Just six months ago, no one could have predicted the tectonic shifts across the globe and that many of the challenges facing the world prior to the COVID-19 pandemic would be amplified. After surveying nearly 1,300 Human Resources (HR) leaders worldwide, we know the pandemic has exposed significant skill gaps, shifted priorities and accelerated digital transformation.

Our KPMG 2020 HR Pulse Survey reveals that the workforce will change ’shape’ dramatically over the next two years. To deal with these changes, more than two-thirds of HR executives (69%) believe the HR function needs to completely transform itself to respond effectively. This pivot requires new mindsets, skills and priorities.

There’s no doubt that the priorities of the HR function have shifted as a result of the COVID-19 pandemic. Its many effects include the mass transition to remote working, which brings fresh challenges to organisations, such as:

• How do we measure productivity?
• How do we maintain collaboration for innovation?
• How do we nurture culture and embrace common values and goals?
• How do we deliver a consumer-grade, individualised employee experience?

Not surprisingly, employee productivity and well-being go hand-in-hand. That is why HR leaders agree that “taking steps to safeguard the experience and wellbeing of employees” is among the key priorities for the HR function. Reinforcing the HR survey findings, the KPMG 2020 CEO Outlook and the (soon to be launched) 2020 Harvey Nash/KPMG CIO survey both ranked culture and employee experience among their top priorities.

The seemingly overnight move to remote working has challenged leaders to rethink their traditional work models and permanently shifted the way they think about what it means to be “connected, engaged, and productive.”

With 39% of employees set to continue to work remotely over the next two years, we expect a hybrid model of attendance. As a result, there has been an unprecedented investment in digital technology to support remote working and to ensure talent pipelines adapt to these new models. Unsurprisingly, collaboration tools are one of the biggest technology investments as they are considered fundamental to increasing team visibility, maintaining productivity, and achieving business outcomes. 

Beyond the HR function, it’s broadly understood that hiring and developing the best talent creates a competitive edge. In the CEO Outlook, CEOs rated talent risk as the largest threat to growth. This is a dramatic shift from a pre-pandemic survey taken six months prior, when it was ranked behind 11 other risks to growth.

There are mulitple ways to shape a workforce: build, buy, borrow, automate (bot), or a mix of all four. Although the vast majority of the HR survey respondents (72%) ranked upskilling and reskilling the workforce as one of the most important paths to shape the workforce, only 33% ranked it as easy to implement.

Significantly, we also found that 35%of employees will need to be reskilled in the next two years. Part of that may be explained by the introduction of new products and services or the implementation of advanced technologies. 

The traditional operating model of many HR functions, often based on the Ulrich model, is ripe for innovation. Significant redesigning is required within HR at the same time as the rest of the organisation. This is a mutually beneficial undertaking that will result in a more productive and connected organisation.

HR needs to work with the rest of the C-suite to re-evaluate what productivity means in the new reality, and to redefine what an outstanding employee experience looks like. Productivity measures certainly won’t be charted by HR tracking employee time spent in remote seats, or by policing output. Instead, the HR function should remove itself entirely from the employee-manager relationship and take a macro-view of the workforce.

If leaders are accountable for people management, then HR’s time and resources can be better used architecting what the workforce of the future will look like. This architecting, or ‘workforce shaping’, will be anchored by predictive analytics, information flows and process automation, among other digital capabilities, to help turn workforce insight into action.

The HR function’s priorities, investments, and workforce skillsets have realigned in a very short time. But what was true before the pandemic will no doubt hold true for the future: talented people, equipped with the right tools and a common purpose, make organisations competitive. It’s now time for HR to transform, to stop firefighting — passively carrying out administrative duties — and think big to play the long game. It’s time to rise to the challenge and shape the technology and workforce of the future to help build successful, innovative companies, where the best people flock to work.