HR isn’t just a key contributor to a company’s success—it’s increasingly becoming the lead force behind successful organizational transformation.
“CHROs sit at the intersection of business strategy, workforce planning and talent development,” researchers wrote in Korn Ferry’s recent report, The Vital Role of CHROs in 2025. “With business transformation becoming such a key driver of growth today, this gives them the unique ability to lead transformation more than many other business roles.”
Yet, the landscape facing today’s HR leaders—from economic instability to rapid AI advancements—can make taking on that responsibility seem like a herculean feat.
Laura Manson-Smith, global leader of organization strategy consulting at Korn Ferry, says the survey—which polled about 750 HR leaders across more than 50 countries—highlights the difficulty trajectory facing HR leaders pursuing transformation.
1. Growth, efficiency and short-term planning are complex.
Sixty-nine percent of HR leaders surveyed pointed to growth and market expansion as their organizations’ top business priority—a 25% jump over the last two years. At the same time, 56% identified cost efficiency and productivity as a primary concern.
Unsurprisingly, that push and pull is affecting HR leaders’ ability to plan for long-range workforce needs—a challenge cited by 37% of respondents. Nearly as many said the organization is prioritizing short-term growth in a way that inhibits their ability to look to the long term.
“The drumbeat of quarterly earnings calls puts pressure on companies to be showing strong results, and we’re in a phase right now where growth is sluggish in a lot of organizations,” Manson-Smith says. “That ends up with a real focus on cost-cutting to maintain margins, which then has an implication of pressure on longer-term investments in people.”
Yet, Manson-Smith notes, Korn Ferry is starting to see a resurgence of employers interested in strategic workforce planning, as organizations consider a future closely informed by their workforce’s skills and opportunity for mobility, as well as the increasing mix of human and AI employees, and full-time and nontraditional workers.
“CHROs who can navigate [long-term workforce planning] well are the ones who can talk about people and numbers at the same time,” she says. “We know that investing in people delivers returns, so they need to show the strong return through on investing in talent to have a better chance of maintaining forward-thinking, long-term planning.”
2. AI skills aren’t there yet.
While only 30% of those surveyed said AI and technology is a top strategic priority, that marked a 10% jump since 2023. Meanwhile, interest in AI is high among HR leaders, 42% of whom said their function is prioritizing AI investment.
Yet, the skills of HR teams need to catch up to that focus: Just 5% said their teams are fully prepared to effectively integrate AI into HR and across work processes.
While conversations about AI upskilling often focus on hard skills, HR teams also need to embrace a mindset shift—being willing to experiment, as the technology advances quickly and new products hit the market.
“We have to force ourselves to allow time for experimenting and learning—and to be resilient,” she says. “If you try something out and it doesn’t work, you may get frustrated and want to just do it the old way; but if you come back in two weeks, the technology has probably moved on and learned and improved.”
A commitment to continuous learning will also be critical for driving improvements in the area of analytics, particularly as AI drives greater volumes of data and insights. About three-quarters of respondents said their function’s analytics aptitude is basic.
“CHROs have to drive this change and get on the front foot with this,” Manson-Smith says.
3. Culture change efforts need a refresh.
Looking ahead to the next two years, CHROs put culture and organizational change at the top of their functions’ agenda.
For organizations focused on growth, the investment in culture makes sense, Manson-Smith notes. Korn Ferry research has found that 60% of executives attribute about 30% of their organizations’ market value to company culture.
“There is an understanding that culture drives value,” she says. “Culture change drives productivity, creating innovation.”
However, HR and business leaders typically undertake culture change by focusing on transforming people-related aspects like skills, ways of working and behaviors. But, Manson-Smith says, change must also happen at the system and structure levels.
For instance, organizations aiming to create a culture that inspires innovation need to question whether the organization is flat and non-hierarchical enough to allow new ideas to bubble up.
“You can’t just train people on innovation; you have to think holistically,” she says.
Perhaps the biggest contributor, however, to successful culture change, Manson-Smith notes, is role modeling from executives and senior leaders—an effort that HR can play a “critical” role in enabling.
4. Cross-functional work requires new skills.
Korn Ferry’s report calls CHROs the “new C-suite power players,” noting that HR leaders have never been more “integral” to organizational success. It’s a shift that has HR working increasingly closer with CEOs and other leaders.
Previously, CFOs and CEOs were the top contributors to business strategy success—and in many organizations, that has now expanded to a trifecta that includes CHROs.
To operate at the level, Manson-Smith says, CHROs need to “effectively talk both numbers and people.” Leaning into enterprise leadership—striving for the good of the entire organization, not just their own functional area—is also essential.
“That requires much better cross-functional work,” she says, “as well as curiosity, empathy and understanding perspectives of others.”
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