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A silver lining of this pandemic is a strong acceleration in digitalization across various industries worldwide in a bid for business continuity through remote working. This new reality has presented opportunities for HR to move away from being an operations function to take on a more strategic role.

KPMG’s 2020 HR Pulse Survey revealed about 69% of HR executives believe that HR needs to completely transform itself by taking on more active, leading roles in the organization to respond effectively to the changes happening.

To assist HR leaders to effectively assess their HR function, KPMG launched the HR Health Check in May 2021 – a complimentary diagnostic tool to gain an in-depth understanding of how an organization’s HR department is functioning, as well as its efficacy in achieving the organization’s overall purpose and departmental objectives.

Through the responses submitted to KPMG from various organizations and industries, we can clearly identify six emerging themes HR leaders should act on:

        1.     Capability building is crucial in developing a competent workforce

Employees are now tasked to do new things in new ways. Whilst this has inevitably caused a growing concern on skill shortages and gaps for business leaders, our findings suggest that many organizations still fail to acknowledge the importance of competency and skills.

Our analysis found that 87% of HR executives were experiencing or are expecting skill gaps in the workforce over the next few years, with less than half knowing how to address it. Moreover, many organizations do not integrate competency into their organization design and HR strategy. Only 50% of organizations surveyed have conducted job analysis and determined the necessary competencies for each job role.

        2.     HR is becoming more data driven

The digital age and the new normal has reshaped how employees interact and work. With the appropriate technological investments, this phenomenon can aid and strengthen the HR function’s strategic role. Additionally, changes in technology can provide HR leaders with the knowledge to make better and more informed decisions through meaningful analysis of historical and new data from systems outside of HR.

Arising from the shift towards a remote working model, there has been a four-fold increase in planned investment towards technologies compared to previous years. This aligned with the priority for operational resilience in 2020, highlighting the value in enhancing technology capability and connectivity within organizations. Today, 83% believe that technology investment in HR is vital to improve employee experience and process effectiveness.

        3.     Performance Management System is key in driving performance

The days of measuring performance based on the number of hours clocked by employees behind work desks are long gone. Organizations should focus on evaluating, tracking, and improving their overall performance in the new setting of remote working.

However, our study showed only 67% of organizations surveyed have utilized Performance Management data to evaluate and track performance. This reinforces the need for organizations to invest in a centralized and structured Performance Management System (PMS) to monitor the employee performance more effectively and draw actionable insights from the performance management data.

        4.     Compensation and Benefits plays a role in promoting Talent Sustainability

The economic effects of the pandemic have resulted in numerous organizations re-evaluating their compensation and benefits (C&B) strategy especially around talent retention, business performance and costs. 75% of organizations agree that a C&B strategy helps to align employees’ behavior with the organization’s business goals and generate greater overall performance.

This presents a new challenge for organizations to get creative in devising an effective C&B plan that meets employees’ needs, without compromising on organizational costs.

        5.     Succession Planning is essential in shaping leaders

An effective succession plan reduces the potential disruption to business operations in both scenarios of planned and abrupt departure of employees in key positions. Based on the KPMG HR Health Check exercise, we noted with concern that only half have a succession plan that helps the organization identify the best successor for key strategic roles.

It was further found that some organizations still encounter limitations in resources and implementation of a proper succession plan. With the imminent retirement of the baby boomers, opportunities for comprehensive succession planning to fill the shortages in talent should take priority in management decisions.

        6.     Organizations need to put more effort into employee well-being

Remote working has its advantages but also drawback, such as work fatigue and/or burnouts, as the boundaries between work and life becomes blurred. These adverse effects, combined with the reported lack of understanding from the employers, highlight a need for organizations to place more effort into safeguarding employee wellbeing.

This is consistent with our study where only 58% of organizations have regular or planned employee engagement activities. Additionally, only half have conducted company-wide employee engagement surveys. This needs to improve to safeguard employees’ health, maintain sustainable productivity levels and achieve long-term business goals, as people are an organization’s greatest asset.

 

As the pandemic highlights the urgency for effective people management, now is the time for HR leaders to reinvent and transform their HR function to be able to respond to future disruptions. 

KPMG’s complimentary HR Health Check is still available for those wanting to gain valuable insights on their HR function. To participate, go to www.kpmg.com.my/PnC/HRhealthcheck