In today’s constantly changing workplace environment, HR faces increasing pressure to add value to business operations and contribute to the organisation’s strategic objectives. As HR is responsible for managing a company’s most valuable and diverse asset – the workforce – HR operations affect business outcomes at every level. But as human resources departments move away from traditional ‘functional’ roles, becoming key players in the organisation’s overall business strategy, the need to radically transform HR processes and establish more flexible practices has become an imperative. HR transformation is now necessary to ensure ongoing employee satisfaction, effective analytics, increased performance, reduced cost and overall business growth.
As with any change in business practices, HR transformation must be driven by clear goals and strategically orchestrated to ensure those goals are met.
This guide explores key strategies to guide your HR transformation process to success. These considerations apply whether your project involves a move towards digitalisation, a change in recruitment practices, internal restructuring or any other transformative process.
The HR transformation process is an ongoing journey
HR transformation should not be considered a singular event but rather an on-going evolutionary process. A strategic HR department is one which continually self-assesses and adapts to suit the business’ changing needs. Workplace and business climates have changed dramatically over the past few decades and will continue to do so into the future. To ensure HR always has an active and beneficial role in meeting business goals, you must be prepared to roll with the punches.
Before you can begin outlining goals and ironing out a solid HR transformation strategy, you must embrace the idea that this is not a finite project. With this knowledge at the core of the entire process, HR professionals can ensure they are considering likely future trends as well as the current workplace situation, when entertaining new strategies and technologies.
1. Align the HR transformation process with business goals
Establishing a clear objective is the first step to planning a successful HR transformation process. Irrespective of the type of HR transformation taking place, your transformation plan must be geared towards the business’s bottom line. The purpose of the transformation is to add value to the organisation; before you can decide what changes to implement, you must remember why you are seeking to do so in the first place. Whether the overall goal is cost saving, improving employee satisfaction, generating new revenue or sourcing the best talent, that goal must be the driving force behind every decision made throughout the HR transformation process.
Do not fall into the trap of making big changes to your HR department simply to fall in line with what other companies are doing. Choosing to ‘go digital’ just because your competitors are will likely leave you with expensive systems and technologies in place which are not best suited to the overall needs of the company.
2. Develop the transformation strategy
Nothing is more vital to the success of the HR transformation process than developing a detailed plan and sticking to it. Begin by putting together an HR transformation team to manage the entire process, which includes individuals with necessary expertise (e.g. software experts for a digital transformation, or talent experts for recruitment reform).
Before bringing ideas to the table, make sure everybody involved has a clear understanding of the ‘bottom line’ business goals, and that a transformation budget has been established. Then, idea generation should take place over the course of several meetings. As ideas arise, they should be sorted and prioritised based on ‘impact vs. effort’. The ideas at the top of the list will be those that most effectively achieve your goal (maximum impact) yet incur the least cost and disruption (minimum effort). Do not forget to include the potential for having to re-train employees when organising ideas. A new piece of a cheap, time-saving software may seem like a ‘top of the list’ option until you realise it would cost hundreds of thousands of pounds to train the entire workforce to use it.
It is easy to get carried away at the ideas stage of the HR transformation process, so take care to keep your core objectives in mind. Question whether short-listed ideas make sense from a business perspective and return to this point often, to avoid getting off track. Before settling on a specific strategy, it may be prudent to test ideas and processes out on a select group of employees or managers.
Identify key phases in the HR transformation process and organise them into a step-by-step plan. Implementing changes gradually is the secret to success as the transformation will not solely affect the HR department. Human resource activities affect – and could disrupt – the entire workforce.
3. Pro-actively prepare for failure
Even the most effective HR transformation plans frequently overlook one essential strategy: planning for failure. This point is rarely considered as transformation teams are so focused on success that they fail to entertain the possibility of failure, or indeed, how they would handle such an event. Minor failures and unexpected setbacks do not have to mean the end of the entire transformation project, but they might, if you do not prepare for them effectively.
The truth is that setbacks need never be unexpected. During the planning phase, identify what could go wrong at each stage of the HR transformation process. Rank these failures in order of likelihood and design contingency strategies to minimise the impact of each event.
4. Manage change
Poor change management is one of the top reasons that HR transformation projects fail. The HR transformation process must be designed to minimise disruption and negative impact to all stakeholders. In a perfectly orchestrated transformation, the workforce should be able to switch seamlessly from one mode of operation to another.
The overall success of the HR transformation process rests on the ‘impact vs. effort’ formula. Achieving business goals is only half the picture; you must also minimise cost and disruption with a comprehensive change-management strategy. As HR operations have an impact on every aspect of the business to some degree, disruptions can be devastatingly expensive and have on-going negative effects.
The basic change management points to consider are:
Gaining buy in
Make sure all key stakeholders in the business are onboard with the imminent changes, from the boardroom to the ‘shop floor’. To minimise disruption and maximise workforce satisfaction, you must start by ‘selling’ the reason for the transformation so that all persons affected are inspired and excited about the change. Underline how the HR transformation will benefit the company and everybody in it. You should also inform every department:
- How the change will specifically affect them
- What disruptions may occur
- What steps are being taken to prevent disruptions
Communicate clearly and frequently with all key parties throughout the HR transformation process. Inform stakeholders when individual phases of the transformation have been completed and report to what degree they have been successful. If any changes to your initial plan that will affect other departments must be made, be sure to communicate these alterations in a timely manner.
This will also entail ensuring that all effected individuals understand how the HR transformation will alter their working experience. If necessary, design and carry out training programs to arm employees with the skills and knowledge required to operate in the new environment. This may involve business-wide software training, or at the other end of the scale, training a handful of HR employees to perform new duties once the transformation is complete.
5. Measure impact of the HR transformation process
To ensure HR transformation adds value to the business as expected, it is essential to critically assess progress and results throughout the entire HR transformation process. Executing your transformation plan without stopping at strategic intervals to assess progress would likely lead to results that are poorly aligned with your overall goals.
Following each key stage of the HR transformation process, your team should analyse the success of the action that has been taken before moving on to the next phase. In doing so, be specific. At the planning stage, identify values relating to your goals which can be tracked throughout the process and set milestones stages at which these values will be measured. This might include tracking absenteeism as a measure of employee engagement or testing new time-saving software on an isolated human resources team. By keeping your finger on the pulse throughout the entire process, you can identify and react to problems as they arise.
DavidsonMorris’ specialist HR consultants are experienced in advising employers on transformation projects and processes. With an exceptional track record in working with HR teams and senior management, we can support on the strategy development and delivery of HR transformation projects to maximise impact and return on investment. For more information about how we can help your organisation, speak to us.
HR transformation FAQs
What is HR transformation?
HR transformation refers to the process and approach taken by organisations to introduce change in workforce management and development in the pursuit of strategic value and competitive advantage. Transformation could relate to process innovations, digitalisation or any form of fundamental change in behaviour or process to deliver commercial benefit.
What are the main functions of HR for transformation?
HR transformation can be applied to any of the main functions, including recruitment, remuneration and compensation, training and development, performance management, employee engagement and compliance.
What do we mean by digitalisation of HR?
One form of HR transformation is digitalisation, whereby organisations move to take advantage of digital technologies to improve and enhance HR activities, processes, competencies and models.
How can DavidsonMorris help?
DavidsonMorris can support your company with the development and implementation of HR transformation projects, delivered in a strategic and value-focused way.
Last updated: 2 August 2022