As an eventful and surprising year winds down (did anyone foresee the surge of generative AI at the end of last year?), I have been pulling together reflections on HR and HR technology in 2023. I aim to map out what the team at H3 HR Advisors and I think will be the most important trends heading into 2024.
While exercises like this are interesting and fun, they can also help frame the development of HR and HR technology strategies for the coming year and beyond. So, I would approach the themes we have identified not so much as specific predictions about any particular piece of technology but more as buckets of ideas, challenges and opportunities. I hope these can help you organize your thinking about people, business and HR strategies for the future.
We’ve identified five main trends that HR and tech leaders should consider for 2024:
1. Generative AI: Unleashing the power of automation
As 2024 nears, generative AI has emerged as the most disruptive workplace technology trend in decades. So, leveraging this capability to its fullest extent is top of mind for HR leaders, who need to have a solid understanding of generative AI in all its forms.
This type of artificial intelligence is specifically designed to generate new data, text, images or objects from existing data and has the potential to completely transform various HR and talent management functions. By automating many HR tasks and providing intelligent assistance, generative AI can free up HR leaders to focus on more strategic activities.
Some of the important areas where Generative AI is impacting HR, talent and leadership teams include recruitment, employee recognition and engagement, performance management, HR service delivery and more. Based on how much generative AI dominated the discourse at the HR Technology Conference earlier this month, there is little doubt that it will be HR and HR tech’s No. 1 topic in 2024.
HR tech providers to watch: Phenom, Oracle Cloud HCM, SeekOut, Businessolver
2. Harnessing the power of skills for growth and development
A focus on skills, not just credentials or job roles, offers the organization new opportunities to tap into underserved sources of talent and increase economic opportunity for all. A skills-based organization is an organization that focuses on the skills, demonstrated abilities and potential of its employees and has reduced its reliance on traditional qualifications like college degrees or designated years of specific experience when making hiring, development and promotional decisions.
This type of approach can provide many benefits to both the organization and its employees. Organizations that focus on skills over job descriptions can be more successful because they will be able to better identify and match the right person (candidate, employee, contractor, gig worker or even whether technology would be a better fit than a person) to the right job.
By looking at a person’s skills and abilities rather than their job title or descriptions of the prior jobs they’ve held, organizations can expand their talent pools and be more likely to find the best candidate with the most value for the organization.
HR tech providers to watch: Reejig, retrain.ai, Microsoft, Cornerstone
3. Adapting to evolving workplace demographics
As the workforce evolves, organizations need to consider how to support their older, more experienced employees while meeting the different needs of the newest entrants to the workforce. For instance, leadership should consider the physical and mental health of their aging employees, technology training, flexible work arrangements—including part-time or retirement transition schemes—retirement counseling and wellness programs.
Plus, organizations facing increased rates of retirement should set up mentoring, coaching and managed knowledge transfer from the older cohort of workers to younger workers to mitigate the potential large loss of institutional knowledge and experience that often accompanies employee departures.
HR tech providers to watch: Wellthy, Torchlight, Cariloop
4. The changing nature of compensation
While compensation has always been foundational to the practice and administration of HR, in 2024 and forward,d we will see a more expansive view of compensation taking hold as organizations struggle with the issues of pay equity, pay transparency and the louder voices of employees.
This year, we saw organizations looking to remediate pay inequities that have lingered for years, as well as HR technology providers that developed new tools to assist. The Nobel Prize in Economics was even awarded to Professor Claudia Goldin for her pioneering work studying pay inequity. In 2024, we expect pay equity to move from a subject associated with corporate social responsibility efforts to one that is a more fundamental component of talent strategy and employee engagement.
Research has shown that employees want to be assured of fairness and equitable treatment for themselves, and they also want to know that their colleagues are being treated in a fair and equitable manner. Solution providers that develop tailored capabilities, reporting and decision-making support tools to facilitate the analysis and adjustment of compensation to move toward pay equity should see an extremely busy year ahead.
HR tech providers to watch: Salary.com, Compa, Visier
5. Unlocking the benefits of total workforce management
With many organizations facing ongoing talent challenges, expanding workforce management to incorporate more diverse and disparate sources of capability, along with the tools to facilitate these initiatives, will increase in 2024.
Among the lingering workforce impacts driven by pandemic-era disruptions has been the increase in size and volume of the gig and freelance economy, particularly in the U.S.—driven by early pandemic layoffs or furloughs; a swell of employees who wanted to strike out on their own for health, safety or caregiving reasons; or the “Great Resignation.”
Additionally, U.S. applications for new business licenses surged, with over 5 million new applications created in 2022, up from 3.5 million in 2019. Meanwhile, the total number of “regular” employees in the U.S. has only grown modestly in recent years—from 152.1 million in January 2020 to 156.9 million as of September 2023.
These labor market factors, along with seemingly perpetual skills gaps and skills mismatches cited by many organizations, necessitate a more expansive, flexible and creative approach to planning, sourcing, hiring and deploying talent. This is essentially fueling an updated and modern definition of total workforce management.
HR tech providers to watch: Ceridian, Lightcast, SAP, Workday
While we are confident that these important workplace trends for 2024 are likely to impact organizations of all types, we also know that it is an incomplete list of the potential challenges and opportunities that will face organizations in the coming year. While no one, including me, can predict the future with certainty, we can take steps to prepare our organizations and teams for the most important changes, challenges and opportunities that we expect to face in the coming year.
One of the very best steps you can take to that end is to mark your calendars now for next year’s HR Technology Conference, Sept. 24-27 in Las Vegas, where we will surely be diving into these themes and everything else that will emerge on the scene in 2024.
And, for those interested, the full H3 HR Advisors 2024 Trends Report, where each of these trends is explored in further detail, is available here.