Chief People Officers believe they are increasingly driving business transformation through the HR function, but are often absent for the strategic planning and decision-making stages.

That’s according to the latest research from HR and Payroll transformation consultancy, LACE Partners, which surveyed 450 C-Suite executives throughout the UK, North America and Gulf Cooperative Council.

The From Implementer to Influencer: Redefining HR’s Role in Business Transformation report found 93% CPOs believe they are leading transformation agendas and decision-making or are playing an active role in shaping transformation projects.

Meanwhile, two-thirds (64%) of CPOs surveyed said they are actively shaping business transformation decisions, while one-quarter (25%) said they are considered but not central to decision-making.

Other C-Suite executives are of a similar mind, with 85% of non-HR leaders rating CPO influence in shaping business transformation as high.

With numerous organizations worldwide facing headwinds such as economic volatility, skills shortages, technological disruption, and shifting employee expectations, the ability to manage change and execute strategic business transformation is critical.

Speaking exclusively to UNLEASH, Executive Director – Head of Workforce Transformation at LACE Partners, Julian Holmes, says CPOs are increasingly involved as “key participants in the business transformation agenda, and largely, this report shows that there is an open door from the wider business.

“However, there remain significant gaps between the aspiration and reality.”

Organizational and cultural blockers are hindering HR’s ability to drive strategic change

Despite the majority of CPOs, backed up by non-HR executives, valuing their impact on business transformation, more than half (53%) of all surveyed said the most common point CPOs are brought into these projects is the implementation planning stage – not strategy setting or decision making.

Some of the main reasons uncovered by the report for HR leaders having less influence over business transformation compared to other executives included being reactive rather than proactive in transformation planning (41%), their contributions being less tangible and manageable (41%) and other functions being seen as more directly tied to business outcomes (37%).

One-third of respondents also said that their CPO lacks the capacity to influence business transformation.

Despite 95% of C-Suite executives surveyed stating that their organization’s people strategy is either fully or somewhat aligned with broader business transformation objectives, there is still a cultural view of HR as an administrative function, rather than a strategic driver of change (44%).

Holmes adds that the most important finding of the report is an “imperative to improve partnering with the other CxO colleagues in business transformation”.

We believe that navigating the complexities of economic uncertainty, geopolitical tensions, and the digital and AI revolution, businesses need the people function working in partnership with agile, cross-functional teams working to a shared agenda,” he explains.

Indeed, strengthening relationships across the entire C-Suite, not just with CEOs, is one of Holmes’ key recommended actions for CPOs, to demonstrate HR’s value to the business improvement and transformation agenda.

He also highlights possessing a “strong listening capability underpinned by data, insights and business relationships to proactively anticipate and identify the most significant people transformation priorities”.

Finally, CPOs should be ensuring HR teams have “the right people strategy, operating model, culture, agility and capability to shape and deliver strategic people transformation,” Holmes concludes.