Research shows an increase in ‘strategic’ HR leaders. Here’s where they are focused

Strategic organizations rely on a culture built around data, according to leading industry analyst Stacey Harris. HR leaders, in particular, need to anchor their work in data, as they are increasingly looked to as strategic partners, according to the results of the highly anticipated HR Systems Survey.

Conducted by Sapient Insights Group, the research includes feedback from 5,000-plus HR professionals—who represent organizations that encompass 25 million workers. Harris, the firm’s chief research officer, presented findings to a keynote audience at the 2023 HR Technology Conference. “We are looking at data year over year to understand what’s changing and what’s remaining constant,” said Harris of the study, which is now in its 26th edition.

Strategic human resources and HR data

Harris emphasized that “HR is the strategic arm” that will help business leaders understand how workforce decisions influence the organization on all levels. She differentiates between “strategic” HR groups—those that broaden their focus from transactional or compliance-centered deliverables—and those that provide value to the C-suite and contribute to overall outcomes. “Our business partners are recognizing the work we are doing,” said Harris, indicating a 15% increase in HR teams viewed as strategic organizational contributors.

The top functions provided by successful strategic human resources teams include adaptable change management, data-centered workforce planning, time management, skills management and transformational leave management, according to Harris. Strategic HR is also twice as likely to adhere to a technology ethics code of conduct compared to what she calls a “low credibility” HR department.

Strategic HR teams are no longer asking for the proverbial seat at the table, according to Harris. She says they demonstrate value in conversations with business leaders by using data to “hold up a mirror” in front of executive colleagues. Less strategic human resource professionals tend to be more reactive and track fewer business metrics, according to Sapient Insights Group.

“If all we are talking about is turnover and compensation, the conversation will shift towards budget cuts,” said Harris. “We need to change the way we think about HR and our roles.”

HR Systems Survey

Human resources leaders positioned to fill a strategic role consult the HR Systems Survey to quantify industry investments in technology and gain insight into how these investments translate into tangible business outcomes. The report covers some of the most pressing topics for HR leaders today and explores how HR is leveraging technology for success.

Here are several of the key HR data points, as presented by Harris:

Change management

Harris was firm on this point: Employees are burned out when it comes to change. “Stop doing change management and instead manage change,” she said. Harris noted that budget isn’t the biggest issue when HR and the workforce are overspending on time and energy resources. Those who are adept at shepherding new systems, programs and plans will be rewarded, according to Harris: “This is one thing that will yield double-digit returns on HR tech investments.”

Return-to-office

The report highlighted the hot-button topic of return-to-office issues, revealing an increase in hybrid workplaces. Harris warned the audience that top talent will seek out organizations that offer flexibility. And despite news headlines, the data showed that “not everyone is making the full return to the office,” with in-office work only increasing by an average of 9% from 2022 to 2023.

HR tech spending

Study respondents reported an overall 11% decline in plans to increase HR tech spending, with mid-market organizations witnessing the deepest cuts. Enterprise organizations with a longer procurement horizon aren’t displaying significant declines yet, but Harris predicted this will eventually occur.

Vendor satisfaction

The report also delved into the world of HR tech vendors, showcasing those that have garnered the highest customer ratings. Harris said that, overall, vendors seem to have heard requests from clients, delivering a 14% increase in customization. Respondents also reported a 3% increase in user experience and vendor satisfaction ratings. The only HR tech area showing a loss of satisfaction was payroll, and 28% of respondents indicated they plan to replace their current payroll system.

Harris also highlighted a set of emerging workforce applications to watch. These include Myriad and Cognota (HR operations); Welliba, Firstup and Hallio (engagement and communications); Salt and Confirm (pay and performance); and Reejig (skills).

Skills management

Harris cautioned attendees that they should be prepared to do the “hard work” of building a skills taxonomy that can demonstrate a return on investment. “Start with business questions and learn how to validate skills” based on those needs, she said. One area that Harris highlighted is, in fact, skills in the field of HR technology. She said that 54% of professionals in this role have less than three years of experience. “We are retraining an entire workforce in this space,” she said.

Artificial intelligence

As the role of technology in HR continues to evolve, understanding the potential impact of AI and intelligent platform innovations is crucial for staying competitive as a strategic HR leader, according to Harris. For those who feel behind in this area, she advised that the best preparation is to understand the ethics and position oneself to provide answers to executives. The report indicated that low-credibility HR functions are 70% more likely to have no strategy for using AI ethically.