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Abstract: The modern workplace is undergoing rapid change driven by forces like globalization and technology, creating an imperative for human resources (HR) to evolve in two crucial ways. First, HR must become more strategic by incorporating deeper business understanding, strengthening its own planning abilities, and building operational expertise across core business functions. Second, HR needs to adopt a more people-centric focus, fostering employee growth, well-being, and inclusion through holistic programs. Case studies from the banking and technology sectors, such as HSBC and Microsoft, demonstrate how navigating this dual strategic and people-centric evolution enables HR to strengthen competitive positioning, improve employee experience, and drive successful organizational transformations. For HR leaders, committing to both strategic insights and employee empowerment will be key to guiding their companies through ongoing disruption.
The modern workplace is undergoing rapid and unprecedented change, driven by forces like globalization, technological innovation, and climate change. Organizations that want to thrive in this new paradigm need employees who can not only perform their jobs but also adapt to shifting demands, embrace new technologies, and think creatively about problems. At the same time, research shows a highly engaged and supported workforce is key to business success. This creates an imperative for human resources (HR) to simultaneously evolve in two crucial ways: becoming more strategic to support organizational objectives, and more people-centric to empower employees.
Today we will explore how HR can navigate this "dual evolution" to strengthen both business results and the employee experience. The overarching aim is to offer practical guidance for HR leaders seeking to guide their functions and companies through ongoing transformation.
Strategic Evolution: Expanding HR's Business Contribution
For HR to act as a true strategic partner, research shows it must incorporate deeper business understanding into its strategies, services and role (Ulrich et al., 2012). Several elements are key to driving this strategic evolution:
Integrating Business Insights: To develop HR initiatives that actually move business priorities forward, functions must immerse themselves in organizational objectives, industry trends and market dynamics (Ulrich et al., 2012). Tools like Korn Ferry's Four Frameworks Model help HR identify strategic business issues and systematically analyze them from different angles (Korn Ferry, 2021). At Medtronic, a global medical technology company, internal "think tanks" bring HR, operations and product leaders together regularly to discuss emerging challenges and opportunities across markets (Boudreau, 2019).
Strengthening Strategic Planning Abilities: Next, HR must sharpen its own strategic thinking, scenario modeling and change management competencies. Developing quantifiable multi-year HR plans aligned to company goals is crucial (Ulrich et al., 2012). At Unilever, biannual strategic reviews assess internal/external forces and adjust HR priorities, with detailed roadmaps to guide execution (Ulrich et al., 2012).
Building Core Business and Operational Capabilities: Beyond people strategies, HR also needs expert-level grasp of core business functions like supply chain management, finance, marketing and customer experience to advise effectively on transformation efforts (Boudreau, 2019; Ulrich et al., 2012). For instance, EY transformed HR into internal consultants on Mergers & Acquisitions best practices (Boudreau, 2019).
When HR assumes this enhanced strategic and operational role, research shows greater impact on areas such as innovation output, productivity gains, and financial performance (Boudreau & Lawler, 2021; Ulrich et al., 2012). The following section explores complementary people-centric evolution HR must also undertake.
People-Centric Evolution: Focusing on Employee Experience and Well-Being
While becoming more strategic is crucial for business impact, HR also needs renewed focus on cultivating engaged, empowered employees. Academic studies link high employee experience scores to lower turnover, higher innovation and productivity (Gallup, 2017). Certain elements have proved pivotal for positively shifting company culture:
Fostering Growth and Career Opportunities: Research finds competitive learning/development programs boost retention, motivation and performance (Gallup, 2017; Hirschi, 2018). Spotify invested heavily in its “Academy” platform giving staff continual skills training through online courses and coaching (Economist, 2021).
Promoting Health, Well-Being and Work-Life Balance: Stress-related illnesses cost global economies over $1 trillion yearly (Anthropic, 2021). Deloitte revolutionized its wellness offerings including flexible work, parental leave equalization, mental health resources and on-site clinics/services (Deloitte, 2021).
Driving Diversity, Equity and Inclusion Initiatives: Diverse, inclusive cultures correlate with increased innovation and financial returns (Hunt et al., 2018). Accenture’s multi-dimensional DE&I strategies encompass recruitment, training/mentoring, resource groups and measuring manager accountability (Accenture, 2021).
Cultivating an Innovative, Growth Mindset: Environments allowing independence, autonomy and risk-taking boost creativity (Pink, 2009). At Google, a “20% time” policy encourages staffers to ideate new projects during work hours (Pink, 2009).
