The quiet erosion of HR’s power
Good morning!
Ruth Umoh here, Fortune’s Next To Lead editor. For decades, HR professionals were denied their “seat at the table” in company leadership. But during the COVID pandemic, it became abundantly clear that the C-suite could no longer ignore chief people officers, who guided companies through existential business challenges, including lockdowns, remote work, and the Great Resignation. Now, a quieter and more structural shift is underway. The seat remains, but the authority attached to it is moving elsewhere.
Across the Fortune 500, HR is reaching an inflection point that looks strikingly similar to the one marketing faced in the late 2000s. When digital tools made it possible to measure return-on-investment at a granular level, brand intuition lost ground to performance metrics, and CMOs who could not quantify impact saw budgets migrate toward finance and analytics. HR is now facing its own version of that moment. As AI-driven job redesigns, labor scarcity, and higher capital costs collide, companies are less interested in culture as a value and more interested in labor as an investment.
The result is a shift in who holds strategic authority. With workforce strategy becoming a question of cost, output, and automation rather than engagement and belonging, finance, operations, and technology leaders are increasingly setting the agenda. This could leave HR to execute decisions it no longer fully shapes.
It’s already playing out: CTOs are effectively rewriting job descriptions by determining which workflows can be automated. Operations leaders are sourcing work through professional services firms, freelance and talent platforms, offshore delivery centers, and automation software. CFOs are reinforcing this dynamic by treating labor as a variable investment to optimize, not as a fixed cost, and applying ROI discipline to talent spend much as they do to R&D or infrastructure.
At the same time, AI is absorbing parts of HR’s own mandate. Recruiting, screening, scheduling, learning pathways, and even performance management are increasingly handled by software, shrinking not only HR’s influence but the function itself.
This shift is as much cultural as it is practical: HR tools and training emphasize culture, development, and capability building, while finance and operations are more likely to speak in the language of margins, financial models, and projections of how workforce decisions affect company performance and profitability. The fundamental workforce question is no longer how to find people, but how to solve a business problem with the optimal mix of humans and automation.
The next generation of chief people officers may need to look less like social scientists and more like workforce economists.
Ruth Umoh
Next To Lead editor
ruth.umoh@fortune.com
This story was originally featured on Fortune.com