What will the HR function look like in 2025?

Artificial intelligence will significantly step up the personalization of digital tools for both employees and managers – that is, if organizations are "bold" enough to embrace such transformative models, according to The Hackett Group's report, "The CHRO Agenda: Become the Force Behind Enterprise Agility."

Why is this especially good news for HR organizations?

Those that have a "digital, world-class HR operating model" will be able to fill 75 percent more open positions–at 39 percent lower cost and 18 percent faster than peers, The Hackett Group estimates. Moreover, such organizations will be able to enjoy a 25 percent higher employee experience score, enabling them to recruit and retain vital skills; are four times more likely to make decisions quickly and 10 times more likely to execute rapidly on those decisions; are 72 percent more likely to respond quickly to major new product, service or line-of-business introductions; and will be able to operate the HR function at a 51 percent lower cost.

"Making the leap to a more agile, responsive, intelligent and innovation-driving HR operating model will not happen through incremental change," the authors write. "Rather, it will require bold thinking and broad transformation of the function's culture, structure, people, platforms and processes to enable enterprise performance and competitive advantage through talent and human capital."

However, too many HR organizations are still woefully behind the digital curve, as the typical organization devotes half of its staff and budgets to administration and transaction processing, according to The Hackett Group's benchmarks.

"Business partners spend much of their time dealing with day-to-day HR issues, leaving them little time to focus on strategic, forward-looking initiatives," the authors write. "At the same time, the traditional HR operating model focuses more attention on running the function than it does on working with senior executives and the board to enable enterprise performance through human capital strategy."

By now, virtually every HR professional has heard that they must be more proactive in elevating their role within their company from merely a service provider to a "transformative strategic advisor." It's been preached to them for a decade or more, but now it's even more critical in this digital age, The Hackett Group contends. But how to realistically accomplish that?

One way is to implement the group's suggested "digital service delivery model," which places customer orientation at the core, with three design principles and six interdependent components, according to the report. The Hackett Group suggests the following action steps around these components:

Technology: reduce technology complexity "ruthlessly;" invest more in emerging technologies such as chatbots, robotic process automation and cognitive AI; utilize smart automation for 50 percent or more of HR processes; increase platform scalability and infrastructure agility.
Service design: adopt "a laser focus" on manager and employee experience; establish ubiquitous manager and employee self-service; put stakeholders first in service design; promote a "consumer-obsessed" service mentality.
Analytics and information management: deliver analytics on-demand for all aspects of HR services; provide omnichannel access to information and insights; train 100 percent of HR staff to become "analytics ninjas;" focus scorecards on business-critical HR metrics; use analytics to slate candidates faster.
Organization and governance: bring strategic service execution to customers; apply business value-based HR portfolio management to prioritize effort; place clear talent responsibility and accountability with business leadership.
Service partnering: elevate strategic third-party relationships to a critical node of the HR operating model; base vendor key performance indicators and pay for performance on business outcomes; incorporate vendors' transformation capabilities into day-to-day delivery.
Human capital: Ensure HR leaders drive a culture of innovation and speed to value; revise and create new roles, incorporating advanced analytical, relationship management, communication, collaboration and digital technology skills into HR profiles; evaluate and upskill/upgrade staff for 2020 and beyond; "supercharge" learning and development programs, and base promotion and raise eligibility on completion of learning tracks. Implementing this model will help HR professionals transition to "transformative strategic advisors," according to The Hackett Group.

"Fortified by analytics and AI, they will have the time, tools and insights needed to work productively with senior business leaders on areas such as enterprise talent strategy, human capital productivity and performance, effective leadership, and organizational culture," the authors write.

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