High-performing organizations have something in common: Human resources helps to guide strategic decisions.
By John W. Boudreau, Ph.D., and Edward E. Lawler III, Ph.D.
Does HR really make a difference when it comes to the future of work? How involved are HR leaders when making decisions about AI or robotics using gig workers?
Our latest research indeed shows that too often, HR isn’t involved in crucial, organization-shaping choices—but it also suggests playing a bigger part in making such choices could lead to significantly better outcomes for both the HR function and the company at large.
So now what?
For more than two decades, the Center for Effective Organizations has surveyed hundreds of global HR leaders every three years to learn what drives HR and organizational effectiveness, and to map the evolution of the HR profession.
You can read what we found in previous studies in our book, Human Resource Excellence. Our new survey once again suggests the need for strategic HR is accepted and acknowledged by HR executives, and that more progressive HR practices are positively related to more effective HR functions and often organizational performance.
But despite this, HR remains remarkably slow to adopt effectiveness-related progressive approaches. We were particularly interested to uncover new data about whether HR is prepared for new work arrangements including robotics, AI, and gig workers, and whether that matters to HR and organization effectiveness.
Our latest survey reached 105 U.S. HR leaders, each representing one organization with over 1,000 employees. We asked, “To what extent is HR involved in decisions about using robotics or AI to get work done?” and “To what extent is HR involved in decisions about when to use ‘gig’ employees?” We defined high involvement as “great” or “very great” extent, versus low involvement as “little or no extent.”
It was troubling to find that 31 percent of HR leaders reported they are involved only to “little or no extent” when it comes to decisions about using robotics or AI to get work done. A slightly more encouraging stat: Only 12 percent of HR leaders reported little or no involvement in decisions about when to use “gig” employees.
HR’s Strategic Role, HR Effectiveness, and Organizational Performance
We examined whether highly involved HR functions are also more likely to have a strong HR strategic role, strong HR effectiveness, and high organizational performance.
We measured “HR’s role in strategy” by asking, “Which of the following best describes the relationship between the human resource function and the business strategy of your organization?”
(Response scale: 1 = “HR plays no role in business strategy”; 2 = “HR is involved in implementing the business strategy”; 3 = “HR provides input to the business strategy and helps implement it once it has been developed”; 4 = “HR is a full partner in developing and implementing the business strategy.”)
We defined a strong HR role in strategy as “providing input” or “being a full partner” in strategy.
We measured “HR effectiveness” by asking, “How well is the HR organization meeting the needs of your company in 14 areas ranging from ‘providing HR services,’ and ‘operating HR shared service units’ to ‘being a business partner,’ ‘being an employee advocate’ and ‘creating organizational agility.’” Our HR effectiveness index is the sum of the 14 dimensions.
We defined highly successful HR functions as achieving a total greater than 104 out of a maximum of 140. We measured organization performance by asking, “How would you rate your company’s performance relative to competitors?”
(Response scale: 1 = much below average; 2 = somewhat below average; 3 = about average; 4 = somewhat above average; 5 = much above average.) We defined high organizational performance as “somewhat” or “much above” average.)
Better Results When HR Is More Involved
The results of our data analysis are clear and important: When HR is more involved, better outcomes occur.
When HR is highly involved in decisions about using robotics or AI to get work done, HR is about twice as likely to play a strong strategic role, achieve high HR effectiveness, and report high organization performance.
Similarly, when HR is highly involved in decisions about when to use “gig” employees, HR is about 10 times as likely to play a strong strategic role and achieve high HR effectiveness, and about four times more likely to report high organization performance.
These results reflect a disturbing, but consistent pattern we’ve seen for more than 20 years: HR generally has low involvement in work and organization strategy decisions, but in the more effective and higher-performing organizations, HR is more involved.
The future of work will require organizations and their leaders to optimize a diverse array of new work relationships and combine humans with automation. As this future emerges, effective organizations should involve HR more. There’s too much at stake not to band together.
John W. Boudreau, Ph.D., is professor emeritus of management and organization and a senior research scientist with the Center for Effective Organizations, at the Marshall School of Business, University of Southern California. He is recognized worldwide as one of the leading evidence-based visionaries on the future of work and organization, through breakthrough research on the bridge between work, superior human capital, leadership and sustainable competitive advantage.
Edward Lawler is distinguished professor of business at the University of Southern California, Marshall School of Business. He has been honored as a major contributor to theory, research, and practice in the fields of human resources management, compensation, organizational development, and organizational effectiveness.