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You might expect a CHRO to make the case for HR being strategic, but tellingly, it’s the CEO who is now asking their HR partner to step up.
According to data from Accenture, the good news is that 89% of CEOs say HR should have a central role in the business. The bad news is only 45% of CEOs say they are creating the conditions for HR to lead business growth successfully. So, what does that mean for the HR function? What can we do to accelerate the change?
As the CHRO for OFI, overseeing a primary workforce of more than 18,000 employees - a figure that more than doubles when considering our seasonal employees - across 50 countries, people are at the heart of our business.
An effective, adaptable HR function is mission-critical to our work with farming communities across the globe to grow, source, and produce ingredients. It’s an equally vital component to the delivery of a myriad of projects our people are involved with in co-creating to find solutions to customer challenges, such as a new chocolate ice-cream coating or a complex spice blend for noodles for one of the big food brands.
Pinch of salt: People have been saying that HR is shifting from a back-office function to a strategic driver of business success for years, but change has been slow, and it hasn’t yet become the reality for most. So, why should 2024 and beyond be any different?
The evolving role of HR
As you’ve no doubt read, heard, and experienced before, the world we operate in is shifting at an unprecedented pace that we have never seen.
The macro-socio-economic environment of the last few years has had a disproportionate impact on the business landscape. Factors such as technological advancements, globalization, ethical considerations, and the impact of events like geopolitical conflicts, war, and of course the global pandemic have forever changed the way we work.
People have been saying that HR is shifting from a back-office function to a strategic driver of business success for years, but change has been slow, and it hasn’t yet become the reality for most. So, why should 2024 and beyond be any different?
This volatility has no signs of slowing down, making the role of HR is more critical than ever before – recognizing the delineation between professional and personal life has been completely blurred – and where the balance must lie in being a strategic HR partner and an employee advocate. This means that HR transformation must be at the heart of how companies respond, with a human-centric approach to leading and running the business.
Gartner reported in 2023 that the metamorphosis of HR is more urgent now than ever as talent becomes an even greater driver of competitive advantage. It found that 70% of CEOs now expect their CHROs to play a key role in enterprise strategy.
What started as the Personnel Department, and is now the Human Resources or People Department, could see its next evolution as Human Capital or Value Creation, for getting the best out of people - and people getting the best out of their work – which is exactly how high performing businesses need to position and leverage HR.
Key trends driving the change in HR
Before we consider how to make HR more of a strategic driver, let’s touch on the key trends that are triggering the need to step up and take ownership more than ever before.
1. Digitalization is having a major impact. A recent Gartner survey reveals that 56% of HR leaders say their HR technology solutions and strategy do not match current and future business needs. As technology continues to be a crucial area of investment in the HR budget, HR leaders must innovate to ensure technology delivers value in a volatile economy.
Leaders need to know how to manage the blending of technology with human capital to maximize impact and return on investment to create value for the business. This requires continued upskilling of your people while also recognizing which technologies are a fad versus those that are here to stay and moreover, recognizing that technology alone will not solve your problems. Success will come down to the ability to adapt to and maximize the positive impact of technology on the future of work.
2. Talent disruption, while not a new challenge, is continually morphing into a new set of variables. 70% of US employers, according to the Manpower Global Talent Shortage survey, said they could not find skilled workers for positions in 2024.
Hybrid working, employee expectations and half-life of skills are having an impact on the changing workforce. Additionally, the future of work sees shifts in middle management responsibilities and emphasis on changing skill sets, as ongoing hiring and retention challenges.
As Josh Bersin notes, we are becoming a “PowerSkills economy: driven not only by technical skills, but even more by empathy, design, communications, and management.” These changes are impacting various aspects, the most important being employee retention whereby companies must understand the needs of their employees in a more holistic way. This ranges from ensuring clarity of goals, to the 'what' of their job, the 'how,' and most importantly the 'why,' in order to help them thrive.
3. Purpose is yet another major factor driving change. I’m of the belief that our people, along with our customers, partners and communities want to know what we stand for and why. At ofi our purpose is ‘To Be The Change for Good Food and a Healthy Future.’ It sits at the core of our belief system and is woven throughout our business, enabling us to show – rather than just tell – its intrinsic value. Workers are more willing than ever to turn down a job if environmental, social and governance (ESG) factors were deemed lacking, and many want the company they work for to demonstrate ambitious ESG commitments. Over and above motivating and retaining talent, there is now a level of expectation on businesses to ‘show-up’ authentically, clearly exemplifying purpose led commitments with clear metrics. We must show the power of being able to do well and do good at the same time
What being a strategic partner looks like
HR needs to impact the company's key goals and objectives by playing a dual role –being a business partner and an employee advocate.
To do this, one must start by getting to know your colleagues, recognizing that everyone has their own story and that is what defines them, guides them and ultimately determines how they show up at work.
Secondly, you need to demonstrate courage – be brave and be bold – and know that it is a a constant challenge to get the balance right. While deeply understanding the company culture we must ensure that everything we do in HR is anchored to the business strategy, vision and most importantly purpose to enable people to relate and feel connected.
And when it comes to purpose, companies have to match the reality to the rhetoric at all levels in the organization, especially their frontline workers who are furthest away from ‘corporate’ but remain at the heart of excellence in execution.
This is not an easy task and HR professionals need to lean into their discomfort to gain credibility and respect.
A high performing HR team, according to recent research , can improve employee performance by up to 22%, boost retention by almost a quarter (24%), and will also drive better revenue (7% uptick) and increase profit (9% increase), too.
Understanding what keeps business leaders up at night and providing them with practical tools and techniques to address these concerns and drive value for the business in an engaging manner is a great way to be a strategic partner.
Stay tuned for my next two articles in this three-part series where I’ll cover what being a strategic partner looks like in more depth, and how to measure the strategic impact of HR.
