The moment is now: how HR will lead business growth in the AI era

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Welcome to our HR Modernization Playbook: Tomorrow’s people – Why HR matters more than ever in the age of artificial intelligence.

Digital transformation is happening faster than ever. The adoption of artificial intelligence (AI) and automation will redefine jobs, enhance employee productivity and accelerate workforce development. In fact, skills and culture – not technology – are the biggest barriers to business growth in the AI era. This means CEOs are looking to their CHRO to lead culture change, manage talent and drive down costs. The time to act is now: the future is already here.

Chapter 1 – The moment is now: how HR will lead business growth in the AI era

The world is changing, and the workplace – ever a microcosm for wider social change – is undergoing a revolution. We are entering a new era for work, underpinned by rapid advances in intelligent technology and amplified by cultural shifts as digital natives enter the workforce.

This is an era whereby our expectations of what can be achieved, how, where and when, are being challenged every day. Job roles are being turned inside-out, with not just the types of role on offer but their number and value subject to unprecedented change. People have never been more important to the success of a business – and yet never more fearful for the impact of technology on their jobs.

Digital transformation is not new. But its pace is quickening. Artificial intelligence (AI) is set to take centre stage in organisations, with intelligent machines demonstrating their potential to boost employee productivity, reduce costs and keep businesses competitive in a fast-moving digital economy.

Cutting costs while upping revenue and productivity are a fact of life for most business leaders today. But the winners in this new era will be those who embrace data to identify where they can introduce efficiencies, streamline costs and respond predictively to problems.

This is no longer a future, what-if scenario: it’s happening now.

Strategic, growth-focused leader

With AI and automation set to impact virtually every job, the role of HR has never been under more scrutiny. The CHRO plays a crucial role in enabling people and processes that embrace new technology and business models. No longer head of a back-office function, the CHRO must step up to become a critical member of the board, responsible for driving the success of the business, as well as guardian of the employee experience.

By implementing an HR strategy that incorporates future-facing technology, CHROs can fulfil their potential, securing talent and demonstrating their importance to the organisation.

Just like the CFO – once head of a back-office, process-driven function – the CHRO must emerge as a strategic, growth-focused leader, because as AI transforms our workplaces, talent becomes a valuable and scarce resource. Pressure is falling on the CHRO to attract, retain and engage the people critical to the organisation’s growth; people with the precise skills needed to leverage AI. It is becoming clear that, far from eliminating people from the workforce, AI is simply raising the stakes: demanding the right type of leadership skills, creative vision, strategic mindset and empathy to get the best out of intelligent machines.

As a recent McKinsey report stated, “The time is right to accelerate the reinvention of HR as a hard-edged function capable of understanding the drivers of strategy and deploying talent in support of it – most importantly as a result of the availability of new technological tools that unleash the power of data analytics.”

Embracing change

McKinsey urges CHROs to reimagine their role in the following ways:

1. Rethink your position as a business partner who truly owns the critical talent asset
2. Embed people analytics into day-to-day HR processes to drive better decision making
3. Automate basic HR operations so the team becomes a strategic adviser to line managers
4. Focus HR resources in agile ways so the basics continue to be delivered seamlessly

IBM’s own research shows that CHROs consider change management and technology adoption to be their main challenges as organisational demands evolve. We see that most are keen to automate basic HR tasks and are eager to be part of digital transformation. But it is also clear that CHROs need to catch up with the CFO in becoming a trusted advisor to the CEO. And there is no shortage of barriers to that: a lack of confidence or knowledge in cloud and AI software is holding many back.

Human and machine

It is no surprise that many CHROs are wary of the potential of AI to transform the workplace generally and the HR function specifically. A people-based environment is always going to come up against questions of privacy when AI is applied, and many fear that machines will eventually replace humans as they become more intelligent. But CHROs are perfectly positioned to embrace these discussions and help to demonstrate that, while data and analytics can do much to embolden a business, they can’t do everything; if used correctly, they simply support human judgement and empower people to focus on the bigger picture.

Whatever the uncertainties, one thing is clear: CHROs do not have time to waste. AI is changing the workforce today, not tomorrow. If CHROs don’t lead this change, firms will look outside the function and even the organisation for fresh perspectives.

Looking ahead

In this series of blog posts we will take a look at the tangible ways in which data and AI are transforming HR functions and processes; address questions and fears boards may have about the proliferation of these technologies; chart the progress of the CHRO from back-office to board; and examine the crucial role of culture in enabling AI.

We hope it will leave you more informed and convinced that, when harnessed by bold, strategic CHROs, AI can help improve employee engagement and make the business more productive.

Explore the next chapter in this series to find out how AI is transforming HR today or visit our website to find out more.