How HR plays a key role in driving business transformations

Efficiency is the key HR transformation agenda in most organisations. With the COVID-19 pandemic, being efficient is no longer enough to navigate the new normal of work. Rapid innovation has become a strategic imperative and HR is placed at the forefront to drive this. 

In our recent interactions with Business Leaders, Organisation and Talent outcomes were identified as the most important for organisations now and going forward. In fact, organisations with these outcomes in mind are able to mitigate risks and deliver on outcomes that matter to the business.

The importance of HR in driving innovation and change needed to transform organisations is supported by the recent edition of Alight Solutions’ State of HR Transformation study, in partnership with People Matter, which saw participation of over 2,200 respondents across the region. The study reveals that companies that spur innovation and reignite profitable growth needs to drive stronger alignment with the culture, align with the pace of innovation disrupting services, build capability internally for critical roles and reconfigure the organisation structure. HR plays a key role in enabling all these aspects.

So, what is holding organisations back from enabling these processes?

Organisations are held back by the assumption that HR transformation is the key responsibility of HR leaders and HR’s performance does not have a direct impact on the overall business transformation. However, this is far from reality. Take this example of The Walt Disney Company.

The Walt Disney Company has an extensive portfolio of core business units. With the ongoing lockdown and restriction on mass gatherings, a large chunk of this business is struggling. It was reported that all the theme parks and fleet of cruise liners of Disney which contribute to the $26.2 billion in sales were put on hold. Furthermore, the worldwide closure of movie theatres and suspension of sports has put pressure impacting $26.34 billion in revenue. 

Still, with the advent of COVID-19, Disney accelerated its investment in technology and digital. The company relooked at its HR processes, training, restructuring, performance goals based on its new business model. The timing of this digital centricity could not have been more right as it blocked the blow of COVID-19 on other business units. 

And hence, being adaptable is key!

Being Adaptable is no longer a choice, it is imperative; it is inevitable! Adaptability should be the foundation of your people strategy. 

As we think of the HR function of the future, the notion of adaptability will enable the HR function to be a guide for Business and Talent. To do so, adaptable HR organisations will need to address both the forces impacting the stakeholders that HR delivers to and its own ways of working internally.

The purpose of HR sets the north star on the values that the function aspires to deliver and will need introspection with regards to the context of the stakeholders (organisation, individuals, and leaders). It will bind and guide the decisions (both within and related to HR) aligned to the larger context of business outcomes.

According to Alight’s Adaptability Framework, the three anchors of adaptability (Commitment to outcomes, Adoption at heart, Navigating to the future) are inter-connected with the five dimensions that HR needs to consider for all transformation initiatives. 

 The three Anchors of Adaptability:

• Commitment to outcomes: HR needs to shift from traditional KPIs driven to outcomes closely aligned to what the stakeholders’ value. The missing piece is for HR to jointly commit with Business on the outcomes and deliver them.
  
  
• Adoption at heart: HR needs to recognise program implementation is not a one-time effort. Instead, it is ongoing and requires constant feedback to ensure completeness of program design both on domain and customer-centricity.
  
  
• Navigating to the future: This enables HR to shape the future rather than react to it. Program adoption yields actionable insights on program outcomes and effectiveness. HR should use these insights for ongoing discussions with businesses to jointly agree on the progress, understand the gaps in performance, and drive change with other stakeholders through constant calibration and adjustment. 

How HR Adaptability can impact business bottom-line 

To understand the relationship between HR Adaptability and business outcomes, Alight evaluated organisations on the following readiness parameters:

• Driving cultural alignment;
• Supporting organisational change;
• Building capability for critical roles;
• Managing employee experience and
• Driving adoption of robotics.

Based on the organisation’s confidence on adaptability anchors, Alight categorised organisations into four types:

• Ad-hoc: Organisations with limited/no clarity on HR operating model.
• Defined: Organisations that have either their own HR Operating Model or HR Technology defined and established.
• Matures: Organisations that have their HR Operating Model complemented with HR Technology strategy that have not realised the full value of their initiatives.
• Outliers: Organisations that are a subset of Mature Archetypes and who are highly satisfied with their technology deployments that complement the HR Operating Model.

The study observes that Mature Archetypes are almost 2 times more confident in their adaptability and nearly 2.5 times more productive in terms of their HR: Full-Time Equivalents (HR: FTE) ratio. 

This ratio is commonly used to measure the effectiveness of HR as it indicates the number of employees per HR resource. True to their description of being Outliers, these archetypes are nearly 4 times more confident in their ability to adapt and excel on all adaptability anchors. 

Notably, they break the trend by excelling the most on Navigating to the Future that is closely linked to the governance practices in HR that enables an Adaptable HR.

By focusing on the Three Adaptability Anchors and by making changes in internal ways of working (Design, Experience, and Governance), HR function can become more adaptable and enable success of business initiatives as organisations navigate to the future. The study observes that organisations with Adaptable HR are not only looking at addressing risks that are closer to the business, they are in fact more ready to address them. 

This article is an excerpt from the Alight Solutions’ State of HR Transformation Study. To find out more, click here to download the study.