Modern businesses must adapt or fail. New technology, an accelerated pace of change, and shifting consumer priorities make old ways of doing business less effective. Many HR executives are realizing that new challenges require new solutions, especially when it comes to understanding and planning for the future needs of the workforce. In KPMG’s Future of HR survey, 57 percent of HR executives said that if HR doesn’t modernize its approach, it will become irrelevant within the modern organization.

Some businesses are already finding their way by focusing on a few high-impact priorities. The authors of the Future of HR Survey call these forward-thinking businesses Pathfinding HR Organizations. Although they make up just 10% of the survey sample, they have a lot to teach businesses about facing the future of HR.

Pathfinding HR Organizations apply four capabilities:

  • Shaping the workforce
  • Designing employee experience
  • Building the culture
  • Using data for workforce insight

These four capabilities fit neatly into the Talent Optimization framework. Talent Optimization is a tool that helps businesses increase engagement and goal alignment among employees to meet modern talent management challenges. It encompasses the four capabilities above within a well-documented, talent-focused strategy.

Workforce shaping

To keep up with new technology and shifting business models, HR must change as well. These changes can be a burden, or they can be an opportunity to gain the full benefits of Talent Optimization. Whether they see it as an opportunity or a challenge, 76 percent of Pathfinding Organizations are rethinking workforce composition.

These are some of the questions they’re asking:

  • Who should we hire?
  • What new teams should we build?
  • Which tasks and projects can be completed by contractors?
  • What technology must we build or acquire?
  • How do we upskill the workforce to manage the impact of Artificial Intelligence and other technologies?

Diagnosing workforce needs and hiring the right talent are two key aptitudes of Talent Optimization. They should be supported by data and aligned with strategic goals to create the biggest impact. HR cannot operate alone; their functions must be aligned with wider business initiatives.

Employee experience design

Hiring the right people is only half the challenge. You must also provide meaning and context for employees. Which is why 95 percent of Pathfinding organizations are prioritizing employee experience. Most have strategies that mirror and support the customer experience.

Technology can easily overwhelm employees, inundating them with information and requests on their time. Without a solid connection to the mission and goals of the organization, employees quickly become dissatisfied.

Designing the people strategy and inspiring employees are the other two core aptitudes of Talent Optimization. By helping employees understand their role in the organization and giving them the tools to fulfill that role, you design a positive employee experience. Employees, in turn, are more engaged and better able to understand the big picture.

Culture building

HR helps to shape workplace culture through hiring decisions, onboarding, and internal and external communications. In the KPMG study, pathfinding organizations were 6 times more likely to say they have a culture strategy, and five times more likely to have dedicated HR roles focusing on purpose and culture.

This focus on culture is a vital element of Talent Optimization, because it helps to support employee engagement. Culture is built from the top down. C-suite leadership must have clear goals that they can communicate to middle management. In turn, middle management can communicate these goals to employees.

At each level, people should understand how the goals fit into the overall business strategy, and what role their work plays in the process. When employees can see the value their work brings, they stay engaged. Building a workplace culture is an ongoing process that requires consistent effort to keep decisions aligned with strategy.

Data insights

Pathfinding HR organizations understand the power of data. They are almost twice as likely to invest in data scientist and data modeler roles, while 35 percent are planning experiments with new technologies.

Data is also the foundation of Talent Optimization. It helps diagnose talent needs, design people strategy, hire the right talent, and monitor the success of inspirational efforts. Without data, HR leaders make subjective decisions. With data, they make objective ones. In the fast-paced modern business, guessing just isn’t good enough.

We believe that Talent Optimization is the path forward for HR specifically and businesses in general. Pathfinding organizations have already reached the same conclusion even if they call it by a different name. Talent Optimization strategies should guide every facet of your organization, not just the HR functions. Focusing on people, culture, and engagement informed by data can keep your business strong with whatever the future brings.

Read more: Prepare For The Future Of HR