A good HR department powers organizational success. In fact, it would be tough to excel as a company without skilled HR. But exactly what does HR do, and how is it evolving? We’ll explore the key functions of HR operations, sharing updates and trends for 2022.
Table of Contents
1. What Do HR Operations Involve
5. Measuring Success in HR Operations
What Do HR Operations Involve
While HR operations are fast evolving, the purpose remains the same. And they still centre on a longstanding set of core functions. Let’s examine HR’s purpose and fundamental roles now.
The core purpose of HR operations
HR focuses on supporting an organization’s most valuable resource: its people. This entails empowering them to succeed, ensuring compliance with policies, and promoting their wellbeing. “Essentially, the purpose of HRM is to maximize the productivity of an organization by optimizing the effectiveness of its employees,” writes Inc.
HR operations fall into three main areas, they add: staffing, compensation, and designing work.
Let’s take a more in-depth look at HR’s core functions now.
Key responsibilities of HR operations
The HR fundamentals include the following 10 functions:
- Recruitment and retention
- Performance management
- Training and development
- Workplace culture
- Employee wellness
- Compliance and safety
- Developing job descriptions
- Compensation and benefits
- Succession planning
- Budgeting
How do performance reviews and performance management fit into HR operations?
While HR doesn’t personally conduct every performance review, it prepares managers to do so. HR should implement a system that streamlines performance reviews. This will ensure managers conduct them in an equitable way, using the same framework.
Likewise, HR should introduce a performance management system across the organization. This system should guide managers in monitoring and coaching employees.
Analytics from these systems will help HR support employees. HR can use performance management analytics to assess the accuracy of evaluations. They can also periodically assess individual training needs, so they can design the necessary solutions.
HR structures
The same HR department typically works across the entire organization. This allows for the standardization of processes, rewards, and other HR essentials. But in a very large company, different departments could have their own HR. This type of HR design is called a matrix structure.
It has various branches that each act more or less autonomously. For instance, sales, marketing, and customer service may each have their own HR.
Emerging Trends in HR
The following trends have been quickly evolving in HR. We expect them to shape the focus of HR well beyond 2022.
Heightened importance of wellness
For 62% of employees, wellness benefits affect whether they’ll accept a job offer. And 94% of employers invested in wellbeing perks in 2020. But according to HBR, 40% of employees aren’t taking advantage of these physical, mental, and financial wellness perks. So, HR will need to double down on promoting these programs.
Commitment to hybrid structures
A full 83% of employees prefer a hybrid model, while 63% of high-performance companies have a “productivity anywhere” approach. And 90% of HR leaders support a hybrid model.
Focus on upskilling
In 2022, upskilling employees (and HR itself) is a key priority. According to Gartner, 29% of skills employers looked for in 2018 are becoming obsolete in 2022. So, HR must assess the skill mix needed in each role and provide the needed training.
HR must also prepare for how organizational roles may need to shift. They can redeploy employees into new roles after upskilling them.
Importance of DEI
Diversity, equity, and inclusion (DEI) also tops the list of priorities. Organizations are increasingly recognizing that DEI plays a pivotal role in success. Strengthening DEI improves job satisfaction and culture as well as collective brainpower. So, smart orgs are using analytics to measure DEI, finding their weak points and working to improve them.
DEI is becoming even more critical with hybrid work, HBR emphasizes. Managers tend to view in-office employees as higher performing and may have a stronger rapport with them. More women and people of colour prefer working from home compared to white men.
“Without intervention, gender wage gaps will widen and the degree of diversity within leadership benches will weaken,” warns HBR. “Without greater intentionality, underrepresented talent could be excluded from critical conversations, career opportunities and other networks that drive career growth.”
Use of technology
Increasingly, HR will use technology to support its operations. Plus, it will continue implementing technologies that enhance performance management and evaluation. Managers across the organization rely on HR to find optimal solutions.
Emphasis on data literacy
In the past, HR was viewed as primarily possessing “soft skills.” But HR staff are increasingly honing their analytical abilities, says Deloitte. And 57% of organizations seeking new HR technology want improved analytics. Their old system simply couldn’t provide the data they need.
Such systems coupled with analytical know-how are equipping HR to advise leadership on personnel decisions.
Most HR departments need to strengthen these skills, however. “Currently, only about four in 10 HR professionals can read, apply and communicate data effectively to influence decision-making,” writes Forbes. “Data literacy is surely here to stay for long as it empowers leaders to accurately deal with workforce data and drive better business value.”
