By Dorothee El-Khoury, HR Practice Leader EMEA – The Hackett Group
With workforce health, safety and well-being at the forefront as organizations prepare for the next normal, the role human resources has never been more important.
The global pandemic has changed the way we work, where we work and how we interact with one another, producing new realities that every company must factor in as it reshapes the workplace for the “next normal.”
Looking back on the response to the crisis, we have seen companies rapidly adapt to flexible working by using solutions such as virtual collaboration tools and videoconferencing, accelerate digital transformation to remain efficient, and reskill employees to take on additional work in a very different work environment.
Given the challenges and uncertainty ahead, workforce and talent strategies will be key dimensions of the evolving organizational agenda.
The percentage of staff that work remotely is projected to increase 2.5x in the post-pandemic world, according to a recent poll by The Hackett Group.
New business strategies will require new workforce demand and supply scenarios, and the transition to a more digital workforce will likely accelerate as the next normal unfolds, requiring new digital talent strategies.
While companies manage changes to business strategies, operations and workspaces, HR will need to define critical workforce roles, skills and behavioral characteristics, as well as recommend the right digital technologies to enable workforce productivity.
HR teams must also be prepared to maintain workforce engagement and productivity as their company resizes for the next normal. The function must deliver talent management processes — including learning and development, talent acquisition, and performance management — virtually and faster. These capabilities will require new investment to meet future needs. Lastly, with the shift to a more remote workforce, HR will need to foster increased trust, transparency and communication across the organization, as well as an additional focus on developing leaders’ soft skills.
Every business currently faces three major short-term imperatives.
The first is defining the next normal for talent, which requires the identification of permanent changes to business strategies and operations, development of new strategy-aligned talent, updated demand and supply scenarios, and resizing of the target operating model to right-size the teams.
HR will also have to refine criteria for determining critical workforce roles and skills and assess skill profiles to match changing workforce demand and needs. Further, they must also contribute to redefining the physical and digital workspace. To do so, they need to segment the workforce population, to assess digital technologies enabling the new capabilities, and to develop rapid response scenarios for upcoming regulatory changes.
The second major imperative is to redefine workforce-enabling strategies. Redefining HR priorities will enable new ways of working digitally and allow HR to embrace changing business requirements, labor requirements, tax rule changes and relevant government and local programs. Talent policies will need to evolve consequently: compensation, performance management, promotion, talent and succession management… as well as identifying and tracking drivers of workforce resiliency, including trust in leadership, employee health and wellness, and engagement.
The third imperative is to architect the next-generation HR operating model. The department must set the target cost structure and rebalance variable and fixed costs based on most likely growth or contraction scenarios, as well as defining the physical and digital workplace footprint. HR must also establish the right service mix by realigning support around differentiated and commoditized services. To do so, HR will need to fast-track enabling technology and boost workforce analytics & decision support capabilities to allow real-time action.
In the middle term : targeting the next normal
As companies define their new business norms, go-to-market strategies and operating models, they must also resize their enterprise cost structure. This will include aligning staffing levels and ways of working with new business realities and projected revenue. It must also entail retaining the talent needed to prevent continued revenue deterioration and spearhead new growth.
In a recent analysis by The Hackett Group, we examined the sales, general and administrative (SG&A) delivery model and its relevance, given declines in revenue.
The study concluded that the typical $10 billion company will need to reduce SG&A costs by 15%, or $241 million, to sustain operational efficiencies across the enterprise and maintain its pre-pandemic ratio of SG&A cost to revenue.
For companies to prevail and achieve top-quartile performance – rather than simply sustain performance – in the next normal, would need to reduce SG&A cost by 30%, which translates to $486 million.
HR must lead the design of new talent strategies and make the case for the investment required to support structural operating model changes, including new funding of digital technology enablement, blended work, and learning and development programs to reskill the future digital workforce. It will be essential to manage workforce demand shifts and structure the new way of working in ways that ensure high levels of workforce wellness, engagement and productivity.