Big shifts in the tech industry are straining operating models, processes, and talent requirements. Companies must transform—and fast. To support that transformation, HR and the role of chief HR officer must also change.
This transformation is essential for addressing trends that are straining operating models, corporate culture, and talent requirements.
- Increasing Growth While Preserving Margins. Although overall industry growth remains modest, certain segments are growing briskly (for example, software as a service and mobile-enterprise security). However, core businesses, such as on-premises applications and hardware, face increasing commoditization. . Since commoditized businesses often fund the new high-growth areas, the challenge is to create value in those areas faster than it’s being lost in the commoditized areas.
- Managing the Core Business Alongside New Growth Areas. Managing your legacy business alongside new growth areas requires maintaining two different operating models: the legacy model optimized for efficiency and the growth model optimized for speed and market responsiveness. Larger companies should decide whether to integrate or segregate the two models. .
- Dealing with Skill Shortages and Talent Wars. Skill shortages are a major concern, especially in areas such as security, enterprise applications, systems engineering, and cloud storage. Specifically, there is a shortage of software engineers, data scientists, and developers with specific skillsets, such as knowledge of key programming languages. At the same time, many companies are deficient in new skills, such as software, digital, and customer contact skills. There is a war for the best and brightest—what Google calls smart creatives. Attracting, deploying, and retaining such talent while addressing specific skill shortages and ensuring rich diversity can be incredibly challenging.
- Collaborating Across Boundaries. Many well-established technology companies have grown on the back of a single flagship product. Today, companies are competing across product categories, and with the rise in integrated solutions, silos are merging. Employees must be able to easily navigate functional and product boundaries and collaborate in order to deliver more holistic solutions.
- Finding New Ways to Work. Agile software development, agile business practices, and XaaS (Everything as a Service) require new processes and operating models. Core business processes, such as product development, are following new rhythms, creating new handoff points, and dictating new deliverables. Development deadlines, sales cycle times, service feedback loops, and other timelines are compressing dramatically. With customers, and even with ecosystem partners, it’s essential to ensure effective collaboration across product teams and functions.
HR’S NEW AGENDA
Where does the human resources function fit into all of this? Its role should fundamentally change. It can no longer be a supporting player. It has to assume a leading role as a strategic partner in driving and orchestrating business transformation.
Of course, HR can’t shed its traditional responsibilities, such as performance reviews, talent searches, and benefits administration. But it should take on broader and deeper organizational challenges in several key areas:
- HR’s Engagement with the Business. How does HR engage and interface with the business? Is the HR operational plan in sync with the business cycle?
- HR’s Own Talent. What talent, competencies, and qualifications are needed in HR?
- HR Analytics, Measurement Systems, and Related Tools. Which technological solutions are needed to support HR’s work?
- HR Structure and Collaboration. How should HR leaders and staff be organized and work together?
- HR Processes and Capabilities. What HR processes and capabilities are required to support the business?
- HR Operational Planning. What is HR’s holistic operational plan?
To fulfill its new role as transformation enabler, HR will also need to retool core processes and upgrade its capabilities. Several critical areas will need attention:
- Organizational design
- Employee engagement and culture
- Strategic workforce planning
- Talent acquisition and retention
- Learning and development
- Leadership development
- Compensation and performance management
The implications of these changes and challenges are enormous. It’s time for technology companies to formulate a new view of HR and forge a deeper partnership between HR and the business.