New types of perks
Some orgs are considering shortening the workweek rather than increasing pay. After all, employees are placing a high priority on downtime and work/life balance. “Ultimately, we’re likely to see a handful of organizations adopt 32-hour work weeks with the same compensation as a new way to compete for knowledge workers,” writes HBR.
Key Roles in HR
Let’s discuss a few of the most pivotal HR roles, including some emerging ones.
The CHRO role
The chief human resources officer (CHRO) role is becoming increasingly elevated, as Forbes says. After all, the CHRO has led organizational transformation over the past couple of years, notes Gartner. In fact, orgs often view it as belonging to the C-suite—and rightly so.
The CHRO is extremely well-positioned to make high-level personnel decisions! This role may also be called the vice president of human resources.
HR operations manager
An HR operations manager has a thorough understanding of all HR functions. Often called an HR director, this staff member oversees HR systems and processes. In other words, this role involves managing all daily functions of HR.
What skills and traits does the ideal HR operations manager have? Excellent interpersonal skills are essential, as this staff member must collaborate across HR functions. Impeccable organizational skills, problem-solving abilities, and ethics are invaluable as well.
HR specialists vs. HR generalists
Your HR team may benefit from a mix of specialists and generalists. Generalists have a broad knowledge of HR operations; specialists have deep knowledge of one area.
If you have a very small team of one or two, generalists will be essential. You can contract outside support and use software to stay on top of compliance issues. But as your team expands, hire specialists for essential functions like recruitment and DEI.
For example, a human resource information specialist manages HR tech needs. This staff person possesses a mix of skills in both HR and technology.
Emerging HR roles
In 2022 and beyond, we’ll see newer HR roles growing more prominent.
Chief purpose officer
According to HBR, this role is bound for the C-suite. It stems from employees’ increased desire to know how companies support their community and broader societal issues. A full 80% of employees under 45 expect their employer to act as a force for good, says Forbes.
The chief purpose officer will handle duties typically performed by several roles. “Currently, these responsibilities are widely diffused across HR, legal, communications, and other roles in the organization,” writes HBR. “In 2022, these will be consolidated into this new role as ESG becomes even more important to corporate strategies.”
Chief diversity officer
The chief diversity officer may also belong to the C-suite. This staff member handles all aspects of building an inclusive workplace, from recruiting to compliance and culture.
HR operations salaries in North America
The mean annual salary for a human resources manager in the U.S. is $136,590. High-level positions like the CHRO have the potential to earn much more. The CHRO position averages $253,600. Meanwhile, entry-level HR positions average $46,486.
Books on HR Operations
To brush up on your knowledge of HR operations and processes, check out these books:
- The Essential HR Handbook, 10th Anniversary Edition, by Sharon Armstrong and Barbara Mitchell. This leading HR resource shares knowledge across a wealth of HR operations.
- Belonging At Work: Everyday Actions You Can Take to Cultivate an Inclusive Organization, by Rhodes Perry MPA. Learn how to strengthen your culture by making it truly inclusive.
- Predictive HR Analytics: Mastering the HR Metric (second edition), by Dr. Martin Edwards and Kirsten Edwards. Make the most of the data at your fingertips to improve HR operations.
We could go on, but we’ll share more reading suggestions for another time!
Measuring Success in HR Operations
HR must set KPIs that will illustrate its success. Consider which factors most shape the organization’s growth when setting KPIs.
Here are some helpful metrics for assessing HR operations:
- Retention rate
- Recruiting success (and cost per hire)
- Employee satisfaction with benefits
- Onboarding effectiveness
- Employee productivity
- Diversity among employees
- Diversity of leadership
- Internal promotion rate
- Salary increases
- ROI on employee development
- Overtime hours worked
- Pay equity
- Average vacation days per employee
Look at the differences between departments for these metrics. If you’re seeing different numbers for sales and marketing, investigate why. This can point to the root cause of the issue for a struggling department.
Some metrics, like retention rate, are easy to calculate manually with your existing data. Conduct employee surveys to assess others. For instance, you can assess pay satisfaction through pulse surveys.
Data from exit interviews will help you assess some of these KPIs, too. As you offboard employees, you can learn from their experiences. Performance management software and other analytics will track other metrics, like onboarding success.
We’re certain to see new HR operations trends evolving over the next five years. By 2030, HR operations could look very different in some ways. Nonetheless, we expect the same core functions to remain vital to organizational success. The way we do them will transform, but the importance of skilled HR staff will remain a constant!
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