The HR department has been undergoing a transition in recent years, repositioning itself as a key stakeholder in the broader mission and business goals of the company. But there’s still a lot of work to do as HR organizations face challenges in helping their enterprises hit objectives.
Research from the “2019 Key Issues” report from The Hackett Group, Inc., finds that most HR organizations aren’t up to snuff when it comes to some milestones essential to enterprise goals: developing executives who can lead in volatile environments, supporting enterprise digital transformation, and dealing with critical talent/skill shortages.
The skill shortage problem, as well as hanging onto key staff and carrying out business strategies, likely won’t see improvement this year, although other areas are tagged for attention. Flat HR budgets (expected to shrink by 0.2 percent in 2019) and low headcounts (a probable decline of 0.4 percent) will probably impede progress.
Organizations are moving ahead on digital transformation, although they’re leaving their HR departments behind. Future growth in digital tech adoption is expected to carry HR along with it, however, over the next two to three years. HR anticipates the biggest gains in such areas as modernizing core ERP platforms (42 percent adoption growth), robotic process automation (2.5x growth), data visualization tools (59 percent growth) and virtual digital assistants/chatbots (2.4x growth).
But there’s a laundry list of challenges facing HR that present problems in the ability to address them. Five “critical” areas, according to the report, include three that aren’t new issues: developing executives who can lead in volatile environments, enabling successful business strategy execution, and enabling digital transformation. The last two are new to the top five list: support for enterprise customer-centricity and the ability to address talent and skills shortages.
There are also six areas in which HR has only limited ability to respond: leveraging technology to improve HR performance; aligning HR skills with changing business needs; modernizing HCM applications; implementing end-to-end HR process management; improving talent management; and improving HCM analytical capabilities.
Another area of concern is the way that HR is prioritizing its areas for improvement—according to the report, some of the highest-cited priorities are actually low on the action list.
Harry Osle, The Hackett Group’s global HR practice leader and principal in charge of the HR advisory practice, said in a statement, “In order to close the capability gaps we’ve seen, and to truly step up the pace of digital transformation, HR organizations require a long-term plan of action that prioritizes closing critical gaps while leveraging technology to its fullest.” Osle added, “It must be a multipronged effort that incorporates technology implementation, data standards, process redesign, organizational restructuring and more.”