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How HR Leaders are Building the Organization of the Future

McKinsey & Company | Asmus Komm, Florian Pollner, Bill Schaninger, and Surbhi Sikka  | March 12, 2021

HR the organization of the future - How HR Leaders are Building the Organization of the Future

The pandemic underscores the urgency for a more dynamic talent and work model. Human-resources leaders can help by focusing on identity, agility, and scalability.

Organizations have by and large met the challenges of this crisis moment. But as we move toward imagining a postpandemic era, a management system based on old rules—a hierarchy that solves for uniformity, bureaucracy, and control—will no longer be effective. Taking its place should be a model that is more flexible and responsive, built around four interrelated trends: more connection, unprecedented automation, lower transaction costs, and demographic shifts.

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To usher in the organization of the future, chief human-resources officers (CHROs) and other leaders should do nothing less than reimagine the basic tenets of organization. Emerging models are creative, adaptable, and antifragile. 1 Corporate purpose fuels bold business moves. “Labor” becomes “talent.” Hierarchies become networks of teams. Competitors become ecosystem collaborators. And companies become more human: inspiring, collaborative, and bent on creating an employee experience that is meaningful and enjoyable.

prioritize initiatives that strengthe identity and agility 1 - How HR Leaders are Building the Organization of the Future


Identity: HR can clarify the meaning of purpose, value, and culture

Companies that execute with purpose have greater odds of creating significant long-term value generation, which can lead to stronger financial performance, increased employee engagement, and higher customer trust.

Hone in on the organization’s purpose

What is your company’s core reason for being, and where can you have a unique, positive impact on society? Now more than ever, you need good answers to those questions—purpose is not a choice but a necessity.  HR can also ensure that clear changes are made to recruitment and capability-building processes by determining the characteristics of a “purpose driven” employee and embedding these attributes within recruitment, development, and succession planning.

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HR can also incorporate purpose-driven metrics into compensation and performance decisions. Companies across industries have embarked on these metrics lately.

Think deeply about talent

Organizations that can reallocate talent in step with their strategic plans are more than twice as likely to outperform their peers. To link talent to value, the best talent should be shifted into critical value-driving roles. To enable this shift, HR should manage talent rigorously by building an analytics capability to mine data to hire, develop, and retain the best employees. HR business partners, who articulate these staffing needs to the executive management team, should consider themselves internal service providers that ensure high returns on human-capital investments. For example, to engage business leaders in a regular review of talent, they can develop semiautomated data dashboards that track the most important metrics for critical roles.

Create the best employee experience possible

Companies know that a better employee experience means a better bottom line. Successful organizations work together with their people to create personalized, authentic, and motivating experiences that tap into purpose to strengthen individual, team, and company performance.

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Strengthen leadership and build capacity for change

To strengthen an organization’s identity, HR should ask the following questions:

  • How can we develop an energizing sense of purpose that has a tangible impact on our strategic choices and ways of working?
  • How can we identify key talent roles and focus them on creating value?
  • How can we build a data-driven, systemic understanding of our organizational health?

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