There’s room to grow
The picture is not all rosy. Several HR Operating Model Study respondents (39 percent) said although their function’s strategic influence was on the rise, it is still less than that of other functions. Some report a limited strategic role for HR and some, 2 percent, say HR has no strategic influence in their organization at all.
The perceived importance of investing in HR varied among financial services respondents, with only about a third (35 percent) saying investments meant to enhance HR’s strategic contribution are a high priority for the business. For the remaining 65 percent, these investments are a medium or low priority, often decided on a case-by-case basis.
Technology offers another opportunity for improvement. For example, a whopping 99 percent of respondents report using cloud-based platforms. But are they moving beyond the basics?
The HR function is more innovative and effective when it pushes past cloud to become more agile and digitally based, and better equipped to focus on signature services during critical employee moments such as:
- Joining the company
- Moving to a new role
- Leaving the company
- Welcoming a new family member
- Managing personal data
- Anything related to payroll
The right technologies, such as artificial intelligence, can help HR design more efficient processes, enhance productivity, foster faster and real-time decision making, improve cross-department collaboration and build a more agile workforce.
An effective model to unlock business benefits
What’s in the way of progress for HR functions wanting to become more strategic? Resistance to change and the prevalence of legacy systems are the two leading challenges HR Operating Model Study respondents cite. Interestingly, lack of funding or lack of vision are not as frequently cited as these two concerns.
Persevering despite a change-averse culture is worthwhile for HR functions because of the potential business gains: Our study finds an average revenue increase of 7.5 percent where HR operates as a strategic business partner—with the most productive partnerships boosting revenue by 18 percent or more.
A strong operating model can be instrumental in helping HR gain a greater strategic foothold in the business. The operating model connects HR’s strategies with the organization’s overall business direction. Done well, the gains can be impressive. But the right operating model is essential to delivering on these gains.
Among study respondents, 87 percent of HR leaders either intend to change their operating model within the next three years or have already started planning a change. Only 13 percent are content with their current model.