There’s never been a more exciting time to be in human resources. The profession is changing rapidly. Just as personnel metamorphosed into HR in the 1980s, it is now changing to become more employee focused and developing into a “people” function. More than nine in ten (94%) HR leaders anticipate changes in the next three to five years as part of this transition, according to the Sage “Changing Face of HR” research report.
A word of caution, though: Don’t expect the journey to be quick. Less than one in five (18%) organizations have begun the journey to change from HR to people and nearly nine in ten (86%) expect it to take up to 10 years to complete.
A people team is often found in fast-growth organizations where business leaders know the critical importance of investing in their people, and attracting and retaining the best, in order to drive company growth.
We call organizations that do this “people companies.” Typically, they’ve embraced new technologies and ways of working. Many have a chief people officer leading the charge.
This is leading to significant changes in the way HR works. Here are five areas where HR could significantly impact your business in 2020.
- HR Teams Continue to Become More Employee Centric
People companies and progressive “people” teams have shifted from being largely focused on low value, manual processes and policies, to a team generating more business value. They not only undertake the day-to-day table-stakes tasks required of HR but now proactively build great experiences for their people that keep them motivated, engaged and productive, so employees and the business can thrive.
A staggering 69% of HR leaders anticipate employees’ expectations of HR will completely change in the next three years alone. Around four in 10 are adopting cloud (43%) and mobile technologies (36%), followed by people analytics (26%) and self-service (24%).
Organizations that have made significant progress in their HR-to-people journey know that becoming a people organization isn’t just a nice thing to do, it’s vital in creating a successful business in the digital economy.
HR and people teams are showing a willingness to ride waves of digital transformation, although 43% of respondents believe their organizations will not keep up with changes in technology in the next 10 years. However, we expect more companies to start their transition to people organizations during 2020.
- HR Becomes More Data Informed
Thanks to modern technology, organizations have a wealth of data about their consumers at their fingertips. Imagine the impact on company performance if you know your employees as well as you know your customers.
The HR and people leaders we surveyed have made as many advances in people analytics and data as they have in people-focused approaches to recruitment; over 40% make people decisions based on data.
In 2020, another 51% of HR leaders are planning to easily access data in real-time. The data conundrum also brings other challenges as data privacy and security is becoming ever more important. Europe’s GDPR and California’s Consumer Privacy Act are creating new rules around data privacy. HR leaders are going to have to pay more attention to understanding evolving legislation while managing and being accountable for employee data.
This creates a dilemma for HR leaders. They need to adapt to new ways of working, by adopting apps and computer devices, to meet the increasingly digital demands of Millennials and Generation Z workers. At the same time, they need to maintain much closer control over company data. This means consolidating the number of outlets that have access to employee information to reduce the exposure to compliance failures.
Around 40% of companies that have cloud-based HR platforms are integrating their core employee data and are more likely to need a single employee system of record. Helping with compliance, providing better people analytics and helping to use data in a more forward-looking manner in support of future business needs will be a major focus in 2020.
- Tech Vendor Consolidation
The entry of Microsoft, Google, Facebook, Salesforce and IBM into the HR tech vendor sector will begin to force consolidation of a crowded and fragmented marketplace. There are an estimated 3,800 HR tech vendors operating in the sector which has attracted more than $19 billion of funding over the past five years.
This is simply not sustainable. HR leaders and companies are struggling to keep up and make sense of it all. There is a need for reflection and determination of where the most business value is being generated. Not all these vendors can or will survive and consolidation is perhaps long overdue. Expect this to become evident during 2020.
- Organizations Will Experiment with AI
Our research shows HR and people teams are in the early stages of learning the value of emerging technologies such as artificial intelligence (AI). Based on the Sage survey, 13% of respondents adopted some form of AI in 2019 and gamification (12%), but there is more to do.
AI is the topic de jour. Experimentation is everywhere, from attracting and developing new skills, improving experiences and providing better analytical support.
Are expectations of AI realistic or is it just hype and creating confusion? Leading analyst John Sumser points out that AI is nothing more than a set of sophisticated statistics. The output of a machine is opinion, not fact. Machine learning thrives on discovering patterns in data that requires large volumes of high-quality data to be meaningful.
How many companies will have the right amount of quality data and will they be able to make sense of it? Analyst house IDC estimates the amount of the world’s data will reach more than 175 trillion zettabytes by 2025.
But, can AI help leaders make better sense of things when this can include exponential disinformation? While AI offers significant potential, there is also a need to avoid further confusion and understand the consequences of introducing these technologies. As AI becomes increasingly sophisticated, its decision-making processes become more opaque to all but a few. There are also ethical considerations to overcome — employers need to find the balance between productivity and ethics when thinking about how machines and humans can partner to get the job done.
Expect the adoption of AI to play out in 2020 as companies grapple with the new possibilities it brings.
- HR Will Look to Attract or Leverage New Skills
What exactly will the role of HR be going forward? Our research found 82% of HR leaders believe the role of HR will be very different in the future. Indeed, almost nine in 10 (86%) identified skills gaps and the need for new skillsets.
HR teams noted they need to be more tech-savvy, creative and proficient in managing data and analytics. But they also saw a need for better communications and marketing skills, the ability to provide stronger vision and leadership, along with offering expertise in behavioral sciences.
In 2020, new skills mean fresh opportunities for career growth and the development of HR staff. It also provides the chance to work more collaboratively with experts in adjacent functions, such as IT or marketing.
In people organizations, HR leaders and teams are embracing new skillsets and responsibilities, such as data science, communications, employer branding and people marketing, well-being, and employee experience managers.
This will make HR a more attractive and diverse career destination both for those in the profession and for others outside, making it a richly rewarding place to be in 2020 and beyond.