The evolution of the HR operating model: Integrating people and culture strategies

by Carlo Borja
HR operating model

Human Resources (HR) have experienced an important change in the constantly changing field of people management. With a variety of titles like People Operations, Human Capital, or Employee Experience Architect, HR is emerging as a key role in navigating the unknowns of the work of the future as we stand on the edge of a new age. Today’s HR professionals face a variety of challenges in this dynamic climate, which calls for a proactive and strategic vision.

Over the next 12 months, organizational development, organizational design, HR strategy and change management will consolidate into a strategic advisory function focused on informing and enabling organizational transformation. 

HR is hardly recognizable from a few years ago. Whether it was the world changing, the workplace evolving, or a worldwide pandemic, the scope of HR has fundamentally shifted. 

A recent Sage poll revealed that 91% of HR leaders and 96% of C-suite execs (n=1,000+) say the department’s role has fundamentally changed. And yet only 32% and 41% (respectively) say the change will continue. Based on evidence from the departments orbiting HR, we think that’s an underestimation.

Breaking down HR’s top priorities in 2024 CTA

3 priorities of CEOs in 2024

Going into 2024, Gartner’s research shows CEOs’ and CFOs’ visions align on three priorities: growth, technology and talent.

  • Growth

With C-suites under pressure to show profitable growth, there’s an increasing need for HR to deliver meaningful, measurable ROI.

  • Technology

The future will likely see you managing people and machines as technology impacts everyone from legal to marketing to IT to operations (and HR). 

  • Talent

A global talent shortage, an increasingly mobile recruiting pool and new employee expectations mean HR needs to think differently to attract and retain the best people.

What you can do to prepare

Define a strategic vision for HR

HR needs to evolve from process-driven to people-focused. A strategic roadmap will help you define your purpose and contribution in the new world of work. You can use these definitions to establish priorities, set goals and communicate more effectively. 

Assess your analytics

If you’re not already being asked to prove HR’s effectiveness with data, the call is coming soon. Now is the time to evaluate your reporting, data pipeline and KPIs to find opportunities where data can add value. 

Set boundaries

All these new initiatives expose HR to a very real risk of job creep. Use your strategic vision and KPIs to establish and communicate clear boundaries. Organizational priorities – not the loudest voice – will determine what you focus on and what you leave behind in 2024.

Redefining culture and connection

Maintaining and strengthening organizational culture requires new strategies and approaches in an increasingly hybrid world. One outcome of the transformation will be “HR” titles disappearing, with “People and Culture” language taking their place. 

Cultivating shared values can be challenging when employees aren’t in the same physical space every day. Culture starts to feel forced. Even 100%-on-site organizations can’t ignore how values around work, culture and community have changed in recent years. Many of these changes will come to a head in 2024. HR will be tasked with bringing the two sides together. 

When Gartner surveyed 500 HR leaders in 40 countries, 41% said hybrid work compromised employees’ connection to culture. Nearly 1 in 2 (47%) didn’t know how to affect change to achieve the desired culture. 

HR will play a critical role in aligning and connecting employees to company culture in 2024.

In light of this evolved function, “Human Resources” suddenly seems too bogged down in process and compliance. “People and Culture” gets closer to describing what you do – at least it names your two focus areas.

HR is a thing of the past. From here on out, it’s all about People and Culture.

Human ResourcesPeople and Culture
Creates policies and proceduresWorks with the team to co-create guidelines
Supports leadership initiativesLeads strategic projects
Hires the best candidate for open positionsRecruits people who will contribute to long-term organizational growth
Ensures the organization meets compliance requirementsProactively analyzes and improves the employee experience
ManagesLeads
Implements disciplinary actionWorks with employees to understand challenges
Encourages employees to participate in a defined company cultureEncourages employees to contribute to a living company culture
Focus: Administrative and operational excellence.Focus: Creating an environment where people are aligned to the mission, vision and values.

People and Culture can thrive in a hybrid environment

Define and articulate the culture essentials

Work with leadership to clearly define the organization’s core values, mission and vision. Remember that company culture is a living thing; you can only guide it. 

Co-design your company’s hybrid work policy 

The policy should include guidelines for communication and collaboration, so everyone understands expectations around behavior and attitudes.

Support managers to build and maintain a positive team culture

Many managers still need convincing on the potential of hybrid work. Your role is not to enforce compliance but to help managers regain peace of mind and communicate with their team. 

Provide opportunities to contribute to culture

Create feedback mechanisms where employees can share their thoughts and concerns about culture and connection. You can use this feedback to recommend improvements.

