COVER STORY: How HR is changing in the middle of a global skills crisis

The performance of human resources has had the spotlight shone on it around the world in recent times as organisations scramble to fill seats in the war for talent.

Digital Nation Australia spoke to CHROs around the country across a range of interviews about the transformation of the role in the last five years, and the perception challenges HR teams face that can cloud their contributions to business growth.

According to Beth Hall, head of people and culture at furniture company Brosa, today’s HR departments have come a long way from the role they played just five years ago.

“We responded to the business need once it was a problem. We weren't necessarily proactive to be able to see what problems might occur. We didn't link the functional strategy with the organisational strategy to make sure that we were ahead of the needs of our people,” said Hall.

“We were executors that would complete tasks that were determined by the business, as opposed to thought leaders when it comes to the people space.”

Melissa Bowden, senior director of HR APJ at Workday, which sells Saas-based HR solutions, told Digital Nation Australia, “Five years ago, HR was frequently viewed as a siloed part of the organisation, and not integrated into the day-to-day of business decision-making. However, since the pandemic, the HR function has been brought more towards the forefront of the organisation.

“Today, progressive leaders understand the power of engaged employees and this has elevated HR to the C-level as a strategic advisor critical to the successful operation of the business.”

The highly competitive talent marketplace alongside the pandemic illuminating the need for businesses to consider employee experience and wellbeing has put the HR department, and the CHRO, into a unique position, she said.

“The success of an organisation relies on having access to the right skills and talent in its workforce, therefore HR has a vital role to play in attracting and retaining employees,” said Bowden.

“Employee well-being, engagement, retention, and providing rewarding careers, including skills and career development, are key focuses for HR in this post-pandemic era.”

According to Robin Boomer, executive advisor from Gartner’s HR Practice, business leaders can hinder the impact of HR teams by failing to recognise where they can best add value.

“There can be HR functions that are stymied by the expectations and the input of business leaders who are reluctant or unaware of the value that they can provide through things like strategic workforce planning or leadership and succession efforts, or even new and different approaches to performance management or aligning employees to the right strategy and culture that they can be providing,” said Boomer.

The box-tickers: HR as a compliance function

One perception challenge that HR teams struggle to break through is the view of the HR function as largely a box-ticking exercise.

According to Brosa’s Hall, the HR function initially was brought in for compliance purposes, but has since matured.

“[HR] was brought in with the intention of making sure that in a highly litigious environment, that we were doing the right thing and ticking all the boxes from a people perspective. And that was HR’s bread and butter a few years ago, I would say now that's a given.

“It’s foundational work that HR departments should just do without it actually being a huge part of their remit.”

That view however is not shared universally.

Susan Chen, director and head of people, Asia at Riot Games argued that that compliance is critical to business operations.

“It's very unsexy to talk about the tick boxing compliance, but I do remind all the leaders that it will never go away and it's because it is about our license to operate,” said Chen.

According to Jordan O’Connor, country HR leader, Australia and New Zealand at IT infrastructure services provider Kyndryl, “Businesses can’t operate effectively without being compliant, and HR should continue to work with other departments such as legal and operations to ensure compliance. But this is just one building block in terms of the value that HR delivers to an organisation.”

O’Connor highlights the role that compliance plays in conducting responsible business.

“In the trust economy we now operate in, compliance is critical to building authenticity with current and prospective employees, customers, partners, and communities. HR plays the important role of enabling its organisation to weave compliance into the company’s DNA to achieve this, with a focus on caring for customers and creating healthy, responsible workplaces for employees,” she said.

HR as a growth driver or enabler?

As HR teams compete for the best talent in a post-pandemic world, in many minds the role of the CHRO has shifted to become a key driver of business growth.

According to Workday’s Bowden, “HR is a strategic business partner, which leverages data and insights to inform the business on strategic direction.”

