Is HR Entering a Golden Era?

Towards the end of last year, The Economist reported as follows on the rise of HR in corporations: “Bit by bit HR is taking over corporate life. The ranks of human resources professionals across the rich world are swelling. Their roles are expanding.”

In the US, businesses employed 64% more HR professionals over a ten-year period, compared with a 14% growth in overall employment. According to The Economist, that trend is also evident in Australia, Britain and Germany. It will be interesting to see what the South African situation looks like.

HR is also moving up in the office pecking order. A study by Stanford University shows that the pay of Chief HR Officers has grown relative to that of other senior executives. Thirty years ago, total compensation (including bonuses and stock options) was 40% of the average director’s salary. Today, that figure has risen to 70%.

More CHROs are also moving into CEO positions. For example, Mary Barra, the CEO of General Motors, previously held the carmaker’s top HR job. Mark Ritter, formerly from HR at Unilever, is now the Secretary General of NATO. Locally, Bertina Engelbrecht, previously HR Director of Clicks, is now the Group CEO of Clicks and is doing a stunning job. Dr Shirley Zinn, formerly HR Director at various listed companies, is now serving on the boards of Sanlam, MTN, SPAR and others. These are powerful examples and role models of HR executives moving to the top of the corporate ladder.

One can view the rise in HR’s importance against the backdrop of doing business in an increasingly complex world. Geopolitical and economic changes are making it difficult to make long-term decisions. The impact of AI on every aspect of business, including job creation, productivity, layoffs, and the need for new skills, is only starting to be felt. The massive impact AI will have on the world of work is gaining momentum. Scenarios are changing day by day. The one certainty is that the world of work will never be the same.

What is different about this moment is not simply that HR has more influence, but that the consequences of getting people decisions wrong are now far more visible and far more costly.

There are several other forces still shaping HR’s role:

1. The demand for top talent is more acute than ever, including leaders who can cope with and thrive in this complex, turbulent world.
2. The fallout from the Covid-19 pandemic led to remote work, then hybrid models, and now a return to the office with flexibility. This continues to pose challenges around employee engagement, security, mental health, and wellbeing.
3. There is a greater emphasis on DEI initiatives, despite pushback from some quarters globally. DEI remains a major priority. Supported by extensive research, we know that diverse and inclusive teams are more innovative and creative. They also drive higher engagement, a stronger sense of self-worth, and overall wellbeing.
4. Continual changes in the regulatory environment are increasing the administrative workload of HR departments, at a time when many are already overstretched.

Although HR’s role in organisations is far more important and strategic today, AI will impact the profession both positively and negatively. In a recent McKinsey survey, companies around the world were asked how headcount had changed across various business functions over the past year as a result of AI. Fully 22% of respondents said it had led to a decrease in the number of HR employees, more than any other function, while only 5% said it had led to an increase.

This creates a paradox for the HR profession. On the one hand, HR’s strategic importance has never been greater. On the other, AI and automation are already reducing HR headcount faster than in most other functions. This suggests that the value of HR is shifting, not shrinking. Administrative and transactional roles are increasingly automated, while judgement, context, ethical decision-making, and leadership influence are becoming more critical. The risk for HR is not irrelevance, but being unprepared for this shift.

Automation will have a significant impact, and this should be embraced. It will drive efficiency and productivity within HR departments, freeing HR professionals to play a more strategic role. At the same time, the challenge will be to stay on top of how AI and other forces are reshaping work across the organisation. This is critical, because without clear guidance to the workforce, AI’s impact could result in increased stress and a more unsettled workforce.

There are several ways HR professionals can stay ahead. My advice is to rub shoulders with colleagues in other companies and across industries. Nobody has all the answers. Learn from each other. Network and work the network. Do not try to reinvent the wheel on your own.

In this regard, I need to declare my interest and make a promise that here at Knowledge Resources, we will ensure that our events, such as the HR Director Conference, Organisational Development Conference, Recruitment, Assessment and Selection Conference, African Leadership Conference, HR Business Partner Conference, and others, address this complex world.

In doing so, we aim to bring you speakers and facilitators from leading organisations who are willing to share their successes, solutions, and even their failures. We will continue to work hard to bring you cutting-edge knowledge and practical solutions.

Let me close by returning to the question posed at the start. This may indeed be a golden era for HR, but it is not one defined by comfort or certainty. It is an era shaped by complexity, heightened expectations, and greater accountability than ever before. For those willing to step into this responsibility, there has never been a more challenging, or more meaningful, time to be part of the HR profession. What a privilege.