The Reinvention of HR
Outstanding results occur when HR embraces a strategic role, explicitly using talent to drive value, rather than just responding passively to the routine needs of a business. That’s a transformation many companies have been striving to achieve recently. Learn about the technological tools McKinsey & Company suggests for HR departments to reach their potential and drive real business value, how to recruit for growth, and attract top talent.
The technological tools
The best HR departments are creating centres of excellence (COEs) in strategic areas such as organizational development, talent acquisition, and talent management. They are also providing better support to managers via strategic HR business partners and supporting the long-term health of the business. However, too many HR departments still fail to make a hard and convincing connection between talent decisions and value.
As a result of the availability of new technological tools that unleash the power of data analytics, McKinsey & Company suggests the time is right to accelerate the reinvention of HR. Businesses need to concentrate on four things:
1. The introduction of talent value leaders (TVLs)
HR departments should introduce a new role: the talent value leader (TVL), who would not only help business leaders connect talent decisions to value-creating outcomes, but would also be held fully accountable for the performance of the talent.
A TVL should have real authority over hiring and firing, even if actual decision rights remain with managers. They should be held to account using metrics that capture year-to-year skills development, capability gaps, engagement, and attrition. And to the maximum extent possible, they should be disconnected from the day-to-day concerns of operational HR, in order to avoid getting pulled back into dealing with employee issues.
2. Using people analytics
Most talent functions follow a process map that requires a recommendation or decision by a human being – for example, the evaluation of an employee’s performance or the designation of a successor to a specific role.
Embedded analytics, by contrast, either inform or replace these steps with algorithms that leverage the data to drive fact-based insights, which are then directly linked to the deployment steps in the process. For example, many companies now use HR analytics to address attrition, allowing managers to predict which employees are most likely to leave and highlighting turnover problems in a region or country before the problem surfaces.
3. Fixing HR operations
HR should raise service levels and improve the employee experience, using next-generation automation tools and standardized processes to drive higher productivity. There are three critical operational priorities for the HR department of the future: continuous process improvement, next-generation automation technology, and user-experience-focused service improvement.
4. Focusing HR resources in more agile ways
Agility, combined with analytics, suggests structural change, particularly for centres of excellence. With more automation of insight generation, and especially the mass customization and delivery of those insights through technology, HR COEs will probably be a much smaller group in the HR departments of the future. Unburdened by operational responsibilities, these pools of talent will be able to work across disciplines (talent management, learning and development, and organizational design), supporting the new talent value leaders and the business as a whole.
Recruit for growth, not for stability
Besides technological tools, HR can do more to make a difference – start recruiting for growth, instead of recruiting for stability. More often than not, recruiters screen out candidates based on shorthand they have developed over the years. The trouble is that this shorthand can be wrong. If you recruit a person who has been working at the exact same position for the past 5 years, you might get stability. But will you get growth? The most important criteria for a recruiter should be whether or not a candidate has potential to grow in a role and at a company.
Transactional recruiters think filling a job fast, based on price and skills is the endgame. Solution-based recruiters think the endgame is finding a great candidate who sees the job as a career move.
Instead of screening candidates out based on things like salary, recruiters should start spending more time with fewer people. The best candidates are either those you know personally or weak connections – people who have been referred to you.
It takes about ten minutes to develop a relationship with these weak connections. After developing the relationship, if the person is qualified, compensation should be discussed. If the job truly represents a career opportunity, the compensation is always negotiable.
Attract top talent
Our consultants suggest attracting top talent by giving them a value proposition for their careers, the possibility to grow fast and showing them you care about diversity.
‘Attract top talent by offering a career path. It’s as simple as that. If they’re going to receive one job, they’re probably not going to come. But if they consider they can grow over at least three assignments, that’s interesting.’ Paul Loftus