Poor data capabilities and lack of AI know-how undermining HR's strategic role

3 minute read

Limited use of data is hampering the ability to map existing skills and plan for future capabilities according to research from The Talent Labs

Letters HR in a pink no go sign on a background of data numbers

While 32% of HR leaders acknowledge data, technology and AI will significantly shape people strategy in the next five years, just 26% say these elements are influencing their people strategy today, according to research from The Talent Labs.

In its new study The Talent Labs research identifies economic volatility, business change and talent scarcity as top concerns for HR leaders, with a quarter citing economic climate as having the biggest impact on their plans, another quarter business growth change and transformation, and 22% skills and talent scarcity. 

Only 2% believe external technology developments are impacting their business and people requirements overall.

Conducted in partnership with change experts Right Management, the study surveyed 120 HR leaders across a wide variety of sectors to uncover the lived experiences of business and people leaders, revealing key insights into the evolving challenges and priorities within the HR landscape.

The data surfaces insights into the evolving challenges and priorities within the HR landscape. Respondents cited effective talent management as a top priority, with a focus on retention and mobility of talent (57%) employee experience and engagement (48%) and leadership and people management (56%) also high on their current to-do lists.

The research also emphasises the necessity of shifting from short-term resource planning to long-term capability planning. Organisations must identify future skills needs and develop strategies to reskill, upskill, and cross-skill their workforce accordingly, as it’s only such a proactive approach that will lead to sustainable growth and adaptability.

However, only a few organisations are effectively utilising their people data and analytics to drive their people strategies. This limited use of data may be hampering the ability to map existing skills and plan for future capabilities, warns The Talent Labs.

Ted Miller, Managing Director of The Talent Labs’ Talent Management & Development Labs, says: "The top three focus areas – talent management, succession planning and business change – emerged as the most crucial now and for the next five years. This alignment with what The Talent Labs supports indicates a significant gap for HR and businesses. The strong emphasis on these areas highlights the challenges organisations are currently facing.

“To effectively align people processes and develop a long-term, flexible strategy, HR needs to invest in high-quality data and analytics capabilities. This investment enables accurate tracking of skills and performance, supports strategic HR conversations and enhances data-driven decision-making. Most organisations want to do this but are not prioritising it high enough. Until they do people planning will remain reactive and inefficient, and the scale of their capability challenges will only get bigger."

The research also flags that HR must dial up its presence in strategic conversations. Too many times HR is ending up excluded from critical discussions about technological integration and change management. 

This, says The Talent Labs, is leading to misaligned initiatives and missed opportunities. Enhancing HR’s role at the executive table is therefore essential for coherent and effective organisational planning. 

Miller adds: “The increased recognition of HR’s strategic role is a positive development, though it does expose a capability gap. Historically, HR has often been brought in too late, resulting in messy implementations on the people side. Now, there's a clear need for HR to take a proactive leadership role in driving change. This shift underscores the necessity for organisations to invest in HR capabilities, ensuring they are prepared to lead effectively and deliver their core functions."

A crucial resource for HR professionals seeking to enhance their people strategies and address the challenges posed by economic uncertainty, technological advancements and evolving workforce needs, the report, Talent Optimisation Insight Report 2024, is available here.

About The Talent Labs

Established in 2007 as a LinkedIn group for talent acquisition professionals, The Talent Labs has since grown into a thriving global membership organisation serving 4,500 members in 67 countries, including organisations such as EY, Nestlé, Balfour Beatty and TUI Group. To help people leaders and talent practitioners unlock their ability to recruit, manage and retain talent, The Talent Labs offers expertise, data insights and a community network of support.

Disclaimer: The Talent Labs is a client of The People Space's sister company Sian Harrington Media Consulting (SHMC)

Published Tuesday 25 June 2024
Enjoyed this story?
Sign up for our newsletter here.