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To Become a Business Partner, HR Needs an ‘Extreme Makeover’

Apr 21, 2015
This article is part of a series called News & Trends.

Human resources, as a business unit and as a profession, is failing to meet the expectations of business leaders. Not only is this true in North America, where HR has for years been yearning for the proverbial seat at the table, but it’s every bit as true in the rest of the world.

In blunt terms, Deloitte’s 2015 Human Capital Trends report says, “HR is not keeping up with the pace of change in business. Today, there is a yawning gap between what business leaders want and the capabilities of HR to deliver.”

The report declares the need for an “extreme makeover” for HR to be one of the 10 most important human capital trends this year. It’s not the first time retooling HR has appeared as a priority among the business leaders and HR professionals surveyed (3,300 respondents in this report from 106 countries).

Virtually no progress, though, has been made toward improvement. HR’s rating this year is little changed from the 2013 report, when it was given a “GPA” of 1.3.

“Recent research shows that only 30 percent of business leaders believe that HR has a reputation for sound business decisions; only 28 percent feel that HR is highly efficient; only 22 percent believe that HR is adapting to the changing needs of their workforce; and only 20 percent feel that HR can adequately plan for the company’s future talent needs,” says the report.

Tempering that assessment is the convergence of multiple factors that are already forcing change upon the role of human resources. Deloitte says concerns about workforce performance, leadership, and culture and engagement have permeated C-suites worldwide, elevating human capital to a top of mind issue.

Meanwhile, many of the mundane administrative jobs handled by HR generalists have been eliminated by technology and employee self-service capability. The globalization of talent is shifting power to employees, while big data analytics demands different skills.

Already underway, says the report, is a redefinition of HR’s role “from ‘service provider’ to an enabler and builder of talent.” Likewise, “HR is shifting from a group of generalists to a team of highly skilled business consultants.”

“Finally,” adds the report, “professional development and research have emerged as key HR capabilities.”

Accelerating this process is the emphasis companies are placing on business savvy. Organizations “are bringing in a fundamentally different kind of executive as CHRO. Research shows that nearly 40 percent of new CHROs now come from the business, not from HR.”

It’s the beginning of an HR transformation, says Deloitte, but only an “extreme makeover” will elevate HR in both value to the enterprise and as a full partner in driving growth.

This article is part of a series called News & Trends.
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