Why HR is becoming a business consulting function

Founded in 1996, for over a quarter of a century Fosway Group has delivered independent insight and research on everything from next-generation HR to talent and learning — giving HR leaders, from brands including BP, HSBC, RBS, and Vodafone, the information to make the right buying and strategy decisions.

In Fosway’s latest HR Realities 2022 study of over 300 HR practitioners, undertaken in association with UNLEASH, the research leaders found that pandemic disruptions to working patterns, as well as digital transformation, demographic changes, and economic uncertainty, have made talent availability the most significant business challenge.

As such, HR talent priorities have been realigned to address this skills shortage: reskilling and upskilling, improving retention and digital transformation have shot up the people agenda, whilst learning and business partnership top the to-do list.

In addition, HR is more interested in becoming a business-influencing function, focusing more on strategic and leadership issues; essentially, becoming consultants to the C-suite.

Employee experience is also a center-stage issue, with increased C-suite interest in this agenda item. Here, HR has made wide commitments to improve flexible working, and career opportunities, as well as diverse and equal work. However, not everyone in HR is convinced their current employee experience is good or that their HR solutions can improve the state of play.

But that’s not all: read on to find out a bit more about the numbers that make up the HR Realities 2022 report. 

Work has changed and talent is hard to find

Fosway’s research found that, overwhelmingly, organizations have changed how they have worked over the last two years. Anecdotally, many will know that initial work-from-home mandates have evolved into increased digitization, flexibility, remoteness, and hybridity of work. Employee demand for this has also rocketed. It’s also born out in the HR Realities stats: 92% of respondents report that their organizational approach to where, when, and how people work is different from 2020.

The changing reality of work has also led to new challenges. 95% of HR respondents say the availability of skills is their most significant challenge, followed by 87% saying performance and profitability, and 82% said increasing business agility is also a core concern.

HR is pivoting to meet these challenges

To successfully deliver against these challenges, HR is also evolving, seemingly becoming a consulting, coaching, and influencing function, clarifying its role as a business partner to truly drive both functional and organizational success.

When it came to what respondents thought would drive this future success, the most popular answer was leadership and people management (same position as last year), followed by change management abilities (same position as last year), business consulting (up from ninth in 2021), coaching (up from tenth), and strategic workforce planning (up from eighth).

What the function will focus on has also changed: talent empowerment, as opposed to talent management, comes out on top as the lack of available talent begins to bite.

To help on this agenda, the most important HR initiative was seen to be skills enablement, followed by empowering all talent and then delivering life-long work. Flexible working and delivering on purpose and belonging also made up the top five.

This refocusing on skills can also be seen in what HR says it will do going forward, with respondents saying the top priority must be becoming a learning organization, followed by improving leadership functions, then better partnering with the business, and then improving employee engagement.

All deeply linked to improving talent outcomes in an ongoing tight market and giving the business insights it needs to succeed. 

The employee experience conundrum

As employers seek a competitive edge in the talent stakes, it is clear that HR believes a focus on the employee experience will be also central to success. For the first time since the HR Realities report began in 2014, employee engagement is seen as the top lever for HR future success — ahead of data and analytics capabilities, and employer brand and values.

Indeed, the function believes it has buy-in from the C-suite to improve this area, with only eight percent of respondents saying they don’t have the backing to improve the employee experience. That said, there is a mixed response to whether HR thinks the current workforce experience is a good one: 48% rate it as average or poor with 52% saying it is good or excellent.

Positively, HR is looking to change this mixed outlook. In order to improve the employee experience, 56% of functions are looking to become more progressive regarding flexible working whilst 48% are looking to improve career progression opportunities. A similar number (49%) are looking to improve diversity and equal opportunities whilst almost half (48%) are looking to improve personal development. There is also a desire to improve the personal wellbeing of workers with 46% of firms looking to focus on this in the year ahead.

Yet, the road ahead won’t be without challenges: currently, only one in four believe their HR solutions can deliver the employee experience they want for their workers.

HR in 2023

Yet, solutions to the employee experience conundrum may be at hand. Almost two-thirds (63%) of respondents to the survey said they expect to get investment for HR technology and innovation, whilst over half (51%) said they expect to get investment in developing their HR expertise. In fact, despite strong economic headwinds, it appears that there is an understanding that technology is now foundational to improving the employee experience and optimizing the workforce.

Positively, 30% of HR expect to invest in overall headcount with more respondents than not saying they will become less reliant on external consultants — an indication, perhaps, that HR is expected to become more consultative itself.

And, understanding that talent availability is the biggest problem — and that success for the function will be driven by better change management, consulting and workforce planning, and that there is widespread business leadership backing for changes to the employee experience — there is an impetus from HR to disrupt its own systems.

With a focus on skills and many HR respondents wanting their business to become better learning organizations, learning, and people development systems was the system that HR most wants to disrupt over the next 12 months. This was followed by skills, competencies, and capability management systems, then recruiting, and then onboarding and re-boarding.

However, the report concludes that those who are being most innovative and disruptive are still the exception rather than the rule showcasing that for many HR functions there is still some way to go.

Looking for more insight? Find out more about Fosway’s work with UNLEASH here.