The human resources (HR) profession plays a heroic role in business. As companies deal with issues such as public health, resilience and rapid business transformation, the HR department has become more important than ever.
Historically, HR departments have largely been administrative, with responsibility for hiring, pay, compliance and basic job design. To push HR beyond traditional roles, forward-thinking companies need to focus on the employee experience and drive reskilling, cultural transformation and an evolution to new models of work.
Our research clearly shows when businesses make this shift, they far outperform their peers. That’s because employees who feel a sense of belonging, purpose, achievement and happiness at work are likely to perform at higher levels and to contribute above and beyond what’s expected of them. Unsurprisingly, they’re also less likely to quit.
But today’s enterprises are far from universally able to create these experiences for employees despite investments in human resource management software, digitization and technology. There is also little evidence employees are more deeply engaged—or happier—than they’ve been in the past.
Businesses that undertake strategic digital transformation have an unmatched opportunity to reinvent the employee experience and to put people’s needs first. As companies move data and applications to hybrid cloud environments, they can simultaneously transform processes, workflows and mindsets to become people-centric organizations. This transformation is referred to as HR 3.0.
The HR 3.0 transformation
Companies are deploying new technologies at scale—especially those referred to as “exponential” because their impact scales so quickly—to make use of the massive volumes of data produced and captured by devices in an Internet of Things (IoT). Businesses use these technologies, especially artificial intelligence (AI) and automation, to build new business platforms and restructure the flow of work across extended ecosystems.
The global pandemic ushered in a massive shift in where work gets done and with diminished human contact due to staff working offsite, enterprises must become inherently humanized, build engagement with remote employees, foster trust in in a climate of uncertainty and cultivate a resilient workforce capable of facing whatever the future may hold.
HR 3.0: A business imperative that turns HR into an agile consulting organization
In its studies of hundreds of global companies, IBM found HR departments fall into three categories:
1. HR 1.0, the traditional departments focused on compliance, administration and efficient service delivery.
2. HR 2.0, when teams have moved toward integrated centers of excellence and focus on training and empowering business partners to deliver solutions.
3. HR 3.0, which only 10 percent of companies have achieved, turns HR into an agile consulting organization, one that not only delivers efficient services, but also practices design thinking to push innovative solutions, cognitive tools and transparency.
IBM research shows why a radical reinvention of human resources is critical for organizations. More than two thirds of the executives we surveyed believe that the global HR function is ripe for disruption. Even more convincing, the best companies in the world—those outpacing all others in profitability, revenue growth and innovation—are extremely confident and committed about the need to reinvent HR.
More than 2/3 of executives surveyed say the global HR function is ripe for disruption.
We uncovered widespread agreement on five common characteristics that underpin HR 3.0:
1. Deeply personalized experience-centric design
2. Skills placed at the core of the enterprise
3. Data-driven decision making powered by AI
4. Agile practices for speed and responsiveness
5. Consistent transparency to preserve trust and reduce reputational risk
Employee experience is central in HR 3.0, as it drives a company’s overall enterprise transformation. The HR function becomes more automated and AI-driven, more data-centric and consultative and more agile. However, achieving this future vision is not easy. Only 30 percent of companies tell us they are living some of the principles today and only one in ten are leading in all five.
The exciting thing about our findings is that HR 3.0 is not an idea: it’s a reality you can achieve by deploying design thinking and highly intelligent cognitive tools, with a focus on transparency, inclusion and change.
Every organization is rethinking work, ways to support people and the roles of technology and leadership. In a business landscape characterized by near constant disruption, HR 3.0 is the next evolutionary step.
Below are areas with associated implications and impacts for the organization on the HR 3.0 journey.
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