to and supporting clients through digital channels, and using client data to make decisions around offerings and services. 

How HR led the digital transformation

In response to the business challenge, the HR team of Bank D&M identified four areas for HR to enhance their digital capability while further supporting the digital transformation strategy of the business through the people agenda:

1. Using digital to create a better employee experience

Many digital tools can easily be used and applied to improve the employee experience, specifically to create a self-service HR functionality. Bank D&M implemented chatbots and virtual assistants to help employees with repetitive queries and a self-service leave capture functionality. They further enhanced the employee experience through automated video interviews and self-directed career paths and mentorships through social platforms.

2. Using digital to increase HR productivity

There are many opportunities to automate repetitive HR tasks and augment tasks to create additional value. Using tools that create visibility of work allows team members to assign tasks, give each other feedback, raise risks, and report how long it took to complete specific tasks. Bank D&M implemented asynchronous video communication tools to allow team members across time zones to hand work over at the end of the day to each other. They also implemented social communication tools to decrease the amount of time spent on emails and encourage digital collaboration.

3. Using digital to create more effective HR services

Within HR services, HR had plenty of opportunities to leverage digital to improve service delivery to the business. These include implementing digital forms and workflows that eliminate any paperwork or re-capturing of information. Bank D&M created automated monthly reporting for divisional leaders that gives them a view of people’s data, such as leave balances, flight risk, turnover, and other relevant information, at the end of each month. Given the size of their workforce, this has saved significant time for the people analytics team and gives leaders autonomy to apply insights that are relevant to them.

4. Using digital to improve the effectiveness of HR practices

In this area, the HR team considered how technology can be leveraged to drive the digitization of HR practices. This includes the use of artificial intelligence and machine learning, which can be used to derive insights, inform decision-making and create additional value. Bank D&M created a shared data warehouse for all HR practices to create one source of information, given the size and distribution of their workforce. They also implemented scheduling tools to execute planned communications and activities automatically. Recently, they took another step towards improving the effectiveness of their HR practices by implementing dashboards for their employee engagement survey data, to assist in structuring and visualizing data and highlighting priorities and specific focus areas based on this intelligence.

To conclude

Digital HR maturity is no longer an optional investment, regardless of the organization’s size. It has to become part of how we do things in HR and within the broader business if we are to remain relevant. This is even more critical and urgent for small to medium-sized businesses as the digital divide keeps increasing and expectations from HR keep mounting. As HR, we need to adapt and evolve or risk being left behind in the wake of progress.

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