The challenges of 2020 are accelerating even more transformation in 2021.
By Anthony DiRomualdo, Dorothée El-Khoury, and Franco Girimonte
Unprecedented disruption in 2020 upended the HR agenda. Many business leaders were forced to put plans for growth on hold in order to step up and guide their organizations through challenging strategic and operational issues, including a global pandemic, a tense political climate, and growing calls for social justice around the world.
According to The Hackett Group’s latest HR Key Issues Study, the crisis and its fallout will continue to shape HR priorities well into 2021 and beyond. Respondents to the study ranked “acting as a strategic advisor” as their top priority for 2021. With so many people-related issues affecting business success, HR leaders recognize they must continue to guide top management and upskill their employees if they want to lead rather than merely react.
Some leaders expect stability within the business environment to remain elusive: 41% of respondents believe conditions will stabilize by the second half of 2021, and another 36% predict it will take longer. In any case, HR must remain agile in its response to the unpredictable challenges it will no doubt face in 2021.
After an accelerated digital learning curve during the crisis, companies are determined to capitalize on the lessons learned. Regardless of HR’s plans and priorities for the coming year, CHROs will ultimately be judged on what they accomplish. These seven steps can help ensure success in 2021.
1. Put relationships first. Developing and maintaining strong business relationships with a strategic focus on creating business value will elevate and upgrade the role of HR business partners. By shifting toward a business-enabling function and acting as trusted advisors, HR leaders are able to leverage their talent to deliver consistency and agility. Aligning with key stakeholders and business delivery points will maximize the HR-business partnership and coordinate support across the HR operating model. Forty-eight percent of respondents in the HR Key Issues Study report they have major initiatives planned to enhance their strategic advisory capabilities.
2. Double down on digital. Digital maturity was a major factor in companies’ ability to effectively respond to the crisis, creating competitive differentiation within the enterprise. To succeed in the future, HR must support their company’s digital agenda while shifting its own digital transformation into overdrive and upping its game in areas that will directly affect the success of key programs. In fact, 74% of respondents say they have major initiatives in place to support enterprise digital transformation. Leaders would benefit from adopting cloud-hosted applications and platforms, smart automation, and other emerging technologies to eliminate dependency on manual tasks and improve overall efficiency. Establishing paperless processes will also help to eliminate dependency on manual tasks and increase speed and efficiency.
3. Create a sustainable work culture. In today’s uncertain times, business leaders need to enhance all areas of employee health to improve workforce resilience. This includes safety and wellness programs; virtual work and service delivery; and diversity, inclusion, and belonging initiatives.
The shift to remote working and socially distanced physical workplaces presents unprecedented obstacles to fostering a much-needed sense of connectedness among employees. HR must step up its collaboration with business leaders to increase communication and culture-enhancing activities, such as virtual town halls, videos from staff, and other tactics for keeping the culture and connections alive in a remote or hybrid environment.
Additionally, business leaders and stakeholders are scrutinizing every aspect of organizational culture to ensure fair, equitable, and inclusive opportunities for all. Organizations that fail to properly address this issue will hurt the employer brand, compromise their ability to attract and retain key talent, and ultimately, hinder the overall performance of the business. According to the HR Key Issues Study, 74% of respondents say they have major initiatives planned to create and sustain a high performance culture while 54% are targeting improvements to their diversity, equity, and inclusion programs.
4. Reinvent talent management. Advanced talent management capabilities not only lead to better talent outcomes, but they can also drive business performance. HR must evolve talent management processes like learning and development, talent acquisition, and performance management to be carried out virtually.
While this is an area where HR capabilities struggle to keep up, implementing digital tools and automation to enhance recruiting, learning, performance management, and strategic workforce planning capabilities will help to increase efficiency. Seventy percent of study respondents have programs in place aiming to enhance their talent management processes this year.
5. Mind the gaps. The shift to virtual work will require significant reskilling and innovation of management techniques. Companies must leverage an increasingly global talent pool and adapt performance management to focus on business outcomes based on teamwork and collaboration rather than from measuring activity-based and task-based productivity. Implementing digital tools to mine and analyze data to enhance recruiting, learning, performance management, and strategic workforce planning capabilities will also be paramount to success.
6. Optimize the operating model. HR must take the lead in rooting out inefficiencies in its programs and operations. Operating models need to align with high-level business priorities. In order to solidify HR’s role as a business leader and strategy influencer, leaders must deliver on both business and human capital goals. HR professionals should focus on creating program innovations, effective implementation, and delivering a great employee experience through digital channels and shared service centers.
7. Accelerate agility. Increased HR agility is critical for success in 2021. Top-performing HR groups can predict and quickly respond to changes in business expectations, but they require an agile operating model and related processes to enable that flexibility. Many HR organizations demonstrated levels of agility they didn’t know they had in 2020. The task for 2021 is to embed agile capabilities into the fabric of the HR operating model. Bold thinking and widespread transformation will support the evolution of HR into a more agile, responsive, intelligent, and innovation-driving function.
Improve HR agility through flexible teams, remote working, third-party staff augmentation, digital processes, and streamlined governance. According to the HR Key Issues Study, 46% of respondents say they have initiatives underway in 2021 to improve the agility of their HR organizations.
The year ahead will bring a dramatic shift in HR priorities. HR must continue to assert its leadership and recalibrate talent management capabilities around diversity and inclusion to ensure an engaged and productive workforce. Additionally, seriously reevaluating how the function utilizes data analytics will be paramount to supporting its aspiration to be a strategic advisor.
Anthony DiRomualdo is senior director, HR advisory program at The Hackett Group; Dorothée El-Khoury is associate principal, HR advisory program at The Hackett Group; and Franco Girimonte is associate principal, HR advisory program at The Hackett Group.