CHROs today face immense pressure to deliver both operational excellence and significant business value. With shifting business needs demanding constant evolution, HR transformation is increasingly seen as essential. According to a Gartner survey from July 2024, an overwhelming 87% of leaders believe continuous HR transformation is necessary due to these shifting needs. However, HR transformation doesn’t necessarily entail immediate and massive change. Instead, it can occur incrementally, gradually evolving the HR function’s leadership, competencies, operating model, or technology to better align with business objectives and deliver more significant impact to all stakeholders.
Shifting Business Priorities and HR Challenges
Workforce Prioritization
Findings from a December 2023 Gartner survey of over 415 global CEOs and senior executives indicate that the workforce, encompassing talent retention, hiring, and diversity, equity, and inclusion (DEI) issues, stands as the third highest priority for businesses in 2025, just after growth and technology. Thus, HR leaders should anticipate that as CEOs drive efforts to grow their companies, business strategies may shift, relying heavily on technology as an enabler. The emphasis on workforce matters reflects the acknowledgment that people are at the core of any successful business endeavor. As such, HR departments need to prioritize strategies that enhance employee experience, development, and engagement.
Given the growing importance of DEI, HR leaders must also focus on creating inclusive environments where diverse talents can thrive. This involves not only implementing policies but also fostering cultures that embrace diversity and inclusiveness at all organizational levels. Additionally, the emphasis on talent retention highlights the importance of understanding employee needs and expectations in the modern workplace. By aligning HR practices with evolving business priorities, HR leaders can ensure they meet the current demands and remain agile and responsive to future shifts.
Mounting Demands on HR Teams
The growing demands placed on HR teams are considerable. Data from a February 2023 Gartner survey of 217 HR leaders highlight that 55% report an increase in requests spanning a broader range of topics, while 80% indicate that challenges faced today differ greatly from those encountered before the pandemic. This escalation in demand and pressure has left many HR leaders feeling unprepared to meet business needs adequately. Consequently, HR leaders are revisiting transformation strategies to redesign their functions, ensuring better support for the business and effectively addressing modern challenges.
As these demands increase, the scope of HR responsibilities expands, necessitating a shift towards more strategic roles within the organization. Meeting these challenges requires HR leaders to adopt innovative approaches, including leveraging technology and data analytics to improve efficiency and decision-making. Furthermore, the post-pandemic era has introduced new complexities, such as managing hybrid work environments and ensuring employee well-being, which require thoughtful and agile responses from HR teams. By proactively addressing these evolving demands, HR leaders can reinforce their departments’ strategic value and better align with broader organizational goals.
Core Areas for Effective HR Transformation
World-Class Leadership
With the evolving business landscape, the role of the CHRO has also transformed. Modern CHROs must transcend traditional HR leadership, strategically driving enterprise-wide business results and participating actively in the development of business strategy. This role involves building and adapting HR strategy in response to business changes, contributing pivotal insights during business strategy formulation, effectively positioning the HR function to meet business needs through optimal structuring and staffing, and managing and optimizing the HR budget. The best CHROs successfully balance these responsibilities while acting independently, even without close supervision.
In addition to these responsibilities, CHROs are expected to be thought leaders who can navigate the complexities of the modern workforce. This includes fostering a culture of continuous learning and development, ensuring the organization remains competitive in attracting and retaining top talent. Effective CHROs also play a crucial role in driving organizational change, guiding major transformational initiatives, and championing employee-centric policies that align with the company’s strategic objectives. By embodying world-class leadership, CHROs can position the HR function as a key driver of business success and innovation.
Modern HR Operating Model
The HR operating model serves as the backbone of any HR transformation strategy, organizing the structures, capabilities, and processes through which HR delivers stakeholder value. When assessing their current operating models, HR leaders must explore all components, including HR business partners’ (HRBPs) responsibilities, shared services structures, and the interaction between HR professionals and leadership while leveraging technology. Key actions by progressive CHROs include reinventing the HRBP role towards strategic talent leadership, establishing a flexible pool of HR problem solvers, providing agile support through next-generation centers of excellence, and forming a solid HR operations and service delivery team.
By focusing on these core elements, HR leaders can create a more adaptable and responsive HR function that meets the evolving needs of the business. This involves not only redesigning roles and responsibilities but also fostering a culture of collaboration and continuous improvement. Technology plays a critical role in this transformation, enabling HR teams to streamline processes, enhance data-driven decision-making, and deliver more personalized experiences to employees. By embracing a modern operating model, HR leaders can drive greater efficiency and effectiveness while positioning their departments as strategic partners within the organization.
Future-Proof HR Team Competencies
The Gartner survey reveals that only 58% of HR leaders believe their function is recognized as a strategic business partner. To enhance this partnership, CHROs must empower HR professionals to operate more strategically and agilely. This entails traditional competencies such as business acumen and relationship management, as well as emerging competencies like agility and strategic consulting, crucial for modern HR effectiveness. Creative problem-solving remains highly valued, but agility—working iteratively to swiftly develop complex solutions—is becoming essential.
Additionally, strategic consulting, which involves crafting and executing solutions for business challenges while influencing strategic decisions, is increasingly vital as organizations navigate hybrid work environments and shifting business priorities. CHROs must invest in continuous learning and development opportunities to equip their teams with the skills needed to thrive in a dynamic business environment. By fostering a culture of learning and agility, HR leaders can ensure their teams are well-prepared to address emerging challenges and drive strategic initiatives that support long-term business success.
HR Technology Enablement
In an era where flexible work arrangements and hybrid environments are standard, effective technology utilization is imperative for a seamless employee experience. CHROs investing in new technology should prioritize projects with the highest impact on employee experience, ensuring an objective comparison and involving key business stakeholders. This involves fostering two-way conversations with IT and the HR team regarding digital transformation and employee experience, beyond mere process improvements. Innovating HR processes by transitioning from task-based automation to comprehensive end-to-end transformations is crucial.
Additionally, CHROs must evaluate their capabilities in managing complex datasets to derive actionable insights that influence employee behavior. This includes leveraging advanced analytics and artificial intelligence to gain deeper insights into workforce trends and inform strategic decision-making. By embracing technology enablement, HR leaders can enhance efficiency, improve the employee experience, and drive more informed and data-driven decisions. Ultimately, effective HR technology utilization positions the HR function to better support the evolving needs of the business and its workforce.
Conclusion
Chief Human Resources Officers (CHROs) currently face the daunting task of delivering both operational excellence and considerable business value. With business needs constantly evolving, HR transformation has become increasingly vital. A Gartner survey conducted in July 2024 found that a striking 87% of leaders believe ongoing HR transformation is crucial because of these dynamic needs. However, HR transformation doesn’t have to involve immediate and extensive changes. Instead, it can progress incrementally, with gradual adjustments in the leadership approach, skill sets, operating models, or technology within the HR function. These step-by-step changes enable the HR department to better align with business goals and ultimately provide a more meaningful impact to all stakeholders involved. By adopting a continuous improvement mindset, HR can stay responsive to shifting business demands and contribute to lasting success across the organization.