Achieving Digital World Class® Transformation in HR With Gen AI

Volatility and economic uncertainty continue to challenge human resources (HR) leaders, testing their ability to support resilience, agility, and growth. But while many teams are focused on managing complexity, a select group is redefining what’s possible – achieving top-quartile performance across business and operational metrics through innovation, not just efficiency.

These Digital World Class^® HR organizations are not simply doing more with less. They are scaling their impact by embracing generative artificial intelligence (Gen AI) in HR, intelligent automation and digital HR enablement – unlocking time for higher-value work and transforming HR into a more agile, insight-driven partner to the business. As a result, they are delivering stronger business outcomes at 29% lower cost relative to revenue than peers, even as overall HR function costs have crept upward since 2022.

By strategically integrating with the broader business, prioritizing workforce management and investing heavily in digital capabilities, these HR organizations are setting new standards for operational excellence and business impact. Here’s a closer look at what sets them apart – and what other organizations can learn from their journey.

1. Deep strategic integration with the business

A hallmark of Digital World Class^® HR organizations is their deep-rooted connection to HR strategy and stakeholder engagement. Rather than operating in silos, they serve as integral partners in shaping enterprise direction and performance.

Formalized HR service delivery

Nearly three-quarters (73%) of these high-performing HR teams utilize a formal HR service delivery model to a “high” extent – more than four times the adoption rate of their peers. This structure enables consistent, efficient, and scalable service delivery across the enterprise and reflects a maturing approach to human capital management.

Unlocked capacity for value-added work

Digital World Class^® HR business partners spend twice as much time collaborating with line management to develop HR plans, and 25% more time on leadership development. Their ability to redirect time away from routine administration (17% less time spent than peers) reflects the payoff of digital transformation in HR and optimized workflows (Fig. 1).

Greater engagement with business leadership

These teams are 81% more likely to be proactively engaged by management for strategic initiatives. This increased trust and collaboration translates to stronger business alignment and greater influence in decision-making – key priorities in HR transformation.

Elevated perception from the business

Two-thirds of Digital World Class^® HR teams are viewed as valued business partners – 2.4 times more than the peer group. This recognition signals a paradigm shift: HR is no longer merely a support function but rather a core driver of business value. This elevates the role of HR consulting in enabling enterprisewide impact.

2. Prioritization of strategic workforce planning

Strategic workforce planning (SWP) is the engine of talent management, agility and business continuity – and Digital World Class^® HR organizations know it. They invest more time, money and resources into SWP than their peers, resulting in tangible talent outcomes.

Higher investment in SWP

These organizations spend 11% more per employee on SWP, and they allocate 75% more of their total HR budget to these efforts. This reflects a clear understanding that workforce management is not optional – it’s essential.

Increased use of strategic HR head count

Even with leaner HR teams overall, Digital World Class^® HR functions have 32% more staff dedicated to SWP, ensuring focus and expertise in this critical area.

Tech-enabled planning

They are 2.3 times more likely to facilitate SWP through digital tools and processes, including Gen AI tools for HR. This not only improves efficiency, but it also boosts predictive accuracy and scenario-planning capabilities (Fig. 2).

Superior talent outcomes

The results speak for themselves: These organizations are 62% more likely to fill manager roles internally – 48% more likely for professional roles – and they fill these positions 27% and 25% faster, respectively. Digital World Class^® organizations leverage the competitive advantage of internal mobility to increase cost-efficiency, enhance productivity and reduce turnover. They are also exploring Gen AI use cases in HR to further enhance workforce agility and drive smarter talent decisions.

3. Greater investment in digital enablement

Digital World Class^® HR teams aren’t just dabbling in technology – they are doubling down on it. From automation to data analytics, their investments unlock efficiency, accuracy, and scalability across digital HR functions and support enterprise wide HR transformation.

Increased HR tech investment

These organizations invest twice as much in HR technology per employee compared to peers, allocating 14% of their HR budget to tech (versus 8% for the peer group). Their 2025 tech spending grew by 10%, while peers increased tech spending by only 4% –demonstrating a stronger commitment to digital transformation in HR.

