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The Changing Face of HR: 3 Ways the Sector is Transforming
Paul Burrin

The world of work is changing – and human resources along with it. The rapid proliferation of digital tools, rising popularity of the gig economy, and increasing demands for work/life balance are creating a seismic shift in the way organizations operate and manage their people.

Paul Burrin
Here are three ways HR is changing – and three challenges that HR leaders must overcome to fully take advantage.

Change 1: HR is transforming to People

Just as “Personnel” evolved into “HR” in the 1980s, today HR is evolving into a function which no longer manages employees as transactions but is people-focused - enabling both the workforce and the business to thrive. One survey we recently conducted of 500 senior HR leaders in midsize organizations across five different countries found that 94 per cent of HR leaders anticipate this transition triggering changes in the next three to five years, with nearly half (47%) expecting those changes to be significant.

We call the businesses among that 47% “People Companies.” Their leaders know the importance of investing in their workers, attracting and retaining the best talent, and embracing new technologies and ways of working.

The best People Companies are shifting their key performance indicators from metrics such as efficiency and monetary value to building great employee experiences, knowing that keeping their workers happy – which also keeps them motivated, engaged, and productive – isn’t just a nice thing to do, but critical to driving company performance.

Change 2: The way HR operates is evolving

When we asked HR leaders which new ways of working they had adopted or were considering, there was consistency across the board: between 30-40% of all respondents had already adopted each option presented, including flexible working, continuous performance management, and data-driven decision-making. Notably, 95% of HR and People teams are either already offering flexible working conditions or plan to within the next two years.In fact, 80% of all respondents told us they expect to adopt modern People processes within the next two years.

Change 3: Workers themselves have new expectations of HR and People teams

With so many respondents expecting further changes in HR over the next three years, it should come as no surprise that employee expectations of HR teams are changing too. In fact, a staggering 69 per cent of HR leaders expect employees’ expectations of HR to completely change in the next three years alone.

Those changing expectations are also driving many of the operational changes HR teams are implementing as they continue their HR to People journey.

Though such planning is an undeniably positive development, at the same time many HR leaders recognize that more work still needs to be done.

Challenge 1: Keeping up with change

Despite evidence indicating the majority of HR and people leaders recognize the importance of digital transformation, a surprising 43% believe their organization will not keep up with changes in technology over the next 10 years.

For example, while the top digital transformation priorities for HR and People teams are cloud and mobile technology, just 43% and 36% of organizations have adopted them, respectively, followed by analytics (adopted by 26%) and self-service (24%).

The reasons vary, but often stem from the C-suite: 53% of HR and People teams told us they’re delaying change because they have too many competing priorities to focus on; 57% said they can’t invest in new technology because of resourcing restrictions; and 51% outright said a lack of vision and leadership in their organization is preventing change.

Overall, our findings indicate that HR as a function largely continues to operate in very traditional and rather inflexible organizations, rather than being designed to support their development.

Challenge 2: As the role of HR changes, new skillsets are required

Even if they could implement every digital tool available to them, HR and People leaders aren’t certain they could help their company take full advantage. Three of the top four areas in which they feel they are weak in are also among the skills they consider most important to their department’s future:

  • Digital skills, which 73% of HR leaders said will be important in three years – yet only 25%rate themselves as tech experts;

  • Creativity, which 73% of HR leaders said will be important in three years – yet only 28% rate themselves as creative experts;

  • People analytics, which 76% of HR leaders think will be important in three years – yet just 28% of HR leaders rate their people analytics skills as expert.

    Perhaps that is why, as HR teams transition to new ways of working, progressive, forward-thinking organizations are blending formal company training with informal autonomous and social learning, continuous development, and flexible career paths.

    For example, 43% of HR and People leaders we polled said they offer employee-driven learning, with a further 44 % planning to offer it within the next year. On a similar note, 41% of HR and People teams offer flexible career paths, with a further 44% planning to in the next 12 months.

    Challenge 3: HR roles will likely change beyond recognition

    With 86% of HR and People leaders polled acknowledging a need to reskill, a global HR skills crunch is almost inevitable.

    But which skills? A whopping 82% of HR and People leaders anticipate the role of HR director being completely unrecognizable in ten years’ time. Just as HR and the way it operates are changing, so too is the world of work managed by HR. In fact, it can be argued that change is the only constant right now for HR.

    It might sound daunting, but if any sector can not only survive, but thrive, in a period of such tremendous change, it’s HR. As companies’ focus on attracting and keeping the best intensifies, who better to lead the focus on people and building great employee experiences than HR?

    After all, as HR leaders ultimately know better than anyone, employees are more than human resources: they are the source of ideas, creativity, ambition, and ultimately, a company’s potential. More than anything, they are people with different motivations, mindsets, passions, and interests with access to technology that allows them to contribute more unique, creative, and ambitious ideas than ever before.

    At Sage, our suggestion is that HR and People leaders focus on agility. With a boost from the right technology, agile HR and People teams can implement changes faster. They can get quicker feedback and take remedial action. They have an unprecedented opportunity to be the face of change in their organizations.

    Paul Burrin is a work trends expert, self-proclaimed People Geek and Vice President at Sage Business Cloud People, a global cloud HR and People system that helps organizations around the world to acquire, retain, manage and engage their workforce.

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