Global State of HR Report 2021

Introduction

Human resources leaders have experienced a reckoning since the start of the pandemic in 2020. To begin, HR suddenly became a front-and-center player in just about every organization. The burdens upon their shoulders were large. They were charged with helping to immediately transition people from in-office to remote work, figure out the best tech for these new work structures, determine how to do more with less, handle layoffs and furloughs and uncertainty, tend to the emotional needs of the workforce, and keep employees engaged and productive under the worst of circumstances.

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In 2021, those tall orders kept coming. In the last year, HR leaders had to navigate vaccine mandates, COVID safety protocols, and the rise of breakthrough cases. They had to deal with a raging debate about returning to the office or staying remote. When many organizations opted for a middle-of-the-road, hybrid solution, HR leaders were the ones to determine how to make that kind of workforce function efficiently and productively.

Also read: Employee engagement and experience for the post covid world

Most importantly, HR leaders are struggling to win the talent wars as they face a historic labor shortage. Employees and recruits are demanding higher wages, better benefits, more respect, more meaningful work, and more empathy from their employers. Unlike any other time, employees have the power. They are also asking for their bosses to address their mental health and wellness with both increased benefits and programs.

In addition, they want their employers to go beyond paying lip service and start making inroads to issues that matter to them like sustainability and diversity, equity, and inclusion (DEI). And C-suite executives are not always on the same wavelength, so HR leaders have to balance the needs of both groups.

HR Exchange Network recently conducted a survey of 433 senior HR leaders to assess the state of Human Resources at the end of 2021. At mid-year, HR leaders similarly had taken stock of the state of affairs. At that time, employee engagement was the biggest challenge. Quickly, recruitment and retention became the number one priority.

A record one in four workers quit their jobs in 2021 as of October, according to data from Visier, a people analytics firm. Visier pointed out that the number of quitters was still rising. In addition, young people, who are notorious for quitting often as they try to find the best fit, were not alone this year. Employers aged 30 to 50 have also increased their resignation rates by more than 38%.

Respondents to the HR Exchange Network State of HR 2021 Survey expressed great concern about the labor shortage and provided insight into the top priorities of leaders going into 2022. What we learned is that most people agree the winners for talent and business will be those who embrace change rather than fight it, listen to their employees rather than talk over them, and lead with both their head and heart.

About the Respondents

HR Exchange Network surveyed 433 experts and leaders from a wide range of organizations around the world. Consider the breakdown by job title, job function, company size, industry, and region.

Job Function

Company Size

Region

Industry

New Challenges

In this third survey during the pandemic, HR leaders are focusing on finding solutions related to the labor shortage and retaining talent. Mental health and wellbeing, remote work, and budget cuts are still top of mind, too.

The Biggest Problems for HR Leaders

Since the mid-year report, the labor shortage has grown. Some thought unemployment benefits would run out and people would run back to work. But that was not the case. The pandemic gave people a chance to rethink their life, including their career. For many, it was time to move on and look for more professional satisfaction and work-life balance.

“The shortage is the key issue,” says Paul Pittman, the Founder and President of the Human Well. “There are so many more opportunities and new types of roles that interest people. We’ve broadened their horizons.”

Pittman believes this shift in culture will have significant ramifications on Human Resources but that employees will eventually lose their grip on the hiring process. After all, these things tend to be cyclical, and capitalism favors business over the individual.

Still, HR leaders have to understand the difference between Baby Boomers, who are entering retirement, and younger people from Generations Y and Z. They see their jobs as a transaction to finance their lifestyle, says Pittman.

“The leaders will be 10 or 15 years younger,” he adds. “We’ve been putting people in leadership who know less about the job and more about empathy.”

In the short-term, employers will turn to untapped groups to fill in gaps. For example, those on the autism spectrum bring diversity and often can be taught a myriad of skills. High school graduates might also get jobs that previously were only for college graduates. Immigration and automation are other tools to get through the shortage, says Pittman. But he warns that no matter how leaders choose to address the problem, they have to retool themselves and embrace all the changes afoot or they will find themselves redundant.

Prioritizing Mental Health and Wellness

Seizing the moment is easier said than done, however. Change is tough for people, and HR leaders are facing another major challenge, burnout. In fact, the majority of respondents said burnout was the greatest consequence of the pandemic.

Consequences of the Pandemic

Challenges to Employee Engagement

Certain industries have experienced more burnout than others. Think of healthcare workers at the height of the pandemic and as spikes continue to come and go. As more Americans quit their jobs, those who stay in their roles inevitably end up taking on more work. This can easily lead to high levels of stress and the potential for burnout.

“Employees feel out of control because, to a large degree, they are,” writes Erika Lance, chief human resources officer for KnowBe4, in an article for Entrepreneur.com. “They have no control over the virus, or over government and employer mandates that threaten to impact both their lives and livelihoods. And they don’t know what to expect next because, in truth, no one knows what to expect next.”

Employers are doing something about burnout and mental health and wellness in general. Respondents said employee assistant programs (66%), training in resiliency and stress management (46%), and health insurance that includes mental health coverage (44%) are among the solutions they are offering employees. Other efforts include access to wellness apps, mental health days, and virtual therapy.

Hybrid Is the New Normal

In some ways, HR leaders are providing a sense of structure and security. They have developed some norms that will carry over into the post-pandemic workplace. Flexible work hours, hybrid workplaces, and online learning top the list of pandemic policies that HR leaders say they will keep even after the pandemic is a memory.

