AI Won’t Save HR. Bold CHROs Will

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The McKinsey Report That Should Terrify Every CHRO

Human resources is facing a critical inflection point that demands immediate action, not incremental improvements. In this episode, co-hosts Scott Morris and Jackson Lynch dive into McKinsey’s 2025 HR Monitor report, which reveals a sobering reality: if HR were a patient, doctors wouldn’t prescribe vitamins – they’d give organizations 12 to 24 months to fix fundamental problems or face serious consequences. Scott and Jackson examine five critical areas where HR continues to fall behind despite higher stakes than ever before: workforce planning, talent acquisition, employee development, employee experience, and the ways HR has failed to leverage AI and shared services for strategic value. They argue that the next two years will determine whether HR earns credibility as a business performance driver or gets permanently sidelined.

Three Key Takeaways

• The gap between what’s needed and what HR delivers is widening quickly – While organizations face unprecedented disruption and skill obsolescence, most HR functions remain distracted by compliance work and administrative tasks rather than focusing on strategic business outcomes that drive competitive advantage.
• Talent acquisition is an ecosystem problem, not a process problem – With global stick rates below 50% and high probationary washouts, success requires thoughtful role design, structured interview processes with specific focus areas, and measuring speed to impact rather than meaningless metrics like average time to fill.
• CPOs must own the AI agenda or lose it forever – AI represents the redefinition of what work is done and how it’s done, making it fundamentally a human capital challenge rather than a technology implementation, but the window for HR leadership is rapidly closing.

Practical Advice

The Strategic HR Transformation Framework:

Phase 1: Capacity Creation

• Shed all compliance and administrative work that doesn’t require human capital expertise
• Move legal compliance to legal department, risk management elsewhere
• Free up capacity to focus on strategic business outcomes without requesting additional headcount

Phase 2: Workforce Planning Revolution

• Start with where you need to be in 2030, not where you are today
• Use algorithmic approaches rather than intuition-based planning
• Plan for skill obsolescence as a core business strategy, not an edge case
• Apply pattern recognition to anticipate disruption rather than react to it

Phase 3: Talent Acquisition Ecosystem Design

• Begin with intelligent role design focused on business outcomes
• Structure interview processes with three distinct focus areas:
  • Group 1: Technical skills and competencies only
  • Group 2: Behaviors and past performance patterns
  • Group 3: Relationship between experience and future needs
• Measure speed to full productivity, not time to fill or other activity metrics
• Hold recruiters accountable for impact metrics, not process completion

Phase 4: Integrated Talent Management

• Focus all subfunctions on talent density as the primary outcome
• Use HR business partners as symphony conductors who integrate efforts
• Ensure learning, performance management, and development align with business strategy
• Stop measuring subprocesses; measure business impact instead

Phase 5: Employee Experience Fundamentals

Answer three critical questions for every employee:

1. Do I have interesting work? (Work that matters to business direction)
2. Do I want to do this work? (Sorted through acquisition and performance management)
3. Do I have a growth plan? (Clear development path aligned with business needs)

Remember: The next 12-24 months will determine whether HR earns credibility as a business performance driver or becomes permanently marginalized. Bold action is required, not incremental improvements around the edges.

Want More?

1. The 2025 McKinsey HR Monitor Report – Comprehensive analysis showing the widening gap between what organizations need from HR and what most are actually delivering, with specific recommendations for strategic transformation (McKinsey & Company, 2025)
2. AI is going to take your HR job. And it’s about time – Scott Morris and Jeff Wellstead’s provocative analysis of why HR professionals should embrace AI disruption as an opportunity to shed administrative work and focus on strategic value creation (HR Executive, 2024)
3. Talent Wins: The New Playbook for Putting People First by Ram Charan, Dominic Barton, and Dennis Carey – Strategic guide for elevating HR from administrative function to business performance driver through talent-focused leadership

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