Hackett: Greatest Obstacles for HR in 2020 Include Overcommitment, Tech & Process Complexity and Skills Deficiencies
Overcommitment represents the greatest transformation hurdle that HR executives must overcome in 2020 as they strive to reduce costs, add value, and pursue digital transformation in the face of an uncertain business environment, according to new HR Key Issues research from The Hackett Group, Inc. . Improving organizational culture has also moved to the forefront as both a key issue and a critical development area for HR.
Over the past several years, HR has struggled to address important overall and human capital management-related objectives effectively, and The Hackett Group’s research shows a continuation and increased prominence of this trend. For the first time in 2020, “enabling a high-performing organizational culture” became the top key issue for HR. At the same time, this is identified as a critical development area, meaning HR performance improvements are required.
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“Culture has always been a major issue,” said The Hackett Group Senior Research Director Tony DiRomualdo. “But the move to the number one ranked spot in terms of importance, along with its identification as a critical development area, is unprecedented and disconcerting. It speaks to the challenges that both the enterprise and HR have had in coping with the impact of digital business. Even if they’re making progress on the technology front, legacy culture is holding the organization back from achieving its full potential. HR executives are feeling the pressure to help the business move faster, to innovate, take risks and to be more experimental.”
Given the global talent crunch, as expected, talent management and development is also heavily spotlighted as a priority for HR in 2020, the research found. “Adapting talent management capabilities to support change” is the second key issue for HR, and “improving talent management,” “retain staff with critical skills,” and “addressing talent/skills shortages” are all in the top 10. At the same time, the research found that all these are critical development areas for HR. According to The Hackett Group Associate Principal Franco Girimonte, “We are seeing more and more organizations invest in their talent management processes such as recruiting, applicant tracking and assessments, candidate and employee experience, engagement tracking and inner mobility.”
Digital transformation remains a top enterprise imperative in 2020, and the research finds that HR must step up its game to support enterprise efforts while driving HR efficiency and effectiveness. It must more effectively enable enterprise data and analytics strategies by improving the ability to attract and retain analytics talent throughout the enterprise. It also needs to enable improved agility and innovation across the enterprise by focusing on technology-led improvements to increase productivity.
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“On top of everything else, our research identifies overcommitment as the top hurdle to HR transformation, which is not hard to understand,” said DiRomualdo. “With so many critical development areas and the ongoing demand that they must do more with less, HR is simply spread too thin. It’s critical that HR leaders prioritize and make sure they’re not directing resources at too many things. Otherwise, it will be difficult for them to move the needle.”
According to Girimonte, “Achieving a proper balance while transforming the function is critical. As HR technology changes are made, it’s important that HR also looks at the operating model, process design and automation, skill sets, alignment of responsibilities and new ways of working, etc., to free up capacity for move value add activities. Ignoring this will hurt HR in the long run.”
The research also examined HR’s adoption and effectiveness levels for various technologies. HR has been more aggressive than any other business services function in adopting cloud-based systems, with 74% of HR organizations showing large scale or pilot deployments and an expected growth rate of 26% in 2020. Nearly 60% are still relying on legacy on-premise systems, which fell short of expectations for over half of HR organizations, despite significant investments. But only 32% of those legacy system deployments are large-scale, and the use of legacy systems is expected to shrink by 10% in 2020. Robotic process automation seems to be living up to its promise in tactical implementations, showing the highest ability to meet or exceed expectations (91% of the time). However, less than 10% of HR organizations have completed large-scale deployments of RPA technology.
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The largest shifts in HR work volume for 2020 are expected to come via self-service (an 8.2% increase) and the use of global business services organizations (a 4.8% increase). HR is expected to rely on both of these to drive cost-effective improvements and a better stakeholder experience while focusing on the business partner role to drive change across the enterprise and within HR.
“It’s an uphill battle for HR to improve its ability to support enterprise objectives while moving forward with their own functional improvement agenda,” said Girimonte. “The challenges identified in our research are too numerous to be overcome in a single year. Instead, HR leaders should aim to make measurable improvements in capabilities that address top business priorities such as enterprise digital transformation, culture, and skills gaps. This will increase HR’s value contribution to the business and help it to secure further support from top leaders for HR transformation efforts.”
Moving forward, The Hackett Group found that HR organizations must chart a careful course to overcome the hurdles and be deliberately focused on building a roadmap which addresses driving an efficient HR engine while leading and guiding the enterprise on the business capabilities that will enhance digital, culture and talent.
The Hackett Group’s 2020 HR Key Issues research, “Achieving HR Excellence in the Age of Digital Disruption,” is based on results gathered from nearly 200 executives in finance, HR, IT, and procurement at a global set of midsized and large enterprises.
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