Historically, human resources (HR) professionals served in more of an administrative capacity, but the discipline is undergoing a radical transformation.
Companies today face public health issues, resilience threats, social unrest and organizational change at a rapid pace. As the business strategies and model continue to adapt to digital transformation, it’s more crucial than ever to foster communication, collaboration, capacity and culture within your workforce.
The rapid pace of transformation has only accelerated due to the pandemic. Organizations are constantly challenged to build employee engagement, reinforce trust and nurture a resilient workforce. In the midst of such change, your HR teams are focusing on what matters most—the people that make your business unique. By gaining a deeper understanding of the people within your organizations, your HR teams can learn what employees need and empower them to better deliver clients value.
HR is pivoting and reprioritizing the employee experience by using technology to better support reskilling, cultural transformation and new ways of working. Industry leaders are deploying new, exponential technologies at scale to help empower their HR teams with the data that employees and clients produce every day. HR teams are also using technologies like AI and automation to build new business platforms and ways of working across the organization. Integrating these technologies into your day-to-day operations empowers employees to improve and grow their skills in new ways.
The evolution of HR
Business executives overwhelmingly agree that HR must be radically redefined.1 But redefining HR isn’t the first change HR has gone through.
HR 1.0
In the industrial era, or HR 1.0, there was a focus on compliance, administration and efficient service delivery. But the introduction of the internet created new needs.
HR 2.0
In HR 2.0, integrated and global centers of excellence developed, and the focus shifted to training and empowering HR teams to help achieve business goals.
HR 3.0
Today, we have entered into the new era of HR 3.0, where HR functions as an agile consulting group that helps bring innovative new solutions, cognitive tools and transparency to an organization.
So where should you focus to ensure your HR discipline continues to evolve?
Companies that evolve to this model far outperform their peers, but only 10% of HR executives are living HR 3.0 today.1 With the right approach, your HR teams can cultivate a sustainable workforce where employees are inspired, enabled and empowered to help you maintain business continuity in the face of disruption.
By focusing on the following guiding principles, you can propel your teams into a new era of human resources and, ultimately, work:
Skills at the core
Executives recognize the skills gap, and HR teams need to continuously improve upon the ability of their workforce to acquire and deliver those skills in the flow of work.
Intentional experiences
The same approach to creating rich client experiences must be applied to employees to drive an organization’s overall enterprise transformation and business outcomes.
Modernized HR
With a cloud-based HR system, data can be easily shared across platforms—providing business leaders with near real-time access to actionable insights.
Diversity, inclusion and transparency
A deep understanding of workforce dynamics empowers teams to create a more equitable workplace with a diverse and inclusive foundation.
For each area, we’ll discuss how to identify opportunities to grow and what the next step should be.
Skills have always been widely impactful for organizations. Often, their teams’ skills enable innovations and economic growth—or an inability to move forward.
In fact, 69% of outperformers place a high-level of importance on skills at the core of their enterprises compared to 38% of other surveyed enterprises. Many business leaders cite organizational complexity, inadequate skills and employee burnout as their biggest hurdles to progress.1
The global talent shortage is a threat to the success of organizations
Rapid technology developments, changes in operating and business models and new, intelligent workflows shift the foundations of industries. And that’s before you factor in economic, market and demographic shifts that occur at both a global and local level. Although the diminishing value of skills used to primarily effect technology positions, that’s no longer the case. New skills constantly emerge across disciplines and quickly eliminate the need for other skills. Considering the frequency of this cycle, it’s understandable that there’s a gap in the value of, need for and availability of workforce skills.
The good news: Executives recognize the skills gap
As hiring criteria evolves, the interest in skills development goes beyond the chief human resource officer (CHRO) to the entire c-suite. Where previously there was a focus on digital skills, recent research indicates that executives now require workers to have a blend of digital and soft skills—also called behavior skills—to be successful in the workforce.2
Executives see the threat the talent shortage poses for their organizations, but not all are actively or effectively working towards a solution and, instead, relying on traditional hiring and skilling strategies. To stay competitive in an evolving HR landscape, innovative strategies are required to address behavioral skills gaps. By embracing a new business and talent management model, your organization can foster skills growth as a lifelong journey and flourish in a flexible culture.
With a new focus on skills growth, a candidate’s ability to learn should be a top skill that organizations target, as well. In a recent study, 66% of outperformers indicated that they make skills growth a key part of performance management, compared to 23% of other surveyed enterprises.1
So how can you ensure your organization focuses on skills at the core?
