HR is at a crossroads, as technology can now accomplish many of those traditional responsibilities faster, cheaper, and better after more than 100 years of existence. It is believed that the first human resources department was established by The National Cash Register Company in 1901 following a bitter strike.

Then referred to as “personnel,” the new department’s role was largely compliance-based, and focused on record keeping, workplace safety, wage management, and employee grievances. A hundred years later, a lot of organisations are still running HR that same way; focusing on risk, focusing on compliance, focusing on the transactional side of it, but there’s this whole new era, and things like unions and pensions and transparency of the workplace have changed.

Today there are countless recruiting platforms, onboarding programs, and talent management systems available to employers, and many have argued that HR as a whole will have to quickly adapt or face extinction. It is now moving from transaction to interaction.

For many years, people have screamed that we are approaching the death of the HR function. However, the people who shouted it out were just a little too early or just being a little bit extreme, but it’s been happening for many years.

While the writing has been on the wall for some time, many factors that point to this outcome have only recently come to fruition. Recruiting software has become more advanced and cost-effective, big data has become a centerpiece of talent management, and 2015 marks the first year that millennials represent a majority of the workforce, a generation that makes career decisions differently than previous ones.

It will lead to drastic changes in the role of human resources departments moving forward. A tipping point doesn’t necessarily spell the end of HR, only an evolution, perhaps even an opportunity.

As recruiting gets more competitive and organisations put further emphasis on acquiring and retaining top talent, many believe that HR professionals of the near future will be part of the core management team.

See: Human Resources: Is HR Essential or Obsolete?

But the industry has thus far been slow to react to these changes. In a recent survey by Deloitte, only 22% of respondents said that HR is adapting to the changing needs of their workforce, and only 20% feel that HR can adequately plan for the company’s future talent needs. It also predicted that 60% of enterprise recruitment technology would be replaced in the next 18 months.

The study, titled “Reinventing HR: An Extreme Makeover,” points to some of the areas where skills need to be improved, such as applying social technologies to the HR management function, embracing social media for talent acquisition, enabling greater innovation and customer satisfaction, and increased knowledge sharing through social technologies.

Those are capabilities that many HR organisations have not yet honed. HR is typically looked toward as the stewards of culture, but if you don’t have those capabilities to bring the culture to a new place, specifically around innovation and driving customer satisfaction, HR is going to struggle, and the organisation is going to struggle as a result.

The study also found that 80% of survey respondents believe that their company’s HR skills are a significant issue, a gap that will need to be accounted for quickly in order to meet the demands of this new era in HR.

HR professionals that embrace the opportunities that technology can provide, however, are able to better allocate their time toward gathering insights beyond their own four walls, outgrowing the traditional concentration on internal compliance. An example regarding the evolution of financial management, which grew from serving basic accounting needs to the CFOs of today, who serve a core function on leadership teams.

Now, we are seeing a very similar evolution in another function known as HR, since some companies have already assigned a chief human resources officer. If you look at the evolution going back to when we called HR ‘personnel,’ it is come a long way as a function since then.

There is a major shift yet again enabled by these tools and technologies that are finally allowing the HR function to look outside the tactical, administrative reporting and data gathering to bring insights and drive business strategy and results.

See also: Revealed, 5 Digital Challenges for Human Resources

Source: Fast Company