Part 1: What needs to change
Human resources (HR) groups have arrived at a transform-or-decline crossroads. The strategies, structures, services and mindsets in place since the turn of the century no longer suffice. The artificial intelligence (AI) enablement era defined by business velocity, human-agent workforces, widening skills gaps and supercharged employees producing exceptional outcomes requires a new HR function.
The enterprise’s accelerating AI transformation has profound implications for every traditional HR function, process and task – especially the administrative and operational work that still consumes most HR professionals’ time but is now being handed to digital workers. Intelligent automation will enable HR leaders to operate as elite business partners while running HR as a business within the business – one whose products must earn their adoption by executives, people leaders and employees and whose success is measured in business impact rather than traditional HR key performance indicators (KPIs).
Avoiding this modernization mandate risks severe consequences. HR groups that remain wedded to 20th century operating models risk surrendering their seat at the table and being downgraded to back-office personnel departments focused on compliance checklists.
The upside of navigating this once-in-a-generation reinvention is equally consequential. CHROs who transform HR into a genuine business-enablement function will become central to their organization’s value equation. This work will be energizing for HR teams that get it right, cementing their role as value creators for decades to come.
Warning: S-curves ahead
Today, HR groups are navigating a series of AI-driven innovation S-curves, a model of technology adoption with three phases: slow incremental progress, steep acceleration as adoption scales, and flattening as the new capability matures.
While AI’s ongoing advance is driving this particular S-curve, its adoption has major implications across the CHRO’s purview.
Organizational structures are moving from triangle-shaped models – broad at the base with large numbers of early-career professionals – to diamond-shaped models with fewer entrants at the bottom, more digital workers and higher-skilled managers in the middle, and an elite core of leaders and specialists at the top. Managing AI agents is an entirely new competency that a growing share of the workforce must master. As automation absorbs more long-static tasks performed by people, roles must be redesigned at an unprecedented scale.
What distinguishes this disruption from other HR transformations? HR leaders must simultaneously reinvent their own operating model while developing new skills-acquisition strategies (“build, borrow, buy or bot”), job designs, workforce planning, and learning and development (L&D) capabilities across the enterprise. The clock is ticking: The transition from the S-curve’s first phase to the second is at an inflection point where incremental thinking and improvements become inadequate.
The artist formerly known as HR
Most HR functions today are built on the pioneering 1990s work of Dave Ulrich, who is widely viewed as the architect of modern HR. Ulrich advocated for HR groups to fulfill four roles: strategic business partner (by aligning HR with business strategy), change agent (by managing organizational transformation), employee champion (by representing employee needs) and administrative expert (by running HR operations efficiently). This framework evolved into a widely adopted four-legged stool structure, with HR business partners aligned to business units, HR centers of excellence (CoEs) responsible for designing HR programs, HR shared services that perform operational delivery at scale, and Field/Country HR that handles last-mile delivery and compliance in key jurisdictions.
While elements of this model remain valid, decades of cost pressures and endless new business and workforce needs have stretched HR’s service delivery model to its breaking point. The following factors are driving the need for a new HR strategy and delivery model:
- A new type of workforce is emerging: The deployment of AI agents means organizations now have both a human and a digital workforce. This renders the concept of “human resources” outdated, reframing the HR group’s foundational scope.
- The organization’s structural spine is misaligned: HR’s “spine” – which consists of organizational design, role design and job descriptions – is out of whack. These paradigms – the sticks and boxes laying out how the organization operates – have changed little in recent years, and few HR teams possess the courage to overhaul them. Job descriptions do not distinguish the skills entrusted to human hands or the skills intentionally placed into digital hands that organizations need to generate value. This shortcoming causes recruiting failures and regrettable attrition that undermine productivity and engagement.
- Current HR KPIs do not connect to business value: Performance measures such as time-to-hire and training completion rates have little, if any, link to business outcomes. CHROs should replace traditional cost, efficiency and task-completion metrics with key business outcomes such as Return on Investments in Talent, Time to Full Proficiency in Role, % of Employees Exceeding Performance Targets, Internal Net Promoter Score, and other outcomes that directly impact top- and bottom-line business performance rather than the things HR can easily measure and control today.
- Highly paid HR professionals spend too much time on low-value work: 60% to 95% of all work completed by every sub-CHRO HR role is best described as administrative and operational work – even those efforts coming from your best HR business partners and your deepest CoE specialists.
Credibility hinges on business fluency
Across HR’s roughly 1,200–1,300 activity-level tasks, hundreds of AI use cases are already being thoughtfully orchestrated by companies and enabled by major technology platforms around the world. There has never been a better time to reimagine HR work and return capacity to the business than the present.
To do so, HR must embrace value creation as opposed to viewing itself as a support function. Rather than a compliance-first cost center, HR should operate as a business-first steward of the organization’s massive investment in people and digital resources, and as a strategic workforce-transformation architect. Rather than reacting to business needs, HR will anticipate requirements while shaping the future of work in tandem with the business.
Above all, the HR function’s credibility in the next 10 years will depend on business fluency rather than fluency in HR.
For more information related to AI workforce transformation, please visit Protiviti’s People & Change consulting page.
For related insights on HR’s new capabilities and structures, watch for “It’s the End of HR as We Know It, Part 2: What comes next.
