HR’s Response To The Pandemic, A Strategic Report On HR Issues

The full research “2021 CHRO Agenda: 10 Key Issues HR Needs to Act.

Key findings from the research include:

• New Top HR Priority – Becoming a strategic advisor has shifted to the top priority for HR, a dramatic change in prioritization. Last year it was ninth among the 10 HR key issues. The pandemic in combination with diversity and inclusion conversations have thrust HR into a prominent role guiding the leadership team through all aspects of the crisis. (Page 2, 4 and 5).

• Increased Emphasis on Enabling Business Strategy and Performance – Key issues 2-5 reflect various elements of this focus. Creating/maintaining a high-performance culture, in the second spot, will be made more challenging by the unprecedented obstacles stemming from the shift to remote working. Aligning workforce and business strategy, in the third spot, is critical as companies continue to adjust market and operating strategies in response to the pandemic. Improving HR agility, in the fourth spot, will require that HR organizations embed agile capabilities into their operating models. Technology will play a key role in this. In 2020 HR organizations demonstrated levels of agility they didn’t know they had, but relied on heroic acts to overcome inadequate systems and other challenges. Enabling business strategy execution, in the fifth spot, is critical, as pandemic-driven disruptions have forced many companies to make strategic pivots and launch new digital initiatives. (Pages 1, 4, 5,7, 8, 9)

• Expectation of Continued Instability – 41% of survey respondents expect business conditions will stabilize by Q2 2021, 36% believe it will take longer. (Page 3). This instability will likely further increase the importance of HR’s role, requiring HR to improve agility, enhance planning capabilities, and be more flexible in how it supports the business.

• Greater Focus on Workforce Diversity – For 2021, harnessing a truly diverse spectrum of people, perspectives and talent has emerged as a top 10 priority for HR. It also ranked second among enterprise priorities. (Pages 4, 9, 15). Today’s organizations require a culture, management philosophy, and supporting practices that welcome and cultivate talent from diverse backgrounds and demographics. This has become a board-level issue, and failure to effectively address it can potentially hurt the employer brand, the ability to attract and retain key talent, and ultimately, the performance of the business.

• Increased Focus on Improving Analytics & Modeling – Among HR’s top 10 key issues in 2021, improving analytical, modeling and reporting capabilities was the one designated as having the lowest ability to address. But implementing advanced analytics and modeling tools, and developing staff skills necessary to use them, is critical to improve strategic decision making, predictive insights and agility. HR leaders are projecting an 18% growth in adoption of advanced analytics tools in 2021, and a 15% growth in use of data visualization tools. (Page 12)

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• More Remote Work – Pre-crisis, only 4% of HR and other G&A staff worked from home. Post-crisis, 25% are expected to work from home and another 33% will have a hybrid arrangement. (Page 3). More information on this topic is also available in our recent research piece “New Working Model”

• Cost Takeout’s a Priority – Under the prevailing crisis recovery conditions, cost reduction is a greater priority. HR must manage both its own operating cost and support broader enterprise cost management initiatives. HR leaders expect to see a 0.5% uptick in HR operating budgets and a 1.4% decrease in staff in 2021, as total workload is expected to increase by 1.7%. The combination of significant 2020 cost cuts and increased workloads is expected to strain many HR organizations (Pages 3, 6). In addition, HR must support enterprise cost reduction strategies and maintain workforce productivity (Pages 4, 11)

• Dramatic Shift in Enterprise Priorities Towards Digital Transformation – Enterprise digital transformation rose five spots to become the top enterprise initiative for 2021 (Page 15). To facilitate greater agility, HR organizations expect to grow their deployment of cloud-based HR suites and business process management tools by 20% and 17%, respectively. While HR organizations have piloted certain emerging technologies, broad adoption of some, including robotic process automation, virtual assistants/chatbots, and cognitive computing, remains limited (Pages 8, 10). All HR organizations should start with understanding their current digital deployment through the use of a “Heat Map” exercise, including one available free from The Hackett Group.

The Hackett Group’s 2021 Key Issues research is based on results gathered from more than 300 executives in finance, HR, IT, procurement, supply chain, and global business services at a global set of midsized and large enterprises.