HR Trends in 2021: Future of Human Resource Management
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The last decade brought an avalanche of change to the HR industry. The rise of artificial intelligence. The growth of the gig economy. The increased push towards greater diversity. And, most recently, a global pandemic that has altered the reality of millions and redefined where and how work gets done. That begs the question, what’s in store for the future of the industry? This article will look ahead for a glimpse of which HR trends will continue to drive transformation and which new trends are emerging to shape the future of work.
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Nearly 60% of employees want to work remote full-time after the pandemic, according to one survey.
Technology adoption and deployment is a priority as companies seek to unify dispersed, digital-first workforces.
Two-thirds of employees value when their feedback is heard and acted on.
In the face of mental health adversity, companies respond by providing resources, cutting costs and taking other measures to support well-being.
Data will be the new currency and a core part of how HR operates in the coming years.
Ensuring employees have the skills they need is a top priority among business leaders.
2020 was fraught with change, as organizations around the world scrambled to react to the global COVID-19 pandemic that affected companies large and small across every industry. If 2020 taught us anything, it’s that companies that don’t transform will get left behind by those that do. This applies to developing a digital transformation strategy that will stick but, more importantly, extends beyond technology to tackle people-centric issues.
Understanding industry shifts is crucial to keeping pace with the rapid developments taking place, especially in light of the pandemic. To that end, we’ve consulted industry leaders and experts to learn the top HR trends for 2021 so you can make informed decisions for your organization.
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1. Virtual Work is Here to Stay
One of the trends we predicted for 2020 was the increasing prominence of the new way to work – a shift away from the traditional work model toward one that’s more flexible and worker-centric, underscored by the increasing acceptance of working from home and the boom of the gig economy.
Little did anyone know – or could have predicted – how true that statement would be, in all the most unexpected ways. From government-mandated lockdowns to companies shifting to a full-time work-from-home model wherever possible, the way work gets done changed drastically.
For some, that change is permanent. Twitter made the decision to let every employee who doesn’t need to be in the office (such as to maintain servers) work from home forever if they choose to. In a similar vein, Microsoft announced that some level of working from home would become a permanent part of their culture, with an emphasis on giving employees the flexibility to mold their work choices to fit their lifestyle.
Other major companies like Facebook, Shopify and Slack have also embraced the new reality that’s normalized and elevated working from home.
When the world opens back up again, it’s clear that the work environment won’t simply return to the way it was. Gallup data shows that 65% of workers would prefer to continue working from home post-COVID.
Similarly, IBM found that nearly 85% of respondents surveyed in the middle of 2020 wanted to work at home in some capacity after lockdowns lifted, with 58% saying they wanted their main way of working to be remote.
Salesforce research offers perhaps the most acute perspective. Of participants in a May 2020 survey, 69% agreed that “the pandemic will permanently change the nature of work.” Another survey in June found that working from home full time would be the most appealing option for 37% of respondents, with another 32% saying a split between home and the office would be their choice.
It’s clear that an increasingly remote, digital work environment won’t disappear once the pandemic is over. The ways in which organizations adjust to this reality will play a major role going forward and particularly affect the next four trends on our list.
2. Companies Double Down on Digital
Given the shift to a workplace that’s increasingly virtual and more disconnected from an office, another trend we expect to see is a focus on what’s been termed “digital-first work”. This has far-reaching implications, as companies seek to determine how this new era will shape their culture and values.
According to KPMG, 77% of CEOs surveyed will “build on their use of collaboration and communication tools” and 67% are more likely to invest in technology, compared to 33% investment in worker skills.
Research by renowned HR thought leader and analyst Josh Bersin took this concept a layer deeper. In his report The Big Reset Playbook, he highlighted balancing a hybrid work environment as one of the priorities of the return to work. Countries not facing COVID-19 restrictions have develope d a hybrid approach, with workers going to a physical office but not as regularly.
“The challenge now,” according to the report, “is learning to facilitate connections and collaboration in this hybrid world in which many employees continue to work remotely but periodically meet with others for in-person collaboration and innovation.”
When we asked David Millner, Founder and Consulting Partner at HR Curator, for his take on top strategies we can expect in the coming years, he also said digital will play a major role. His perspective, however, is that digital HR goes beyond supporting changes that lead to “transformation-based initiatives”.
