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Two thirds of HR leaders view people function as key business driver, research finds
HR is increasingly seen as a driver of business performance as organisations place greater emphasis on workforce strategy and execution.
Two thirds (65 per cent) of HR professionals described HR as a key driver of business performance, according to Boston Consulting Group’s (BCG) Creating People Advantage 2026 report.
However, half (51 per cent) of the 7,000 HR and business leaders surveyed said administrative workloads prevented HR from contributing more strategically.
“Companies measure HR by the value it creates for the business, not the volume of activity it delivers,” said Peck Kem Low, president of the World Federation of People Management Associations. “CHROs and their teams are expected to be at the forefront to lead the workforce transformation and help leaders achieve their ambitious agendas.”
Organisations with stronger HR capabilities reported lower turnover and filled critical roles roughly 17 to 18 days faster than their peers.
By linking these HR metrics to measurable business outcomes, such as profitability and growth, people teams will be better able to define their value to the wider business, the report’s authors said.
However, the survey also identified a gap between HR’s expanding impact and the function’s capacity to meet escalating demands.
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“The main brake is operational. Fragmented systems and manual work still trap HR in troubleshooting. Give HR clean data, unified platforms and a seat at the table, and it becomes one of the most powerful drivers of business performance.”
HR takes a leading role
The CHRO and CEO relationship has also become more important as HR’s remit has expanded, the report’s authors explained. Chief people officers are working more closely with the leadership team to shape enterprise strategy and support execution.
Despite the closer relationship between the CHRO and CEO, the two leadership roles have differing attitudes towards AI. Almost all (90 per cent) of chief executives believe that the technology will shape their industries and a similar proportion plan to increase AI investment.
However, only a minority of HR teams have successfully scaled AI across their function, according to the BCG report. This is primarily because of data privacy concerns, a lack of technical expertise and uncoordinated initiatives.
Philipp Kolo, director in the people and organisation practice at BCG, said HR teams needed to move faster in their adoption of technology. “HR can make or break business performance in the AI era. CHROs must meet the moment to embrace what could – and should – be a golden era for HR,” he added.
This will require HR to provide more training, encourage greater adoption and design new ways of working.
“You can install new systems, pivot your market strategy and enter new geographies, but none of it lands if your people aren’t skilled, aligned and ready to move,” explained Alice McCormack, senior manager at HR consultancy LACE Partners. “Technology doesn’t transform businesses, people do.”
