What Is HR Transformation — and What Does It Achieve?

Where effective CHROs focus

Highly effective CHROs today do more than just lead the HR function, rather they help enable business success across the enterprise as a strategic business leader. Specifically, top CHROs:

• Build a strategy for the HR function and adapt it as the business and operating environment change
• Provide key inputs to business strategy development
• Position the HR function (operating model, structure and staffing) to meet business needs
• Optimize the HR function’s budget

The best CHROs know how to distribute HR leadership among their direct reports to create a future-focused, financially disciplined function while also contributing to the overall vision and strategy of their organization.

Model of a World-Class CHRO

The Gartner Model of the World-Class CHRO provides a roadmap for greater personal effectiveness and strategic leadership, based on the best demonstrated qualities of HR leaders in five core roles:

• Board’s and CEO’s leader of human capital and culture
• Win in a dynamic talent landscape
• Leader of enterprise strategic change
• Leading through evolving stakeholder scenarios
• Trusted advisor and coach

To be most effective, CHROs must discuss with their CEOs which of these roles to prioritize, based on the imperatives facing senior leadership and the strategic position and direction of the business. (CHROs should never ignore any of these roles, despite prioritizing some over others at times.)

In their increasingly strategic position, CHROs also have more interactions with the board, yet many still struggle to influence board decisions. Gartner defines success in board interactions as ensuring the board is best-positioned to have discussions and make decisions that help the CEO, C-suite and organization achieve their goals.

The HR operating model is a foundational piece of any HR transformation strategy, as it organizes the structures, capabilities and processes through which the HR function delivers value to stakeholders, both internal and external.

In evaluating the performance of the existing operating model, HR leaders must consider all its moving parts — from the responsibilities of HRBPs and the structure of shared services to the ways in which HR professionals interact with leadership and ways in which technology is used. But first, HR leaders must know the strategic objectives for the HR function and their enterprise — and be ready to adapt those objectives as the business environment changes.

4 ways HR operating models are evolving

Gartner expects progressive CHROs to transform the HR operating model in the following ways:

• Reinvent the HRBP role as one of strategic talent leadership
• Create a dynamic pool of HR problem solvers
• Provide agile support with next-generation centers of excellence (COEs)
• Build a robust HR operations and service delivery team

Reinvent the HRBP role as strategic talent leaders

HR functions must redesign the senior or VP-level HRBP role toward a more analytically-oriented strategic talent leader and reallocate transactional tasks. Similar to present-day HRBPs, they are aligned with a specific business unit or function, and own the talent management strategy for that group. Effective strategic talent leaders must think holistically about the strategy of the business and talent processes that support the business’s goals.

Create a dynamic pool of HR problem solvers

A dynamic pool of problem solvers that works on various strategic projects is critical to the success of the HR operating model of the future. As their name suggests, problem solvers’ primary job is to hypothesize, test and build solutions to strategic problems. This team creates and upgrades resources, practices and policies used by HR and the workforce. It effectively serves as the “flex muscle” of the HR function, agilely moving from project to project.

HR transformation will require HR teams to build new capabilities to tackle a range of business priorities, including:

• New ways of working
• Increased demand for data-driven insights
• Evolving HRBP roles and competencies

New and Evolving Workforce Needs

Today’s hybrid work environments and rapidly changing business priorities require new ways of working. As organizations shift business strategies and implement new processes and structures, HR must be prepared to support the execution of these changes. HR staff can use an open-source change approach to ensure that employees remain engaged despite potential change fatigue. HR must also support leaders developing their ability to be more human-centric leaders to ensure a happy, healthy workforce that can generate sustained performance. 

Data-Driven HR Insights

HR increasingly needs data-driven workforce insights — and the skills to turn talent analytics into workforce plans and decisions. The growth in the number and availability of employee data sources requires HR professionals to develop their ability to not only analyze employee data but also communicate that data effectively to their audience.

By asking the right questions, choosing the right metrics and crafting a compelling narrative with the right data, HR professionals can drive better data-driven employee decisions. In doing so, they can increase their business impact and play a more strategic role within the organization.

Shifting HRBP Competencies and Roles

As the HR operating model changes the HRBP role is likely to be split between more specialized roles. HR leaders must ensure their staff are equipped with the competencies necessary to effectively provide value to the business in these new roles.Gartner’s HR Professionals Competency Model identifies both the critical competencies and behaviors HR employees must demonstrate to be effective strategic partners to the business.

With radical flexibility and hybrid work environments the norm, it’s imperative to leverage technology effectively to provide a seamless employee experience. Virtual and technology-enabled processes can create both positive and negative impacts, and Gartner research shows that employees who are dissatisfied with workplace technology are twice as likely to look for new positions externally than internally.

People-first technology strategy

With significant advances in HR platforms, hubs and solutions, HR Technology leaders are poised to become the catalyst of change across HR processes as technology now touches every aspect of employees lives. To power this transformation, technology should be more accessible and help employees ‘in the flow of work.’

To empower and engage their workforce, HR leaders need a people-first HR technology function. This means that the pillars of the operating model — the processes, structure, team capabilities and network — must be informed and aligned. When successful, a people-first HR technology function can improve key people and business metrics around DEI, well-being, collaboration and innovation.

Emerging HR technology

Innovations, such as artificial intelligence (AI), machine learning (ML), natural language processing (NLP), virtual assistants (VAs) and virtual and augmented reality (VR and AR), all play a part in this evolution toward more virtual HR processes.  

HR leaders responsible for investing in emerging technology need to:

• Focus on trends that have an immediate impact for employees and HR operations
• Drive HR process innovation using a digital-first, location-independent strategy by creating a roadmap to move from ad hoc, task-based automation projects to end-to-end process transformations 
• Create a more secure remote operations environment by enhancing employee data privacy and adopting adaptive access management strategies
• Assess trends that are likely to impact HR strategy over the next five years by evaluating the function’s capabilities in collecting, maintaining and analyzing complex datasets to turn them into actionable insights that influence employee behavior