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The future of HR: Moving from “function” to value generator

We surveyed HR leaders to track the changes and approaches that are elevating the function to essential new responsibilities.

The HR team of yesterday was the pulse of the organization: the “people” people who kept snacks flowing and spirits high.

But the HR team of tomorrow will be much more the heart of the business—strategists and soothsayers who keep talent flowing and margins high.

This transition had already begun before the pandemic rolled in and made protein bars and ping-pong tables a bit less relevant. It’s accelerated since, as the race for talent continues to ratchet up amid a persistently tight labor market and the new reality of employee nonnegotiables: remote work, attention to wellness, competitive compensation, and more.

And so for HR today, the overall challenge is to stay three steps ahead. But how?

To learn more, we surveyed 300 chief human resource officers (CHROs) and other HR leaders for our comprehensive new report, The future of HR: From flux to flow. The report explores in-depth how HR experts see their functions changing over the next three years, along with a wealth of on-the-ground insights from our Pathfinders—future-forward HR leaders who are helping their companies meet today’s challenges head-on with transformative new approaches.


The percentage of Chief HR Officers and their equivalents who say they need to alter their employee value proposition (EVP) in response to the labor market.

Who are the Pathfinders?

The 52-page report includes interviews with a dozen Pathfinders. These are HR leaders who’ve trashed their old playbooks and are embracing the uncertain future with intention, courage, and thoughtfulness.

Pathfinders represent about 10 percent of organizations who are leading their peers by integrating the HR function into the wider business and positioning it to make a bigger impact. They come from some companies you’ll know well, and some you may not. But all have put bold people strategies at the heart of their decision-making and, as a result, have gained a strategic advantage amid the Great Reconsideration.

What’s more, they’ve already been tackling what our 300 survey respondents see as their six areas of focus over the next three years. In other words, the Pathfinders—true to their name—are setting the example, charting the course, and leading the way. 

What is consistent and underpins all of the Pathfinders’ capabilities is a focus on evidence-based decision-making; greater integration of the sub-functions of HR, and creating a superior employee experience.

Insights from the KPMG report, The future of HR: From flux to flow.

A three-year impact plan

Our survey identified six key priorities that HR leaders are focusing on as they look out toward 2025, and our report details how our Pathfinders are viewing these challenges and building solutions. Here’s a taste of what they told us.

Priority #1: Deliver on strategy every day

Does your HR operating model align with the organization’s wider strategic vision and drive measurable ROI? If the answer is not an emphatic “yes!” today, change may be on the horizon. Many HR leaders already recognize this, with 60 percent expecting to change their HR operating model in the next two to three years.

Our Pathfinders say: HR must have a seat at the strategy table—after all, it’s building the team that will take your organization into the future. How to earn your spot? Organize to deliver business value by putting a multidisciplinary team in place with complementary skills: organizational design, recruiting, training, workforce analytics and planning, culture change, agile delivery, and more. 

Priority #2: Integrate digital operations

Move away from technology as facilitator of basic needs and instead leverage it to enhance HR effectiveness and employee experience. Nearly 40 percent of HR leaders reported that automating HR service delivery is a key focus between now and 2025.

Our Pathfinders say: Choose a technology platform as the basis of your “digital headquarters” to make the organization more accessible, connected, and communicating seamlessly. If all staff are using the same messaging platform, for example, one-on-one conversations can happen much more organically than the knee-jerk “let’s call a meeting.”

Priority #3: Amp up your analytics

It’s time to push beyond rearview analytics like hiring, attrition, and engagement: 36 percent of survey respondents told us that delivering predictive insights and business value will be a priority in the next three years.

Our Pathfinders say: Leverage comprehensive data sets and relational analytics capabilities to answer big questions about people in the business. Treat your employees as the “customer,” and use the findings about their needs to create products and services that enhance their experience.

Priority #4: Build a talent marketplace

Talent flows in every direction—up, down, and out. Embrace it. It’s essential to understand the skills your organization will need in the years to come, and the gaps you’ll need to fill.

Our Pathfinders say: Develop a talent marketplace that allows you to match skills to tasks, and not just people to jobs. Start with a database of the skill sets required, existing employee skills, and who’s working on what. Think about team agility and mobility, particularly across borders. Got gaps? Start there.

Priority #5: Bring your purpose to life

Culture, company values, and purpose are vital factors in the employee value proposition (EVP) and contribute to organizational success and reputation. Consider how you can transform your purpose from a catchy slogan to a living, breathing key performance indicator (KPI) that employees can contribute to every day.

Our Pathfinders say: Integrate your purpose into how you recruit, how team members prioritize decision-making, and how leadership operates. Foster a culture in which employees embrace purpose to drive the new products and services they create. Take net-zero emissions goals, for example: Think about how employees can help achieve the company’s aspirations, and then empower them to do so.

Priority #6: Prioritize employee well-being

Supporting the mental health and well-being needs of workers is a key priority for 85 percent of the HR leaders we surveyed. That means making employees feel like partners, not cogs—and providing benefits that make a measurable difference in their lives.

Our Pathfinders say: The pandemic may be waning, but don’t take your foot off the gas. Younger employees especially expect employers to prioritize mental health (including anxiety and depression) and overall well-being. Treat these as three separate areas—and think about how the requirements of each can shape policies and programs.

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Meet our team

Image of Lisa Massman
Lisa Massman
Principal, Human Capital Advisory Leader, KPMG US

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