SME News March 2018

24 SME NEWS / Q1 2018 , TheHackett Group’s 2018key issues studyfinds shortfalls inHR’s ability to support enterprise goals, plus gaps in criticalHRcapabilities. HR Focused on Unlocking Value of Digital Transformation; But Less than Half Have the Necessary Resources & Skills in Place Despite another year of flat to decreasing budgets and headcounts, HR organizations are focused on helping their companies unlock the value of digital transformation this year, according to 2018 Key Issues Research from The Hackett Group, Inc. But while most HR executives recognize the future potential of digital technology to transform the enterprise as well as HR roles and operating models, less than half feel their organizations have the resources and capabilities in place to execute and support their company’s digital transformation strategy. The research also found that urgent shortfalls exist in HR’s ability to support critical goals, including developing executives who can lead in volatile environments and enabling business strategy execution. In addition, there are significant internal gaps, with limited ability to address some of the most critical development areas. On the upside, HR organizations are now targeting many of these same areas for improvement initiatives in 2018. Overall, HR budgets are expected to decline by 0.7 percent in 2018, significantly more than the 0.2 percent actual decline in 2017. In the context of projected revenue growth of 3.6 percent, this creates productivity and efficiency gaps that HR must overcome. Adding to the challenge, HR staffing is expected to decrease by 1.0 percent in 2018, much more than last year’s actual decline of 0.1 percent. Over 90 percent of HR executives in the study agree that digital transformation will fundamentally change the way HR services will be delivered over the next three to five years. In addition, 86 percent believe that digital transformation will drive improved performance in cost, quality, cycle time, and other areas. But most HR executives don’t think they are fully prepared. Only 46 percent say they have the resources and competencies in place to execute their company’s digital transformation strategy. Although this figure is up somewhat over last year, it still indicates that a majority of organizations are still not yet ready to fully execute their digital transformation strategies. Overall, the research also revealed that many HR groups are simply not prepared to provide capabilities critical to helping the enterprise accomplish its strategic and operational objectives. The research assessed HR’s ability to support the business agenda and achieve its own performance goals, and found large gaps in many key areas. The most critical among these is enterprise digital transformation, which jumped to the top of the list of key development areas in 2018, but where the study found that HR’s ability to address is very limited. Development of executives who can lead effectively in a volatile business environment is another area that has been at or near the top of HR critical development needs for the past three years. HR organizations have significant room for improvement in bridging this leadership gap. The research identified several other areas where capability gaps exist between strategic enterprise objectives and HR’s ability to address them: ensuring that staff have the right skills, behaviors and mindsets for successful business strategy execution; providing effective, programmatic change management; and supporting the retention of staff in key positions with critical skills.