isolved®, a provider of human capital management (HCM) solutions that help organizations recruit, retain and elevate their workforce, today released new research revealing the barriers that continue to limit human resources’ (HR) strategic impact. The report, “Leveling the Playing Field: Unlocking Better Business Outcomes by Elevating the HR Role,” was conducted by Sapient Insights Group and commissioned by isolved. Drawing on insights from nearly 3,500 primarily small and midsized businesses (SMBs) representing more than 25 million employees, the study identifies outdated perceptions, underused artificial intelligence (AI) tools and persistent gender disparities as the key obstacles holding HR back and offers a path forward.
In an era defined by disruption, economic uncertainty and AI-driven transformation, the need for strategic HR leadership has never been greater. The report delivers a compelling call to action: for organizations to thrive in today’s environment, HR must move from the margins of compliance to the center of business decision-making.
Download the full report to explore the data and strategies behind high-performing HR teams.
Strategic Credibility Gaps Limit HR’s Impact
A credibility gap between executive and operational functions continues to reduce HR’s ability to influence business-critical decisions:
- 62% of business owners and 55% of CEOs view HR as a strategic partner.
- Only 23% of finance leaders and 35% of IT leaders agree.
Even within HR teams, only 52% of functions are seen as strategic across the organization. This is despite strong evidence that strategic HR drives 34% stronger business results over five years, including gains in profitability, innovation and market share.
“The research confirms what many HR leaders already feel,” said Amberly Dressler, Vice President of Corporate Marketing at isolved. “HR is expected to drive transformation but is still treated like a support function. At isolved, we’re focused on closing this alignment gap by empowering HR to deliver measurable business outcomes through intelligent technology and data-driven decision making.”
AI as a Strategic Differentiator
Organizations that use AI in their HR processes report an average 8% improvement across HR, talent and business outcomes. This level of impact can represent thousands or even millions of dollars in value, depending on the scope and scale of adoption. Despite this opportunity, 25% of SMBs and 20% of mid-market companies remain unaware that their existing HR technology already includes AI and machine learning capabilities.
“This research is a wake-up call not because HR lacks capability, but because too many organizations that treat HR as a compliance function risk being left behind,” said Stacey Harris, Chief Research Officer at Sapient Insights Group. “We can’t overlook the strategic value of intelligent tools already at our fingertips. AI is no longer a concept of the future. When HR leaders engage with it intentionally and ethically, they not only streamline operations but also elevate their influence and drive measurable outcomes. AI.”
HR Missing Its Moment in Change Leadership
According to the research, companies experience an average of four and a half major business changes per year, yet many HR teams remain reactive and focused on compliance. The report finds that HR functions embracing cross-functional collaboration, data fluency and workforce-centric scheduling are more likely to be viewed as strategic.
Gender Equity Gaps Undermine Strategic Roles
Although women make up more than 70% of HR leadership overall, the report finds that men are significantly more likely to hold strategic HR roles in publicly traded companies. In fact, men account for 86% of these roles. The data also shows that female HR leaders are more likely to report through finance or payroll—functions that are among the least likely to view HR as strategic. This reporting structure can reinforce the perception that HR is mostly transactional, making it harder for HR leaders to gain influence at the executive level.
Outcome-Focused HR Creates Business Value
Organizations that focus on measurable outcomes such as skills development, internal mobility and workforce planning are more likely to drive long-term business success. These HR teams contribute meaningfully to profitability, innovation and workforce agility. By aligning their efforts with both business objectives and employee needs, they help position HR as a critical partner in organizational growth.
Attend Live Keynotes with Stacey Harris at Connect for People Heroes
HR professionals interested in exploring the full findings of the research are invited to attend one of isolved’s upcoming Connect for People Heroes events this November, 2025. Stacey Harris, Chief Research Officer at Sapient Insights Group, will deliver the full results of the study during her keynote presentation at both locations. The events are open to all HR professionals and provide an opportunity to dive deeper into the data, connect with peers and explore actionable strategies for elevating the role of HR.
