Technology and analytics are the focus of six out of the top ten planned HR transformation initiatives for 2016, according to new HR Key Issues research from The Hackett Group, Inc.
The Hackett Group’s research found that HR leaders are increasingly acknowledging that the future effectiveness of their organizations depends on improving the use of technology, including analytics. The benefits of this digital transformation include the ability to: provide data-driven insights that help improve corporate agility; manage talent more effectively; assist managers in evaluating and supporting their employees; and make day-to-day life easier for employees by streamlining administrative tasks.
HR organizations are expected to see virtually no change in budgets and staff in 2016, requiring them to self-fund digital transformation initiatives. The research found that most HR organizations are also ill-equipped to support key enterprise strategic objectives, including developing executives capable of leading in today’s volatile and competitive business environment.
HR organizations are also struggling to keep pace with the growing demand for high-value capabilities in several key areas, including increasing use of data modeling and forecasting, strategic workforce planning, and talent management.
The Hackett Group’s research found that many HR organizations are not well-positioned to support enterprise strategic and operational objectives. Several key areas rated as highly important by the business are low on HR’s ability to address, are strong initial focus areas for digital transformation of the HR function.
The issues with the biggest importance and readiness gaps include: improving the development of executives who can lead in a volatile business environment; adapting talent management strategies and process to deal with changing business needs; enabling successful business strategy execution; dealing with shortages of talent and critical skills; and aligning workforce strategy with business strategy.
“Top performers have long understood the role that technology plays in HR, and most companies are now realizing that digital transformation is critical,” said Harry Osle, The Hackett Group’s Global HR Advisory Practice Leader and Principal.
“At the heart of this is using technology to improve efficiency and effectiveness, developing the ability to analyze data to gain insight and provide better support to the company, helping the company adapt to changing talent and staffing needs, and becoming more customer-centric. Top performers have understood this for some time, and are now three times more likely than their peers to have an explicit HR technology strategy.”
The Hackett Group’s research shows that the most agile human resource organizations are focusing on becoming more information-centric. They are learning to utilize data to drive analysis, planning, and recalibration that leads to insights and improved agility.
World-class HR organizations focus more heavily on this than typical companies, and make 2-3 times greater use of predictive modeling.
“It’s critical that HR make connections between what they’re learning from their internal HCM systems and what’s happening in the external market. In today’s market analytical abilities are a ‘must have skill set’ that needs to reside throughout the HR organization,” said Osle.
“Everyone has to have the ability to use data to drive insight, and turn that insight into intelligence and an improved ability to deliver HR services. In addition, HR can enable managers through technology and data, helping them develop a better understanding of who their top performers are, where problems with productivity, efficiency, and effectiveness are emerging, and how to better coach and train employees.”
Finally, top HR organizations are using technology to become more customer-centric. Processes are being redesigned with the customer in mind, and technology enables direct access. World-class HR organizations provide 50 percent more on-demand access than typical companies, making it easier for employees to handle day-to-day administrative tasks and providing them with analytics that can help them to be more successful.
According to Scott Leuchter, Global People & HR Transformation Practice Leader and Principal, “It’s disconcerting to see that there are significant skills gaps within HR. The nature and scale of these gaps, namely analytics and forecasting for the future workforce, directly hinders HR’s ability to support many of the areas that are most critical to the business.”
By increasing their overall knowledge, skills and capabilities in these areas, HR has the opportunity to strengthen alignment with the business, better understand their needs, and become more proactive in solving the human capital dimensions of business issues.”