Thursday 29 June 2017 – There is increasing pressure for human resources (HR) managers to respond to the changing conditions of the accelerated work environment. Digitalization, above all, presents the greatest challenges: nine out of ten of the executives and HR managers surveyed consider answering these the most important future task of the HR department. These findings are drawn from the recent study: Rethinking HR – Transforming Organization and People, which was produced jointly for the first time by: strategy consultancy the Boston Consulting Group (BCG), executive search firm Egon Zehnder, the Quadriga University of Applied Sciences Berlin and the Federal Association of Human Resource Managers (BPM).
For the study, presented at the human resources conference "Personalmanagementkongress" in Berlin on 29 June 2017, the authors conducted qualitative interviews with more than 40 executives from all function areas, as well as HR directors and trade union leaders. The respondents are from industry-leading German companies – close to one-third are HR directors at DAX companies – as well as market leaders in their industry ("hidden champions"). In addition, the authors surveyed more than 1,300 HR managers, about half of whom are members of BPM, on current and future challenges they face.
"Companies are currently transforming at a dizzying pace – and so the way we work is changing. Many HR managers don't feel adequately prepared for this. Yet, a new approach for work is crucial for the competitiveness of these companies," says Prof. Dr. Rainer Strack, senior partner and expert for human resources at BCG.
Strong leadership for the "New New Way of Working"
In the face of rapid technological change, the "New New Way of Working" describes the emergence of a new, highly-digitized, customer-centric, project-based and agile approach. To achieve this, leading German HR managers see the strengthening of employee performance as one of their most important tasks. To evaluate and enhance performance and improve overall efficiency, the use of HR analytics in organizations could be greatly beneficial, suggest the study's authors. However, there is currently a deficiency in the skills needed to increase performance. "It is the leaders who take their teams on the path to agile and flexible working methods. Future-oriented HR management must therefore recognise, promote and evaluate the competence of managers, guide and coache them in the 'New New Way of Working'," explains Prof. Dr. Jörg K. Ritter from the Quadriga University of Applied Sciences Berlin, coordinator of the study and partner at Egon Zehnder.
HR managers consider the efficient establishment of HR processes to be a major challenge. Stronger digitalization and automation of personnel management, as well as the use of robotics and artificial intelligence (AI), could clearly simplify human resources work. Currently, however, HR managers are able to claim high levels of competency in less than one third of the necessary areas. Data could be used to explain and manage business-critical (HR) events – in accordance with privacy policies – for example, to anticipate the departure of employees with "predictive analytics". "If personnel departments wish to use AI tools, they urgently need to build up digital expertise – either by attracting digital HR talents, or through training initiatives for the existing team," says Prof. Dr. Christian Gärtner, professor of business administration with a focus on digital transformation and leadership at the Quadriga University of Applied Sciences Berlin
Connecting HR management with company strategy
The technological change to HR also goes beyond the HR department: three-quarters of the executives, HR directors and union leaders surveyed state that they are currently faced with cultural change in their organization. "HR managers need to consider themselves as designers of digitalization and do more to actively manage cultural change. They should also make use of digitalization tools for their own work. It must be their aim to organise increasingly complex processes in companies with simple digital tools. Every employee and company benefits from this equally," says Dr. Elke Eller, president of the Federal Association of Human Resource Managers.
The study identifies four areas of focus on which HR managers need to concentrate on in times of technological change: the design of the entire organization; the design of work at the intersections between teams, people and machines; sustainable support and development of employees; and news approaches to HR processes.
About the study
For the study Rethinking HR – Transforming Organization and People, the Boston Consulting Group, Egon Zehnder, the Quadriga University of Applied Sciences Berlin and the Federal Association of Human Resource Managers conducted qualitative interviews with more than 40 executives from all function areas, HR directors and trade union leaders. Of these, one-third are HR directors at DAX companies, while the others are executives from medium-sized companies, family businesses, trade unions and start-ups. In addition, the authors surveyed over 1,300 HR managers – about half of whom are members of BPM – on their current work and future recommendations for action. Among the organizations consulted were private companies (87%), public institutions (9%) and associations (4%) of various sectors and sizes. The study was presented at the human resources conference Personalmanagementkongress in Berlin on June 29 and 30.
More about the research project Rethinking HR