Why HR 3.0 Captures the Attention of Many Company Leaders

​Even while withstanding the grind of day-to-day decisions, HR teams must be working to reinvent themselves and serve in more critical, strategic roles at their companies. IBM calls this critical transformation HR 3.0: a business imperative and a paradigm shift.

More than two-thirds of the executives IBM surveyed said the global HR function is ripe for disruption. "The best companies in the world—those outpacing all others in profitability, revenue growth and innovation—are extremely confident in the need to reinvent HR," according to an IBM report. Eight times as many HR execs from these "north star" companies are already driving the disruption in their organizations as compared to others, it went on to state.

IBM also found widespread agreement on five common characteristics that underpin HR 3.0:

• Deeply personalized experience-centric design.
• Skills placed at the core of the enterprise.
• Data-driven decision-making powered by artificial intelligence.
• Agile practices for speed and responsiveness.
• Consistent transparency to preserve trust and reduce reputational risk.

However, achieving this future vision is not easy. Only 30 percent of companies from the survey said they are living some of the principles today, and only 1 in 10 are leading in all five.

HR Advancing to Strategic Partner

Creating and emerging from that disruption calls for HR leaders to develop different attitudes about their role and how they go about achieving success for their companies, research shows.

Despite the workplace upheavals of the past two years, perceptions of HR effectiveness have increased, according to McLean & Company's 2022 Trends Report. Unfortunately, the gap between how HR professionals and non-HR professionals perceive HR effectiveness remains significant, pointing to a need to improve communications about HR's role and how it enables organizational success.

McLean & Company reports that when HR is a partner, organizations are:

• 1.4 times more likely to be highly effective at quickly changing at scale to capitalize on new opportunities.
• 1.3 times more likely to be highly effective at generating and implementing new ideas.

"We're at a tipping point in terms of transformation of the HR department," said Sally Cornet, executive counselor at McLean & Company in Palm Beach Gardens, Fla. "HR continues to evolve in terms of it becoming a true business partner with the executive suite. HR leaders must become influencers and develop their own skills on how to do this more effectively," she said. "With the pandemic, HR was thrust, front and center, into having to deal with so many things, mostly new things. Some organizations were ready for this; others weren't. Companies looked to HR to make meaningful changes."

Cornet added that the companies that weren't ready were reactive and mostly took a tactical approach, while those that were ready took more of a strategic approach.

The Key Components of HR 3.0

The strides HR made in 2021 planning and executing on strategy appear to have solidified, the report showed. HR departments are also moving beyond traditional functions: 83 percent of respondents said that at least one of the following functions has been added to the HR department's portfolio: diversity, equity and inclusion (DE&I), corporate social responsibility, or environment and social governance.

Not surprisingly, recruiting remains the top organizational HR priority, and HR respondents plan to spend 25 percent more time on talent acquisition in 2022, according to the study.

"HR has more on its plate than ever," McLean & Company reported. "Despite HR's expanded role as a strategic partner and the increased number of FTEs [full-time employees] it is responsible for supporting across the organization, HR has managed to increase its effectiveness." And yet, most respondents do not expect HR headcount to change, even with HR's expanded scope.

How BMW Is 'More Transformational Than Most'

Joe Ziska, manager of HR Planning and Steering at BMW Manufacturing Co. in Simpsonville, S.C., said he finds that his company's HR department is more transformational than most.

"We want HR to be more than a valued service and instead become a strategic partner," he said. "We're not here just to fill orders, but rather to be proactive on issues our company faces."

Two of those issues are workforce planning and upskilling. BMW, which employs 8,000 workers and 3,000 contractors in South Carolina, is about three or four years into its workforce planning initiative.

"In it, we're looking at a five- to seven-year window for our workforce needs in things such as associates' competencies, and [we] are considering what new roles we might need to fill—positions that don't even exist today," said Ziska, who has been with the company for 14 years, the past eight in its HR department. "For example, what new vehicles are we working on? What changes might need to be made in our paint shop? What strategy might change for how we operate our plants?"

Ziska explained that their analysis is both qualitative and quantitative. "With each skill we identify, we think strategically about how we'd fill that gap through training or upskilling. We'd like to train from within, but we know that doesn't always work with all skills, so we might need to look outside, or even internationally, to find those workers," he said. "We're giving our talent teams all the transparency they need now about what is coming to help us with hiring for the future."

BMW is looking into creating university programs to help train workers to meet the needs of five years from now, Ziska said, "so it starts there—the fifth-year finish line—and we work backward to strategize a plan to get us there."

BMW also is conducting scenario planning to address external risks such as what competitors might be doing, advancements in automation, and associates' expectations of compensation and work/life balance.

"These are things we don't have control of but will need to adjust to if and when they arrive," Ziska said. "We'd only implement them if we find ourselves heading in those directions. To determine that, we're coming up with KPIs [key performance indicators] and other metrics that will let us know when we get to that point. For example, if we find that inflation rises 6 percent, we'll do X, Y and Z in response."