Process automation at scale

They lead in automating high-impact HR processes. For instance, they exhibit 2.4 times more automation in talent acquisition and compensation administration, and 2.2 times more in training administration (Fig. 3).

Strategic tech alignment

Seventy percent of Digital World Class^® HR teams have a tech application strategy tied directly to business goals – twice the rate of peers. This alignment ensures tech investments support broader enterprise priorities.

Error reduction through automation

Technology doesn’t just make HR teams faster – it enhances the outcomes of the HR teams. These teams maintain sub-1% error rates across critical HR processes, significantly outperforming peers in areas like payroll, benefits and employee data management.

4. Embracing disruption and innovation

Disruption, especially technological disruption, is not a threat – it’s an opportunity. The integration of Gen AI in HR, predictive automation, and agentic AI technologies allows HR to reimagine performance and scale agility.

Leveraging AI for competitive advantage

Gen AI for HR and agentic solutions are already surpassing human performance in key tasks. Digital World Class^® HR organizations see this as a game-changer and an opportunity to embed AI into workflows to drive resilience, scalability, and innovation. Strategic AI implementation is key to capturing this competitive advantage.

Opportunities for reinvention

New tools are redefining what’s possible – from conversational AI for onboarding to predictive scheduling in workforce planning. These innovations are not only improving service delivery, but they’re also reshaping the very nature of HR work.

Closing the Digital World Class^® performance gap

To truly transform, organizations must evolve on all six dimensions of The Hackett Group^® Digital Service Delivery Model (Fig. 4):

1. Service design

Proactively define workforce needs and develop skill pipelines to align with long-term business strategy.

2. Technology

Digitally enable HR leaders to open capacity for strategic initiatives like internal mobility, as well as enhancing human team performance across the board through AI implementation and automation.

3. Human capital

Address internal skill gaps (in HR and throughout the organization) and embrace new ways of working, including collaboration with AI agents.

4. Analytics and information management

Harness data and analytics to enhance storytelling and drive talent strategy, as well as inform decision-making.

5. Service partnering

Evaluate external providers for non-differentiating services and focus in-house talent on strategic priorities.

6. Organization and governance

Build a digitally enabled HR operating model with clear governance and agile execution. This includes business enablement partners, enterprise capability centers and digital operations functions.

Accelerating the Journey to Digital World Class®

HR leaders today face a generational opportunity: to reshape their function with urgency, intelligence and vision. Achieving Digital World Class^® performance requires bold thinking and decisive action:

• Think enterprisewide: Align HR transformation with enterprise strategy, driving business values and long-term impact on human capital management.
• Be agile: Iterate fast, pilot ideas and adapt quickly.
• Embrace high-risk, high-reward thinking: Disrupt old models and seize emerging technologies, particularly Gen AI for HR.
• Drive collaborative innovation: Tap into cross-functional creativity to identify Gen AI use cases in HR and drive transformation.
• Measure, learn, repeat: Use robust evaluation frameworks, such as HR benchmarking, to determine impact and refine strategies.

As intelligent automation and Gen AI mature, HR can’t afford to lag behind. The future belongs to those who anticipate change and design for it.

Digital World Class^® HR organizations aren’t just improving HR performance – they’re redefining it. By aligning closely with business goals, investing in workforce management and embracing intelligent automation, they are building a future where HR is a strategic engine for growth and resilience throughout the business.

For HR leaders everywhere, the call to action is clear: Lead with HR strategy, invest in capability and reimagine what’s possible. The future of work is being written today. And those ready to innovate will shape what comes next.

Gen AI can’t wait. Neither can you.

Organizations that integrate Gen AI in HR and other AI capabilities into their operations will outpace those that don’t. Early adopters are already reimagining work, gaining a significant edge in performance and competitive advantage. While the risks associated with AI are genuine, they can be effectively managed through responsible AI implementation and sound governance practices. In today’s fast-evolving landscape, failing to keep up is the greater danger. By adopting a structured approach to ideation, identifying Gen AI use cases in HR, and implementation, businesses can seize opportunities and stay ahead of the competition.

It’s time to act. Contact us for more information or to schedule a demonstration.