For a role that is believed to be "behind the scenes", HR leaders have faced an increasingly intense spotlight in recent years, illustrating the significant evolution of the HR function. While the function, and its leaders, have always been crucial to the health of any company, issues such as AI adoption, hybrid working arrangements, talent management strategies, succession planning, and ongoing debates about Diversity, Equity, and Inclusion (DE&I) have propelled HR to the forefront of boardroom priorities. These developments have necessitated a more strategic involvement from HR leaders, who are now expected to contribute to high-level decision-making processes and align HR initiatives with overall business objectives.
In response to these mounting pressures and expectations, HR leaders are increasing their efforts and energy to serve the business more effectively and efficiently. As a result, almost every HR leadership team (HRLT) is currently undergoing a review to assess its structure, roles, and responsibilities. This transformation is not merely a superficial change; it reflects a profound shift in how HR operates and interacts with other business functions, aiming to enhance overall organizational performance and employee engagement.
While most HRLTs still follow the conventional model of divisional HR, specialist roles, and HR Operations leaders, the variations and innovations within this framework reflect a function in flux, adapting to the dynamic business landscape. So how can Chief Human Resource Officers (CHROs) successfully adapt this structure to meet today’s multifaceted challenges?
The answer lies in a careful consideration of several key factors that are shaping the future of HR. Here are 5 factors to consider:
1. HR’s Expanding Role & Remit
In the contemporary business environment, modern HR leaders may find their responsibilities extending well beyond traditional HR functions. They may now also be accountable for critical issues such as sustainability, internal communications, facilities management, and organizational transformation initiatives. Given that the HRLT will include direct reports who oversee these additional areas, traditional HR activities often now reside within non-traditional teams, such as employee wellbeing being integrated within the communications department. This shift can lead to ‘double-hatting’ within the HRLT, where leaders take on multiple roles and responsibilities — a practice that is not always viewed positively and can create challenges in clarity and focus.
2. The Decentralization of the Business
As HRLTs are designed to mirror the organizational structure of the business, a highly decentralized structure typically results in divisional HR leaders having indirect reporting lines to the CHRO. In contrast, a more centralized HR function may benefit from greater scalability, efficiencies, and simplification of processes. This centralization can foster a more coherent group culture, yet it might also stifle innovation and experimentation, leading to increased groupthink and potentially disempowering individual HR leaders.
Empowered HR leaders, operating as ‘mini-CHROs,’ are often found in regions or divisions that operate under very different rules or in sectors that are distinctly varied. In situations such as mergers and acquisitions (M&A), a lack of integration frequently necessitates a more federated model, wherein divisional HR leaders may lead teams that also utilize the Ulrich model, supported by dedicated Centers of Excellence.
3. The ‘Double-Hatting’ of the HRLT
In a strategic move, CHROs may opt to combine roles within their HRLTs to enhance efficiency and streamline management. For instance, a divisional HR leader might also oversee areas such as employee engagement, inclusion initiatives, or reward systems. This approach can enable the CHRO to manage a smaller number of direct reports, which is particularly critical if they themselves have an ‘HR-plus’ scope of responsibilities. Additionally, this strategy can be cost-effective, promote coherent messaging, and create synergies across different HR functions, while also serving as a valuable tool for executive development.
However, it is important to note that in practice, ‘double-hatting’ can lead to unintended negative consequences. The anticipated synergies may not materialize, and the morale of teams may suffer if they perceive that someone lacking deep domain expertise is being promoted to a critical role. This can create feelings of uncertainty and dissatisfaction among team members who may feel overlooked or undervalued.
4. How do Specialist Roles sit together?
The constellation of roles within the ‘talent’ domain is diverse, encompassing everything from the high-volume machinery of talent acquisition to the high-touch apparatus of leadership development — a combination that does not always integrate smoothly. Some organizations choose to separate talent acquisition from talent management, allowing the latter to concentrate on building strategic capabilities over the long term without being bogged down by the operational complexities associated with recruitment. Others may opt to have executive talent acquisition and/or executive development as standalone roles, reflecting their distinct skill sets and priorities.
Similarly, the realm of rewards presents its own complexities. While the core responsibilities surrounding compensation and benefits are well-defined, companies may seek to incorporate elements such as HR technology, HR operations, or people analytics into this function. The feasibility and effectiveness of these extended responsibilities depend heavily on the skill sets of the executives involved and the maturity of the sub-functions within the HR department. For example, while HR Information Systems may not always necessitate in-depth in-house expertise, a specialized ‘data science’ team is essential for effective people analytics.
5. The role of DE&I
In light of growing social, political, and economic pressures, accompanied by skepticism surrounding the outcomes of various initiatives, many companies are re-evaluating the scope and impact of their DE&I efforts. The positioning of DE&I within HR varies widely; many organizations have chosen to integrate inclusion with broader themes such as corporate culture, talent management, and employee experience. This strategic alignment may be designed to provide DE&I leaders with direct control over critical levers, ensuring they possess expertise in the processes that shape inclusion, and/or to simplify organizational structures through ‘double-hatting’ as a means of development.
The organization of DE&I initiatives may also hinge on the willingness of the chief people officer to act as a personal sponsor and mediator for these efforts, as well as whether short- and medium-term DE&I goals have been successfully achieved. The interplay of these factors can significantly influence the effectiveness and visibility of DE&I initiatives within the broader organizational context.
A Function in Motion
In light of recent developments, it is evident that HR leaders must factor in a considerable amount of uncertainty into their immediate planning processes; a stable business environment is increasingly elusive. However, this intense volatility is precisely why CHROs must continuously evaluate the effectiveness and adaptability of their HRLTs. As times change and new challenges emerge, businesses must also adapt and evolve — and HRLTs are no exception to this rule. The ability to remain agile and responsive to the shifting landscape will be paramount for HR leaders as they strive to drive organizational success and foster a positive workplace culture.
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