HR Leaders Must Build a Human Capital Strategy to Navigate Critical Moments

Organizations are navigating critical changes from digitization brought by new technologies such as AI, to cost cutting approaches, hyper-growth settings, environmental, social, and governance (ESG) demands and more. Chief human resource officers (CHROs) must develop a human capital strategy for these different scenarios that builds confidence among leadership and demonstrates the value of HR.

To do so, HR leaders need to identify a number of factors: the scenario’s assumptions within which they operate, the initiatives to prioritize and the metrics that determine success. Gartner has identified nine business scenarios that CHROs should develop a strategy around.

We spoke with Gaston Gomez Armesto, Senior Director, Advisory, in the Gartner HR practice, about what CHROs should consider when developing human capital strategies to build confidence in their direction.

Journalists who would like to speak with Gaston regarding this topic can contact Mary.Baker@gartner.com or Gerri.Weinberger@gartner.com. Members of the media can reference this material in articles with proper attribution to Gartner. 

A: All organizations face common business challenges, but each organization has its own unique set of circumstances. This context can make it difficult for CHROs to rely on past experience alone when preparing a human capital strategy for different scenarios.

At Gartner, we identified a set of common business scenarios that CHROs should develop a strategy around:

• Digitalization: Providing greater value for customers through increasing implementation of technology
• Hypergrowth: Increasing operations and resources for market expansion, new product launches or other reasons
• Impending Retirements: Embedding agility into succession planning when facing a high volume of retirements 
• Cost Optimization: Cutting costs without damaging strategic long-term potential
• Newly Established HR: Standing up a new HR function or pivoting from a very basic administrative-task-oriented department
• Post M&A Integration: Quickly sorting out processes, systems, ways of working and culture post M&A
• Sustainability and Environmental, Social and Governance (ESG): Incorporating sustainability and ESG goals and embedding sustainable practices within culture, talent processes and leadership models
• Risk Mitigation for Organizational Uncertainty: Managing a high level of ambiguity from a combination of internal and external factors
• Reduction in Force: Abruptly reducing headcount and resources

A: Often, CHROs have difficulty finding the best plan format and struggle to decide what inputs to consider when building their HR strategy.

CHROs should take into account the following considerations as they develop any strategy:

• Scenario: The specific context or setting the organization is facing, for example a significant loss of senior employees and institutional knowledge due to a large number of retirements.
• Underlying Beliefs and Assumptions: Elements that are set, and which the CHRO can’t change, that enable and reinforce the purpose of the strategy. For example, if the industry the organization operates in is undergoing a disruptive change (i.e., banking or energy).
• Top Human Capital Strategic Initiatives: The actions the CHRO and HR senior leadership team are responsible for and can control via the HR strategy. Regarding a strategy for impending retirements, this could include creating a retirement risk profile and identifying impacted roles and their potential impact on the organization’s ability to deliver on current and future strategy. 
• KPIs: Determining the right metrics to measure the success of the strategy based on HR’s current and future goals. 
• Rationale: The specific reasons this key moment is a strategic priority and requires strategic investment.

A: One major hurdle HR often faces is the lack of integration between their planning processes and broader business planning. A Gartner survey of 617 HR leaders and managers across 2023 found that only 29% of HR leaders indicated that their HR strategic planning process was fully integrated with the business planning process. This lack of integration makes it difficult for HR to adjust strategy as business changes during critical moments.

CHROs may also struggle to build a human capital strategy for key moments because, even though they may have knowledge from past experiences, the context of their current situations may challenge their experience and expertise.

Gaston will provide more information on how HR leaders can craft strategies around specific critical moments, including cost optimization and growth strategy, at the upcoming Gartner ReimagineHR Conference.  

About the Gartner ReimagineHR Conference

The Gartner ReimagineHR Conference is the premier event for CHROs and HR leaders to learn from the latest research and Gartner experts covering talent acquisition, diversity, equity and inclusion, learning and development, total rewards, talent analytics, and HR technology. Gartner ReimagineHR will be held September 17-18 in London, October 28-30 in Florida and December 4-5 in Sydney. Follow news and updates from these events on X using #GartnerHR.