When operationalized holistically, personal and societal well-being programs have successfully repositioned HR as a valued employee advocate and changed perceptions of entire organizations (Deloitte, 2021; Hirschi, 2018). The next section examines industry case studies applying these dual strategic and people-centric evolutions.
Industry Cases: Banking and Technology Sectors
This section analyzes examples of companies navigating HR's dual evolution across two major sectors.
Banking Sector: HSBC
Seeking to reinvigorate its brand after financial crises, HSBC transformed its HR function through initiatives like:
Partnering with business units to develop a new customer-centric operating model shaping capabilities and talent strategies. HR played a lead role in company-wide change efforts.
Developing more robust data analytics and scenario planning to forecast talent/skills gaps and proactively address workforce transition away from traditional banking roles.
Bolstering learning programs for in-demand skills like data analytics, cloud technologies and artificial intelligence as digital transformation accelerated across markets.
Launching global diversity programs, expanded wellness benefits and adjusted performance metrics/incentives to improve engagement levels reduced by ongoing industry changes.
These efforts strengthened both HSBC's competitive positioning and employee experience to weather industry shifts (Ulrich et al., 2012; Khan, 2019).
Technology Sector: Microsoft
Embarking on a major company reorganization and "culture reset," Microsoft tasked HR with initiatives like:
Partnering tightly with leadership to align internal culture to customer obsession, trusting staff to make decisions and emphasizing continuous learning.
Deploying new collaboration technologies and adaptive spaces to enhance teamwork across dispersed divisions/offices.
Expanding mental health coverage, personal development accounts and career coaching for employees tasked with constant skills upgrades.
Standardizing inclusive talent processes worldwide and committing deeply to representation goals to access the broadest talent pools.
By evolving HR's strategic contribution and caring deeply for employee experience, Microsoft saw big gains in morale, diversity, productivity and financial performance (Bersin, 2013; Petre, 2018).
Conclusion
The research and cases presented clearly show the dual evolution of strategic and people-centric HR is crucial for organizations to successfully navigate ongoing disruption. When HR immerses itself in deep business understanding, sharpens strategic planning abilities and builds operational expertise, it greatly strengthens competitive positioning and value delivery. Simultaneously focusing on employee growth, well-being and inclusion through holistic programs can culturally transform entire companies. Industries from banking to technology exemplify how navigating this dual path through the examples of HSBC and Microsoft has paid off. For HR leaders charting a course through uncertainty, committing to both strategic insights and employee empowerment will be key to guiding successful workforce and business model transformations.
References
Accenture. (2021, October 5). Why diversity, equity and inclusion matter.
Anthropic. (2021, September 20). The true cost of stress on business and the economy.
Bersin, J. (2013). Microsoft's amazing transformation: using corporate culture to drive business success. Berkeley Executive Group.
Boudreau, J. (2019). Beyond HR: The new science of human capital. Harvard Business Review Press.
Boudreau, J. W., & Lawler, E. E. (2021). HR: Setting the table for talent-based competition. Journal of Organization Design, 10(1), 1-13.
Deloitte. (2021). Total rewards that matter.
Economist. (2021, June 19). How Spotify is trying to stay ahead of Big Tech.
Gallup. (2017). State of the global workplace.
Hirschi, A. (2018). The fourth industrial revolution: Issues and implications for career research and practice. The Career Development Quarterly, 66(3), 192-204.
Hunt, V., Layton, D., & Prince, S. (2018, January 15). Why diversity matters. McKinsey & Company.
Khan, M. (2019, September). HSBC- Lessons in strategic HR from banking giant's digital transformation. People Matters.
Korn Ferry. (2021). Four frameworks.
Petre, B. (2018, May). The power of purpose: How Microsoft used culture to drive business success. Forbes.
Pink, D. H. (2009). Drive: The surprising truth about what motivates us. Riverhead books.
Ulrich, D., Younger, J., Brockbank, W., & Ulrich, M. (2012). HR from the outside in: Six competencies for the future of human resources. McGraw-Hill Education.
Jonathan H. Westover, PhD is Chief Academic & Learning Officer (HCI Academy); Chair/Professor, Organizational Leadership (UVU); OD Consultant (Human Capital Innovations). Read Jonathan Westover's executive profile here.
Suggested Citation: Westover, J. H. (2025). Navigating the Future: The Dual Evolution of Strategic and People-Centric HR. Human Capital Leadership Review. 17(2). doi.org/10.70175/hclreview.2020.17.2.13
