The high cost of silos: Trillions lost when HR, company goals are out of sync
It’s become a cliché of business: working in silos is almost always a terrible idea.
With that in mind, fresh research reveals a stark reality for HR leaders in particular, as more than 8 in 10 companies report critical misalignment between their department’s initiatives and those of the broader business, contributing to an estimated $8.9 trillion in annual economic losses.
It is a disconnect that’s about much more than just organizational efficiency. Rather, it can have a profound, direct impact on employee satisfaction and retention and, in fact, contributes to more than 80% of workers actively seeking out other jobs.
The findings — from a survey of 500 HR leaders and 1,200 employees by the talent intelligence platform Eightfold AI, in association with 3Sixty Insights — point to a growing crisis in workforce management, according to experts.
No competing priorities
“HR and a company’s larger goals aren’t competing priorities — they’re intertwined,” said Katya Laviolette, chief people officer at the tech company 1Password. “People drive business results, not profits alone. When HR operates in sync with business objectives, organizations are better positioned to recruit, retain and develop the talent needed for sustainable growth.”
Laviolette believes that in the coming year and beyond, HR and company culture will become more deeply embedded in how companies manage success — realizing more and more that people and profits “go hand in hand.”
“When HR is aligned with company goals, it moves from being a cost center to a strategic driver of productivity, innovation and retention,” said Stephen Chu, chief legal and administrative officer at InStride, a workforce education company. Misalignment, meanwhile, “leaves HR stuck in operational tasks, hindering its ability to attract talent, fill skill gaps and drive measurable business outcomes.”
The latest data is bolstered by a range of other studies making a case for collaboration.
In its report, Deloitte emphasizes the importance of a “high-impact HR” approach, where CHROs and their teams actively contribute to overall business strategy by having direct buy-in across areas like talent acquisition, development, engagement and workforce analytics, in addition to traditional HR functions such as payroll and benefits.
Likewise, Gartner recommends that HR departments not operate independently but, rather, actively seek to identify how their strategies contribute to achieving company objectives.
Putting out fires
Significantly, just half of HR leaders in the Eightfold AI survey said they were involved in developing their companies’ overall business strategies from the outset, while 66% acknowledge their talent strategies don’t align with the larger aims of the business.
Cindy Kravitz, an executive coach and business strategist, points to the fundamental problem therein. “Too often, and by nature of the role, HR operates as a support function rather than a strategic partner,” she said. “Many HR leaders find themselves needing to spend more time putting out fires rather than having the time to focus on how to prevent the fires from happening in the first place.”
When HR is viewed negatively, it can be the fault of HR itself.
Business leaders “tend to form their perceptions of HR based on what they can see, so it’s crucial for HR professionals to demonstrate their strategic contributions versus just being seen as the compliance enforcers who react to problems,” said Céline Hervé, people partner at Grammarly. “They need to balance competing priorities, since issues like poor well-being, insufficient development and compliance concerns directly hit the bottom line through increased costs and missed targets.”
Heads of HR, she added, “bear the responsibility of connecting these dots for the organization, showing leaders how their decisions play out while being clear about the trade-offs involved.”
AI is emerging as an important solution toward addressing challenges around alignment, according to Eightfold AI’s research.
The study found that an overwhelming number of companies — 96% — have already started using AI for HR functions, with 67% reporting high levels of satisfaction with AI tools. Moreover, 77% of respondents indicate that HR-specific AI solutions have resulted in improved efficiency and effectiveness across the whole company, not just HR.
That said, challenges remain. Organizations in the survey report ongoing concerns around areas like data privacy, inherent bias and possible regulations regarding AI adoption in HR functions — worries that must be balanced against the benefits of AI-powered solutions and talent intelligence platforms.
Solutions for getting aligned
Industry experts make several recommendations for bridging the gap:
Elevate HR’s strategic role. “HR must position itself as a co-driver of business strategy, embedding workforce planning into every major decision,” Kravitz said. That includes regular strategy sessions between HR and top executives to ensure talent priorities integrate with business plans.
Leverage data and analytics. Tim Glowa, founder of the AI-driven career development platform HRBrain, emphasizes that HR must shift from being seen as merely a support function to being recognized as a strategic partner — something, he stressed, that requires “a proactive, data-driven and forward-thinking approach” on the part of company leaders.
Implement a clear framework. Philip Huthwaite, CEO of the learning platform 5app, recommends putting into motion a companywide Objectives and Key Results (OKR) program, enabling teams across the organization to “understand exactly how its actions impact the success of the business” and helping company leaders “stay laser-focused on tasks that will move the needle.”
Foster cross-functional collaboration. Organizations should put into practice working across functions and departments, getting HR out of its silo and into cross-functional partnerships with finance, IT and other departments, according to executive coach and consultant Suriel Arellano.
“This alignment isn’t just nice to have — it is a must-have if the company wants to drive sustainable, successful outcomes and navigate the increasingly complex business landscape of today’s world,” Arellano said. Because when the strategies of HR and the company agree, “it’s a beautiful thing.”