Kyndryl’s O’Connor believes that HR has been overlooked as a strategic partner, with a significant role in helping to achieve business outcomes.

She said, “The skills gap and associated need to respond to talent shortages has quickly become a top priority for business leaders across the entire organisation. HR is seen as a key enabler to navigate these challenges from a talent acquisition standpoint but is also collaborating with other parts of the business such as learning and development, operations, and sales enablement to upskill and reskill existing employees.

Riot Games' Chen however, believes that HR does not have to be a growth driver to add value.
“We are not necessarily the driver and I think that’s okay because I believe we’re enablers. Drivers to me set a direction, but enablers amplify our direction to drive towards that,” she said.

“For us, it's much more about the quality of that journey and outcome of that direction rather than necessarily always driving the direction.”

There are some circumstances though where HR leaders can sit in the driver’s seat, said Chen.

“For example, really understand talent dynamics as we build out international operations. Where is a good place to set up a hub for certain things? These types of insights will impact how the other collaborating partners drive their decision making.”

According to Angela Colantuono, head of SAP SuccessFactors Human Experience Management Suite (HXM) Asia Pacific & Japan, “Traditionally HR has been viewed as a cost centre; it doesn’t generate revenue. The challenge for the CHRO is to ensure HR is permanently seen as a strategic function, and once the dust of the pandemic settles, to see how HR can generate revenue rather than be a supplement to the business.

“With the CHRO finally by the side of the CEO, businesses need to examine how the HR function can drive growth for a constantly changing business landscape and workforce.”

Custodians of culture

Despite soaring salaries particularly in areas such as technology, employees are considering more than just their pay packet as they make their next career move.

For many organisations the buck stops with HR when it comes to developing the employer value proposition (EVP) that sets the organisation apart from the rest.

“Employer Value Proposition (EVP) helps to attract the right talent who will add to the culture of the company, which aids growth — as the custodians of culture, HR then facilitates a business to scale its culture as it grows. Internal career and development must also be part of a company's succession planning. If you can promote people internally, you gain engagement.
You then backfill the role at a more junior level,” said Alex Hattingh, chief people officer at the people-management platform, Employment Hero.

“The fundamental role of HR is to be a custodian of your people and culture. While every leader should own their people and their engagement, you need an expert to drive this agenda. To essentially drive people metrics for the business to measure how each function and leader is tracking on engaging employees; leading a high performing team and quality hiring.”

Riot Games’ Chen believes that HR leaders may not directly influence culture, but what they are responsible for is helping to shape the behaviours of the leadership team.

“Most people leave an organisation because of crappy leaders. They don't say ‘I'm leaving my job because I had a bad HR manager’ – that’s very, very rare,” she said.

“It's mostly about the experience they have within their team, with their leader. Therefore, culture is shaped by these leaders and these employees and their experiences and therefore the HR role isn't necessary to directly influence culture, but it's to build and cultivate the right environment, the internal ecosystem that allows the leaders to be great leaders, that will, in turn, drive culture.”

According to Sarah Dunn, head of employee experience at Adobe Asia Pacific and Japan, HR teams need to consider employee experience holistically.

“This means partnering with the business to support and drive acceleration and growth, looking at levers to build the business while also providing an environment to support our employees to excel in their professional and personal lives,” she said.

The HR function in a Web3 world

While many employees have already become accustomed to virtual meetings replacing in person ones, and home offices replacing the company headquarters, the role of digital in hybridising the workplace is only set to expand.

Adobe’s Dunn asserts that HR teams will need to adapt as the world enters the third iteration of the internet: Web3.

“As the metaverse finds its way into our regular working routine over the next five years, the role of HR is to assist in connecting remote teams to help them still have those human connections traditionally only found in the office,” said Dunn.

“We will see an increase in the number of metaverses used in onboarding processes, meeting rooms and casual spaces where employees can connect and socialise. The HR team will drive this quickly and efficiently to ensure the business can grow at scale.”