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While the bold advance the timid lose ground on transforming HR for the digital age

Bold advance and timid lose ground on transforming HR

Which lens are you using to shape your HR function?


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KPMG’s new global survey – HR Transformation: Which lens are you using? – reveals a dichotomy between ‘enlightened’ organizations boldly engaged on strategic HR transformation and the ‘unenlightened’ taking a timid approach to change as the digital era explodes around them.

Forward-looking organizations are responding strategically to the dramatic new realities they face. They understand that the HR function needs to evolve and contribute new value to the business as today’s technology megatrends redefine markets, business models, workforces and customer relationships.

Three out of four organizations that undertook HR transformation told us that they have successfully executed large, complex HR initiatives, including implementation of cloud HR technology. The survey findings reveal some interesting characteristics common to organizations leading the way on transformation: 72 percent have changed their operating model alongside their implementation, while 73 percent reported having a business case to identify clear measures for success. The vast majority (89 percent), meanwhile, also reported that their HR function added strategic value to the organization.

Is your organization’s HR function viewed as strategic?

More than one in four (27 percent) organizations view their HR function as a key business asset adding strategic value. Among these organizations, the vast majority (91 percent) are benefitting from moderate to extensive change management capabilities, while two thirds (66 percent) are examining the impact of intelligent automation for their business. Not surprising, but most important, is the finding that 92 percent of strategic HR functions viewed intelligent automation as having a significant impact to the HR function.

The other lens

Businesses in many cases are failing to transcend the gap between knowing what’s needed and doing what’s needed for real progress by combining modern technology with new processes and skills to propel HR into the 21st century. Some say they are changing their technology but not their operating model, while others are simply biding their time, rather than taking control of their destiny in a digital world. Failing to pursue a strategic, highly proactive approach to change becomes increasingly risky as technology reshapes business models and the pace of change accelerates.

Business reporting initiatives that did not meet expectations (11 percent) exhibited some common characteristics that are noteworthy. For example, 85 percent reported not changing operating models or roles consistent with transformation, 90 percent failed to identify measures for success and manage initiatives to such metrics, and 75 percent reported having moderate to no change management capabilities in place.

The bottom line

The critical differences between the ‘enlightened’ and ‘unenlightened’ should serve as a timely reminder for organizations to drive bold changes now. 

Among forward-looking organizations redefining HR as a strategic value driver, 51 percent reported having clear measures for success on transformation, 46 percent evolved the HR model to capitalize on new technology, and 16 percent have skills needed to create an engaging employee experience. In addition, 23 percent used predictive analytics that focused on business outcomes. The results these organizations are achieving are significant: 24 percent achieved ROI for their cloud HRMS initiative, 27 percent have deployed predictive talent management and 36 percent of HR functions are delivering real value in enabling the workforce of the future. 

Passive organizations are falling behind: 76 percent did not achieve ROI on their cloud HRMS investment, 69 percent lacked workforce analytics and 64 percent reported little if any value in enabling a transition to the workforce of the future.

The choice is clear: Drive change or be changed. Which lens are you using to shape your HR function?

For further insights into the findings please read this year’s executive summary and infographic.

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