What used to be a behind-the-scenes function — handling hiring, payroll and benefits — has become a central driver of strategy, culture and transformation. The role of the human-resources (HR) function has ballooned. This isn’t just about recruiting or compliance. It’s about shaping organisational purpose, re-engineering work, managing talent ecosystems, and influencing how companies respond to global change.
Here’s what you need to understand: how HR rose, what’s behind that rise, what challenges are emerging — and what it means for individuals, companies and society.
🚀 The Rise of HR — Why It Took Over
Several forces have converged to elevate HR’s stature:
- Workforce complexity: With globalisation, remote work, contingent labour, gig-workers, multiple job types — managing “people” has become far more complex.
- Talent as a strategic asset: In knowledge-economy companies, people and culture are often the differentiator, so the “people function” moves from administrative to strategic.
- Technology and data: HR now has access to analytics, AI, workforce platforms, and real-time data — turning it from paperwork to strategic insight.
- Societal expectations and governance: Issues like diversity, equity, inclusion (DEI), well-being, workplace-culture, employee experience are under public view. Boards and investors expect HR to manage these.
- Organisational change & transformation: Mergers, rapid strategy shifts, digital transformation — all require workforce re-skilling, organisation redesign, culture change — areas where HR is central.
Because of these, HR is no longer “just HR”. It’s a major lever for business outcomes.
🔍 What the Economist Article Covered
The Economist piece lays out how HR functions have grown from administrative to strategic:
- It tracks the structural shift in big companies: HR functions gain seats at the executive table, influence decisions about strategy and workforce.
- It highlights how HR is central in shaping workforce models — hybrid work, remote models, flexible staffing.
- It underscores the risks: as HR gathers power, its decisions matter more — for fairness, for employee-experience, for culture and for trust.
🌐 What the Story Didn’t Fully Explore — Additional Dimensions
Here are key areas where the story can be taken further:
1. The Shift in Role & Skills for HR
HR professionals today require a very different skillset: analytics, digital fluency, strategic mindset, change-management, stakeholder engagement. Traditional HR-tasks (payroll, hiring) are still needed—but the function now must also “shape culture”, “drive transformation”, “measure human capital”.
This changes the identity of HR and the career path of HR professionals.
2. Power and Governance Implications
When HR becomes powerful, there are governance issues:
- Who holds HR accountable when decisions affect thousands of employees?
- How transparent are workforce analytics and people-decisions?
- What checks exist against bias, misuse of data, unfair practices?
These governance dimensions become critical.
3. Technology, Data and Automation in HR
HR itself is being transformed by technology: AI for recruitment, analytics for workforce planning, platforms for employee performance, remote-work tools. This dual transformation (HR transforming and being transformed) adds layers of complexity.
For example: when HR uses AI to screen candidates, issues of bias and fairness arise. When HR monitors productivity via data-platforms, concerns about surveillance emerge.
4. Global & Societal Impacts
The expansion of HR’s influence is uneven across regions and types of companies. In large multinationals, HR may be highly strategic; in small firms, HR still may be administrative.
Also, the rise of HR matters for societal issues: worker rights, labour markets, gig-work regulation, employee voice and representation. The “HR-world takeover” has implications for the balance of power between employers and workers.
5. Risks of HR Dominance
- Over-emphasis on efficiency or metrics may degrade employee experience or human touch.
- HR power may tilt towards corporate interests at the expense of employee advocacy if not balanced.
- Rapid change (hybrid work, AI tools, contingent labour) may outpace HR’s capacity or ethics frameworks.
- A workforce-centric strategy may still fail if culture, leadership, trust are weak.
6. Future of Work & HR’s Evolving Mandate
Looking ahead, HR’s mandate may expand even further:
- Reskilling and upskilling at scale as work changes.
- Workforce ecosystem management (full-time, part-time, gig, remote).
- Employee lifetime experience (not just job lifecycle).
- Integration of work-life, purpose, social value — making HR a “human experience” function.
🧭 What This Means for Stakeholders
For Employees
- HR’s rise means changes in how you experience work: more involvement in culture, more data collected, more transparency expected.
- It also implies opportunities: career development, flexible work, voice in organisational strategy. But you also need awareness: pay attention to how HR decisions affect your role, your data, your progression.
For HR Professionals
- The role is more strategic and influential—but also more demanding. You’ll need to combine business acumen, data-skills, ethics, people-skills and change-management.
- You’ll be part of shaping the future of work, not just administering the present.
For Organisations
- Investing in HR talent, capability, technology and governance matters more than ever.
- Ignoring HR as a strategic function risks falling behind on workforce, culture and transformation.
- But concentrating too much on metrics and efficiency can drag down human experience, morale or innovation. Balance is key.
For Policy Makers & Society
- With HR functions scaling globally, there’s need for oversight on labour rights, data use, fairness in employment.
- Workforce transformation means public policy (education, reskilling, labour law) must adapt.
- As companies restructure how they use “workforce”, societal impacts (job security, inequality, job quality) must be managed.
❓ Frequently Asked Questions (FAQs)
Q1: Why has HR grown so much in influence lately?
Because the nature of work, technology, talent and workforce models has changed dramatically. Companies need to manage more complex talent ecosystems, use data to make people decisions, respond to culture and employee-expectations issues. That elevates HR from admin to strategic.
Q2: Does HR dominance mean employees lose power?
Not necessarily—but there is risk. If HR is used solely to drive efficiency or cost-cutting, employees may feel less voice or power. If HR balances business and human needs, it can empower employees. The design and governance of HR functions matter.
Q3: What new skills do HR professionals need?
Beyond traditional HR skills (recruiting, compensation, compliance), HR now needs: data analytics, strategic workforce planning, change-leadership, digital literacy, culture and experience management, ethics and governance expertise.
Q4: How does HR using technology (AI, platforms) change the game?
Technology enables HR to scale decision-making and data-insights (e.g., workforce analytics, AI recruitment). But it also raises issues: bias, surveillance, fairness, transparency. HR must balance innovation with human-centric ethics.
Q5: Is HR’s growth the same across all companies and regions?
No. Larger, global corporations often have more strategic HR functions. Smaller firms, or companies in emerging markets, may still have HR in administrative mode. The transition is uneven.
Q6: What are the risks if HR is not aligned with business strategy?
If HR is siloed or purely operational, companies risk: talent mismatches, culture problems, disengagement, inability to adapt to transformation. HR not aligning with strategy can become a barrier rather than enabler.
🔮 Final Thoughts
We’re living in a time when who does the work and how work is done are being remade. In that context, HR isn’t just part of the business—it’s shaping the business.
For individuals and organisations alike: recognising this shift is crucial. Don’t think of HR as a service function anymore. Think of it as a strategic partner, talent architect and culture driver.
As work transforms, HR may well be the function that holds the future of the organisation in its hands.
Sources The Economist