To lead your organization through the skills gap, your HR teams need to continuously seek the skills your business needs, assess the workforce’s ability to deliver on those skills and pursue the best ways to help employees acquire those skills. The following three strategies can help close your organizational skills gaps:
1. Make it personal. Use digital tools to create personalized learning experiences for every employee.
Although 74% of executives believe they have been helping their employees learn the skills needed to work in a new way, just 38% of employees agree.1 That’s why a personalized approach to continuous learning is key to success. With data from your HR systems, social and collaborative spaces, and other sources, your HR team can use AI to infer which skills are available and which ones are lacking. As a result, HR teams can provide employees with the right learning, at the right time and at scale.
41% of outperformers use AI to identify the skills they need for the future as opposed to 8% of all others. 1
Learning content can be stored in a variety of formats that allow for a self-service experience for your employees based on what they believe is best suited to their needs. Plus, an effective skilling program includes the opportunity for individuals to learn by doing. Adopt augmented and virtual reality to create more immersive learning environments, especially for industries like healthcare and manufacturing that rely on physical interactions.
2. Turn up the transparency. Develop deep visibility into the skills you have today.
You’ll want to provide your teams a deliberate skills agenda and review the programs for hiring, training and managing talent often. HR teams will need to frequently conduct skills gap analysis and enlist the help of the different business functions when doing so to keep these elements updated. This collaboration allows your organization to develop skills profiles based on your specific needs and industry standards.
74% of outperformers use advanced analytics to know exactly which skills they have in the workforce as opposed to 13% of all others. 1
AI and predictive analytics can be applied to help determine what skills your organization needs, and which are of lesser importance. You can also assess external data sources and trends to help inform your results. By being transparent about the results of this analysis with your employees, you can empower them to upskill and reskill as needed to create a more resilient workforce.
3. Look inside and out. Foster a culture of perpetual learning that rewards continual skills growth.
As the length of time that skills remain useful decreases, a culture of continuous learning and collaboration begins to have higher importance than simply business and technical skills. That’s why 66% of outperformers are actively investing in upskilling their teams compared to 11% of all others.1 An upskilling approach allows you to look internally for talent. Your HR teams can implement experiential learning through practices—such as project rotations, stretch projects and mentoring—to amplify the results of upskilling current employees.
66% of outperformers are actively investing in upskilling their teams compared to 11% of all others. 1
If your teams can access internal and external data sets that highlight skills gaps within your organization, then you can identify areas of improvement and craft developmental plans that bridge gaps before they exist within your organization. Combine these data sets with behavioral science information to help improve leadership skills and performance. This future-looking approach to upskilling—and the corresponding culture of embracing change and learning quickly as your go—is key to adaptability.
Click the button to learn more about the skills gaps and what you can do to close that gap in your business.
61% of outperformers create consumer-grade digital employee experiences, which is 4 times more than all others.1
The idea of customer delight doesn’t apply only to clients—we need to delight employees, too. The new dynamics that accompany an increasingly remote workforce create new challenges when designing employee experience. Employees expect creative ways for HR to still ensure meaningful personal connections, demonstrate empathy and foster engagement.
Nearly two-thirds of the reinventors—organizations that outperform in profitability, revenue and innovation—agree that focusing on compelling employee experiences, such as workforce learning, has a direct impact on customer experience, not just the employee experience. 2
By thinking of employees as customers, HR can apply the same approach used for creating rich client experiences to employees and business partners. This mindset helps drive an organization’s overall enterprise transformation.
To create a new HR experience, many organizations combine the power of AI and other exponential technologies with the value of their HR teams to curate the experiences employees want. While traditionally HR worked to perfect a solution prior to launch, now HR leaders are breaking down those silos and co-creating solutions with employees.
For this level of collaboration, HR has to build up their agile and design thinking capabilities and apply those new skills to better understand the workforce. A never-ending, iterative cycle allows for HR to craft experiences that constantly evolve based on the current needs of the business and the workforce.
This feedback loop also reinforces a culture of continuous learning, adapting and applying what’s learned—not just in HR, but across the organization. Since they have a say in what learnings are being released, teams are more motivated to proactively update their skills. The resulting trust, confidence and pride employees have as a part of your workforce will translate to the overall perception of your organization. The following three strategies can help you ensure you’re developing intention experiences:
1. Design employee experiences using rapid, iterative design principles.
Companies taking HR to the next level create highly personalized, digital experiences that are consumer-grade. Compared to only 29% of other enterprises, 61% of outperformers place deeply personalized, experience-centric design at a high level of importance.1 To achieve this goal, these outperformers apply the principles of good design—which include gauging and adapting to employee sentiment—as part of the solutions and services creation. AI and other tools can support this continuous feedback loop to enable even more human-centric solutions and empower your employees
68% of outperformers listen to the workforce to help create better experiences while only 17% of their peers do the same. 1
With intelligent automation, the management and improvement of physical and digital business processes is streamlined. This simplicity helps organizations create new, personalized products and services, improve operations, reduce costs and increase efficiency by turning decisions into iterative innovations and workflows. As a result, HR teams are free to focus on building trust through new services and deepen relationships with employees as data-driven, consultative and agile advocates.
