The world of work has been disrupted in ways I’ve never seen. We’re working many more hours (we’ve lost an entire week of vacation time since 2000), we feel overwhelmed (40% of US workers believe their work is “highly stressful”), and more and more people are taking on gig-work and alternative work arrangements. And everywhere, we are re-inventing our skills and ourselves to cope with the rise of labor-saving technology and software, including Artificial Intelligence. (Read the article “Catch the Wave, 21st Century Careers” for more on this.)
What is HR’s new role in all this change and how can HR add the most value? Our latest research, “High-Impact HR”, helps explain what HR should be doing about all this.
What Is Happening to HR?
HR professionals can play a role in responding to this disruption, even though it’s not easy. In many ways HR is a “no-win” profession: when things go well management takes the credit, and when things go poorly, HR is often blamed.
Consider all that today’s global HR function is expected to do: train managers, address diversity problems, find and hire talented people as fast as possible, train better employees, on-board and transition people smoothly, pay people competitively, arrange great benefits and perks, and build a work environment that is rewarding, enjoyable, and inspiring. And through it all, HR is also expected to maintain accurate records, make sure the global payroll works efficiently, and keep the company out of legal and compliance problems in hundreds of countries around the world.
This is not an easy job… but it may be easier by seeing the HR function as having two essential tasks: Doing the “hard things” and the “soft things.”
The Hard Things are the “transactional” issues at work: getting people screened and hired, posting job descriptions, building a career portal, running the payroll, making sure compliance training is done, getting people to do appraisals, and handling employee grievances, safety issues, and terminations. These processes, including things like benefits administration, onboarding, alumni management, and employee communications, are very complicated – but people tend to get very upset if they aren’t done well every single time.
The Soft Things are the “people-centric” challenges at work: making sure performance management is done in a positive way, training new managers to be effective, building a leadership and executive pipeline, assessing and strengthening culture and engagement, understanding turnover and productivity, and diagnosing complex issues like theft, harassment, lack of diversity, collaboration, innovation, and employment brand. While HR can be creative and consultative in addressing these “soft issues,” they tend to be squeezed into available time and budget, while the “hard stuff” gets done first.
HR Teams Still Spend Too Much Time on Transactional Work
Whether we like it or not, HR teams spend a lot of time on transactional work. Our new research shows that 41% of HR professionals’ time is spent on “transactional activities,” 40% on “talent and people,” and 19% on “workplace and work.” HR teams are trying hard to fix this: respondents told us they plan to reduce the transactional work (moving from 41% to 30% over the next 3 years) in an effort to focus on people, culture, and the workplace.
As you look at the maturity model below you’ll see a clear trend: the more time you spend on non-transactional work, the more impact HR will have. Level 4 companies spend only 29% of their overall time on transactional work, while level 1 companies are spending 58%! So if you find yourself spending most of your day running reports and dealing with payroll, you’re not automating HR sufficiently.
Today The Soft Things Matter More
Today our research shows that the Soft Things matter more than ever. Here’s why: People-centric issues drive value. Research by the Bureau of Labor Statistics shows that almost 90% of US stock market value is now driven by intellectual property, services, and brand – all of which are “people-driven” issues. It appears that regardless of the business you are in, “people are your product.”
 Source: Bureau of Labor Statistics.”
In addition, the “soft issues” are at the heart of some major economic challenges. The productivity of the workforce has not been going up. The current digital revolution is actually the least productive revolution we have seen in U.S. economic history (the invention of the steam engine, electricity, and the original computer drove more output per hour of work). So the pressure is on: How can HR focus on the “soft issues” to help people get more done at work?
We Did the Research: What Effective HR Looks LIke
After nearly two years surveying more than 1,000 organizations, studying nearly 100 talent and HR practices, and evaluating lots of data about how companies evaluate HR for its impact on profitability, revenue growth, and other financial metrics, we can say what leading companies do. Truly effective HR organizations today are taking on a whole new identity. They are still doing the “hard things” well, but they are using automation and streamlining these “must do” activities so they can focus on design, culture, values, leadership, and productivity – the people-centric outcomes from addressing the “soft things.”
This is a transformation we call “High-Impact HR,” and it represents a manifesto for the HR department. But it doesn’t only apply to HR. High-Impact HR gives us insights into being a better manager, running IT and other business functions effectively, and focusing your entire business. We found seven key practices that differentiate these high performing companies.
The Seven Key Findings
- Design employee experiences by segmenting and understanding the work lives of your people. Design thinking takes into account how people already work, make decisions and otherwise organize their day and effort – and uses that knowledge to build specific HR-driven tools to help employees meet goals, improve skills, collaborate and feel more engaged.
- Use HR technology to help improve people’s productivity and experience at work. HR-driven technology has the potential to do much more than automate existing practices. High-impact HR organizations find opportunities to use technology to improve productivity, feedback, and alignment among teams throughout the company.
- Lead the company’s digital transformation. As many companies struggle to understand what the digital revolution means for their businesses, HR is uniquely specifically positioned to lead rather than follow. Organizational structure, reward systems and incentives – all under the purview of HR – are critical pieces for businesses in reaching the digital future.
- Understand and support agile and team-centric organizational models. Traditional hierarchies no longer represent the way that most work really gets done. High-impact HR organizations offer collaborative solutions to help constantly shifting team structures with issues such as goal management, performance management, coaching, check-ins, and development.
- Work with leadership to shape a culture of trust, inclusion, purpose, and accountability. High-impact HR organizations don’t just focus on compliance and control – the “hard issues.” By focusing on culture, high-performance HR teams are able to address multiple entry points for “soft issues”.
- Design the HR function to operate as a network of teams, breaking down silos within the HR function and with the rest of the business. While specialization in issues like recruiting, learning, compensation and other key functions is important, almost all problems today are multi-disciplinary. High-impact HR teams operate as agile consulting groups, bringing together all the disciplines into action when a problem emerges.
- Regenerate, professionalize, and continuously develop your HR professionals. HR should never be a place to “throw people” who can’t perform in other parts of the business. Demand the same level of growth and innovation as you would from other functions of the business and give your people lots of opportunities for developmental assignments, external education, research, and visits to peer companies.
Where Do You Stand?
These seven findings are inspiring to think about – but how do we get there from here? What specifically can HR departments do to address this “disrupted work” world we operate in today? And how far are you from “high-impact?”
Let me show you our new maturity model. After analyzing data from more than 1,000 organizations, we correlated and grouped the practices into four categories, and found the aggregate looks like this:
In Today’s Disrupted World of Work: HR Matters More Than Ever
The examples of HR organizations that climb the ladder to deliver high-impact results are often inspiring and educational. And what’s more, they demonstrate something I’ve seen throughout my career: The companies that march up this ladder and focus on achieving the seven common outcomes of effective HR organizations are simply better-run companies overall. They tend to be more profitable, grow faster, and have higher levels of employee engagement. We carefully analyzed these companies, and the results are clear.
The research has lots of detail, but let me conclude with a simple message. Today’s “disrupted world of work” demands leadership, creativity, and passion from HR. The days of HR teams wishing for a “seat at the table” are over: you’ve been given the opportunity to lead. High-Impact HR professionals should lead a crusade to make the work experience productive, engaging, and rewarding. Business leaders will be thrilled.
I know that HR professionals are up to this challenge, and I hope this research gives you inspiration and ideas to “rethink the disrupted world of work” in your own organization.