If HR cannot adapt, it may not be able to keep up with today’s fast-changing work environment, according to a new report by Henley Business School and Oxford Strategic Consulting.

The report examined global human capital challenges facing leading organisations and how leaders can deliver the differentiating strategic capabilities (DiSCs) needed to achieve success.

The report, HR with purpose: future models of HR, highlights three important new trends: a rapid and continuing shift from a permanent full-time workforce to a combination of full-time, part-time, permanent and temporary, employed and self-employed staff; a tendency towards more flexible, project-based teams, contrasted with traditional steady state business-as-usual operation; and an increasing use of artificial intelligence (AI), meaning potential near-term displacement of human capital with AI capital – a development most business leaders are ill-equipped to manage.

“HR will be increasingly impacted by technology, and its own future will depend on its response,” said Gavin Walford-Wright, senior director of talent acquisition and international mobility at Cleveland Clinic Abu Dhabi (CCAD) “Firstly, the basic work that HR does, and is mostly valued for – such as recruitment and administration – will be primarily carried out through AI and other smart technologies. At CCAD, for example, our recruitment process has been made highly effective through the use of our technology stack.

“Secondly, as noted in the report, the strategic capabilities the organisation needs will have to be built and acquired through an interchangeable mix of human and technological resources. If HR wants to remain strategically relevant in the future, then it must understand and embrace the use of advanced technology in HR delivery and take a strategic role in building capabilities by developing in-depth expertise in people and technology,” he added.

Professor William Scott-Jackson, chairman of Oxford Strategic Consulting and director of research and development, Arabian Society of Human Resource Management (ASHRM), believes HR should make a proactive decision to add real strategic value to the business. “This would apply in the GCC even more so than elsewhere, as the pace of change and the onset of technology is arguably even faster than in other economies,” said Scott-Jackson.

“Business is evolving faster in the GCC than anywhere (look at HE Matar Al Tayer’s flying taxi), so HR had better catch up. On future working patterns, the historical use of huge numbers of expatriates on a purely transactional deal is also changing so, again, even work relationships could well begin to change faster than in the West,” he added.

The report concludes that future leaders have two choices: simply re-skill HR to provide better tactical value through people processes and expert advice on people issues, or transform the function to exploit the full potential of its strategic contribution by defining and delivering DiSCs.

If HR cannot rise to this challenge, then it will be eclipsed by another function, be it IT or strategy, said the report. This would confine the HR function to an increasingly marginalised and unfocused mixture of welfare, legal and service delivery roles. The future of HR is not doomed, concludes the report – but it must adapt to prosper and to deliver true value for organisations.