2. Build an employee experience coalition that crosses traditional organizational silos.
Hierarchical cultures are flattening as agile business processes and intelligent workflows empower teams at every level of the organization with the data they need to make everyday operational decisions on their own. A lack of silos and hierarchy enable teams to respond to external shifts and feedback quickly, which is accelerated by an agile approach to HR. Leaders at forward-looking organizations empower teams to make decisions and function more as coaches than key players.
68% of outperformers place agile practices at a high level of importance compared to 34% of other surveyed enterprises. But only 47% of all HR teams have expertise in agile practices today. 1
By breaking down innovations into smaller, faster releases, HR teams can incorporate feedback as they move along, ultimately creating more efficient and effective outcomes. This approach continues to foster a culture of continuous feedback and learning. Employees are able to co-create solutions to their own problems from start to finish. HR teams can also use metrics like a Net Promoter Score to help assess program quality and keep the dialogue open with employees.
3. Listen to the voice of the employee with advanced analytics.
Removing silos and enacting an agile approach provides you the opportunity to act on employee opinions, but you have to create a culture of open-mindedness and true listening, too. In fact, 68% of outperformers listen to their workforce for better experiences compared to 17% of all others.1 Today’s and tomorrow’s leaders listen to and work with their teams to cultivate a truly engaged workforce, teaming with HR to continually iterate for better employee experiences.
56% of outperformers incorporate employee opinion into HR solution design compared to 14% of all others. 1
There’s a wide variety of tools for employees to express themselves where they’re most comfortable, such as internal and external social platforms, direct feedback, pulse surveys, exit interviews and forums for concerns like harassment or safety violations. And while not a replacement for person-to-person feedback, technology can amplify impact through human-technology collaboration. Resources fueled by exponential technologies, such as virtual chatbots or next-best-action dashboards, have to be reliable and intuitive for teams to build the comfort and trust necessary to be integrated into their day-to-day workflows.
Want to learn more about how to build a cognitive enterprise? Click the button to explore nine action areas.
As the focus of HR teams shifts to employee experience, old technologies and tools become ineffective and the systems that support these teams must evolve.
You need to consistently integrate your data architecture needs across the organization to deliver results, especially for making skills-based decisions in HR. To create this consistent experience, you’ll need a cloud-based HR system. With a cloud-based HR system, data can be easily shared across platforms—providing business leaders with near real-time access to actionable insights.
Since more than 120 million workers in the world’s 12 largest economies may need to be retrained or reskilled in the next three years as a result of intelligent and AI-enabled automation, enabling your HR teams with data is crucial to bridge the skills gap.2 That’s why 76% of outperforming chief human resource officers (CHROs) view providing access to real-time workforce and skills information as particularly important over the next 2 - 3 years.4 But a modernized HR infrastructure empowers your teams with intelligent automation to help increase the efficiency of reskilling internal talent and hiring the right external talent. To modernize your HR approach, follow these three strategies:
1. Move your HR systems to the cloud.
70% of outperforming CHROs report that their organization has a fully integrated hybrid cloud infrastructure, whereas only 30% of aspirational CHROs are so fortunate.4 By moving to cloud-based systems, you can increase the scalability and flexibility of your HR infrastructure. As a result, 71% of surveyed outperformers deploy a consistent, integrated HR architecture compared to 11% of all others.1 This structure is designed to provide leaders and employees with security-rich, stable access to data to help teams make evidence-based decisions that better align with the business strategy.
57% of outperformers use AI and analytics to make better talent decisions compared to 16% of all others. 1
The future of HR requires the ability to weave internal data sources and external industry insights to get a deeper understanding of the workforce. Today, 22% of organizations source and analyze external data for future success. In two years, 79% of outperformers will do so, compared to only 26% of all others.1 To reveal opportunities hidden within these massive data sets, companies invest and build expertise in data analytics specifically for HR. In fact, 57% of outperformers use AI and analytics to make better talent decisions compared to 16% of all others.1
2. Invest in and use AI across HR to improve the employee experience.
Only 30% of companies have skills and capabilities in AI for HR, which means there’s a huge opportunity to increase productivity of teams and enhance the employee experience.1 Using AI and other exponential technologies can help your HR team predict future performance of new hires, serve employees 24x7 with chatbots and even flag issues by employing AI-powered virtual agents.
64% of outperformers use AI and emerging assessment techniques to find new talent compared to 11% of all others. 1
This level of efficiency requires an investment in exponential technologies, as well as in HR. When you ensure your HR teams have the necessary tools—and the skills to capitalize on those tools—ROI can be exponential. That’s why 72% percent of industry leaders are planning large investments in AI or machine learning in the next few years.3 HR teams can employ automation for repetitive tasks, AI for skills gap data analysis, Internet of Things (IoT) for data collection and blockchain to streamline administrative items. These innovations free up the HR team’s time so they can function as agile, data-driven consultants for the organization.
