Benefits going bye, giving new org. structures a try, and the rise of AI: These are the HR trends to look for in the decade ahead.
If the 2010s taught us anything about where HR is heading, it’s that you can never expect things to stay the same for long. Over the past 10 years, we’ve seen HR’s concern over employee productivity pivot to employee engagement, then to employee wellness and the employee experience. Performance reviews were dead, then they weren’t. Google entered the recruiting market, threatened to upend it, then left.
So it would be a fool’s errand to try to predict, with any accuracy, what’s going to happen to HR in the decade ahead. It would be even worse if the person doing the predicting once wrote a paper arguing that Netflix was on its way to bankruptcy (that’s a true story, but in my defense, this was the days of Qwikster).
But if even 20% of these predictions come true, they point to big changes in HR that you need to be prepared to act on. So without further ado, here are the five HR trends that will define the 2020s.
Trend #1: The rollback of employee perks and benefits
Prediction: By 2022, employers will offer employees 25% fewer perks and benefits than they do today.
Though the past decade’s “war for talent” may have been a hyperbolic phrase, there’s no denying companies were willing to throw a lot of money at the problem to emerge victorious. Yoga retreats, free massages, catered meals: You name it, there was a company out there offering it to attract and retain top talent.
But change is on the horizon. The U.S. Federal Reserve now estimates there is a 38% chance of an economic recession in August 2020, and the likelihood of one occurring only goes up from there. When a recession does strike, HR will have to make big changes, starting with cutting those expensive perks and benefits.
Is this prediction a big stretch? Hardly. Seventy-two percent of companies cut benefits like stock options and relocation assistance in the wake of the last recession. But this benefits rollback will be at a scale unlike anything we’ve seen before, for a few reasons.
For one thing, workers just don’t put much value into a lot of these frivolous perks. Whereas 88% of job seekers prioritize core benefits like healthcare and PTO during their job search, less than a third care about things like company-wide retreats and free gym memberships. They’re just not the big talent attractors and retainers companies hoped they would be, making them ideal candidates for the chopping block during budget cuts.
The benefits job seekers value most (Source)
The growth of the remote workforce is the other big factor here. With more and more employees working from home or elsewhere, and 66% believing the physical office will be obsolete by 2030, those perks and benefits consumed at company headquarters become less valuable as fewer workers get the chance to use them.
Though unemployment will rise when the next recession hits, shifting the power back from the job seeker to the employer, the pressure will be on HR to find other, more substantive ways to appeal to top talent.
Trend #2: The decline of the line manager
Prediction: By 2025, 20% of open line manager roles won’t be backfilled.
When it comes to managers, everyone is struggling.
HR is struggling because good managers—who play a significant role in employee engagement—are increasingly hard to find. Managers themselves are struggling because they’re not getting enough support or training. And employees underneath these managers are struggling with bad employee-manager relationships, causing 60% of them to consider quitting.
It’s a dire situation, and begs the question: At what point do companies decide to phase out managers altogether?
I think that point is coming sooner rather than later. When it comes to many management tasks—approving expenses, giving feedback, even onboarding new hires—artificial intelligence (AI) has advanced to the point where a human is no longer necessary. In fact, Gartner predicts that 69% of what a manager does today will be automated by 2024.
You might think workers would be weirded out by having a bot as a manager rather than a person, but surprisingly, they’re not. Blame the badness of managers or the goodness of AI, but 64% of employees say they would trust AI more than their direct manager, and 82% believe AI could perform certain tasks better than their managers. Clearly, there’s little worry of workforce pushback.
There’s a bigger organizational shift that plays a role here too, and that’s the transition from traditional hierarchies to teams. Only 14% of executives believe that the traditional organizational model with hierarchical job levels makes their organization highly effective. On the flip side, 53% of organizations that have shifted to a team-based structure have noticed a significant improvement in performance.
An example of a team-based organizational structure (Source)
Team leads—leaders producing in the trenches who can act as a point person—are vital in this new structure, as are cross-team hybrid roles to fuel collaboration. Line managers as we know them? Not so much. By the middle of the decade, their time may be up.
Trend #3: The evolution of performance management
Prediction: By 2026, the performance management process at 35% of companies will be completely owned by employees and incorporate wellness metrics such as work-life balance.
After years of talking, HR may finally be doing the walking when it comes to revamping performance management. According to Gartner, 82% of HR leaders say performance management is not effective at achieving its primary objective, prompting 81% to make changes to performance management in their organization.
