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As CHROs in Australia face ongoing pressure to deliver operational excellence and create greater business value, many are looking to HR transformation as the solution, writes Robin Boomer.
According to Gartner research, 87 per cent of leaders believe that shifting business needs requires continuous HR transformation. However, most HR teams already feel stretched thin and are experiencing constant change in today’s work climate, so it’s important to recognise that HR transformation doesn’t have to be a massive change that happens all at once.
Instead, chief human resources officers (CHROs) can evolve components of the HR function’s leadership, capabilities, operating model, and technology incrementally to better align with business goals and deliver more value for all stakeholders.
A recent Gartner survey indicates that the workforce, including issues around talent retention and hiring, is the third leading business priority for CEOs in 2025 after growth and technology. HR leaders in Australia can expect that as CEOs seek to grow their organisations, they’ll shift business strategies accordingly and will rely on technology as an enabler. In fact, 60 per cent of HR leaders’ budgets are staying flat or decreasing, but the share of budget allocated to HR technology is increasing for most.
At the same time, HR teams are expected to do more, with many HR leaders reporting rising demands on their functions exceeding their capacity to deliver. They’re receiving more requests on a wider range of topics, including more complex and novel challenges to those faced in previous years, due to changes in technology, ways of working and labour market trends.
In response, CHROs are turning to HR transformation efforts to redesign their functions to better support the business and meet today’s challenges. To be successful, the following four key areas must be considered.
1. World-class leadership
As the business environment has become more complex, the role of the CHRO has expanded. While leading the HR function to be highly effective, productive, and efficient, they must also play a pivotal role in enabling success as a strategic business leader.
Leading CHROs not only drive enterprise-wide business results, but they also actively shape and influence the business strategy. They leverage a deep understanding of workforce health and skills to inform executive peers and the board while operating independently and proactively as an executive leader.
Specifically, top CHROs build a strategy for the HR function that drives strategic business objectives forward and mitigates risk while accounting for the need to adapt as the business and operating environment change. They contribute crucial insights to business strategy development, align the HR operating model, structure, and staffing with organisational needs, and optimise the HR budget for maximum impact.
2. Modern operating model
The HR operating model is a foundational piece of any HR transformation strategy, as it organises the structures, capabilities, and processes through which the function delivers value to stakeholders, both internal and external.
When evaluating the performance of existing operating models, HR leaders must consider all components. These include the responsibilities of each HR role, the service management approach, how governance and decision rights are negotiated, and how HR professionals interact with leadership and use technology.
Progressive CHROs use data to identify and implement improvements continuously, incorporate business feedback to optimise the operating model, and use agile resourcing models and ways of working to staff initiatives without needing to restructure.
3. Future-proof HR team competencies
Gartner benchmarking reveals only 58 per cent of HR leaders believe their function is viewed as a strategic business partner. To improve the partnership between HR and stakeholders, CHROs must empower HR professionals to adopt more strategic and agile approaches.
In addition to traditional competencies like talent management acumen and relationship management, it’s increasingly necessary for HR professionals to demonstrate agility, strategic consulting and business acumen.
Most HR business partners believe creative problem solving is one of the most valued capabilities by internal clients, but it doesn’t deliver enough value on its own. HR professionals must increasingly demonstrate agility, working iteratively to develop solutions to complex problems more rapidly.
Strategic consulting is necessary to develop and execute solutions to business challenges and influence strategic decisions. However, business acumen is most often cited as a gap by stakeholders, which damages HR’s credibility and influence. Business acumen is applied through the acquisition and application of industry, organisational and financial knowledge.
4. HR technology enablement
As distributed work environments continue and organisations strive to reduce operating costs, HR functions are increasingly adopting HR technology intended to automate operational activity while delivering a seamless employee experience.
Since technology-enabled processes can create both positive and negative impacts, HR leaders must be smart about how they leverage technology, as employees dissatisfied with workplace technology are more likely to look for new job opportunities elsewhere.
CHROs should prioritise HR technology projects with the highest impact on employee experience by facilitating an objective comparison and involving key HR and business stakeholders. It’s important to drive two-way conversations with IT and the entire HR team on digital transformation and employee experience rather than focus solely on process and system improvements driven by cost savings.
To boost HR process innovation, CHROs should develop a roadmap transitioning from ad hoc automation to comprehensive process transformation. They must assess HR’s ability to collect, maintain and analyse complex datasets, turning them into actionable insights that influence employee behaviour.
When considering HR technology transformation, the key is to start with a clear vision of HR’s goals and how to deliver business value, then identify which transformation levers to prioritise.
Robin Boomer is a senior director of advisory in Gartner’s HR practice.
