A new north star for HR

Originally a 2 part series, this long form article discusses the urgent need for the HR industry to consider a new north star to re-orientate it for the future of work, and to align to the changing needs of business leaders and workers.

Whether or not HR needs a rename, a rebrand, a reset, or whatever has been a popular topic lately. The impact of COVID-19 and flexible working, the elevation of HR in daily business operations and a renewed focus on the future of work has brought this topic into the spotlight. And rightfully so. It’s long overdue.

I’ve read and listened to a lot of what’s been written on this topic. Much of it I agree with - that HR needs to reposition itself if it’s going to continue to be relevant to the humans and organisations it supports. But it’s not simply a reposition or a rebrand - we have to alter how we function, the work we perform, and how we support people and organisations.

Our current state

I was fortunate to attend some of our industry’s highly anticipated and much respected conferences over the past few months: the L&D HR Symposium in the Hunter Valley, NSW, and the Future Talent Council’s global event in Stockholm. And they got me thinking hard on this topic, but not in the way I was anticipating.

Both were well run events. AI was unsurprisingly covered, and covered well.  So was the need to move towards skills and development-based workforce strategies. There were some great case studies and valuable insights shared that will be useful for me and my consulting work. As always, both events provided great opportunities to network and meet interesting people from a range of industries and regions.

However, I came away from both events feeling there was a lost opportunity for 'deeper thinking' on the future of the HR function.

As an industry, together with an overdue need to rewire our function, we are leaning into an unprecedented period. The seismic macro-environmental, cultural and demographic shifts that business, economies and societies are experiencing - including the global skills shortages, Ai and automation’s effects on workers and economies, geo-political unrest and risk, consumer and employee expectations for positive social impact of business - are all generating pressure and opportunities for the HR function.

These events led me to think more about whether the HR industry should spend more time considering whether the current HR paradigm is fit for purpose in today’s world or whether a radical re-orientation is required to deliver better outcomes for business, workers and society.

So, if we’re in agreement that this re-orientation is needed now, what should it look like?

A rebrand for HR is long overdue

We call the function ‘human resources’, but this naming is based on an outdated concept of work, with workers or ‘resources’ being hired and deployed as inputs to production. Our very name perpetuates an expectation of what the function should be doing, and it’s time that we challenge this.

Just think what perceptions would look and feel like if the function was called ‘human potential’ or ‘human development’ or ‘human experience’. These are simply early ideas, so don’t hold me to them, but our function now requires a name that reflects the possibilities that people bring to an organisation. Humans no longer think of work as a way to earn a living. Humans want to work for organisations that reflect their values, are excellent corporate citizens and support their entire potential – as a worker and a person.

With that in mind, the HR function needs a reorientation – and within that, a name – that communicates what a company can do for its people rather than what the people can do for the company. HR needs a name that communicates how it helps workers become who they want to be, and how they want their work and work potential to be a part of that.

The same point can be made about ‘talent acquisition’. It’s time to move on from thinking people are something that a business ‘acquires’ like assets and property. They are humans with goals, dreams and aspirations, and they are choosing whether your business is worthy of being part of their career and life journey.

You may think I’m digressing, but the point here is that our name belies our purpose. The way we refer to ourselves as an industry is outrageously outdated, so how can we expect to be future-fit if something as essential as how we refer to our function is wrong? This is a foundational question: a new name is essential to communicate what we do, who we serve, the relationships that matter and the outcomes we deliver.

What does the industry say?

This topic was generating significant discussion within my team at TQ, so I ran a poll on LinkedIn to open it up to the industry.

Below is an extract from LinkedIn of my question and the poll’s results:

Poll conducted in August 2023

The post resulted in some great discussion and perspectives and is worth reviewing, but here are a few verbatims from senior HR Professionals from PwC, KPMG, Bapcor and others:

“Gareth Flynn I think in our complex world we need to use naming of things to simplify - ie reduce the cognitive load and/or create the question .. 'yes that's your name, but what do you do?' On that basis I am big fan of employee experience - because it defines (in the broadest sense of definition of employee) the relationship we have with the organisation that pays us for the value we create. People is too generic, worker has IR connotations, humans feels 'new age' and so easily dismissed.”

"I see these all as pathing stones, on the path to Human Potential. First, we need to get the culture & experience right though to prime the environment for potential to be unlocked. I don’t mind keeping Human, keeping the lens of humanity today is important.”

“Here at KPMG “HR” is referred to as People & Inclusion which I really like. I also like the simplicity of People Experience (PX) as a naming convention.”

“There is also a great discussion to be had about 'talent' - this implies (I think) a judgement. That people are 'talent', or not. 'Top talent' programs sharpen this focus. Organisations are communities. We need to be careful about the language we use and the unintended consequences.”

The term HR is clearly redundant

Based on the poll results and the discussion that followed, it is clear there is a ground-swell for change. It’s also interesting to note that there was no-one who challenged the re-naming and wanted to keep ‘HR’ in its current guise.

Overwhelmingly, 59 per cent voted for ‘Experience’ in the functional naming convention. This is not surprising given the shift towards ‘employee’ and ‘candidate experience’ in the past few years, as talent attraction and retention has become a higher priority. A broader focus to include the experience of ‘leaders’ as well as the participants of the function is also critical and this focus may miss these stakeholders. Afterall, they are critical ‘customers’ of the functional work too.

