What HR has to really do to meet its new priorities

From retention and recruiting to budget gaps, HR leaders have their work cut out for them in 2022, according to a recent report from the Hackett Group.

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The strategic consultancy firm’s 2022 Human Resources Key Issues—based on a survey of more than 250 executives in HR, finance, IT, procurement, supply chain and global business services at midsize and large enterprises—suggests that HR leaders have to refocus their agenda this year on several key issues, says Hackett Group’s Global HR Advisory Practice Leader Harry Osle. Of particular concern, he explains, respondents said they lacked confidence that seven of the top 10 HR priorities identified are actually achievable.

“The majority of HR organizations have launched or are launching major initiatives to improve their capabilities to enable enterprise-growth strategies, digital transformation, creating a high-performing organizational culture and improving talent management,” Osle says. He adds that in order to close capability gaps, HR organizations must take greater advantage of digital technology to improve service delivery and insights.

The HR priorities survey participants identified as most challenging include:

HR performance is driven by budget and staffing gaps: One of the reasons HR professionals may lack the overall confidence to address top priorities is that HR budgets are expected to decline by 0.2% and head counts to contract by 0.4% in 2022, the study found. With workloads projected to jump by 9.3%, HR will need to make up a productivity gap and efficiency shortfall.

Technology spend accelerates to fill the resource gap: Facing another demanding year of “doing more with less,” HR will rely on technology to increase productivity, efficiency and effectiveness. HR technology spending is expected to increase by more than 9% in 2022, according to the study. To reap the full benefits of these investments, HR organizations will need to intensify their efforts at digital transformation and harness data and insights from analytics.

HR is struggling with talent retention and recruiting pressures: Amid difficulties retaining talent and filling open positions, HR has struggled to determine practical hybrid work strategies and prevent workforce burnout. HR must improve both its own talent management capabilities and those of managers across the enterprise.

HR-related tech skills are also lacking: HR has chronically lagged in key business- and technology-related skills essential to digital transformation, according to the report. Competencies such as the ability to derive meaningful insights from data, proficiency using digital technologies, critical thinking and adaptability to changing priorities remain underrepresented among HR groups, as are highly prized skills such as business acumen and the ability to innovate.

Strategic advisor role is a top priority: According to senior research director Anthony DiRomualdo, the report makes the strong case that employers have dramatically expanded their reliance on HR as a key decision-maker through the pandemic, to deal with issues such as burnout, safety, work from home and more. So, he says, it’s not surprising to see that, for the second year in a row, the top priority for HR leaders is to become a more strategic partner. This will continue to be a struggle for most firms as they battle higher demands on the recruiting front and strapped resources, he says.

To drive an effective, value-focused HR function, many companies will turn to technology, Osle says.

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“The question is, how do organizations implement the technology in a smart way to drive the broadest and most impact?” he says. “The enterprise is hoping HR can do this, but hope is not a strategy.”

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Franco Girimonte, associate principal at the Hackett Group, says the range of tech advancements available to HR leaders is expanding just as quickly as their HR agendas.

“From cloud to data visualization to master data management, robotic process automation and more, the adoption rates and the number of large-scale deployments keep creeping up,” Girimonte says.

When implementing tech and designing overarching strategies to address these priorities, he adds, HR leaders should keep in mind that they may need to be prepared to pivot quickly.

“It’s very difficult to predict that’s going to happen, with everything from the pandemic itself to talent management to remote work,” Girimonte says. “So, it’s challenging to do things like settle on an office strategy and finetune talent acquisition when it’s unclear when or how things will normalize.”

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