3. Develop high-tech skills in the HR team in analytics, AI and machine learning.
While the potential efficiency gains of exponential technologies on your HR discipline are exponential, they’re relatively useless without the right skills within your HR teams to use them and act upon insights. You’ll need to invest time in skilling your teams for optimal results with exponential technologies.
64% of outperformers use AI and emerging assessment techniques to find new talent compared to 11% of all others. 1
But with a deep understanding of these tools and how to use them to deliver results, HR teams of the future can focus on advising senior leaders and providing actionable solutions to business issues, such as the skills shortage.
Read insights from CHROs about the value data can bring to an organization. Click the button to learn about the human side of data.
The future of HR relies on the ethical application of technology to help HR teams increase transparency across the organization as a means of enhancing diversity and growing talent.
With the data-driven decision-making that corresponds with exponential technologies, there’s greater visibility into the demographics, performance and skills within your workforce—as well as where it’s lacking. As a result, 66% of outperformers place transparency to preserve trust at a high level of importance, compared to 35% of other surveyed enterprises.1
Employees and candidates expect transparency, which presents an opportunity for HR leaders to truly address diversity and inclusion realities—not only in the workplace but in society as a whole. Systematic inequalities remain despite a stronger focus on diversity. By understanding your current workforce dynamics, you can create a more equitable workplace and help ensure that your talent and recruitment strategies have a diverse and inclusive foundation. This strong commitment to diversity helps attract the right talent and support employee retention, which can build a more stable future for your organization.
To build upon that foundation, technology enables you to link rewards and recognition programs to expertise demonstrated within training systems. By designing performance measurement tools in an employee-centric way, you can build skills growth and relevancy directly into performance management. You’ll also have the visibility within your organization to tie skill attainment to compensation, helping eliminate pay bias and continuing your pursuit of an equitable workplace. And by “pricing” these skills, you can demonstrate the value of reskilling efforts and increase employee resilience and agility. As a commitment to diversity, inclusion and transparency, we recommend following these steps:
1. Apply analytics to track workforce growth and development.
To modernize your HR approach, you’ll want to ensure that goals and projects are transparent. This assurance allows teams to see what each team member is working on, identify and prioritize items based on importance, and track progression towards results, enabling employees and managers to have open dialogue. Managers can use employee performance to coach individuals towards deeper expertise, higher performance and continual growth by checking in and evaluating and updating goals as needed. Visibility into team skills and performance allows you to use talent acquisition as a strategic tool to ensure external hires complement and enhance your internal workforce. This approach enables recruiters to make informed, equitable decisions.
77% of outperformers promote transparency through open dialogue with the workforce compared to 23% of all others. 1
2. Source new talent strategically.
Not only can analytics help improve workforce performance, but it can help your HR teams understand how diverse your workforce is or isn’t. By building a workforce that’s diverse and inclusive, you can create teams with different skills, talents and ideas that drive innovative business solutions. Broad hiring strategies that go beyond traditional requirements, such as education level or job experience, can attract team members with valuable new perspectives that would have been previously ignored with programs like P-TECH .
The P-TECH 9-14 School Model is a pioneering education reform initiative created by IBM that helps prepare young people with the academic, technical and professional skills required for 21st century jobs and ongoing education. Students take high school and college coursework simultaneously, engaging in industry-specific workforce development along the way.5
3. Establish pay transparency goals that align with company values and use AI to identify and eliminate pay bias.
Only 31% of companies surveyed say their pay decisions are based on contribution and are fair and equitable.1 But the future of HR relies on AI to help HR teams develop proactive pay equity programs. By analyzing volumes of data inside and outside the company, these models can reflect competitive wage rates and help organizations pay workers more equitable wages. This visibility also increases your HR teams’ ability to identify and eliminate pay inequities across the enterprise due to factors, such as race, gender and age. This approach reinforces the new compensation model for HR—tying pay to capabilities and market value for skills.
67% of outperformers tie skill attainment to compensation compared to 17% of all others. 1
The current pace of change is only accelerating, so you’ve got to keep evolving, too.
Client and especially employee relationships have radically shifted. Employees expect organizations to understand that there are many factors—their work environment, family circumstances and communities—that affect their everyday work. To adapt, employers need to rethink their day-to-day business approach.
HR transformation is a journey, and we can help you along the way. As a trusted partner for organizations across the globe, we provide a unique approach to reinventing your workforce. Working with you to understand your unique needs, we reimagine ways of working by infusing AI, employee experience design, and digital technologies across your organization. As a result, you can see increased reskilling of your workforce, improved employee engagement and accelerated rates of innovation. These new models help you craft a more resilient HR framework in the face of constant change.
