Despite being at the heart of workforce strategy, HR is still battling for its seat at the decision-making table, according to a major new study released by isolved® in collaboration with Sapient Insights Group. The research, titled “Leveling the Playing Field: Unlocking Better Business Outcomes by Elevating the HR Role,” draws on feedback from nearly 3,500 small and mid-sized businesses (SMBs) representing over 25 million employees—and it delivers a sobering message: HR’s strategic potential remains largely untapped.
Strategic HR: Still on the Sidelines?
While many organizations expect HR to drive transformation, few actually empower the function to lead it:
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Only 52% of HR teams are perceived as strategic across their organizations.
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A credibility gap persists: 62% of business owners and 55% of CEOs see HR as strategic, but just 23% of finance leaders and 35% of IT leaders agree.
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Yet, companies with strategically aligned HR teams report 34% better business outcomes over five years, including higher profitability and innovation.
“HR is expected to drive change but is often treated as a back-office function,” said Amberly Dressler, VP of Corporate Marketing at isolved. “This report is a call to action to close that perception gap through better tech and smarter decisions.”
AI: The Overlooked Advantage
One of the clearest opportunities? Artificial intelligence (AI). Organizations that integrate AI into HR workflows see:
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An 8% average improvement in HR, talent, and business performance
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Higher efficiency, improved decision-making, and better employee experiences
Yet a surprising number of organizations are leaving value on the table:
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25% of SMBs and 20% of mid-market firms don’t realize their current HR tech already includes AI or machine learning.
“AI is not a future trend—it’s a current lever for impact,” said Stacey Harris, Chief Research Officer at Sapient Insights. “HR leaders who learn to use AI strategically and ethically will expand their influence—and their results.”
HR in Times of Change: A Missed Opportunity
Organizations experience an average of 4.5 major changes per year, but too many HR teams remain reactive. The study finds that high-performing HR functions:
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Engage in cross-functional collaboration
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Demonstrate data fluency
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Focus on skills development and workforce planning
These traits distinguish HR teams that are seen not as support functions—but as business-critical partners.
Gender Disparities: HR’s Strategic Glass Ceiling
Ironically, although women make up over 70% of HR leadership, they are vastly underrepresented in strategic HR roles within public companies, where:
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86% of strategic HR roles are held by men
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Female leaders are more likely to report through finance/payroll, reinforcing transactional perceptions
This entrenched reporting structure dilutes HR’s ability to influence executive strategy and limits progress toward gender equity in leadership.
Building Outcome-Focused HR Functions
What sets successful HR teams apart? According to the report, it’s outcome orientation:
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Prioritizing skills development, internal mobility, and workforce agility
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Linking HR initiatives directly to measurable business goals
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Elevating employee experience and company performance simultaneously
These HR teams don’t just serve the business—they help lead it.
What’s Next: Live Insights at Connect for People Heroes
To explore the research further, isolved is hosting its Connect for People Heroes events this November. Stacey Harris will present the study’s findings live, offering actionable strategies for elevating HR’s role in your organization. The event is open to HR professionals from all industries.
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