BCG: 65% of leaders see HR as a strategic business driver

It’s no secret that organisations measure the success of their HR function by the value it adds to the business, rather than the volume of activity it delivers. 

According to BCG’s latest report, Creating People Advantage 2026: Four Power Moves for the CHRO, 65% of leaders shared that they saw HR as a strategic business driver. 

However, 51% of HR teams are consumed by manual administrative tasks, describing them as the “primary barrier to the function making a more strategic contribution".

Despite this, expectations for HR to truly operate as a value‑creating function have never been higher. To understand what HR leaders must know, HR Chief Magazine spoke exclusively to BCG’s Managing Director and Senior Partner, Nick South. 

Is HR falling behind the AI curve?

Nearly 70% of HR teams are using Gen AI in some form, according to BCG’s report, but just 38% say it’s highly relevant for their organisation today.

For South, this highlights a significant gap between AI experimentation and AI impact. He explains: “This data suggests that most companies are at the foothills experimenting, often at quite a low level, rather than fundamentally transforming how their HR function operates using AI. 

“Instead of using AI as an opportunity to reimagine how work gets done, BCG’s report indicates that many organisations are still thinking incrementally about individual use cases,” says Nick.

What’s more, the report found that half (50%) of organisations are expecting agentic AI to have a “high” or “transformational” impact on their business in the future. 

However, this research represents a “stark” contrast to other research from BCG, which states that nine in 10 CEOs believe that AI will “shape their industries", with a similar number planning to continue to increase their investments in AI.

Additionally, half of BCG’s respondents shared that administrative workload is the main barrier stopping HR from playing a more strategic role. Nick highlights that there is “clearly a big ‘win’ for any HR leader” who is willing to “take greater advantage of AI to strip out time-consuming administrative activity".

“Businesses are often underestimating the challenges around AI adoption and overlooking the need for company-wide upskilling, with only half currently running structured reskilling programmes,” he explains. 

“The companies pulling ahead aren't just deploying better tools; they're redesigning workflows end-to-end and beginning to treat AI agents as part of the organisational chart.”

This growing mismatch between ambition and execution makes it clear that HR’s real opportunity lies not in experimenting with AI, but in scaling it to fundamentally reshape how work gets done.

The key learnings for HR leaders 

For Nick, HR leaders “can't afford to choose between fixing the basics and preparing for a very different future". Instead, he believes that leaders should do both at once, by thinking in a more “future-focused way” as to how AI and agents can be used and how they can help to fix the biggest pain points of today.

He explains: “If one key goal is to sort out the day-to-day operational challenges - getting rid of clunky manual processes, better connecting systems and information, freeing up time so HR isn't buried in admin – shifting to new ways of working, enabled by AI, will be a core part of the answer. 

“The research also makes clear that this isn't just about transforming the HR function itself. HR leaders have a key role to play in helping the rest of the business navigate what AI means for roles, skills, how teams are structured and how work gets done.

“The ones doing that well are already seeing the payoff in speed, efficiency and impact.”