What Is HR Transformation — and What Does It Achieve?

HR transformation is the evolution of the HR function to drive operational excellence and create greater business value in a world of hybrid work.

HR transformation

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Transform the HR function to deliver more impact

HR transformation is more urgent now than ever as talent becomes an even greater driver of competitive advantage. It’s critical for success in a world with new cost pressures, hybrid work models, and ever-evolving employee expectations.

HR transformation doesn’t have to be a wholesale restructuring or massive change. It’s about CHROs evolving, even if incrementally, the HR function to better align people, strategy, processes and technology with business goals to deliver more impact for all stakeholders.


The 4 key components of HR transformation

Where effective CHROs focus

Highly effective CHROs today do more than just lead the HR function, rather they help enable business success across the enterprise as a strategic business leader. Specifically, top CHROs:

  • Build a strategy for the HR function and adapt it as the business and operating environment change
  • Provide key inputs to business strategy development
  • Position the HR function (operating model, structure and staffing) to meet business needs
  • Optimize the HR function’s budget

The best CHROs know how to distribute HR leadership among their direct reports to create a future-focused, financially disciplined function while also contributing to the overall vision and strategy of their organization.

Model of a World-Class CHRO

The Gartner Model of the World-Class CHRO provides a roadmap for greater personal effectiveness and strategic leadership, based on the best demonstrated qualities of HR leaders in five core roles:

  • Board’s and CEO’s leader of human capital and culture
  • Win in a dynamic talent landscape
  • Leader of enterprise strategic change
  • Leading through evolving stakeholder scenarios
  • Trusted advisor and coach

To be most effective, CHROs must discuss with their CEOs which of these roles to prioritize, based on the imperatives facing senior leadership and the strategic position and direction of the business. (CHROs should never ignore any of these roles, despite prioritizing some over others at times.)

In their increasingly strategic position, CHROs also have more interactions with the board, yet many still struggle to influence board decisions. Gartner defines success in board interactions as ensuring the board is best-positioned to have discussions and make decisions that help the CEO, C-suite and organization achieve their goals.

CHROs can drive greater success by ensuring the board composition and culture are designed to encourage openness, trust, inclusivity and respect, and that executives and nonexecutive directors understand the role of each member and commit to continuous improvement.

CHRO’s critical role to help win in a dynamic talent landscape

A series of recent shocks, such as the COVID-19 pandemic, widespread adoption of hybrid work and Russian invasion of Ukraine, have reshaped workplaces and the talent landscape., As a result, the CHRO’s role as creator of talent strategy — and associated strategic workforce planning — have shot to the fore. 

Devising a people strategy that maps to business needs in an uncertain world requires CHROs to identify strategic priorities, analyze emerging trends, translate priorities and trends into workforce capability needs, and prioritize those capabilities.

World-class CHROs will leverage labor market intelligence and talent analytics (also known as HR analytics, workforce analytics and people analytics) to forecast the future workforce and create long- and short-term sourcing plans with deep knowledge of the competitive landscape for critical skills. This enables them to be effective human capital leaders for the board.

The HR operating model is a foundational piece of any HR transformation strategy, as it organizes the structures, capabilities and processes through which the HR function delivers value to stakeholders, both internal and external.

In evaluating the performance of the existing operating model, HR leaders must consider all its moving parts — from the responsibilities of HRBPs and the structure of shared services to the ways in which HR professionals interact with leadership and ways in which technology is used. But first, HR leaders must know the strategic objectives for the HR function and their enterprise — and be ready to adapt those objectives as the business environment changes.

4 ways HR operating models are evolving

Gartner expects progressive CHROs to transform the HR operating model in the following ways:

  • Reinvent the HRBP role as one of strategic talent leadership
  • Create a dynamic pool of HR problem solvers
  • Provide agile support with next-generation centers of excellence (COEs)
  • Build a robust HR operations and service delivery team

Reinvent the HRBP role as strategic talent leaders

HR functions must redesign the senior or VP-level HRBP role toward a more analytically-oriented strategic talent leader and reallocate transactional tasks. Similar to present-day HRBPs, they are aligned with a specific business unit or function, and own the talent management strategy for that group. Effective strategic talent leaders must think holistically about the strategy of the business and talent processes that support the business’s goals.

Create a dynamic pool of HR problem solvers

A dynamic pool of problem solvers that works on various strategic projects is critical to the success of the HR operating model of the future. As their name suggests, problem solvers’ primary job is to hypothesize, test and build solutions to strategic problems. This team creates and upgrades resources, practices and policies used by HR and the workforce. It effectively serves as the “flex muscle” of the HR function, agilely moving from project to project.

Provide agile support with next-generation COEs

Next-generation COEs need to become more agile, dynamic and adaptable. The overall goal of COEs remains unchanged: provide deep expertise in important subject areas for HR. They achieve this goal by redistributing and specializing tasks across other roles in the HR operating model of the future. For instance, instead of being the sole producer of talent management policy, practices and procedures, COEs work with the problem-solver pool to develop policies, practices and procedures across HR. In addition, COEs rely less on full-time, static teams and rely more on external, contracted work. 

Build a robust HR operations and service delivery team

As organizations increasingly outsource and automate transactional and administrative tasks, they have an opportunity to upgrade HR’s operational capabilities. Led by an HR COO, an HR operations and service delivery team should include shared services, HCI, people relations managers and the HR technology team. The goal of the team is to act as a centralized, dedicated team servicing employees and managers with the proper infrastructure and support to effectively carry out their day-to-day work.