I’m not going to try to solve the re-naming issue here as it will be contextual for different organisations and their business priorities, but a move towards ‘experience’ is likely to be important. With this as the functional north star it will change the work that gets done and the skills and capabilities needed within the function. Think ‘experience design’ or ‘product management’ or ‘performance analytics’ or ‘customer/stakeholder research and analytics.  A simple re-frame changes the game completely.

Part 2: What the HR revolution will look like for your business

Part one of this article put forward the case for change in our industry: that a re-orientation and re-naming of what we call ‘human resources’ today is needed. This evolution is critical to ensure it’s future-fit, with its purpose and output aligned to the needs of the business and the people who work within it.

Here I discuss the radical transition of the HR function that is required and refer to a couple of recent papers by McKinsey and the Josh Bersin Research Academy who both support this makeover.

Closing HR’s capability gap

McKinsey states that “HR business partners (HRBP) lack the skills and time to keep up with the latest HR developments.” – this is unsurprising in the volatile world of business today and the increasing pressure of having to do ‘more work with less’.

I referred to the expanding expectations being placed on the HR function in part one: rapidly evolving consumer and employee expectations; the adoption of new technology and AI; the growing importance of wellbeing, diversity and inclusion in the workplace; as well as managing increasing geopolitical unrest and risk. Each is creating significant work and placing new pressures on the HR function, as well as exposing interesting opportunities.

HR must seek to close its capability gap and evolve into the business-critical function it needs to be – supporting business transformation efforts; driving an ‘experience’ focus for candidates, workers and leaders; digitising and productising HR’s work where relevant; and introducing meaningful data and workforce intelligence for the business and its leaders to use. Closing this gap will transition HR from being constantly reactive to being in the driver’s seat, evolving the HR function and supporting the business in its transformative phase.

Your HR transformation will look different to other HR transformations, and that’s great

While I’m set on the need for HR as a discipline to rebrand and transform its purpose and function so that it’s future-fit, I’m also firm on the fact that one company’s HR transformation won’t mirror another company’s similar evolution.

McKinsey’s paper on the new HR operating model cites some of the major internal challenges that HR teams are navigating right now as post-COVID-19 working models, remote leadership, majority millennial workforce, shifting expectations of work and business, and the skills crisis. These are all apparent for most HR functions today, but the impact of each of these challenges will be felt more or less depending on the company, its size, the industry in which it operates, its products/services/customers, and other influences. Basically, one organisation’s pain point won’t be another’s.

The paper identified eight ‘innovation shifts’ that chief human resource officers need to prioritise. These include: agile principles, maturing the employee experience, re-empowering frontline leaders, offering individualised services, and others.

The innovation shifts that take priority will determine the new HR operating model the organisation transitions to, and McKinsey goes on to identify five to choose from: Ulrich+, Agile, Employee Experience Driven, Leader-led and Machine Powered. Each of these models is underpinned by two core elements: strong data and user-friendly, highly reliable service. Quite a bit for any HR department to work through alongside their operational deliverables.

How these insights can be applied operationally

I resonate with McKinsey’s proposal to ‘productise’ HR services because the introduction of ‘product management’ mindsets will significantly improve the design and impact of HR services. Too many HR systems and programs have historically been implemented based on process / efficiency rather than user experience and human centred design. However, this will be a new skill and muscle for the function to develop.  As part of this evolution, HR professionals must make tech and data part of their DNA; it will no longer be something that can be ‘outsourced’ to HRIS or people analytics teams.

What say you, Bersin?

So, we know where McKinsey stands on what an HR transformation looks like and with that in mind, how does Josh Bersin’s perspective align or differ?

Bersin obviously concurs that change for our function is needed and needed now. But rather than focusing on changing the HR operating model, Bersin is proposing the introduction of an entirely new HR operating system. He identifies that individual HR practices will no longer work independently, tech and data is integral to every domain of HR, and HR professionals must now be deep experts and hybrid and broad in their skills. In alignment with McKinsey, he goes on to say that the foundational aspects of HR now need to be reinvented and companies can no longer copy best-practice models, they need to build a model bespoke to their business.

How to apply these insights to build your transformation

The next five years will be critical and failure to do so will jeopardise HR’s position and relevance in the future. You may find the concept that our function faces redundancy alarming, but this period is also an exciting time for us to evolve and reposition the function to support business success.

The elements that HR teams can get right to navigate this transition are:

1.     Clear space in your HR function to allow the time and resources your teams will need to navigate this revolution

2.     Identify the capability gaps in your HR function and develop strategies to close the gap through hiring, cross functional mobility, upskilling or reskilling

3.     Rebuild your HR operational model and make it bespoke to your business. Best in class is now what works for your business, not what another company has done that works for them

4.     Recognise how essential good tech and data will be to the HR function, build it into your framework and make upskilling and reskilling the right people part of this shift

5.     Talent mobility within HR will be essential. Build out your business’s talent mobility model from HR during this period of reinvention

The function will deliver value to its full potential only by defining an appropriate ‘HR north star’ that is future-fit and aligned to business strategy and priorities, but some hard questions have to be asked, and answered, before it’s too late.

The naming of the function will emanate from this north star and help to crystalise and galvanise expectations for the function itself. Remember perception is reality, and we no longer want a perception based on an outdated and archaic view of work.

Human resources is dead. Long live… (well, that’s up to you!)

Find out more from one of our TQ people today.