The practice of combining backward-facing annual reviews with more forward-facing continuous feedback is becoming more common and has produced desired benefits, but there’s still a lot of work to be done. As roles and responsibilities become muddier, a one-size-fits-all performance management framework becomes harder and harder to adapt to the individual.
Moreover, as performance software has increased transparency around performance data, it really doesn’t make sense for that data to be the focus of performance management anymore. Technology has made it abundantly clear to workers whether they’re a high or low performer, yet the performance management process continues to focus on the symptoms (e.g., the numbers) rather than the causes.
So why not have employees design a performance management process that works best for them? With some guidance from HR, employees can match the process with their needs and focus on the factors that actually inform their day-to-day, driving a 19% increase in performance management utility.
That’s not all. As companies continue to shuffle their feet on addressing the employee burnout crisis affecting two out of every three full-time workers, it’s past time for organizations to incorporate wellness into performance management. Not only can workers better “manage up” if they’re not achieving work-life balance, but it can also lead to a much-needed culture shift regarding mental health and setting necessary boundaries.
The debate around what performance management should and shouldn’t be will never die down, but the 2020s will represent real progress.
Trend #4: The rise of the AI recruiter
Prediction: By 2028, 50% of new hires will have been routed to their role by a job-matching AI.
It’s hard to oversell how much, and how fast, jobs are changing. The World Economic Forum predicts that close to 1 million people will lose their jobs by 2026 because their role will cease to exist. Dell adds that 85% of jobs in 2030 haven’t even been invented yet.
Caught in the middle of all this job morphing and collapsing is the overwhelmed recruiter, who is just trying to keep up with understanding who the best person for the job should be. And they’re getting it wrong more often than not: Gallup found that companies fail to choose the candidate with the right talent for the job 82% of the time.
Recruiters are already leveraging AI for a number of recruiting processes: finding talent, sorting through resumes, ranking the best candidates, etc. The next step in that evolution is going to be routing the right people to the right roles.
An example of AI job matching (Source)
When a job seeker applies to a job, the AI will assess their skills and career goals against the employer’s needs. If it’s a good fit, great. If not and there’s another role that would be a better fit, the AI will recommend the job seeker apply to that role instead.
This works internally, as well. As workers are promoted or leave the company, or as skills gap needs require organizational reshuffling, the AI can assess who in the company has the highest potential to fill each open position.
Will these AI recruiters be able to make perfect matches right out of the box? No. They’ll first need to learn from a massive recruiting and performance dataset provided by a diverse sample of organizations. But once they get going, recruiting will never be the same.
Trend #5: The debut of the HR tech bundle
Prediction: By 2030, the most popular method for purchasing HR software will be through a subscription to an HR application bundle or ecosystem.
Stay with me here, because this one is a doozy.
As any user of an end-to-end human capital management (HCM) solution knows, these systems do a lot of things fine, but they don’t do any one thing great. As these systems have become more employee-focused than HR-focused, and with only 13% of employees being largely satisfied with their work experiences, it’s clearer than ever that “fine” isn’t going to cut it.
Venture capital (VC)-funded point solutions focused on doing one HR thing really well—from employee recognition to HR analytics—have flooded the market and filled the void. But with $5 billion pouring into HR technology investments this year alone and no sign of slowing down, the number of point solutions is becoming overwhelming. Sierra-Cedar estimates that the average large company already has 11 (!) HR systems of record, and small businesses can’t afford a point solution for every process.
One solution to this conundrum is for those HCM solutions to buy up point solutions and integrate the functionality into their platform. With SAP acquiring Qualtrics and Sage buying CakeHR earlier this year as examples, we may already be heading in that direction.
But I’m imagining a different scenario, one in which a few savvy vendors or investors form partnerships with a number of these point solutions and offers them to buyers in an affordable, pick-what-you-need subscription bundle. Imagine the Salesforce AppExchange of HR, but even more simplified.
The Salesforce AppExchange (Source)
Integration concerns would need to be ironed out, but this solution solves two problems:
- Businesses don’t have to invest in an expensive suite with a bunch of unnecessary features for their needs.
- Small organizations can afford to cobble together a complete platform with best-in-class point solutions to give employees a stellar employee experience.
It’s a pipe dream, but one that at least flirts with the realm of possibility.
Now it’s your turn
Let me have it. What do you think I got right and wrong about these HR trends? What trends do you think will define the next decade in HR? Let me know in the comments below, or get at me on Twitter @GDMBrian.
And if you’re interested in other content covering HR trends or anything else related to talent management, head over to our blog.
Note: The applications selected in this article are examples to show a feature in context and are not intended as endorsements or recommendations. They have been obtained from sources believed to be reliable at the time of publication.