“Digital HR is about process optimization in which social, mobile, analytics and cloud-based technologies are leveraged to make the HR function more efficient.
“However, the application of new technologies is not what makes the function digital. It’s also about culture alignment, talent practices, structures and processes to balance efficiency and innovation opportunities, all focused on ensuring there is an ability to provide a clear, sustainable, measurable impact on the organization as it continuously transforms.”
3. Teams Play an Essential Role
We asked Steven Cates, Graduate Professor of Human Resources Management at Purdue University Global, for his thoughts on where HR is heading the next few years.
“The concept and creation of virtual teams that goes along with virtual work will become a huge issue moving into 2021,” he said.
Deloitte also highlighted “superteams” as the way of the future. A superteam combines people and technology to produce outcomes more quickly and at a greater scale than would otherwise be possible.
Factors that contribute to successful superteams, according to their survey data, include:
Creating a “culture that celebrates growth, adaptability and resilience” (45% of executives surveyed).
Enabling a capable workforce “through upskilling, reskilling and mobility” (41% of executives surveyed).
“Implementing new technologies” (35% of executives surveyed).
Beyond the presence and importance of teams, Cates brought up some challenges that HR will face. “How will be trained? How will they communicate? How will they develop bonds among members? How will they be evaluated for performance?”
Millner had a similar take when asked about the pandemic’s effect:
“The most challenging shifts have related to changing core HR practices such as the remote onboarding of new employees, the shift to virtual/online learning and development interventions rather than the more traditional face-to-face practices that employees have been used to. Additionally, for those organizations that are still recruiting new hires, they have had to refine assessment methods and techniques to embrace more online methods such as video-based interviews and automated-based sifting.”
In Cates’ opinion, looking to the past will be a critical strategy going forward. “We should look at the lessons that teams taught us from the 1980s and how they failed,” he said. “They failed due to top management not investing in the infrastructure that is needed to train and evolve teams so they can perform the intended work they were designed to perform.”
A central component of that infrastructure is HR design.
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4. HR Design is a Strategic Focus
According to Millner, the concept of design should be a prominent focus over the coming years.
How does this work out? Millner believes HR design aids strategy in three important ways:
“Shaping the design of the new organization of the future.
“Designing the new and re-shaped jobs that new working practices and automation will demand.
“Identifying the new capabilities and requirements that the new world of work will make upon the workforce, its managers and its leaders in terms of behavioral and technical demands.
“This means that some of the old techniques that don’t seem to be a part of the regular HR toolkit (such as organizational design, job design, scenario planning, etc.) need to be revisited and HR practitioners reskilled as necessary,” Millner continued.
“Organizational design and change management” was also the second-most important priority for HR leaders in 2021, according to Gartner research. Challenges cited include managers who aren’t equipped to lead change (37%) and employee fatigue due to the amount of change happening (36%).
Digging deeper, Gartner found the main issue to be organizations’ inability to react quickly in response to changing conditions. Factors that contribute to this friction, as Gartner termed it, range from rigid processes and overwhelmed teams to a work design that’s misaligned.
Gartner suggests that to deal with this and create a responsive workforce, companies need to clarify team boundaries, ensure work design lines up with how work actually happens now and formally create process flexibility.
On the subject of work design, Deloitte noted that in addition to things like investing in collaboration tools and redefining expectations for schedules and meetings, as mentioned above, there’s also an emphasis on aspects like leadership training and access to the appropriate technology to support work.
However, their research also found a disconnect between executive and employee priorities. Most notably, workers ranked “improving worker well-being” as the third-most important outcome, while it ranked eighth out of nine according to executives.
As we’ll explore in trend six, the emphasis on well-being, particularly mental health, is going to be a key focus this year and moving forward.
5. Employee Experience is Redefined
Employee experience (EX) was the third most important key initiative among HR leaders in 2019, according to Gartner. And while Gartner’s most recent report on HR leader priorities for 2021 places employee experience as the fifth highest, it’s undeniable that this trend will continue to be relevant and important heading forward.
Focusing on the experience that employees have with the company, much as a brand focuses on the customer experience, can:
However, thanks to the slew of changes caused by the pandemic, the employee experience has taken on new shape and meaning.
“The battle for the hearts and minds of employees’ has become even more important,” Millner said, “especially when the leadership/management and employee relationship in a number of instances is very different to how it has been previously.”
