A New Operating Model for People Management: More Personal, More Tech, More Human | McKinsey & Company (2025)

UNLEASH HR SUCCESS

A New Operating Model for People Management: More Personal, More Tech, More Human | McKinsey & Company (2025) | Research reveals how organisations can transform HR into a strategic, data-driven function that personalises experiences while enhancing human connection.

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✨ OVERVIEW

Drawing on insights from over 100 experts, McKinsey's research outlines how tomorrow's people function will leverage technology to deliver personalised employee experiences while freeing HR professionals to focus on strategic value creation. The report introduces a "strategic triumvirate" model replacing traditional HR structures with three key roles: people strategists, scientists, and technologists. Organisations implementing this approach are seeing measurable improvements in people's development and financial performance, with top performers four times more likely to outperform competitors financially.

🧩 CONTEXT

The workplace is experiencing unprecedented disruption. Generative AI has caused more changes to people operations in the past year than the previous decade combined. Simultaneously, employees increasingly expect the same personalisation at work that they experience as consumers. Despite these shifts, only 5% of organisations have successfully incorporated new technologies into their people functions. This implementation gap—with 70% still planning and 25% in early scaling—creates a competitive advantage opportunity for early adopters.

🔍 WHY IT MATTERS

↳ Technology enables truly personalised employee experiences—Just as streaming services recommend personalised content, organisations can now offer tailored development paths based on individual skills, aspirations, and learning styles. A telecommunications company demonstrated this by creating an AI-powered coaching engine that analyses call centre conversations to deliver personalised learning recommendations, resulting in a 17% improvement in customer satisfaction scores.

↳ Fluid talent deployment replaces rigid structures—Traditional hierarchies and career ladders give way to skill-based talent marketplaces. McKinsey found that organisations lose value because 80% of role moves involve changing employers rather than internal mobility. Advanced internal talent exchanges now match employees to opportunities based on skills rather than titles, enabling organisations to adapt rapidly to changing business needs.

↳ HR transforms from cost centre to value driver—Only 20% of today's strategic HR activities will remain unchanged as automation reshapes the function. This shift allows HR to focus on organisational effectiveness rather than administration. One Asian ride-hailing provider has already deployed personal agents to automate mid-skill HR tasks like compensation assessments and regulatory updates, freeing HR professionals to drive strategic initiatives.

💡 KEY INSIGHTS

↳ The "strategic triumvirate" creates a new HR architecture—Future HR will comprise people strategists (senior coaches who translate business strategy into people priorities), people scientists (subject matter experts who design evidence-based interventions), and people technologists (data scientists who build the technology backbone). This structure replaces the traditional three-box model with a more dynamic, expertise-driven approach.

↳ Technology enables managers to be more human—As economist Andrew J. Scott notes, "As machines get better at being machines, humans have to get better at being more human." When technology handles routine tasks, managers can focus on providing the empathy and judgment employees crave. HR's role shifts to equipping managers with the tools and insights to excel at these uniquely human elements.

↳ Integrated data ecosystems replace fragmented systems—Organisations need a unified data lake and streamlined technology stack instead of disconnected HR applications. McKinsey developed "Lilli," an AI platform serving as a centralised knowledge hub that enhances productivity by facilitating access to information and providing customised resources that improve employee experience.

🚀 ACTIONS FOR LEADERS

↳ Begin with a targeted value assessment—Identify one high-priority people challenge (retention, skills gaps, or leadership pipeline) where technology could create measurable value. Calculate the business impact and use this to build your transformation business case, focusing on outcomes rather than HR process improvements.

↳ Form a cross-functional "People Tech" team—Assemble senior representatives from HR, IT, finance, and key business units to govern your transformation. Ensure the team has decision rights over technology investments and process redesign to avoid siloed implementation.

↳ Start with employee experience quick wins—Deploy one technology solution that directly improves employee experience visibly. Organisations often begin with AI-enhanced learning recommendations or chatbots that answer HR policy questions, establishing proof points before tackling more complex transformations.

🔗 CONCLUSION

The future of people management transcends simply automating existing processes—it reimagines how organisations attract, develop, and retain talent. Leading companies are already creating competitive advantage through this transformation. McKinsey's research provides a roadmap for organisations at every stage: "strategists" defining their vision (70%), "scalers" building capabilities (25%), and "visionaries" implementing fully AI-powered operating models (5%). By combining technology's analytical power with human interpersonal strengths, organisations can create workplaces that are simultaneously more efficient and more engaging.

🎯 KEY TAKEAWAY

Future HR success depends on balancing seemingly opposing forces: technology that personalises experiences at scale alongside enhanced human connection, fluid talent deployment with stable capability building, and automated processes with strategic insight—creating an HR function that delivers better experiences and better business results.

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