The road ahead
As 2024 begins to unfold, layoffs continue, including at major tech giants like Google and Amazon, according to The Economic Times. These job cuts come as companies strengthen their fiscal discipline by streamlining operations and prioritizing key business areas. They also coincide with companies like Google exploring the many untapped benefits artificial intelligence has to offer, according to Wall Street Journal. This ongoing restructuring we see that things are far from stable. It is likely that this volatility will continue to impact HR teams in particular for some time to come, which will create demand for the evolution of the function as a whole.
Over the past decade, HR has evolved into a strategic function in many organizations. However, this landscape is changing once again as HR teams are affected by these layoffs. Talent acquisition teams have been significantly reduced due to reduced hiring targets, and other HR functions have seen commensurate reductions in headcount to support organizational needs. This shift reflects a worrying trend for the HR function to potentially regress and lose its hard-won place at the table, something that took a long time to achieve.
The role of AI in reshaping HR functions
The rise of artificial intelligence is a key factor in recent layoffs at companies like Amazon, according to Luck, and continues to transform HR functions and the way we work with the business. HR teams need to have important skills, not only in training others but also in strengthening our own capabilities to ensure we can adapt to the effects of AI on organizational design, ways of working and overall employee engagement and productivity .
This is vital for all HR disciplines in a post-AI era and marks a new phenomenon for people teams: acquiring a skill that is rapidly evolving in the world of work, while also being expected to have expert opinions and programs ready for upgrading the rest of the organization.
Adapting to new challenges
The future of HR extends far beyond the technology industry. It is not just about adapting to new technologies or economic changes, but about a fundamental transformation of human resources as a whole. This leaves us with a big question about the future of HR, both at the executive level and the internal structures of the HR team. Will HR evolve to realize its full strategic potential, or will it revert to the primarily administrative back-office role it played in the past?
Organizations that don’t have strong people leadership (either because they never thought it was important or because they were fired to help with the bottom line) may not be able to keep up with this transformation – inadvertently forcing the rest of HR to report to Finance or Operations, thereby losing his position at the level of Executive Leadership. Alternatively, organizations that continue to double down on strong people leadership and HR functions in this environment will be the ones able to rebuild from the layoffs and support the business to focus on the new goals of success.
Over the past decade, big tech has become famous for its extravagant pay packages, employee perks, and benefits that set the bar for many companies around the world. However, the current economic climate, characterized by constant layoffs, cost optimization efforts, and the widespread adoption of remote work in various forms, brings a humbling moment for these practices in the tech industry. Many of the pre-pandemic benefits, such as gourmet food and child care services, are now being reduced.
Companies are introducing new compensation models—for example, Airbnb has already moved to value-based rather than location-based models, according to blog. Shopify has redefined employee choice by allowing employees to define their own pay structures, according to their blog.
This constant change is pushing both employers and employees to rethink how benefits packages and compensation policies fit into the broader employee value proposition, as businesses draw clearer lines between how these factors impact business results, productivity, sense of belonging and spending. This will change the current skills and capabilities that leaders and teams with total rewards (rewards and benefits) will need to design creative programs in the future and evolve their role into a core business partnership.
Talent acquisition professionals should also begin to focus on striking the right balance of quality and speed to ensure we are effectively recruiting the right talent for the evolving needs of the organization. Previously there was an emphasis on filling positions quickly to support overgrowth, thus negatively impacting cash burn. However, as businesses adapt to the demands of layoffs, AI integration, and financial prudence, Talent Acquisition must become more strategic. We will need to act as marketers and business partners who have a deep understanding of the skills and capabilities required to drive the business forward in conjunction with the right organizational design. We will play a central role in shaping the future of the organization by understanding its evolving needs, working closely with internal decision makers and strategically sourcing the right talent.
Preparing for the Future
It’s clear that HR teams, like all functions, could be significantly smaller in the future by leveraging technologies like genetic artificial intelligence to do more with less. As such, we can expect to see new iterations of HR team structures and required skills. Executives and HR teams will need to think more like designers than program creators to connect deeply with business problems and rethink programs like recruiting and performance management to lean into this evolving landscape.
There could also be a future where all functions and employee service for HR, IT and Finance are consolidated into a group called ‘Business Services’. The role of HR Business Partners (HRBPs) will converge with the role of total rewards and talent acquisition skills into a single Business Services Partner (BSP) role. These BSPs can easily be equipped with insights across all general and administrative disciplines with the help of customized AI tools like ChatGPT to be holistic business partners. Fiscal discipline and impact will be driven simultaneously by this approach. Does this mean that the Chief People Officer of the future will be a Chief Business Officer? Or it could Leena Nair’s unique journey, according to Businessmanfrom the Chief HR Officer to the CEO of Chanel, can you see what the future may hold?
The future of the HR function will undoubtedly be driven by the increased demand to be thought partners and leaders across businesses. HR professionals who have always been driven by business goals are likely to achieve even greater success in this new environment. Those who have focused primarily on employee advocacy or maximizing engagement will need to adapt quickly. While this change may be challenging for many, there is a clear opportunity for HR to move even closer to the strategic core of the business.