Measure cultural KPIs

Culture isn’t intangible. There are plenty of performance metrics related to culture and connection, such as absenteeism, turnover, schedule adherence, productivity and employee engagement. They’re all measurable with the right technology.

Wielding tech to its full potential

Both within the evolved People and Culture remit and throughout the organization, AI is the biggest opportunity in 2024. We’re past the point of early adoption. But there’s still time to catch up.

Technology plays a pivotal role in streamlining processes, improving employee experiences and informing decision-making. Artificial intelligence (AI)  represents the biggest opportunity for organizations to achieve step-change growth rather than incremental improvements.

UX researchers Nielsen/Norman Group tested the impact of generative AI like ChatGPT on productivity. Their results were surprising, even for tech nerds like us. 

When using AI:

  • Call center agents could handle 13.8% more inquiries per hour 
  • Professionals could write 59% more business documents per hour 
  • Programmers could code 126% more projects per week 

But we’re encouraging you to ask a simple question that opens a lot of doors:

What else can AI do for business? 

ManagementMarketingeCommerce
– Online customer support
– Process optimization
– Task automation
– Email spam filtering
– Automated data insights
– Sales and financial forecasting
– B2B account identification
Document creation
– Automated emails
– Personalized recommendations
– Behavior trends and anomalies
– Optimized ad bidding
– Customer segmentation
– Lead nurturing
– Analyzing social media sentiment
Content creation
– Dynamic pricing
– Better search filtering
– Personalized product recommendations
– Abandoned cart emails
– Purchase predictions
– Fraud detection and prevention
– Chatbots
Content creation and branding

Generating text and images is only a small slice of AI’s potential. The heavy lifting happens behind the scenes in data processing and task automation. We believe this is the real productivity opportunity, both within People and Culture tech (HR tech) and “WorkTech” more broadly. 

But tech must be treated with tact. Underutilization is common when businesses rush to get the latest toys with no game plan. And there are reputational risks for organizations that misunderstand AI’s purpose and limitations. 

  • Training and education

People and Culture must proactively build capability among employees to use tech to its full potential. 

This includes training on using technology in daily tasks, collaborating with others, accessing resources and quality-checking output from generative AI tools.

  • Defining the rules of engagement

We believe People and Culture leaders will be charged with establishing safeguards for safe and effective technology use in 2024. This means getting up to speed through training, reading up on regulations and best practices, and reaching out to technology vendors for advice. 

  • People and Culture tech

More than 1 in 2 People and Culture leaders – 56% – say their tech solutions and strategies are already outdated. If you’re going into 2024 with dreams of digital transformation, choose tools that:

  • Facilitate employee feedback, recognition and well-being
  • Automate admin tasks so you have more time to interact with people
  • Contribute to, and prove your contribution to, organizational goals
  • Integrate with other team’s systems, giving you access to performance metrics

Should “People and Culture” become “People, Culture and Machines”?

As the lines between human creativity and technological capability blur, some workers are worried tech could replace part or all of their function. This is a thorny problem with deep roots.

Stanford and MIT analyzed 5,000+ customer support agents using generative AI and noted a 14% productivity increase ( like the Nielsen/Norman study). The researchers observed the biggest benefits at the low end of ability as AI disseminated information down the experience curve. 

The researchers note: “In addition, we show that AI assistance improves customer sentiment, reduces requests for managerial intervention, and improves employee retention.”

The key takeaway for People and Culture leaders is that when employees understand the tools at their disposal and use them responsibly, they are more productive, engaged, and satisfied in their roles.

Harvard Business School professor and AI expert Karim Lakhani summed it up perfectly when speaking to HBR. “AI is not going to replace humans, but humans with AI are going to replace humans without AI,” he said. 

Conclusion

The evolving landscape of Human Resources into a strategic advisory function, focused on organizational transformation, reflects a fundamental shift in the role of HR. As organizations navigate the dynamic challenges of 2024, the alignment of CEOs’ and CFOs’ priorities around growth, technology, and talent underscores the pivotal role HR will play. 

The transformation from HR to People and Culture signifies a broader, more impactful focus on creating an environment where people align with the mission, vision, and values. The forthcoming hybrid work era poses challenges for maintaining and strengthening organizational culture, making it imperative for HR leaders to redefine strategies and adopt technology wisely. 

The integration of AI offers significant opportunities for productivity and growth, emphasizing the need for proactive training, education, and strategic tech solutions within the People and Culture domain. As the boundaries between human and technological capabilities blur, the key takeaway is that humans, when empowered with AI, become more productive, engaged, and satisfied in their roles, contributing to a harmonious and efficient workplace.

 
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