Formerly in-person connections have become completely technology-based. “When it comes to leading and engaging people, you never really know how someone responds best until you’ve worked with them for a while and entered into a meaningful dialogue with them,” Millner explained. “Both of these elements are now very different.”
How does that play out at a practical level moving forward?
“The link between the rise of automation and the employee experience is being made to provide personalized solutions and information for the workforce in a cost-effective and sustainable way. HR will need to focus on those critical HR practices and understand how they can be improved and made more relevant for the workforce of tomorrow,” Millner said.
Another way for companies to improve the employee experience in uncertain times is to give employees a voice. A Qualtrics report found that gathering feedback from employees and then acting on their input is the best way to improve EX, with 65% of employees saying it’s very or extremely important for their company to listen to feedback. The study also found the following benefits of “turning feedback into action”:
Employees are twice as engaged compared to those at companies with no listening program.
Almost 70% are very or extremely likely to stay with a company longer.
More than 90% will be more resilient in the face of change.
However, stopping at EX improvement isn’t enough, according to Dave Ulrich, a professor, author, speaker and HR thought leader. He believes the idea of the employee experience needs to be taken a step further for organizations to truly realize the benefits. “Building employee experience is not enough—HR must link employee experience to customer experience and investor confidence,” he wrote in an article shared with us.
“Many suggest that ‘people are our most important asset,’ but today, that should be modified to ‘our people are our customers’ most important asset.’ HR initiatives that foster the right talent for customers will have much more lasting impact in a perilous world. As customers experience dramatic pandemic change, talent has to adapt as quickly (e.g., using digital information to access products and to manage people virtually).”
6. HR Delivers Value Through an Outside/In Approach
Another trend Ulrich believes we’ll see is HR impacting business success through an outside/in approach. In the same article, Ulrich wrote that this approach is the next “wave” in the evolution of HR’s contribution:
“The outside-in wave moves from value creation to value delivery when HR ‘customers’ are not just employees, leaders or business strategies inside the organization but also stakeholders such as customers, investors (debt or equity), and communities outside the company. HR value delivery is captured when HR analytics are not about activities with scorecards, dashboards and insights but about the impact of HR activities on key stakeholders.”
This HR contribution spans three core areas: talent, organization and leadership. And while Ulrich pointed out that these spheres aren’t new, he said, “They are even more critical in responding to current challenges and discovering future opportunities.”
Here are a few key takeaways:
Talent: “ talent-related efforts can evolve to be viewed outside-in to respond to changing times by ensuring that the right competencies are those that deliver customer and investor value, and by linking employee experience to customer experience.”
Organization: “Our research (The RBL Group and University of Michigan) found that the capabilities of an organization have four times the impact on business results than the competence of individuals. For example, teams with individuals who work well together as a team will outperform a team of individual all-stars that don’t work well together.”
Leadership: “Employees often mimic what their leaders do, and organization capabilities often reflect leaders’ personalities. More importantly, leadership at all levels of the organization signals thoughts and actions that get attention. In the current uncertain world, it is more important than ever to ensure that the right leadership exists to create value for customers and investors.”
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7. Mental Health Gets the Attention it Deserves
One of the most palpable impacts of the pandemic has been its effect on mental health. An SHRM report from the first half of 2020 found that up to 35% of employees surveyed experienced depression symptoms often, while 41% reported work burnout and 45% said they felt “emotionally drained from their work”.
Furthermore, a survey conducted by Hibob discovered that among workers in the U.S. and U.K., the pandemic caused mental wellness to drop 27%.
We’re living in unprecedented times. It should come as no surprise that the stress and uncertainty facing vast amounts of the population have taken a toll. As organizations scrambled to react to a crisis that was beyond their control, it thrust well-being forward as a factor that couldn’t be ignored.
Companies like Chevron, EY, Verizon Media and TIAA aided their employees’ mental health in a variety of ways – access to licensed counselors, a recognition program, a daily newsletter with resources, monthly challenges to promote mental health and more.
This emphasis will continue in 2021. A report by Business Group on Health identified some key areas of expected growth in the mental health arena where large companies are concerned:
More than 90% of employers will offer telemental health.
The number of organizations providing mental health resources will climb from 69% in 2020 to 88% in 2021.
Costs for mental health services will be waived or reduced in 54% of companies in 2021.
