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October 28, 2020

The Six Lasting Impacts of COVID-19 on HR

By Tony DiRomualdo  – Senior Research Director at The Hackett Group

The Covid-19 crisis has tested companies as never before and thrust the HR function into a starring role in crafting and executing their response. Those that have been able to rise to the challenge have done s by harnessing their strongest capabilities while overcoming entrenched weaknesses. Having sped up their digital and cultural transformations by years, these HR organizations are now well-positioned to continue driving organizational success through people. Here’s a look at the areas where Covid-19 has been a major game-changer for HR, and how the best HR organizations more successfully met the challenge.

 

1. Employee well-being is now a business issue

The novel coronavirus disrupted businesses financially and operationally on an unprecedented level. More than any previous crisis, Covid-19 brought the human element of the business into sharp focus. Employee wellness, health and safety suddenly took center stage, as did company culture and values.   The scale of impact on the business and workforce pushed leaders to demonstrate high levels of empathy and authenticity in their communications with employees.

A rapid and large-scale shift to digital working that few previously believed was possible caused companies to drastically accelerate plans to digitally transform their business. Not the least of which was a  near universal shift to virtual business and work from home.

The most vulnerable segments of the workforce were hit hardest by the pandemic, elevating a host of issues to the top of the leadership agenda, including inadequate health care, financial inequity, and a lack of diversity, inclusion and sense of belonging.

 

2. The role of HR is better appreciated

The people aspects of the crisis could not have been handled successfully without a strong HR response. The pandemic made the importance of HR abundantly apparent. The function was involved in all key strategic and tactical responses, helping leaders and managers set and communicate policy, instituting programs to ensure workforce health and safety, and spotting where interventions were needed

HR has played a leading role throughout the crisis, which brought a new appreciation of its necessity in keeping the business running.  Ensuring employee health and safety has been an all-consuming activity for HR throughout the crisis.

The crisis severely strained HR service delivery models and technology. Organizations that had previously transformed to embrace digital were better able to respond.

Among companies that have weathered the crisis successfully thus far, the hallmarks effective HR responses were: acting decisively and with urgency; executing with speed and precision; showing agility and nimbleness; shifting to information, analysis and reporting in real time; and acting as strategic advisors to leaders. This last item involved coaching leaders how to act, and at least some companies, particularly in the pandemic’s earliest days, convincing leaders to take the crisis seriously.

 

3. The strategic leadership role of the CHRO is clear

The global and people-centric nature of the Covid crisis inevitably put the onus on HR leaders to guide the company response. Workforce health and safety became a priority and underscored the importance of the CHRO in shaping how leadership handled the crisis, catapulting the role of the CHRO to front and center. It has put the CHRO in the spotlight to help the CEO and the management team think in a very different way about what is important.

As the scope of the pandemic became evident, the CHRO’s role as confidant and advisor to the leadership and board was accentuated, as was the responsibility to keep them continuously informed about workforce issues. Many CHROs personally coached leaders on what to do and how to act.

HR leaders with well-established relationships with their CEOs were in the best position to act. Along with greater responsibility placed on the CHRO as a result of the crisis came stress as well, challenging HR leaders to stay calm and optimistic, but at the same time realistic and pragmatic.

 

4. HR organizations can actually be agile

In many companies, HR may be known for its bureaucratic tendencies, caution and aversion to risk. But Covid-19 brought out an agile, pragmatic, even heroic alter ego. Leading HR organizations demonstrated the ability to step up in a crisis. CHROs challenged  leaders to act faster and do right by their employees and stakeholders.

The pragmatism of HR also kicked in as the crisis gained momentum, as evidenced by several comments we heard from HR leaders in our research such as “sense of ownership/accountability for problem-solving,” “get-it-done mentality,” and “dedication to doing whatever needs to be done to make things work.” Another characteristic of HR organizations that emerged strongly was a willingness to work collaboratively with other functions. This loomed large as many of the actions companies needed to maintain operations and protect the workforce required cross-functional expertise and coordinated actions.

