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Competition increases among HR’s to retain talent according to McKinsey Report

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It is becoming more challenging for human resources (HR) departments to retain talent, according to the July 2017 edition of McKinsey Quarterly titled The CEO’s guide to competing through HR. The report outlines the state of HR in the fight to stem high turnover and recruit more talent, and suggests steps that an innovative HR department might take in order to become competitive in today’s talent market.

The report cites how HR can step out of its traditional silo and be a strategic force rather than just responding passively to the routine needs of business by calling for renewed action. “We believe the time is right to accelerate the reinvention of HR,” the report states, “as a hard-edged function capable of understanding the drivers of strategy and deploying talent in support of it – most importantly as a result of the availability of new technological tools that unleash the power of data analytics.”

This involves rethinking the role of HR’s business partners – senior individuals who counsel managers on talent issues, as well as identifying strategic talent value leaders (TVLs) – business partners who show potential for connecting talent decisions to value-creating outcomes, as well as being held fully accountable for the performance of talent. The report suggests 3 areas of focus:

People analytics

  • Companies need to assess data readiness that will add value to HR. They will need dedicated analytics capability, including roles, capabilities, and data governance.

HR Operations

  • Standardize and centralize key work flows. Next gen automation technologies – robotics, cognitive agents, and natural-language processing, for example – will accelerate efficiency.


  • HR’s agility depends on companies establishing a rigorous strategic-planning process that lays out which initiatives HR will pursue each year to drive value and which ones it will not.

Other key challenges include how to find appropriate candidates to fill bigger HR shoes. The report suggests “starting a cohort-based, high-potential program that balances rotations in and out of HR with dedicated time for skill building. Companies can also reward executives from other functions for stints in HR and potential HR leaders should experience line and other functional-leadership roles … in order to build better business strategy capabilities.”

The report also suggests that HRs fix their operations to avoid being routinely pulled into operational issues and distracted from its core strategic mission.

The full report is available at http://www.mckinsey.com/business-functions/organization/our-insights/the-ceos-guide-to-competing-through-hr

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