Article: HR transformation realities no one wants to discuss

Strategic HR

HR transformation realities no one wants to discuss

HR (and other) transformation efforts are back with a vengeance with many executives looking at AI technologies to usher in new ways of work. But, are leaders really ready to take on these efforts and what sort of executive is best suited to drive one of the most challenging change efforts possible?
HR transformation realities no one wants to discuss

Transformational HR projects are once again getting a lot of discussion with many being greenlit. Why? Newer technologies, like generative AI, RPA (robotic process automation), smart analytics, and more are triggering some firms to consider how these could generate competitive and economic advantage. Additionally, changes in the workforce post-pandemic are causing executives to demand a better approach to their war for talent: a war many firms have made little to no progress in winning. 

The magnitude of potential change in these projects is often great with HR processes getting dramatically reimagined and reengineered. Constituents beyond HR staffers (e.g., alumni, jobseekers, contract workers, etc.) will also expect redesigned and more compelling processes and technologies. When large numbers of people are impacted by significant change, HR needs to approach these new initiatives as something more than a simple automation project. These initiatives will be transformational, may take considerable time and effort to implement, and will contain a high degree of risk to complete successfully. Will your next HR transformational effort succeed?

A list of challenges that are likely to emerge during a transformation effort. Copyright TechVentive, 2024.

The fact that transformational efforts are complex and time-consuming should indicate that there could be significant risks associated with them. And, unsurprisingly, some great HR transformational efforts get halted sometime soon after they get underway. 

Is this due to a lack of planning? Not necessarily. Is it a people issue? Sometimes. But more often than not, the HR transformation effort gets hammered by an external event. It could be an economic recession, an industry downturn, a pandemic, appearance of a new technology (e.g., generative AI), rising interest rates or other causal factors.  

Big initiatives can also grind to a halt due to a number of company-specific factors. Some transformations are derailed by a leadership change, new capital constraints, a change in board directives, a restructuring, a merger or some other force that can suddenly change the entire business case or raison d'être (i.e., the reason for existence) of the transformation.

In fact, the bigger and more time-consuming a project is, the risk that it may be derailed grows.

The ugly truth is that many of these HR transformation efforts are frequently halted or cancelled prematurely. Few people like to discuss this as they may feel some measure of professional embarrassment due to the project’s cancellation. That’s unfortunate as these are rarely the ‘fault’ of HR or the project/program leader. 

An essential step in executing a successful HR transformation is to preemptively identify potential program risks and develop mitigation measures to work through these challenges. And while not all of these risks can be mitigated completely, great risk mitigation responses can lessen the risk impact, provide for an orderly transition to an alternate plan, etc. Never sign up for a transformation initiative until you craft both a list of potential risks and the methods to mitigate these risks. A great transformation leader embraces risk but also does a great job of managing downside risk!

Leadership issues can adversely affect many of these HR transformation programs. A new CEO might rethink how the company is organised or structured. A centralised, top-down organisation may overnight become highly decentralised with new decision rights passed to business unit leaders. A transformation effort, like ERP standardisation, can instantly be on the wrong side of a new business or go-to-market strategy. Leadership changes can also impact key transformation project roles. For example, the project sponsor could get transferred to another department or re-assigned to an expatriate offshore assignment. If key team members must be replaced in the middle of the project, the transformation can be delayed and/or some key decisions may get rethought. 

Mergers, acquisitions and divestitures can materially impact a transformation project. These large capital transactions may cause IT to radically reconsider its systems plans, software purchases, and other priorities. Your big shared service program may get rolled into a merger integration effort or cancelled altogether. These big financial transactions can directly or indirectly change project/program priorities, trigger staff reassignments, etc. At a minimum, these transactions can delay your transformation effort and may force you to recompute the value proposition or business case for your project.

The importance of political capital to successful transformation

Without sounding too Machiavellian, a great HR transformation needs a politically savvy and influential leader. This is someone who has the respect and ear of the executive committee and board of directors. This person must be willing to burn through some of the political capital they have amassed during their tenure with the firm. Why? Because some of the transformation’s design decisions, budget requests or timing issues will conflict with the needs, staffing, budget and power of other leaders in the firm. 

An HR transformation leader that cannot defend the budget needed for their initiative will never succeed. And note that a leader that has already burned through their political capital during an earlier project may also be of little help for the transformation. They’ve effectively used up all of their chits and can no longer call in any favours from others in the organisation. 

CHROs often bring in third-party consultants or implementers to help with this political capital shortfall. A savvy HR executive will let the third-party defend the initiative, justify the costs and benefits, request the cooperation needed from other organisations (e.g., IT), etc. Even if the third-party is unsuccessful, it doesn’t impact the career or existing political capital of the CHRO. 

I get handed this role all of the time. Clients want to make big transformative changes but they would also like to be there at the end of the initiative (as an even more successful executive). They will let me use up all of my influence, persuasion, etc. throughout the project instead of their own. That way, when I leave the project (a spent resource), they can take credit for the change and see their own political capital rise as a result of the new changes. 

A mentor of mine once opined that the minute you have two or more people in a room, you have politics. The scale of transformative projects virtually ensures that politics will be omnipresent. Great transformation leaders know this and plan accordingly.

A list of risks that transformation leaders should anticipate and seek to mitigate. Copyright TechVentive, 2024.

Additional Considerations

Finally, let’s acknowledge a few more uncomfortable truths about HR transformation projects:

Not everyone is cut out for leading a transformation effort. These are often technically complex, multi-faceted, emotional, financial and political efforts. There are landmines everywhere and the best leaders may need to be highly empathetic and forward thinking. In other words, they have to constantly anticipate all sorts of moves by others and changing business realities. They also have to be highly adaptable while maintaining thick skin. 

Project leaders and sponsors should keep Newton’s Second Law of Motion front and centre. That law stated that Force is equal to Mass times Acceleration. So, if you want to move a massive transformation project along quickly, you will need to expend a significant measure of force. There’s simply too much inertia (i.e., a body at rest will remain at rest) in your firm to do anything except what it always does unless you really apply a lot of force. 

Changes of this magnitude will trigger a number of change management challenges. Like some famous journeys in history (e.g., Homer’s The Odyssey) not everyone makes it to the end. There will be passive resistors and other parties who will fight the change. And, don’t forget those who just hate any change. They think nostalgia is a strategy (it only is for failure). So, make the change efforts a key part of the transformation. 

A corollary to #3 above is that the people issues will often dwarf the technical or technology challenges you’ll encounter. 

Bottom line: If you, like many Texans, believe in “Think Big, Be Big”, then you’ll have a mindset for transformation. And, if that’s not quite your cup of tea, then bring in some help who can bring the change and results your firm desires. 

Good luck.

Brian Sommer is a frequent keynote speaker on HR Transformation and other burning issues at People Matters events, including TechHR Singapore 2022, TechHR India 2023, and TechHR Pulse Mumbai 2024. Catch him at more People Matters conferences this year!

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Topics: Strategic HR, #Future of Work

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