HR TRANSFORMATION: Aligning People and Business

A guide to the why, what, how, and who
of a great HR function.

HR people, structures, systems, and processes have always evolved. But new factors are hitting business with alarming frequency and show no sign of slowing. Demographic change. New business models. Employee expectations about culture and systems—where their own technology is more responsive and effective than their employers’. A relentless quest for cost savings. IT-driven automation. And an unpredictable economy.

To stay relevant and add value, HR functions must transform. The old model was to identify a glitch, run a change project, and treat the problem as fixed to continue as before. Now, one-off change is not enough. Genuine transformation demands continuous improvement. Change becomes always-on, not something that you do once and then stop.

In this digibook, we explore the key questions and practical steps HR leaders, their peers, and their teams must address to create a function that is capable of supporting wider organizational strategy—and helping businesses compete—in this state of permanent transformation.

Further reading.

If we seem to be missing three big-ticket items, it’s because they’re covered elsewhere in this series. Check out our three digibooks on Career Management and Development, HR Data and Analytics, and Managing Organizational Culture.

Who will find this digibook useful?

HR leaders. Your tools, technologies, and challenges are shifting quickly. As are expectations about HR. We don’t want to panic you, but if you’re not putting “CHANGE” as the headline on your five-year plan, you’re in trouble. (And we think we have some great subheadings for you…)

C-level execs. Put the “war for talent” cliché to bed. (Promise: It won’t appear again.) You already know that your agility and ability to operate rest on having the right people in the right places—and they’re increasingly hard to find and motivate. You need smart HR, not only to thrive, but to survive.

Line management. You have a right to expect smooth sailing on the transactional processes around HR. But be honest: Don’t you wish the HR function was a bit more focused on making life easier and a bit less driven by rules and process? This guide will help you ask for the right service.


“The future is here—it’s just not evenly distributed.”

Modern business is an unforgiving beast, which means one thing for support departments. Either you add value or you’re out. And HR is far from immune. So let’s spell it out:

“HR functions must help their companies increase sales and create new sources of revenue—now and forever.”1

If your HR function isn’t and doesn’t, it needs to change.

Three reasons HR needs to think fast about value.

  1. 1.

    Demographic change. Your workforce is getting older and more diverse. Forget millennials (a horribly oversold marketing label). The four-generations workplace is a coming reality. That means thinking now about policies and systems that are flexible, support knowledge transfer, reskill old workers, and more.

    FIGURE 1:

    Demographic changes in the developed world

    • 2013
    • 2017
    • 2022
    • 2027
    • 2032
    • 2037
    • 2013
    • 2017
    • 2022
    • 2027
    • 2032
    • 2037
    • Median age of UK population
    • People over 65 (millions)
  2. 2.

    Fast-changing business models. You don’t have to be in Silicon Valley pivoting your business to know that agility is today’s watchword. Your people need to be able to collaborate easily. Managers must build and reshape teams quickly. Talent locked in functional silos will leave or be wasted.

  3. “In a modern company, HR takes on this expanded responsibility for team building and enabling teamwork. I can’t think of anything that’s more important than that.”—Oracle CEO Larry Ellison

  4. 3.

    Transparent technology. We’re way past the point where employees’ personal tech got slicker, faster, and more entertaining than the kit they use at work. People expect systems to work seamlessly today; to be easy to use. Your HR system almost certainly isn’t. And that’s why you can’t persuade them to use it properly.

The only roadmap you really need.

Step one, then: Work out where your HR function is. And a good map is the HR maturity model. All you need to do is point to where you are right now…and keep moving right. The Maturity Institute version spells it out:2


Sweeping right: moving up the maturity model

Investment yields little value or
risk management
The “Aha!” moment: HR as a driver of value
Risk management, value creation
  • Stage 0
    HR is non-existent
  • Stage 1
    Some HR admin
  • Stage 2
    HR treated as a function, but mainly transactional
  • Stage 3
    HR is seen as effective, and contributes
  • Stage 4
    HR becomes indispensable and integrated in business ops
  • Stage 5
    HR moves from operational to strategic focus and impact
  • Stage 6
    The entire organization aligns around human capital and values

HR needs to focus on the employee experience, removing barriers to them delivering to their full potential. HR has to be utterly aligned with the business. Its transformation must bring about a shift in management attitudes to nurture and develop the full potential of human capital.

The new basics.

HR needs to minimize the cost and complexity of the transactional basics so it can deliver against this checklist:

  • Talent-centric perspectives. What do you need from your people? (Extra points for not using any jargon.) Can HR help the organization deliver an experience that nurtures talent?
  • Collaborative tools and processes. People need to work across functions and disciplines to respond to colliding sectors and innovation. Collaboration tools need to be embedded, not separate systems.
  • Engaging and mobile interfaces. Employees expect the same responsiveness from their employers that they get as consumers, or on the social-media apps on their phones.
  • Insights for management. The ultimate proof of HR’s value—information, analysis, and advice that shape decision-making and can be connected to creating value.

So: Act fast or risk HR being sidelined. Factor in tech, business change, and a diversified workforce. Hold HR to account for the organization’s ability to grow the business. And get it all done before artificial intelligence makes the whole function redundant. We like a challenge…

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