Do HR leaders need to have an HR IT strategy?

In this article I explore how the role of an HR leader has evolved and that an HR IT strategy is now a “must have”. Over the past decade or so there has been an abundance of literature on how the role of a CEO has changed and that understanding technology and investing significant time in the organisation’s IT decision-making is now a key requirement. I argue that the same is now true of HR leaders and that an HR IT strategy is the link between (efficient) HR operations and the organisation’s (desired) culture. Towards the end of the article, I look at some of the common reasons organisations lack an HR IT strategy and share some ideas on overcoming the barriers.

During my 20+ years in HR, and now as an HR tech leader, I have observed that HR leaders (typically HR directors) broadly fall into one of two categories:

  • Technical Expert – Highly knowledgeable of HR processes, operations and, perhaps, employment law/policies.
  • Business Partner – Trusted advisor and coach to a business leadership team, strong knowledge of the business and, probably, focused on culture, strategy and transformation.

In many large organisations, the HR function has been organised around the concepts of HR specialist departments (Centres of Expertise, HR Operations, HR Shared Services) and internal client-facing Business Partners. This model became prevalent in the mid to late 1990s and is associated with Dave Ulrich, the management and HR thinker.

I learned a lot working with Technical Experts and respected their focus on delivering core HR activities such as HR admin, payroll and processes like compensation and performance reviews. However, often they were not very inspiring and added limited commercial value to their businesses.

I learned less working with Business Partners, in part because their work with their business leadership teams was less visible. Nonetheless, they had significant organisational impact and were often inspiring. On the other hand, they could be frustrating to work with because they were often too distant from the operational realities and lacked technical depth (indeed, in some organisations Business Partners may not have an HR background).

During my HR career I did not work with many “All-Rounders”, i.e. HR leaders that combine both strong technical expertise and business partnering capabilities. They were very impressive in the same way as an all-rounder in any team sport. They were also highly valued and respected by colleagues, business leadership teams and CEOs.

In today’s world, being either a Technical Expert or a Business Partner is too one-dimensional. Organisations need HR leaders that are All-Rounders and can help them to address two challenges that are key for success: Operational Efficiency and Organisational Culture.

Operational Efficiency

In era of rapid digitisation, increased competition and thinning margins (compounded by inflation and, in some markets, recession), organisations’ operational processes need to be highly efficient, robust (scalable, reliable) and business continuity-proof (e.g. pandemic ready).

As an HR director I spent a lot of time working with colleagues on initiatives to improve companies’ (or divisions within companies) operational efficiency. Such initiatives included analysing and benchmarking existing efficiency levels and identifying opportunities. One of the things I learned very quickly was that my own HR department needed to be very efficiently run before I could expect line managers to partner with me to improve the efficiency of their own departments. Otherwise, I simply lacked credibility.

As such, HR leaders need to ensure that HR is run efficiently and (then) work with their peers to maximise the efficiency of other departments.

Organisational Culture

HR leaders have an important role to play in defining an organisation’s culture, as well as the values and expected employee behaviours to maintain and promote that culture. The culture should be a positive force that unites and energises a diverse group of employees. Ultimately, it is a driver of organisational performance and success.

Maintaining an organisational culture is increasingly challenging because organisations exist within societies and many of our societies are increasing polarised. Examples of polarisation include “right” vs. “left”, facts vs. fake news, social progressives vs. reactionaries, green committed vs. green-washed, right (for a woman) to choose vs. right to life, different work/life expectations of generations Z, Y and X, and internationalists vs. nationalists. An additional challenge that many organisations are grappling with is maintaining their office culture in an era of increased remote working.

Modern HR leaders need to bring together operational efficiency and organisational culture in an integrated HR strategy. A pre-requisite of any strategy is knowing what the desired outcomes are. A focused list of interventions or activities can then be designed to deliver those outcomes. An HR strategy typically involves aligning the HR operational processes to the stated culture, values and desired behaviours. For example:

  • Recruitment process needs to identify candidates with the required technical skills AND cultural fit;
    Performance management needs to include an evaluation of employees’ delivery (results) AND demonstrated behaviours;
  • Compensation needs to reward what was delivered AND how;
  • Promotions need to be awarded to employees that have consistently demonstrated strong performance AND alignment to the organisation’s values; and
  • Talent identification and succession planning need to focus on performance, potential AND behaviours.

Technology is a means to an end, not an end-in-itself. It should enable an organisation to improve operational efficiencies and, in the case of human resources, promote the desired culture.

Recruitment, performance management, compensation, talent management, and many other people management processes can be “enabled” by smart software. “Enabled” means made more efficient and designed to deliver the desired behaviours/culture. For this reason, HR leaders need to have an IT strategy. It is an essential lever for driving the efficiency of HR processes and reinforcing or transforming the organisational culture.

There are number of common reasons why organisations do not have an HR IT roadmap:

  • HR leaders’ reluctance to ask for an IT budget because they think it will be declined;
  • Linked to the above, a perception that the investment will be very expensive;
  • HR leaders taking a piecemeal approach to identifying the needs (this often results in organisations having an expensive and clunky patchwork of software for different processes); and
  • Concern that new IT will result in significant change management that neither HR nor the line have the time to manage.

Organisations that have an HR IT roadmap overcome these barriers. Their HR leaders have typically addressed the following points:

  • Articulated the business case – in words and numbers – for investing in HR technology. Such a business case highlights the existing deficiencies such as inefficiency, quality and control issues, and places a monetary value on them;
  • Taken a holistic approach to the organisation’s HR software needs, focusing on the overall user experience (for employees, managers and HR) and the total cost of ownership (“TCO” in IT speak) of different solutions;
  • Made the link between HR software and culture, and how the new HR IT investments will enable or reinforce the organisation’s desired culture; and
  • Demonstrated that change can be managed responsibly, is needed and is healthy.

If you are an HR leader without an HR IT strategy, I would encourage you to develop one. Getting started is not easy and the current macro-economic environment may make it daunting to ask the CEO or the Board for investment in HR software. On the other hand, a strategy can be implemented over a number of years if needed and a well-constructed business plan should demonstrate that the return on investment (ROI) is relatively short. The financial investment may also be less than you expect.

PeopleWeek works with organisations to help develop such business cases and implementation roadmaps that are aligned with their operational and financial realities. Other HR software providers may do likewise. Exploratory conversations are free and may help you take the first steps in developing an HR IT strategy.