Good morning!
Today’s top HR leaders are facing an increasingly difficult balancing act. They’re asked to push major new initiatives across the organization to boost the bottom line, like AI adoption, but also expected to spend as little money as possible to do so.
The top strategic business priority for CHROs over the next two years is market expansion, with 69% of this group ranking it as a major concern, according to a new survey from Korn Ferry, a consulting firm, which surveyed 750 HR leaders from around the world. That’s a 25% increase over the past 24 months. But the second highest-ranking business priority was cost efficiency and productivity, with 56% of HR leaders reporting it was a major issue.
“It seems that CHROs have priorities that are in tension,” says Laura Manson-Smith, global leader of organization strategy consulting at Korn Ferry. “On the one hand, they’re supporting the business to grow, but at the same time, they have to keep quality standards up while encouraging productivity and efficiency.”
And these dueling priorities can be a problem if businesses aren’t careful. Around 60% of CHROs say they’re struggling to move away from old ways of thinking, and only 40% say they’re able to actually incorporate disruptive ideas into their business. The problem becomes particularly severe when it comes to technology; while 42% of CHROs are prioritizing investments in AI for the HR space, only 5% of HR teams feel fully prepared to implement it effectively. That said, Manson-Smith says the best company executives she works with are redesigning their entire operating structures to deal with all the disruptions.
The antidote might be transformational alignment between CHROs and the executives they report to. Right now, only 30% of CHROs say the leaders they work with are aligned on their transformational needs.
“Companies have been used to the CEO and the CFO being strong partners, but in some of the best organizations, we see it being the CEO, the CFO, and the CHRO, all three working together,” says. “That’s when the decision-making is more balanced and allows them all to align both short-term and long-term goals.”
Brit Morse
brit.morse@fortune.com
Around the Table
A round-up of the most important HR headlines.
The administration decided to put a 90-day pause on steep Chinese tariffs, agreeing to lower them back to 30% from the current 145%. New York Times
Now that more people have returned to the office, it may be time to bring back rules around lunch etiquette. Washington Post
Using AI too much could have negative consequences at work, including a hit to one's professional reputation, a new study finds. Ars Technica
Watercooler
Everything you need to know from Fortune.
Managing the cloud. The CEO of recruiting platform Greenhouse says ensuring employee or client data is safe on the cloud is a 24/7 job these days. —Brit Morse
Administration woes. The majority of employers say that Trump’s latest White House plans are having significant impacts on business. —Sara Braun
A huge hiring push. In an effort to spur new growth, McDonald’s plans to hire a massive 375,000 U.S. workers this summer. —Dee-ann Durbin and The Associated Press
