New HR Paradigm for the Age of AI-Driven Business

Once considered a primarily administrative function, HR has changed dramatically — and it might be time for a new HR paradigm
Organizations now face complex, “post-industrial age” challenges that simply cannot be solved without the HR function playing a central and strategic role. These challenges encompass managing hybrid work, modernizing recruitment practices, solving skills gaps, redefining roles, and revamping pay practices in a world of AI (artificial intelligence).
Meanwhile, in the social context, HR practitioners must help their organizations deal with diversity and inclusion issues, improve productivity, and retain and engage a highly-stressed workforce.
Time for a New HR Paradigm
In the wake of the global health crisis, HR has also faced a series of increasingly tough questions and been asked to shoulder more responsibilities.
The problem is that these are colossal challenges that require an entirely new approach. Essentially, the conventional “HR as a service center” model we have been working with since the 1980s has come to the end of its usefulness. So what should take its place?
Learnings from a Major HR Study
To better understand how HR is addressing these challenges, we recently concluded two years of research examining the most extensive HR dataset ever assembled.
I use “we” here because we were fortunate to collaborate with LinkedIn, providing us access to analyze no less than 7.5 million HR practitioner profiles.
This exploration illuminated what HR practitioners are being tasked to deliver right now. We also performed an in-depth survey and data analysis of HR strategies from over 1,000 companies and 26 million employees across multiple industries and geographies.
Our findings confirmed what we had already suspected: the emergence of a brand-new, conceptual HR model, which we’ve called Systemic HR, currently being adopted by the best-performing global companies like LEGO, Mastercard, Unilever and others.
The reasons behind this shift come across loud and clear. Our research revealed that organizations fully implementing a systemic approach were 12 times more likely to consistently achieve high workforce productivity. They were seven times more likely to adapt well to change, six times more likely to innovate effectively, and nine times more successful in engaging and retaining their workforce compared to their counterparts who aren’t.
What Does It Look Like?
Fundamentally, this approach involves the integration of all previously isolated facets of HR — spanning operations, service delivery, HR technology, recruiting, L&D, DEI, total rewards, and HR business partners — to collaboratively function together.
It is perhaps best conceptualized as HR operating as an integrated system, rather than a set of disconnected parts. Achieving this goal state sees HR professionals undergoing cross-training, working in agile teams, and using world-class technology to serve, train, enable, and support employees — equipping them with the necessary tools to address the business challenges outlined earlier.
It starts with establishing a robust HR and people strategy, intricately aligned with the business strategy. Notably, the most impactful practice for your business, your workforce and the market occurs when the people strategy integrates with the overarching business strategy, becoming a pivotal component therein.
To lock down this alignment, you need to engage in candid dialogues with the C-Suite to get real answers to core questions such as what level of transformation do we, as a business, anticipate in the next few years? To what extent is technology disrupting our market? And how can the HR strategy most effectively contribute to addressing these challenges?
For example, healthcare front-runner NewYork-Presbyterian expressed its aim to enhance the patient experience, extend its network, and undergo digital transformation. The people strategy that fell out from defining these goals naturally centered on:
- Enhancing the talent pipeline, particularly in clinical domains
- Cultivating skills and proficiencies in digital, AI, and technology, and
- Redesigning care teams to enhance the patient experience.
It’s also imperative to tailor everything to the distinctive characteristics of your business. For instance, a growing technology firm would require a completely different people and HR strategy from a large healthcare organization aiming to manage costs effectively.
Once the strategy is established, focus on doing the most helpful HR work to sustain and accelerate the right kind of change. Define the highest priority, most strategic, value-adding work; prioritize workforce planning to address talent shortages where they are likely to make the most significant impact; and operate systematically moving forward, and not in silos.
Lastly, support your team with the right HR technology. Employee-centric technology empowers employees to identify areas for development, engage with mentors, access coaching, or swiftly resolve issues — all seamlessly integrated into their workflow.
Throughout all of this, the CHRO needs to be embedded within the C-suite, serving as a true peer to the CFO, COO and CIO. Consider the company’s AI strategy: If it is solely driven by IT, it will fall short in transforming work processes and job roles. In fact, AI represents a significant opportunity that only HR can effectively spearhead.
A Systemic Approach
So, taking this approach requires a concerted effort to establish the right strategy, reimagine HR roles and organizational structures, and integrate the right HR technology to bolster these efforts.
It does mean rebuilding the HR function from the ground up, requiring a substantial reimagining of your approach. That’s no small task, and so it’s no wonder that our research indicates only a mere 11% of companies really embody this right now; even if they’re the highest-performing ones.
Although it’s hard, this endeavor is undeniably worthwhile, as the right HR operating system yields a host of benefits:
- Enhances financial stability within your company
- Facilitates the creation of customer delight
- Fosters a more productive workforce
- Helps attract, retain, and engage a diverse workforce, and
- Cultivates innovation and enhances agility in navigating change.
Embark on your journey toward it today and unlock the transformative potential it holds for your organization.
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