HR transformation will require HR teams to build new capabilities to tackle a range of business priorities, including:

  • New ways of working
  • Increased demand for data-driven insights
  • Evolving HRBP roles and competencies

New and Evolving Workforce Needs

Today’s hybrid work environments and rapidly changing business priorities require new ways of working. As organizations shift business strategies and implement new processes and structures, HR must be prepared to support the execution of these changes. HR staff can use an open-source change approach to ensure that employees remain engaged despite potential change fatigue. HR must also support leaders developing their ability to be more human-centric leaders to ensure a happy, healthy workforce that can generate sustained performance

Data-Driven HR Insights

HR increasingly needs data-driven workforce insights — and the skills to turn talent analytics into workforce plans and decisions. The growth in the number and availability of employee data sources requires HR professionals to develop their ability to not only analyze employee data but also communicate that data effectively to their audience.

By asking the right questions, choosing the right metrics and crafting a compelling narrative with the right data, HR professionals can drive better data-driven employee decisions. In doing so, they can increase their business impact and play a more strategic role within the organization.

Shifting HRBP Competencies and Roles

As the HR operating model changes the HRBP role is likely to be split between more specialized roles. HR leaders must ensure their staff are equipped with the competencies necessary to effectively provide value to the business in these new roles.Gartner’s HR Professionals Competency Model identifies both the critical competencies and behaviors HR employees must demonstrate to be effective strategic partners to the business.

HRBPs as strategic talent leaders

Strategic talent leaders are aVP-level evolution of the HRBP, focusing on strategic priorities and are aligned with a specific business unit or function.

Success in this role requires a combination of strong business acumen and talent management skills to work with and influence the aligned business unit or functional leader. Strategic talent leaders must also have strong strategic consulting and relationship management skills to collaborate and network throughout the organization to identify synergies in work and business goals. High levels of proficiency in data judgment are critical in enabling strategic talent leaders to use and interpret labor market intelligence and other talent data to inform decision making.

HRBPs as problem solvers

The primary responsibility of problem-solving HRBPs is to define talent problems and hypothesize, test and build solutions. Core competencies for this role are similar to those of a consultant competency model: project management, consultative problem solving, relationship management, growth mindset, as well as creativity and innovation.

HRBPs as people relations managers

These are a central pool of HR staff that takes on much of the work that is traditionally owned by the HRBP role, including compliance, employee relations issues and people manager support responsibilities that are not self-serve or automated.

With radical flexibility and hybrid work environments the norm, it’s imperative to leverage technology effectively to provide a seamless employee experience. Virtual and technology-enabled processes can create both positive and negative impacts, and Gartner research shows that employees who are dissatisfied with workplace technology are twice as likely to look for new positions externally than internally.

People-first technology strategy

With significant advances in HR platforms, hubs and solutions, HR Technology leaders are poised to become the catalyst of change across HR processes as technology now touches every aspect of employees lives. To power this transformation, technology should be more accessible and help employees ‘in the flow of work.’

To empower and engage their workforce, HR leaders need a people-first HR technology function. This means that the pillars of the operating model — the processes, structure, team capabilities and network — must be informed and aligned. When successful, a people-first HR technology function can improve key people and business metrics around DEI, well-being, collaboration and innovation.

Emerging HR technology

Innovations, such as artificial intelligence (AI), machine learning (ML), natural language processing (NLP), virtual assistants (VAs) and virtual and augmented reality (VR and AR), all play a part in this evolution toward more virtual HR processes.  

HR leaders responsible for investing in emerging technology need to:

  • Focus on trends that have an immediate impact for employees and HR operations
  • Drive HR process innovation using a digital-first, location-independent strategy by creating a roadmap to move from ad hoc, task-based automation projects to end-to-end process transformations 
  • Create a more secure remote operations environment by enhancing employee data privacy and adopting adaptive access management strategies
  • Assess trends that are likely to impact HR strategy over the next five years by evaluating the function’s capabilities in collecting, maintaining and analyzing complex datasets to turn them into actionable insights that influence employee behavior

Talent analytics technology solutions

With the growing importance of talent strategy, CHROs need new approaches and supporting technologies to track, develop and deploy talent. AI-enabled talent marketplaces and skills and worker data platforms are key. HR must plan to incorporate them into their technology roadmaps.

For example, HR leaders need more automated ways to map and detect skills — in conjunction with strategic workforce planning efforts. They can apply skills data across many processes, including hiring, staffing, scheduling, learning and development, labor market analysis and workforce planning. (It is also an essential component of the internal talent marketplace.)

What CHROs need, though, is to turn data into actionable insights. This means locating critical talent hotspots and identifying skill relationships and competition for in-demand skills.


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HR Transformation Frequently Asked Questions

HR transformation is the evolution of the HR function such that service delivery, talent and technology are seamlessly integrated and aligned with HR strategy to create greater business value for internal and external stakeholders. It doesn’t require wholesale, immediate change but instead a thoughtful approach to improving both operational excellence and strategic impact of the HR function over time.

Due to cost pressures, hybrid work models, and fast-evolving employee expectations, HR transformation is a critical prerequisite for business success.

To drive a successful HR transformation strategy, HR leaders should take following steps:

  1. Build an HR transformation narrative by defining the why, the what and the how of the transformation
  2. Create a long-term master plan for the implementation by breaking down activities into manageable steps, considering dependencies and setting a realistic timeline
  3. Manage the change with open communication along the way, driving employee engagement and equipping managers to lead through the change

HR transformation delivers:

  1. World-class leadership
  2. A modern HR operating model
  3. Future-forward HR roles and competencies
  4. Integrated HR technology and analytics

Drive stronger performance on your mission-critical priorities.