What’s Keeping HR Up at Night in 2020?
The number of job openings in the U.S. fell from 7.6 million in January 2019 to 6.8 million in January 2020, according to the Bureau of Labor Statistics. Is this an early sign that the talent shortage is dwindling? Maybe. But regardless of what those numbers reflect, HR professionals continue to worry about maintaining a skilled workforce.
While the largest decreases occurred in retail trade (139,000 jobs) and construction (112,000 jobs), retaining key talent is HR’s chief concern, according to a survey of more than 300 HR executives representing mid- to large-size employers across multiple industries conducted by Human Resource Executive® between December 2019 and January 2020.
Slightly more than half of the respondents worry about retaining key talent, with the next most common concern being developing leaders and succession planning, followed by improving the employee experience, and driving innovation and helping teams work together.
Although the talent shortage began dominating the labor market more than a decade ago, the No. 1 issue among HR professionals in the last three consecutive HRE surveys was employee engagement; last year was the first time that retaining key talent tied for the top spot.
So, what changed?
Susan Haberman, senior partner and U.S. leader of Career Business at Mercer, points to the 3.5% jobless rate, which encourages job hopping; employers’ increased need for specific skills, especially those involving digitization of work; and the challenge of improving employee productivity, which requires a blended mix of new skills and institutional knowledge.
“If all you’re doing is bringing people in from the outside, you’ll run into problems,” she says. “You see this in particular when looking at tech companies on the West Coast that have massive turnover.”
Some survey respondents also mention the exodus of baby boomers. How can employers capture and accelerate the transfer of their knowledge to the existing workforce?
In the coming years, however, that may not be an issue. According to Glassdoor’s Jobs & Hiring Trends for 2020 report, baby boomers—those 65 or older—will become the fastest-growing workforce, a trend the report calls the “gray wave.” According to Glassdoor, this segment of the workforce is expected to grow by 61% over the next decade, compared to 5.5% for the overall American workforce.
Holding the reins
Employee turnover harms nearly every part of an organization: Sales. Operations. Finance. Research.
The fallout is different for each organization. According to one HRE survey participant:
“We struggle with high turnover in the healthcare industry, which can lead to staffing and safety concerns, as well as a lack of internal candidates for promotions.”
Another says, “We develop leading-edge custom business solutions. Our people MUST maintain capabilities and skills with the latest technologies.”
There’s no shortage of triggers causing people to quit. Some respondents blame outdated technologies and manually intensive processes. Others mention such contributing factors as high benefit costs, weak managers or leadership, poor communication or a toxic culture where core values and responsibilities are not clearly defined or even widely accepted by the workforce.
At organizations with high turnover, a big chunk of HR’s time is directed toward recruiting, onboarding and training new workers, which distracts from other important matters, ranging from employee coaching and succession planning to updating compensation and benefit packages.
Combined, more than 60% of survey respondents are either extremely or very concerned about their organization losing talent over the next 12 months.
All the other “stuff,” Haberman says, like the quality of leadership, performing meaningful work and observing a corporate social responsibility agenda can also help retain employees.
“In a tight labor market, competitive compensation is an expectation,” she says, adding that she suspects the labor market will recalibrate or correct itself within two years. “You need an entire employee-value proposition and an employee experience that is very differentiating.”
But when unemployment rises and the economy starts to soften, she says, compensation will likely become more important and employees “… will let go of some of this other stuff.”
Are your leaders ready?
Survey respondents report other key concerns, too, including driving culture change, managing healthcare costs, and upskilling and reskilling for the jobs of tomorrow.
“The war for talent is real and continues to be a struggle,” says one survey participant. “Culture change is required to provide a positive employee experience, which also means our leaders need to develop their leadership skill sets, confirm we have the right folks in the right seats and create succession plans for key positions while also drafting development plans for low performers and top performers.”
External global survey results from Deloitte Consulting also reflect similar findings. Leadership-development programs and digital skills are top concerns for C-suite executives, yet less than half (41%) believe their organization is either ready or very ready to meet their leadership requirements. Worse yet, only 17% reported that C-suite executives regularly collaborate, and only 2% of U.S. executives say their workforces possess the skills needed for the future.
