The changing dynamics in the world of work also call for HR transformation with newer technologies like generative AI, automation processes, and analytics, for a better impact on business. Nevertheless, certain facets of HR transformation's impact on business remain unspoken despite acknowledgment as these require significant time, effort, and risk to successfully implement. Thus, leading to a key question: Will your next HR transformational effort indeed succeed?

Sharing insights on HR transformation realities no one wants to discuss, Brian Sommer, founder, and president of TechVentive and keynote speaker on HR Transformation and other burning issues at People Matters events, talked about the fact that transformational efforts, being complex and time-consuming, should indicate significant associated risks. Unsurprisingly, some great HR transformational efforts get halted soon after commencing. Is this due to a lack of planning? Not necessarily. Is it a people issue? Sometimes. But more often than not, the HR transformation effort gets affected by an external event. It could be an economic recession, an industry downturn, a pandemic, the emergence of a new technology, rising interest rates, or other causal factors. 

Some of the halting factors in HR transformation include company-specific factors, executive leadership change, new capital constraints, a restructuring, a merger or some other force that can suddenly change the entire business operations, pointed out Brian. 

Bigger HR transformations projects pose bigger risks (although rarely reflecting the inadequacies within HR or leadership), therefore, it becomes crucial to identify potential risks and the formulation of mitigation strategies to navigate these challenges effectively. Before committing to a transformation initiative, it is imperative to meticulously compile a list of potential risks and corresponding mitigation methods

4 uncomfortable realities of HR transformation, and how to address them? 

#1 Leadership change

The change in leadership team may trigger a reconsideration of the company's organisational structure. Brian explains, “A centralised, top-down organisation may overnight become highly decentralised with new decision rights passed to business unit leaders. A transformation effort, like ERP standardisation, can instantly be on the wrong side of a new business or go-to-market strategy.” Furthermore, leadership changes may also disrupt key roles within HR transformation projects like, a project sponsor could be reassigned to another department or deployed on an expatriate offshore assignment. The replacement of key team members midway through the project can lead to delays and necessitate a reevaluation of crucial decisions.

#2 Mergers, acquisitions and divestitures

These changes impacting substantial financial transactions often prompt IT departments to reassess their systems plans, software acquisitions, and overall priorities. “Your big shared service programme may get rolled into a merger integration effort or cancelled altogether. These big financial transactions can directly or indirectly change project/program priorities, trigger staff reassignments, etc. At a minimum, these transactions can delay your transformation effort and may force you to recompute the value proposition or business case for your project,” adds Brian. 

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#3 Lack of political capital

“Without sounding too Machiavellian, a great HR transformation needs a politically savvy and influential leader. This is someone who has the respect and ear of the executive committee and board of directors,” says Brian. The leader must be prepared to expend a portion of the political capital they have accumulated over their tenure with the firm. Why is this necessary? Because certain design decisions, budget allocations, or timing considerations inherent to the transformation may clash with the priorities, resources, and authority of other leaders within the organisation. A crucial aspect of HR transformation leadership lies in the ability to advocate for the necessary budget allocation for the initiative. A leader who has already depleted their political capital in previous endeavours may struggle to garner support for the transformation. In essence, they have exhausted their influence and can no longer rely on favours from others within the organisation.

To address this shortfall, CHROs often enlist the assistance of third-party consultants or implementers. A strategic HR executive will delegate the task of defending the initiative, justifying its costs and benefits, and securing cooperation from other departments such as IT, to these external partners. Importantly, even if the third-party's efforts are unsuccessful, it does not negatively impact the CHRO's career trajectory or existing political capital. 

#4 HR transformation capabilities

Navigating through the complexities of transformational initiatives requires leaders to be highly empathetic and forward-thinking. They must possess the ability to anticipate various moves by stakeholders and adapt to changing business landscapes. Furthermore, these leaders must maintain a thick skin, as they are likely to encounter numerous challenges and setbacks along the way. In essence, successful leaders in HR transformation must combine empathy, foresight, adaptability, and resilience to effectively navigate the myriad of obstacles they may encounter. Brain underlines, “Not everyone is cut out for leading a transformation effort. These are often technically complex, multi-faceted, emotional, financial and political efforts. If you believe in “Think Big, Be Big”, then you’ll have a mindset for transformation. And, if that’s not quite your cup of tea, then bring in some help who can bring the change and results your firm desires.”