HR’s Role in Propelling Medium-sized Company Growth | Deloitte US has been saved
Authored by Keerat Bawa, Martin Blinn, Dana Flynn-Rea, and Shirley Hou.
A growing opportunity for HR
As “growth-minded” organizations invest most of their energy and resources in business and market growth, the role of support functions such as human resources (HR) is often put on the company's back burner. Medium-sized businesses are left to pick and choose investments that point more toward growth and direct revenue-driving innovations and strategies rather than “back-office” or support organizations, including HR.
However, this approach gradually stops working as organizations realize it becomes increasingly challenging to meet talent needs and anticipate future workforce needs without adequately investing in their talent and HR function. HR organizations end up constantly playing catch-up, as they are often capacity- or capability-constrained in meeting those needs. This issue was vividly clear when HR had to navigate and lead through the COVID-19 pandemic and the Great Resignation. With increasing needs to reimagine the employee experience and where work is being done, now is the time for HR to elevate its game.
In a recent report, Deloitte interviewed chief human resources officers (CHROs) from 15 leading organizations across multiple industries, asking which workforce issues have been elevated to the board level and which topics are likely to remain there for the long term. We also inquired how the CHRO‑board of director relationship evolved during the crisis and what skills CHROs have had to draw upon to succeed in their new environment. We spoke to diverse industries and geographies, and the feedback was largely consistent, suggesting that the role of today’s CHRO was becoming more strategic, influential, and demanding—or, as one executive stated, “I don’t remember a time when CHROs had as much time in front of the board as [they have] over the past two years.”1
A real-world example: Change through crisis
An organization that doubled in size due to pandemic-driven, exponential growth and changes in its HR leadership team, was considering the next disruption’s effects and how leadership could prepare.
With this market growth, HR had adjusted in size in an ad-hoc fashion, adding team members to address pain points without clarity of the HR strategy or a “North Star” HR operating model. The HR team became generalists trying to be everything to everyone rather than an agile, scalable team that could deliver high-impact business value. The CHRO felt they were sitting on the sidelines, contributing only to traditional business areas—excluded from the organization’s growth strategy.
The risk of not bringing HR along the growth journey
Without bringing HR along the growth journey and being thoughtful about “what” HR is doing and “how” it delivers services, organizations expose themselves to three key risks that can directly affect their growth trajectory.
- Struggles in attracting top talent: HR teams that cannot build a thoughtful talent experience and a strong employer brand risk lagging in attracting the best talent. HR teams must focus on nurturing, developing, and retaining current talent while also positioning themselves to compete and attract future talent.
- Challenges in driving impactful performance: Fueling sustained business performance is a leading challenge facing the C-suite, including CHROs. Traditionally, HR has focused on improving efficiency and effectiveness to create business impact. Research shows HR is still missing the mark. Only 30 percent of business leaders believe that HR has a reputation for sound business decisions, while only 22% of business leaders are confident that HR can adapt to the changing needs of their workforce.2 The CHRO needs to see HR strategy as more than aligning with business objectives; it’s about leading the business and workforce toward a sustainable future of growth by consistently making winning workforce decisions.
- Difficulty preparing for the unexpected: The pandemic challenged organizations unprecedentedly and forced C-suites to question how prepared they were for the next disruption and risks thereof. HR teams need to build the capacity and credibility to drive the mandate with the business to assess and prepare for shifts in future business and workforce direction.
Keys to success: How one organization shifted the role of HR
Collaborating with Deloitte, the new CHRO of a medium-sized business challenged HR to evolve from just “keeping the lights on” to proactively advising and driving growth strategies for the business. The team achieved the transformation by creating a clear HR strategy and operating model, highlighting four critical strategic moves to achieve their objectives, become strategic partners to the business, and drive sustainable business performance:
- Know your customer: A significant shift the HR team made was understanding who their customers were and their current and future perspectives. By listening to the voice of customers and HR stakeholders, the HR team better understood the gap between their customer relationships today versus where they wanted to be in the future.
Studying and listening to employees to understand their unique needs, values, and behaviors are vital to designing solutions that help elevate employees’ experiences interacting with HR and the organization at large. Brand loyalty with current employees ultimately drives the market brand loyalty the future workforce will seek. - Build a credible and capable HR function with the capacity to drive business performance: Anchored in Deloitte’s industry research and leading practices, the HR team reviewed and refreshed the operating model and HR construct, which focuses on creating credibility, capability, community, and capacity. The newly developed model enables the HR organization to 1) free up time for HR to focus on the moments that truly matter to the business and the organization as a whole, 2) enable HR to deliver upon those moments with the right solutions in the right context at the right time, and 3) give HR the license (that is, support) of the business to influence and engage on the most critical issues and initiatives.
- Embrace agility and adopt leading practices: Change isn’t easy, but introducing change in the organization through controlled solution pilots allows teams to simulate changes—visualizing, observing, and learning about impacts and benefits without putting the organization at operational risk given their limited ability to absorb it.
By embracing an agile mindset, the HR team successfully used a pilot approach to introduce new solutions to the organization and test the proof of concept while avoiding business disruptions. This also included adopting leading practices and strategies—such as process standardization to decrease risk, accelerate implementation of change, and lay a solid foundation for future business scalability and growth sustainability. - Build trust and coalitions with cross-functional stakeholders: We would be remiss if we didn’t mention the importance of building trust with the business and key stakeholders—such as IT, finance, and procurement—through the transformation journey by reinforcing how much investment in people drives organizational performance.
Using stakeholder-management strategies and approaches, the human resources management team proactively built trust and coalition with their stakeholders by articulating the transformation’s business value. Throughout the transformation journey, the HR team ensured they had buy-in from key stakeholders by demonstrating visible wins, such as enhanced workforce experience.
Now is the moment for HR to lead the way.
The pandemic has elevated the workforce agenda in the boardroom, and we recommend HR leaders and organizations stay proactive and develop a sustainable HR operating model that allows the HR teams to build credibility, capability, capacity, and community. Now is the ideal time for HR to seize opportunities and become the driving force of business success.
Authors:
Endnotes:
1 Deloitte, The Elevated Talent and Culture Agenda in the Boardroom, 2022.
2 Arthur H. Mazor et al., “Reinventing HR: An extreme makeover,” Deloitte Insights, February 27, 2015.