According to Deloitte, based on these responses, the company created several in-house programs that can fit into many work environments and be used as recruitment and retention tools. These include skill-development initiatives to help veterans, people on the autism spectrum and those returning to work after an absence.
Among the most surprising HRE survey outcomes is that more than 51% of respondents report there isn’t a succession plan in place for the HR leadership role in their organization.
Organizations looking to be better prepared on that front should consider taking a step back to re-think the value of the traditional “one-for-one successional-planning model,” says Tami Simon, senior vice president and global corporate consulting leader at Segal, a benefits and HR consulting firm.
Start by re-evaluating your organization’s business goals and how the workforce supports them. By overlooking this step, she says, HR professionals miss a key opportunity. Maybe a leader’s role has mushroomed or evolved into something different and will be redefined in the future. Consider dividing the leader’s responsibilities among multiple employees.
As a professional-developmental strategy, she says, this empowers people and spreads the risk among your workforce instead of focusing on enabling one person to adopt all of a leader’s responsibilities.
“[HR] needs to be more agile, flexible and creative when it comes to thinking about the needs of the business and how it’s going to meet those needs as turnover naturally occurs in the organizations,” says Simon. “The way to do that is to make sure [leaders] have protégés and properly give them enough career development.”
If a leader is on vacation or retiring within the next several years, for example, conduct trial runs by rotating tasks. Ask one employee to present at the next client meeting and someone else after that, she says.
Recognize These Pain Points?
No two organizations are alike—and, thus, no two HR leaders are facing exactly the same challenges. However, respondents to HRE’s “What’s Keeping HR Up at Night” survey did share many similar concerns. Below is a sampling of some of their comments.
“The reality is that experience is the best leadership development you can give people,” Simon says, warning against going overboard by creating a cutthroat, competitive environment. “Manage to people’s strengths. You also don’t want a company of Borgs. Different people—leaders who are quiet and demure or others who are jovial and effervescent—can be successful in their own way. That’s how they remain authentic and how you create a culture of innovation and diversity of thought within an organization.”
Building healthy cultures
Meanwhile, the level of stress among HR professionals has either increased dramatically or somewhat among nearly 75% of survey respondents.
Some HR professionals reported worrying about the future, specifically that the aftermath of the 2020 presidential election could add even more pressure for HR professionals. Will federal or state laws change? Will there be additional reporting requirements or regulations? Will the Affordable Care Act survive?
More than half of the respondents are concerned about potential changes to healthcare, while other common worries include changing wage and hour policies and paid-leave requirements. Others point to a patchwork of state laws, pay equity, employee leave and immigration. Survey participants reported the least amount of concern about retirement, workplace discrimination and workplace safety.
Considering the strong link between retention and employee morale, it’s surprising that only 6.5% reported that employee morale and engagement in their organization is extremely strong; about one-third believe it is strong.
One way to build employee engagement and morale is to ensure that all employees understand their purpose and how their responsibilities contribute to the organization’s goals or mission, adds Simon of Segal. She says HR can achieve this through effective communication—on or off social media—and by using collaboration tools and employee-empowerment strategies.
Simon tells the story of custodial workers at a large hospital system whose job titles were renamed “health and safety professionals.” They were taught that one of the hospital’s biggest challenges was lowering the patient infection rate and that their chief role was to help patients avoid infection. They were then empowered to be innovative at solving problems within their job boundaries, which led to higher morale and engagement.
Healthy cultures, Simon says, are also learning cultures, where giving and receiving feedback is a natural part of the lifecycle of every role, project or task. The point isn’t to be critical, she explains, but to create a culture of transparency, learning and trust where everyone receiving feedback knows their job matters and that their boss or co-workers want them to succeed.
“Everybody needs to matter,” Simon says. “That’s a human instinct. We all want to be wanted.”
From an overall workforce perspective, perhaps the survey’s key takeaway for HR professionals can be summed up by the following participant comment:
“Organizations will struggle with recruitment and retention in this difficult labor market if they lack a great employee experience and a ready-now leadership pipeline.”
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