There is an increased trend towards executives from other functions coming into HR leadership roles, according to strategy expert Ram Charan.
He said this trend is an important one, as companies look to improve business understanding within HR functions and align HR strategies with broader business strategies.
At the same time, Charan predicted HR as a function would evolve and become more important in the coming years as it harnesses technology for greater efficiencies and talent management for business outcomes.
“There is no doubt in my mind that HR people will learn business,” he said.
“They will count on their knowledge of the function, and outsource a lot of things so they can really focus on talent and the organisation and be a partner to the CEO.”
Charan said HR professionals must focus first on being leaders, and HR second.
“Learn the business. Learn the business. Learn the business. That’s the key,” he said.
“HR can learn anything, so they need to devote time to learn the new game of digitisation and algorithms, and then exercise their expertise to find the right talent.”
““Learn the business. Learn the business. Learn the business. That’s the key”
Charan pointed to three very clear trends that would impact HR and business over the coming years, and said the rise of technology would have a profound impact on companies.
“All of them will have to digitise and become mathematics houses – bar none,” he said.
“That requires new expertise, new talent and leaders of new talent, because millennials are coming in now, so there is going to be a major transition,” he said.
Another key trend is around the increased important of talent as a genuine competitive advantage in business, and Charan said there has already been a major shift supporting this trend.
“In the past, competitive advantage has come down to capital usage. Now, capital is in abundance,” he said.
“The competition now is for talent. There is a great scarcity of digital and algorithmic talent, and those companies that can’t get and use this talent will be at a great disadvantage.”
The third major trend is around the drivers and motivators of this talent, according to Charan, who explained that this new wave of talent wants a different kind of work.
“This new talent does not want to go through hardworking like people have in the past, but they prefer to work in teams to get things done,” he said.
“The number of layers in the company must reduce to four or less to enable this and greater efficiencies across the organisation.
“The CEOs loved it. A large number of people in top HR positions, who came from a non-HR background, loved it. The ones who came from HR, they did not like it”
Charan observed that HR functions and leaders who do not ride this new wave of talent “will be left behind” and warned the “consequences can be dire” for businesses that fail to make the shift to the digital world.
“Algorithms and digitisation are altering business,” he said.
“This is becoming the driver in deciding what the strategy is, what the portfolio mix might be, how to make business decisions faster and what talent is needed.”
Similarly, new roles are emerging in business with the shift towards digital, and Charan said HR plays an important role in helping to understand and define these.
“Before you can say you have the right people, you have to define the right roles. That is going to change,” he said.
“So the role of HR is increasing, and focused on recruiting the right talent and designing the organisational structure.”
Charan also reflected on his recent HBR article about ‘It’s time to blow up HR’ and said he had received a mixed response.
“The CEOs loved it. A large number of people in top HR positions, who came from a non-HR background, loved it. The ones who came from HR, they did not like it.”
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