
According to Harvard Business Review, HR Leaders have the opportunity to assume a more strategic role in 2021, in the same way Finance leaders expanded their influence following the 2008 financial crisis.
HR leaders have more than demonstrated their importance in the last 12 months. All the signs are that they will now have a greater scope to influence business strategy and will enjoy larger budgets as organisational structures continue to evolve.
HR are playing a pivotal role in protecting and boosting profits.
According to the most recent PwC Pulse survey, the top challenges facing HR leaders in 2021 are:

This list reveals 2 things; 1) that 2021 promises to be another busy year for HR leaders, and 2) the link between HR and bottom-line business performance is becoming clearer for all stakeholders to see. Whilst HR will never just be about the bottom line, this list does illustrate that it will be easier for other leaders in the business to appreciate the strategic role HR plays in protecting not just the people, but the business as a whole.
Building Critical Skills and wellbeing
With HR becoming more central to the company strategy, HR leaders are finding themselves with increased budgets. They intend to put this to work by increasing support for employee wellbeing as well as prioritising skills development.
A recent survey by Gartner reveals that seven out of ten HR leaders feel that building critical skills will be the most pressing issue in 2021. Whilst ‘critical’ means something different for every business, recurring themes include sales, productivity, customer service, leadership, communication and wellbeing. HR leaders will need to play a proactive role in identifying skill gaps and finding the relevant learning solutions.
A McKinsey survey also found that 87% of businesses were either already experiencing an internal skills shortage or expect to soon. Key to ensuring that their business thrives, it falls to HR to find the solutions and ensure that team leaders have the right managerial skills to lead through change.
Employee Wellbeing
It is well documented that Health and Mental wellbeing has been climbing up the agenda for several years and is now widely seen as an essential part of any HR strategy. Despite this (but unsurprisingly), the UK alone recorded 828,000 cases of workers being affected by work-related stress, depression or anxiety in 2020, at an estimated cost of over £10bn.
Companies who do not have a mental wellbeing strategy will need one. Employees and candidates are increasingly favouring employers who are proactive in providing wellbeing support, which may explain why 45% of HR leaders highlighted ‘wellbeing’ as one of the top three investment areas for 2021.
Data enabled decision making
Data has been something which HR teams at a corporate level have been wrestling with in recent years. The numbers confirm that the pandemic has accelerated digital transformation, but the scale of the projects and the speed with which businesses are aiming to implement them has led to mixed results.
The boom in new cloud-based HR tools has meant that smaller businesses have more immediate access to use data-driven tools, without the complication of the technical burden that some of their corporate counterparts have to deal with.
Tools such as leave planning systems, absence management solutions, reward and benefits platforms, employee engagement systems and recruitment platforms can be adopted without the need for an IT-led project. The by-product is that smaller businesses naturally find themselves with a greater volume of meaningful data they can use to make better decisions about their workforce.
Our view is that smaller businesses need not scramble to copy their corporate counterparts just yet. Yes, tech is absolutely becoming more powerful, but smaller businesses should avoid falling for the ‘promised land’ that tech hints toward.
Let’s not forget that some of these initiatives used at a corporate level seek to replace the intuition that a business loses as the workforce scales in size. HR leaders in smaller business have the advantage of personally knowing the workforce and shouldn’t rush too much to replace intuition with artificial intelligence.
Any tech adoption should be in response to a clear need, and incremental advances to the range of tools used are likely to lead to greater long-term success.
Keeping an eye on Employee Monitoring
Around one in 3 companies have adopted some form of employee monitoring software to track their employees since the start of the pandemic. With remote working expected to be feature for the long term, we expect this to continue. Tools using AI and analytics may help to make these more subtle from an employee perspective but the challenge of maintaining employee trust and goodwill remain.
Diversity & Inclusion
Against the backdrop of worldwide protests against racial inequality, 2020 saw companies make diversity and inclusion a central part of their CSR strategy. Fanfares of new diversity and inclusion targets by the likes of PwC, and Channel Four already sound like news from a bygone era. In 2021, businesses who pay lip only service to diversity and inclusion challenges risk being left behind.
Despite the spotlight put on it, some argue that progress has stalled during the pandemic. HR departments and the wider workforce alike have found themselves stretched and diverted to meeting the immediate business challenges.
In the years following the financial crisis in 2008, companies who prioritised diversity and inclusion outperformed those who didn’t. Banks with female CEOs were more stable during the crisis and recent research shows that companies with the most diverse executive teams are more likely to have above-average profitability.
Whilst this is nothing new, HR leaders can point to this to highlight internally, the commercial benefits of investing in unconscious bias training, leadership training, inclusive benefits or grievance and complaints systems.
Future Outlook
Signatories to initiatives such as the Race at Work, RIA Equality, Diversity & Inclusion and Women in Finance Charter, combined with the appointment of several new diversity leaders and heightened sustainability efforts, strongly indicate that 2021 could be an even bigger year on this front.
Ethnic and gender diversity are expected to be the main priorities for businesses moving forward. Companies will be looking to invest in family-friendly benefit schemes, refine recruitment strategies and introduce inclusive development programmes.
HR has shined over the last 12 months, but leaders hoping for a quieter time in the next 12 may find themselves disappointed. Instead, HR departments are likely to find themselves with increased scope, influence and budget. The panoply of personnel issues is not going to go away, so the challenge is to face the daily pressures that come with the territory, whilst being a leading influence at the boardroom table.
The opportunity is huge but be aware that the rest of the leadership team may not understand the size of the challenge. It is up to HR leaders to ensure that one long-lasting impact of the pandemic is that HR are no longer the unsung heroes of business, but a confident and powerful authority deservedly sat at the boardroom table.