8. Data Becomes the New Currency
A top strategic focus of HR over the next few years, Millner believes, is a focus on data. The shift to remote work caused by the pandemic, he explained, meant employers had to increasingly rely on tools to gauge how engaged and productive employees were, and, by extension, turn to data insights for direction.
“Data is the new currency when it comes to the workforce,” Millner said, “and as long as HR retains that human touch, the advent of data should not scare any HR practitioner.”
Why, exactly, is data taking center stage?
In Millner’s view, it provides understanding of three pivotal areas. First, it shows how successful HR practices are in adding value at the strategic or business level. Second, data allows HR to identify ways to enhance practices and the employee experience. Third, it enables HR to show how its various functions align with related strategies and commercial demands.
In terms of the impact at a tangible level, data is critical, according to a recent Mercer report. It found that more than 60% of executives say the top HR trend offering impact is using talent analytics to make decisions rooted in data.
Millner concluded by saying, “People analytics is not going to go away and it will be an integral part of the way that all HR functions operate over the next few years.”
9. DEI Receives Major Focus
Over the years, companies have faced increasing expectations – particularly from younger generations – to support DEI initiatives (diversity, equality and inclusion). Matters of diversity and inclusion have become part of the conversation as HR professionals seek to address bias, unfair wages and other problems.
In 2020, a Rolodex of news headlines highlighted new issues, measures and movements that have driven DEI even more to the forefront. In response, companies from Google to Nielsen and beyond are emphasizing these matters more than ever. In fact, 81% of CEOs indicate their business has or will “publicly announce new anti-black racism measures,” according to KPMG.
Another outcome of 2020, spurred by the pandemic, is the decrease of women in the workplace. McKinsey research shows that women are nearly 1.5x more likely to leave the workforce, with the U.S. potentially losing more than 2 million women all told. New home life demands created by school shutdowns and other factors played a major role. McKinsey reported that 15% of mothers are spending five or more hours on their household than before the pandemic, compared to 7% of fathers.
DEI is a focal point among executives, according to Bersin’s research. This carries through to managers, with HR executives agreeing that training for middle managers – who are often overlooked – is imperative to help address well-being and D&I issues.
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10. Workers are Equipped with the Skills and Tools They Need to Navigate Uncertainty
The war for talent has been a hallmark of the past several years. Thanks to historically low unemployment rates and a candidate-favored market, companies had to battle for top talent. The past year saw that trend, like many others, redefined by COVID-19.
The new frontier of the talent war, prompted by the pandemic, will hone in on empowering employees with the tools they need to gain the skills they need, rather than simply attracting top talent from outside the organization to fill vacancies.
A KPMG report found that CEOs view talent risk as the top threat to growth thanks to the pandemic, and “building skills and critical competencies” is the top priority in 2021 for 68% of HR leaders, according to Gartner. What’s more, Deloitte data found that more than half of respondents indicated that anywhere from 50%-100% of employees will need to change their skills over the coming three years.
One way companies can cope with this new normal, according to Bersin’s report, is to emphasize internal talent development and mobility. His research has found that reinventing job roles and quickly redeploying workers have the greatest impact.
The matter goes well beyond merely reskilling, according to Deloitte experts, who suggested that resilience – helping workers, and by extension organizations, adapt to uncertainty by supporting them with tools and strategies – forms a vital part of the equation.
The continued rise of AI and robotics is a central driver of this need to adequately equip employees in the face of this evolution. A McKinsey survey found that 68% of executives expected hiring to increase across automation and technology roles, with 35% saying AI, automation and robotics were specific areas that would require more skilled workers.
11. HR Offers Guidance to Drive Success
The concept of HR guidance, delivered using an organization guidance system (OGS), is a trend Ulrich predicted for 2020 and expects to play a significant role moving forward.
Such a system, he explained in a LinkedIn blog post, “shifts thinking about and actions in organizations from being descriptive to prescriptive.”
It does this, he said, “by starting with desired outcomes from key stakeholders inside (e.g. employees’ competence, well-being and productivity, and business strategic clarity, positioning and delivery) and stakeholders outside (e.g., customer net promoter scores or customer share, investor profitability today and confidence for tomorrow, and community reputation for social responsibility).”
In essence, an OGS identifies desired outcomes related to four spheres that are critical to business success: talent, organization, leadership and human resources. “Once desired outcomes are articulated,” Ulrich explained, “an OGS informs choices about how to best reach the outcomes. Guidance is less about what is done and more about what should be done.”