Technology and Training Take You There

Data analytics is the skill that is perhaps most cross-functional within BMW's operations and that of many other companies.

"It's not just a trending but temporary workplace skill," he said. "It's one that will become a standard competency that is needed in every department, if it isn't that already."

Cornet agreed that companies today "have a voracious appetite for data: how to understand it and use it to their benefit for operations. Having that data, it can show those companies what's going on in the world."

With the growth of electric vehicles (EVs), any skills related to that process are needed at BMW, Ziska said. (BMW is one of the largest producers of EVs globally.) "It's not just something needed for us in manufacturing, but in our suppliers as well," he said. "We're also focused on skilled maintenance workers. Years ago, we'd need parts and we ordered them. Today, with 3-D printing, we can print our own. Those who were in charge of the logistics for ordering parts before are now being trained on how to make them via 3-D printing."

Cornet said that when it comes to training employees, "companies need to plan for this because they can't necessarily trust the education system or universities to be able to provide the training they will require."

For BMW, the general area around its headquarters is the northwest corner of South Carolina, which has a population of about 1 million. "So that's not like Detroit, New York or San Francisco, and because we want to 'grow our own' workforce, we need to be looking to develop programs through technical schools, high schools and universities to train the kind of workers we'll need," Ziska said.

For its current workforce, BMW has an eight-month program that can help train production workers to become robot and equipment maintenance workers if they are more technically minded. And if they are more leadership focused, it has a long-term development program to enable those employees to become front-line supervisors.

DE&I Driven by Belonging

Being a federal government subcontractor, BMW strives to meet the Office of Federal Contract Compliance Programs' baseline requirements for affirmative action. "We are focused on recruiting a diverse set of candidates because if we have a diverse pool, our hiring panels will be in a better position to hire for diversity," Ziska said. "When giving promotions, we look to create more diverse management teams as well."

While BMW has focused a lot on diversity in recent years, the company has been putting more attention and energy toward inclusion. "It's one thing to hire a diverse workforce, but if they don't feel like they are a part of the company, they will leave," Ziska said. "Inclusion comes from our company culture. The past year, we've conducted many employee surveys to get an understanding of what our workforce wants. This is a very collaborative approach. It's one thing for a company to put forth a global workforce initiative, but we're finding from these surveys that it makes more sense to address the specific needs of a given manufacturing plant." BMW operates over a dozen manufacturing plants worldwide.

For the HR team, a key step is moving to more digitalization and innovation, something the company began in 2018. "Using the latest technology helps us to implement these things more efficiently," Ziska said, such as using augmented reality and virtual reality for employee training. "Companies that are not using what's available will fall behind."

How to Manage Hybrid Workers

The hybrid work environment is not going away, Cornet said. "Employees today have so many more choices on the type of work environment that they can perform in," she said. "They want the opportunity to choose their own flexibility. HR teams spend a great deal of time on their companies' employee value proposition, and now HR needs to re-evaluate that proposition and have a culture of hybrid work included in it."

Cornet said some corporate leaders are confident when allowing flexible work schedules and others aren't—and they know it.

"Some chose not to allow it because they didn't think they'd be good at it, so they instead called for their workers to return to the office," she said. "Those decisions led to disengaged employees and, eventually, the Great Resignation [that has gripped the country]."

Being a successful manager looks different in a remote or hybrid environment than it did in the office, Cornet said, and leaders need to be taught how to lead a hybrid and remote workforce. "They need to be able to create engagement with their employees, give those workers a sense of belonging and build strong relationships," Cornet said. "HR needs to influence these executives to take those steps and show them the benefits of making it happen."

HR Departments Endure Elevated Stress Levels

Meanwhile, many HR professionals report feeling more stressed than ever, according to McLean & Company's report. "There's been so much to do in the past two years," Cornet said. "HR leaders are also surrounded by so many others who also are overly stressed. In 2022, HR leaders need to put greater focus on their own mental and physical well-being, in addition to that of the broader workforce."

Stress levels within HR have risen 1.5 times compared to 2020 and 1.2 times compared to 2021, according to the McLean & Company report. Despite such conditions:

• 12 percent of respondents have programs or processes to support HR professionals.
• 58 percent of respondents have no plans to implement programs or processes to support HR professionals.

Many impacts from the workplace upheavals of the past two years are here to stay. In 2022 and beyond, HR will continue to play a critical role in helping organizations find their footing in the new world of work. As part of that effort, SHRM now offers THRIVE360, which uses a data-driven approach to analyze a company's HR function and leverages SHRM's Capability Model to align HR functions with a global standard of excellence. Through strategic planning, SHRM will help position organizations for success now and in the future.

"THRIVE360 is designed to thoroughly assess an HR function's strengths and growth priorities," said Nick Schacht, SHRM's chief global development officer. "An evidence-based approach is a necessity when aligning HR strategy with business objectives." 

Paul Bergeron is a freelance writer based in Herndon, Va.