For years, human resources (HR) departments across all industries have received pressure from their companies to reduce the amount of transactional work and provide greater value and outcome-based strategic programs.

Although this request isn’t unrealistic, the path to transform and modernize HR isn’t a simple one. To achieve this, HR and the business must align and agree on the future of the HR department.

Some common questions organization leaders can use to start the process include:

• Why do we need an HR strategy?
• What does an HR strategy do?
• How do we deliver strategic HR programs?
• Where does an HR strategy add value?
• Who decides whether HR is being strategic?

The HR Strategy Challenge

The primary reason HR hasn’t progressed as quickly as other functions is often due to the lack of knowledge in HR to lead strategy and transformation efforts. Or, there’s a lack of support from the business. For HR transformation and modernization to occur, some critical yet fundamental alignment from both HR and the business is required.

Organizational Mindset

This is the biggest challenge for most organizations. The organization must be ready to adopt a new way of working with HR, and a new way of working altogether.

When HR transforms, the organization must be open to the change, and the organization must be willing to let go of things HR stops doing.

Time

Effective transformation and modernization isn’t an overnight exercise; it can take months if the change is relatively small or years if highly complex. Regardless of the duration, properly implementing and managing change takes time. Organizations must be willing to commit to enough time needed to achieve the desired outcomes.

HR Transformation Budget

Depending on the size, scope, and duration, it’ll require a financial investment from the organization to transform HR. Organizations attempting to partially fund or cut corners often get what they pay for—resulting in a failed attempt.

HR Transformation Resources

After a mindset change, the second most difficult challenge organizations face is adequately resourcing the effort.

HR transformation and modernization requires two sets of resources:

• People who will lead, manage, and support the transformation and modernization efforts
• People who can execute the strategic programs needed to deliver the future of HR

This second one is often overlooked. It sounds simple, but most HR departments don’t have the required skills and capabilities to do this.

The HR Transformation Solution

The current workforce climate offers an opportunity to transform and modernize HR. It’s no longer a luxury but a necessity and business requirement. Workforce needs have never been so complex and the high demand for talent by organizations has never been greater.

Organizations are desperately trying to meet their performance and productivity levels, and without the next generation of strategic HR programs they won’t be able to. To overcome these challenges, there are three areas that will support the progression of HR.

Relevance

HR needs to increase its awareness, alignment, and value to the business. It needs to elevate its strategic position by clearly articulating the value-based outcomes it’s driving.

To do this requires understanding what the business needs and closely aligning to that. When HR demonstrates its value, it breaks down many silos, builds relationships, and smooths the path to transformation.

Differentiator

HR needs to modernize how it works and develop programs that create a competitive differentiation. These programs should address both the needs of the employees and the business.

These programs don’t just solve a problem but drive value. HR needs to demonstrate that an investment in time, budget, and resources will not only meet short-term goals, but create a path for continuous innovation, competitive differentiation, and a leading employer value proposition.

Demand

HR needs to deliver the following that will scale to support the ever-changing employee and business needs:

• People strategies
• Structure
• Operating models
• Programs
• Processes
• People Capabilities
• Technology

A large component of this is to be much more proactive in the innovation cycle. HR professionals should leverage industry and economic data along with other techniques, such as scenario planning to predict a possible future, and make the appropriate adjustment to adapt to the future.

How To Start HR Transformation

The path to HR transformation and modernization can be challenging. The following are steps to get you started.

• Meet with business executives to understand their short-, mid-, and long-term HR and people needs
• Conduct an evaluation of the HR department to determine your ability to meet needs
• Develop a modernization strategy to declare your desired future state, HR outcomes, and business outcomes
• Create a business case outlining the value of the transformation and modernization efforts
• Socialize the strategy to ensure business alignment and gain support
• Create a strategic plan to outline the modernization work, time, effort, resources, budget, and outcomes

HR Transformation Via Digitization

HR departments have positioned themselves to transform from a transactional to strategic function.

Traditional HR teams sustain required transactions and current processes, leaving limited time to put the right amount of effort into a full transformation and modernization.

This is a new era of HR focused on digitization to leverage technology in transactions. Organizations need to allow HR to evolve to continue to meet workforce and business demands.

We’re Here to Help

Looking to evolve your organization’s HR strategy? Explore our additional resources and discover new human capital management tactics to get started. If you have further questions about HR transformation and strategy, reach out to your Moss Adams professional.