Leading HR organizations rose to the challenge by drawing on the strongest aspects of their mindset and capabilities. Those who had digitally transformed their processes, operating models and technologies were in the best position to respond quickly and effectively to the day-to-day challenges presented by the pandemic.

Of greatest benefit were operating models that relied on global business services or shared services and a culture emphasizing smooth operational capabilities and strong strategic alignment between HR and the business. Clear delineation of HR roles and responsibilities across a global operating model greatly facilitated response, letting the organization set strategy globally but respond to needs at a local level. These HR organizations also demonstrated an ability to adapt as changing priorities and issues as the crisis unfolded.

Greater levels of digital technology infrastructure and ability to leverage global process scale on the fly also aided rapid response.

 

5. Organizational and technology deficiencies must still be overcome

Impediments to HR’s response fell broadly into two categories: organizational and technological. Many HR models were not designed for the stresses put on them by the pandemic. The traditional HR way of working is not known for speed, forcing organizations to find ways to act more quickly and pragmatically than usual.  HR groups had to quickly adapt, doing things in just a few weeks that used to take many months.

At some companies, process gaps and breakdowns constrained HR’s ability to respond. In other instances, HR skills deficiencies in areas such as project management, user experience design and working with data were also revealed. Compounding the difficulties, HR staff sometimes overpromised, trying so hard to please stakeholders that they neglected self care, which led to fatigue and risk of burnout.

Technology is an Achilles heel, even at the leading HR organizations, according to the CHROs we interviewed. Held back by incomplete HR and workforce data, many initially struggled to access the information required to manage the crisis and anticipate further developments.

Often, HR’s data analysis capabilities proved insufficient or analytics and benefits teams became overtaxed. As the crisis rapidly evolved, inability to use data to anticipate future risks became an issue. And, while many were able to quickly shift to fully digital recruiting, onboarding and learning processes, a lack of integration among applications impacted the overall employee experience using these systems and made it hard to capture the big picture of what was happening on a timely basis.

 

6. HR will never be the same

The pandemic has permanently elevated HR’s voice and visibility. On the other hand, the higher appreciation of its contributions has led to raised expectations. As a result, HR must now be prepared to “lead from the front,” spearheading change on people issues and acting as a key influencer in serving the business, workforce and communities in which the organization operates. HR must focus on adding value to the business through organizational culture and employee experience. Accelerating cultural transformation requires developing workforce behaviors and skills that enable high levels of agility and collaboration.

Moreover, it will be more vital than ever for HR to help managers become better talent leaders and developers. This calls for changes in the way leader competencies are developed so they can act with more authenticity and empathy.

Like the business overall, HR has had to speed up its adoption of digital tools to respond to the changed operating environment. Many have rapidly expanded their digital footprints to include all aspects of service delivery and talent management. The scope of this transformation will be expanded through accelerated implementation of technologies such as virtual and augmented reality, artificial intelligence applications and software bots. Creating sustainable digital HR processes will be required to fully realize and sustain the benefits of digitalization efforts. A more blended remote/on-premises business means leveraging digital tools to enable individual and team productivity in hybrid working modes.

Another shift involves dynamic monitoring and analysis of workforce sentiments, using all forms of employee communications and feedback mechanisms such as real-time social listening, and weekly pulse surveys of employees to gauge their concerns.

During the pandemic there has been a dramatic reprioritization of the workforce issues companies need to address, meaning reskilling of HR – especially more digital skills – needs to be fast-tracked. Recruiting and retention have given way to issues such as employee well-being, remote working and flexibility, digital learning and upskilling and demands for more diversity, inclusion, equity and racial justice. Many have taken short-term actions such as amending policies and targeting new training. Leaders are also moving quickly to rethink the components of their employee value proposition and formulate long-term, structure changes to policies and programs to fully encompass employee well-being and equity.

As a result of Covid-19, HR organizations have more of a voice and platform to show what they can do for the business. HR is in a position to work on things that will make a difference and to bring about positive, real and lasting change.