What Is HR Transformation? (With Key Components and Benefits)

Updated November 11, 2022

Human resource management is an important function of any organization or business. With changes in labour markets, it's important for businesses to participate in HR transformation to re-evaluate talent strategies and assess activities related to human capital management. Understanding this complex change in the human resource function can help you develop a more strategic approach to managing talent to achieve business goals. In this article, we answer "What is HR transformation?", explain the objectives of implementing changes, review its four components, and offer tips for a successful transformation.

What is HR transformation?

If you're considering a career in human resources, you might wonder, "What is HR transformation?" HR transformation is a dramatic redesign of the human resources function within an organization to improve the department and its operation. Many organizations participate in this transformation process to better align the business goals with the HR strategy, processes, and technologies to deliver results for their stakeholders. This can help businesses differentiate themselves in the market as an innovative employer and increase their competitive advantage. Participating in a transformative process within the HR department can improve the process of attracting, hiring, and retaining employees.

Related: The Definition and Role of Human Resource Management at Work

Objectives of HR transformation

With the increase in technology and the differentiation of working models, HR departments have begun prioritizing talent strategies to improve operational success. An effective HR transformation can increase the value of an organization's HR department through the evaluation and design of more attractive policies to attract top talent and retain employees. A thoughtful strategy focuses on helping employees achieve the goals of the organization and deliver on the promises made to customers, vendors, and stakeholders. Here are some additional objectives of HR transformation:

  • Improve the employee experience. Employees are increasingly expecting more from their employers, such as embracing more innovative ways of thinking and operating. Organizations use HR transformation to evaluate the needs and desires of the workforce and make changes to increase employee happiness, performance, and retention.

  • Facilitate skills improvement. HR transformation involves the development of the skills and abilities of HR professionals to improve the employee experience. This may include developing data analysis skills, talent management abilities, or technological capabilities.

  • Deliver more impact for stakeholders. By promoting collaboration and productivity between the executive leadership and the HR managers, organizations can align their business goals with the talent strategy. This can improve a company's ability to move into new sectors, scale its business model, and deliver positive results for stakeholders.

  • Adapt to changing talent preferences. With the increase in flexible working models and talent expectations, it's important for businesses to recognize the changing talent requirements and adapt. This can help organizations attract skilled candidates, offer competitive employment packages, and reduce employee turnover.

  • Position the HR department as a strategic partner. By aligning the business goals with the talent strategy, organizations can work with HR professionals to identify issues with talent acquisition and build solutions for succession planning. With the HR department as a strategic partner, businesses can use labour market insights and trends to make informed business decisions.

  • Comply with changing regulatory requirements. Compliance with changing legal and regulatory requirements around employment law is essential for all businesses. HR transformation can help you improve your processes to increase compliance and make organizations more adaptable to future changes.

Related: 6 Useful HR Competencies (And How to Develop Them)

4 components of HR transformation

Here are the four components you might see in a human resources transformation strategy:

1. Improving leadership and talent strategy

HR transformation focuses on the development of a strategy that forecasts business needs, analyzes human management trends, and prioritizes workforce preferences. Senior HR professionals use the strategy to inform short-term recruitment and long-term talent acquisition plans. A primary objective of a successful transformation positions human resources as a strategic partner in the development of a business to ensure goals align with the HR activities and plan. By improving the collaboration between the HR leaders and the executives of an organization, businesses can shift into new industries or sectors more efficiently.

Related: Guide on Strategic Human Resource Management

2. Automating processes to improve HR operations

An important component of the HR transformation process is adopting new technologies that automate processes within the HR structure. This includes integrating technology into the people management capabilities that help professionals attract talent. Embracing new technologies that automate processes can reduce manual administrative tasks for these teams and improve the security of employee information. An improvement in technology delivers valuable data for analysis and trend evaluation, which can further help improve HR operations and transform human capital management within an organization.

Related: How Does Human Resource Management Work? (With Duties)

3. Improving HR capabilities

HR transformation can help departments manage new working environments, including hybrid or remote working models. Throughout the transformation process, HR professionals can learn new skills and improve departmental capabilities to ensure they're continuing to adapt to changes and maintain employee performance. It's important for those in HR roles within an organization to have the skills and capabilities to accommodate various employee needs and create a working environment that prioritizes employee happiness. This includes the ability to maintain a healthy corporate culture while managing hybrid or remote working options for employees.

Related: 7 Important Departments in HR (With Detailed Explanations)

4. Enabling digital communications and technology

With new technologies available, it's important for human resources teams to embrace the changes and prioritize equipment upgrades to maintain employee satisfaction and happiness. Organizations can incorporate technology and digital communications to facilitate workflows and improve their employees' ability to perform their jobs efficiently. As part of the strategy, it's also essential to provide equal access to technologies for all team members to empower and engage employees and provide an improved experience. When engaging in HR transformation, professionals prioritize the integration of technologies that have a significant positive impact on the employee experience.

Related: What Is Talent Acquisition? (With Steps and Tips)

Tips for successful HR transformation

Here are some tips you can implement to prepare the workplace for a human resources transformation:

Create a transformation plan

Before engaging with an HR transformation process, it's important to develop a strategic plan to identify the purpose, goals, and methods of evaluating success. The plan may include details on organizational goals, a communications strategy for sharing changes and information with employees, and metrics upon which you can measure your success. Creating a thorough plan that outlines technological priorities, transformation milestones, and stakeholder involvement can help you execute the transformation successfully.

Related: How to Implement a Business Transformation (With Steps)

Prioritize people

Because HR is the management of an organization's human capital, it's important to prioritize the employees to ensure the plan addresses their needs and offers sufficient communication about the changes. Considering and prioritizing the employee experience in the plan's creation can increase employee support for the proposed strategy. When developing and executing the plan, you can request feedback to ensure the team is willing to adapt to the changes. It's also important to be transparent about the transformation process by sharing detailed information with employees to increase satisfaction and adoption.

Related: What Is Human Capital? (With Types and Importance)

Secure support from leadership

Significant organizational changes require support from leadership, which is why it's important for HR managers to become strategic partners with executives during an HR transformation. Consider including key executives and stakeholders from the beginning of the process to ensure the HR strategy aligns with and supports the overall organizational objectives. Throughout the plan's development, it's essential to consider executive feedback and ideas to ensure the goals align and the business leaders become advocates for the changes being made.

Related: What Is Leadership in an Organization? (With a How-to Guide)

Evaluate available technologies

There are many types of software and technologies available to help organizations streamline their work, improve experiences, and automate processes. Before committing to a software or program, it's important to participate in a careful evaluation of the options to ensure it meets the needs of your department and organizational goals. Adopting tools before considering all options may disrupt your transformation process and impact your ability to meet objectives.

Related: What Is Digital Transformation and Why Is It Important?

Consider the available data

It's beneficial to review labour and employee data to inform the changes proposed in the HR transformation plan. This might include data relating to skills, demographic information, performance metrics, training information, and employee workplace models. You can consider the information available to identify opportunities and potential obstacles for transformation. For example, if you discover that 75% of employees use a hybrid working model, you might implement technological changes that help ease the transition of moving between workspaces. Reviewing data can also help you set metrics for changes and evaluate the success of programs once implemented.

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