Notable circumstances from 2020, including pandemic demands, economic difficulty and social unrest, have given rise to the need for innovation, Ulrich said. “Guidance helps identify the best solution based on empirical data.”
He also noted that, “Technology has enabled digital information that moves from descriptive dashboards and scorecards to insights based on big data to guidance to determine which activities provide specific outcomes.”
Finally, in another LinkedIn article, Ulrich concluded: “HR’s opportunity to create value through targeted organization effectiveness initiatives in talent, leadership, organization and HR can now be realized. A portfolio approach to these initiatives will better allocate resources (time, energy, money) to key organization effectiveness priorities.”
12. Companies Show Their True Colors
Zooming out from the preceding trends, one final prediction comes into focus: 2021 will be the year that employers and employees alike, from the C-Suite to the line worker, discover the true nature of their organization.
The pandemic, social justice causes and economic difficulties cast a spotlight onto companies, and everything discussed thus far circles back to the matter of how organizations have and will respond as the journey into an uncertain future unfolds. Values, priorities, culture and more will solidify or emerge, depending on how businesses react to things like:
Whether to require vaccination for in-office workers and how they handle potential ensuing lawsuits.
How and when to return to work, along with safety measures taken to alleviate employee concerns.
The extent to which employees are allowed to work from home when it’s no longer required for safety reasons.
What well-being measures to invest in and encourage among employees.
How diversity, equity and inclusion practices are woven into the culture of how a company operates.
The extent to which managers and executives listen to and then act upon employee feedback.
How well employees from the top floor to the home office display empathy for their colleagues.
The level to which leaders show trust in their people, rather than trying to retain control by micromanaging from afar.
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Embrace the Future
2020 was a year of drastic, unparalleled change. As we move further into 2021, a new landscape will emerge, one marked by lessons learned from the pandemic and new or renewed dedication to areas such as the employee experience, virtual work, mental health and DEI. Team design and evolution, as well as skill development, will heavily influence organizations’ ability to execute and succeed.
The move to digital will become even more marked as companies seek to transform in the face of new challenges, leveraging data to enhance practices, deliver value and create alignment. HR will also help drive success through guidance and by taking an outside/in approach.
And finally, in the wake of so many life-altering changes and the presence of a murky future, where companies land on today’s unique issues will define them for better or worse.
“This is an exciting time to be in HR and if challenge, innovation, change and personal growth are of interest to you, then stick around,” Millner summarized.
What do you think the key 2021 HR trends will be? Did we miss any? Share your insights in the comments!
Contributing Thought Leaders
Dave Ulrich is the Rensis Likert Professor of Business at the Ross School, University of Michigan and a partner at the RBL Group, a consulting firm focused on helping organizations and leaders deliver value. He has published over 200 articles and book chapters and over 30 books. He edited Human Resource Management 1990-1999 and served on the editorial board of four journals as well as the Board of Directors for Herman Miller (16 years). He’s spoken in 90 countries, performed workshops for over half of the Fortune 200, coached successful business leaders and is a Fellow in the National Academy of Human Resources.
David Millner has a business background followed by 30 years of internal and external consulting experience in NatWest, Kenexa and IBM. Dave worked directly with different global and multi-national based organizations offering organisational effectiveness-based solutions focusing on future proofing their businesses.
He is a regular presenter at HR conferences promoting the role of technology and people analytics to demonstrate tangible business value. His first book ‘Introduction to People Analytics’ on the changing role of HR and the increasing demand for data insights was launched in April 2020.
He’s regarded as a social media guru through @HRCurator, referenced as being one of the Most Influential People on Twitter in a number of HR subject areas. He’s an Associate with CRF, Hult Ashridge Business School, the Centre for Effective Organizations at USC and an Adviser to iPsychTec.
Professor Steven Cates serves as a Graduate Professor of Human Resource Management in the School of Business and Information Technology at Purdue University Global, the first online university to offer “extreme personalization” to working adult students. He has over 30 years of managerial experience in all facets of HR and over 20 years of collegiate instruction experience at both the undergraduate and graduate levels in business. He is certified through the Society of Human Resource Management and specializes in employment law, diversity issues, talent management, and strategic human resource management. In addition, he has authored over 100 publications in the field of HR management and marketing and served on dissertation committees.