This article was updated on July 10, 2018.
As the need for business transformations increases, HR teams must be prepared to develop an HCM strategy during transformation. According to consulting firm Innosight, "75 percent of the S&P 500 will turn over in the next 15 years," one third of organizations will de-list in the next five years and the rate at which industry leaders are being replaced has doubled in the last generation.
The speed at which organizations can become obsolete is faster than ever and organizations must evolve continuously to remain competitive. According to research conducted at the Center for Effective Organizations at the University of Southern California, HR should be an active partner and can add tremendous value to any organizational transformation by becoming strategic partners with the corporate leadership facilitating those changes.
But before HR helps organizations drive transformation, you must first ensure your HCM strategy is aligned to support it.
Here are five tips to get the job done.
1. Understand the Transformation
Above all, HR leadership needs to understand the nature and purpose of the transformation. For example, according to Harvard Business Review, if the transformation is operational, like a digital transformation, with the purpose of improving innovation and operational efficiency (cost cutting), an HCM strategy will be designed to target those goals.
HR leaders must prioritize communication to understand the purpose of the transformation.
2. Align HCM Strategy to the Goals of the Transformation
Everything devised in the HCM strategy should be aligned to the purpose of the transformation. In a digital transformation, for example, an HCM strategy could focus on improving employee technology, expanding into tech-centered geographies or leveraging HCM technology to streamline HR operations.
3. Ongoing Leadership Development
According to research from McKinsey & Company, when leaders verify that front line staff feel a sense of ownership toward change and take the initiative to drive it, transformations have a 79 percent success rate. HCM strategies, therefore, should include programs to develop leadership skills that inspire management to communicate, motivate and work with front-line employees to encourage full engagement.
4. Assess Current Talent Capabilities
Whatever the transformation, an organization will need capabilities and skills it does not currently have, which will need to be developed or acquired in some way. In order to develop an HCM strategy during transformation, HR must assess the current talent in the organization and work with the executive team to identify gaps, and then put plans in place to close those gaps.
But it's not just about skills.
According to the same 2010 McKinsey survey, certain "mindsets" must change for transformations to succeed. Leveraging the talent assessment, HR can help executive teams identify those mindsets, who has them and the reason they exist. Then HR can work to address those issues either through discussion and education or by bringing in new leaders who can promote the need for change effectively.
5. Help Executive Team Continuously Communicate
Early in a transformation, communication should be paramount. Your HR team can develop communication plans that will help employees understand why they should buy in. HR can also bolster executive team communication by touting the benefits of the transformation on a regular basis, thereby letting employees know how committed the organization is to the process.
HR can have a big part in driving organizational transformations by working to develop a sound HCM strategy that aligns with the transformation and ensures the organization is primed to head in a new direction.