The Transformation of HR: Part 1

With unprecedented forces of change continuing to push and pull companies in the digital era, the need for strategically-managed HR transformation is inevitable. But according to KPMG’s 2017 HR Transformation Survey, an uneven change landscape is being revealed, with some organizations boldly shaping the future of HR and others that are stalled and uncertain.

Intelligent automation (IA), for example, is an essential part of driving significant changes for the business and HR operating model.  According to the 2017 Survey, 36% of organizations expect to employ intelligent automation within the next year, and top expected benefits from IA investments include improved performance (56%) and freeing resourcing to perform more strategic tasks (54%). Half of respondents also said intelligent automation will drive significant changes for the business and believe process automation will have a significant impact on the HR operating model. Top focus areas for intelligent automation efforts are talent management (61%) and talent acquisition or onboarding (57%).

“In the last 3 months, I can’t think of a client that we’ve talked to that hasn’t raised automation and machine learning, as part of a mission-critical dialogue not just for HR, but for the enterprise as a whole,” says Mike DiClaudio, principal in KPMG’s Advisory Services practice. “That is drastically different to conversations we were having even one year ago.”

Situ Sakha, HCM Solution Architect at KPMG, agrees that RPA is gaining momentum in HR, for areas such as report manipulation and transactional data entry, which is in turn leading to joint machine learning and RPA work. “For example, a front-end machine learning application can ask questions about transferring a worker from one organization to another, and the RPA technology on the back end can actually do the transaction,” she says. “The manager doesn’t even need to know the process; it takes the manual work away from the manager altogether.”

HR transformation challenges: How to use technology to solve problems

There are still a variety of challenges when it comes to transforming technology in HR, however. According to KPMG’s 2017 HR Transformation Survey, three quarters of respondents struggle to achieve a return on investment (ROI) from their cloud HR technology, while more than half of organizations lacked a business case or metrics to measure results.          

Research funding is often seen as an obstacle to transformation, says DiClaudio, but the number one blocker, he says, tends to be a definitional problem — that is, how to use the platform and how to use the technology to solve problems.

“It’s an interesting Catch-22 relationship, where the organization says I can’t bring in IA because the data isn’t pristine, but you can use machine learning to clean the data; effectively you can use IA to solve that core problem,” he says. “There is an opportunity to think more holistically to adopt the platforms and technology in this ever-evolving space.”

Another challenge for organizations is keeping an enterprise-level focus that could boost results, rather than more limited use cases, says Sakha. “What usually happens in HR is there is a problem that they think RPA can solve, but when they delve deeply and see the vast amount of activities or features they can have, they can’t see beyond their limited perceptions,” she says. “When they get more knowledgeable, they realize it is not just automation, it is an augmentation for your workforce, making your workforce more efficient and allowing them to do more high-value work. For clients, this is often a big ‘aha,’ eye-opening event.”

One interesting result from the study came out of a regression analysis looking at clients that said they would use IA in next year and said it would really disrupt their business and the market, says DiClaudio. “We looked at that group as a cohort and asked what other characteristics they share.” It turned out they had implemented cloud platforms already; were viewed by business as being strategic; and had led organizations through this type of change in past. The other cohort, or organizations that said they did not think IA would impact their business, were quite different. 

“The other cohort is using legacy, on-prem technology; they do not invest in HR technology; are considered a cost center with limited strategic value; and aren’t seen as the engine to take an organization through change,” he says. Clearly, the lesson for HR transformation is perhaps best summed up as “shape or be shaped,” with a definite dichotomy between today’s “enlightened” businesses — those clearly engaged on the need for strategically managed HR transformation — and those seemingly ‘”unenlightened” organizations that are moving forward with uncertainty as the digital era continues to unfold around them.                                       

From automating to reshaping the workforce

To transform in the digital age, the HR function must gain a new mindset that understands the accelerating speed of change and how it is dramatically rewriting the rules for future success. The HR function will gain business value by becoming more evidence-based, using technology and skills that capitalize on the immense value and competitive advantages of data and analytics.

“For now, technology is an augmentation tool in automating the HR space, not a net replacement tool for workers,” says DiClaudio. “But organizations have to get really good at reshaping their workforce in an agile way — that means replacing some tasks by automating them, which requires the HR department to retask and reskill workers rapidly. HR needs a heavy hand in the process.” 

The HR function, he continues, can plant seeds now to create the new jobs that will sit alongside robots and machines in the future. “We have an approach to that in the HR function — it’s all around job and skill creation,” he says. “When the ATM was invented, the teller did not disappear — they started doing other things.”

In the increasingly digital, global and agile world of work, companies need HR to act locally, but think globally, adds Sakha — that is, start out small but always have an enterprise-level view for greater business insights and smarter decision-making. “Intelligent automation does have the capability to help not just one part of the company, but the whole,” she says. “If it works well on a small piece of the HR process, you can crawl, walk and then run towards your goal.”