A little less than 80% of C-level executives believe businesses will benefit from increased flexibility, according to Adecco. The report’s writers concluded that the world is “ready for hybrid working” because 51% of employees who responded called for an in-office model, whereas 49% wanted remote work.

The biggest priority for respondents to the HR Exchange Network survey, in fact, is employee engagement, followed by flexible work culture and hybrid workplaces. And flexible work hours and hybrid workplaces are the big winners when it comes to the pandemic policies that employers are planning to keep well into the future.

Top Priorities

Remote work – whether on its own or as part of a hybrid workplace – is here to stay. HR leaders have to make it their business to help connect teams that could be working from home in their slippers, in different geographies, and time zones. This phenomenon was already happening before the pandemic, but now there is no turning back. What is changing is that there are more people returning to an office, too.

In October, the number of employed people working remotely dropped to 11%, which was the lowest since the pandemic began, according to the Bureau of Labor Statistics (BLS). With more people demanding flexibility, however, hybrid work is becoming the likely model for workplaces. It comes with its own set of challenges.

“I’m actually quite worried about how we’re going to navigate to a hybrid environment. It’s going to get a lot more complicated,” said GoFundMe CEO Tim Cadogan, according to Time. “The situation where everyone has got one screen, in a sense, it’s been a great leveler. Everyone’s got a screen, everyone’s on the same playing field. Going to a world where there are three people in the room, two people on a call. It’s going to be pretty difficult trying to find the right balance. And I think it’s going to take a lot of experimentation as to what are the best communication methods.”

Some companies are leaving it up to individual departments to decide whether to return to the office or not and how to schedule hybrid work. The New York Times cited LinkedIn, which scrapped its plans to return to the office when the Delta variant began wreaking havoc in the United States. The company put the onus on individual managers to decide from where their teams worked. LinkedIn was one of 60 major companies allowing some form of flexibility to employees, according to The Times.

But HR leaders are stressing about productivity monitoring and employee engagement of their remote workers.

Pandemic Policies to Remain

Challenges of Remote Work

Only 8% of respondents said they would be working remotely full time. A whopping 42% said they plan to be back in the office a few days per week in 2022. Being in the office makes safety an issue and puts COVID-19 vaccinations front and center. The overwhelming majority of respondents or 47% said they will enforce vaccine mandates at their offices.

About 24% of respondents will have no vaccine mandate and no penalties for the unvaccinated, and about 19% were undecided. About 6% said they will not require a vaccine but will penalize the unvaccinated without firing them. In those instances, some employers require frequent testing and may refuse to pay for sick leave should an employee contract COVID-19.

Vaccines make going back inside an office safer. But removing remote options is a risk, too. It could drive some employees to quit. After all, many people moved during the pandemic and their lifestyles changed. During the labor shortage, the message about a need for more flexibility has been clear.

Also read: Delivering learner centric training in the era of hybrid work

Still, companies are gearing up to anticipate attrition. Most of the respondents to the HR Exchange survey said their budgets will either remain the same or increase in the next year, and their priorities for investment have a story to tell. Data is going to be a driving force in Human Resources moving forward. Indeed, 107 or about 31% of respondents said they will be investing in analytics in the next six to 12 months.

Although some experts have said that HR is late to the data analytics game, they are recognizing how data can be used to identify those with the potential for promotion or those thinking about quitting, for example. The point is that HR leaders are looking to have forecasting at their fingertips. Perhaps, they are trying to avoid the surprises that have caught them off guard during the pandemic.

The top 5 priorities for investment

Recognizing that some form of remote work is inevitable in this new world, employers are going to hang onto certain technology in which they invested when transitioning from in-office to remote work.

Technology for Keeps

Shift in Culture

Changing employee expectations and shifts in the talent pool top the list of happenings that respondents believe will have the biggest impact on Human Resources in 2022. This new normal with the employees having more leverage is changing the culture of workplaces. The majority of respondents, 37%, expect their employees to be less engaged in 2022.

So, there is great pressure to improve company culture to keep people on the team. Helping them to collaborate, regardless of where they are, is an important task.

Priorities to Improve Culture

DEI Efforts Expected in 2022

One of the ways companies have been improving culture is by increasing diversity. These concerted efforts are a must because prevailing research indicates that diversity on your team translates to better business outcomes. Having a team that represents society is also the right thing to do. However, many are still determining what DEI efforts have the most impact.

As the Black Lives Matter movement gained ground the world over, employers focused on what they could do to support better understanding and influence societal change. Women are leaving the workforce in droves to the detriment of businesses, so there is an effort to win them back. Diversity of thought is a priority across the board.

Orly Lynn, Global Vice President, Head of Diversity, Equity, and Inclusion at Contentsquare, says her organization and others are addressing the positive effects of change management beyond performance.

“In 2022 I see HR professionals, not just at Contentsquare but across organizations, taking on very strategic approaches from a growth, transformation, and culture perspective. From a DEI standpoint, Content square continues to cultivate a workplace that is inclusive, where respect in the workplace and a sense of belonging are our core. As we evolve our DEI strategy, we are taking steps to continue bringing awareness to inclusion, equity and diversity, and engaging our employees in a scalable and consistent way,” says Lynn.

Organizations are working to determine the best ways to find harmony in their diverse teams and take advantage of all the associated benefits. Not surprisingly, creating a dialogue is a preferred way to address DEI.

The Future

Clearly, HR leaders, along with everyone else, have to adapt to transformational change. It’s no easy task, but those who are up for it can win the talent war during this unprecedented labor shortage. Hybrid workplaces are going to be the norm and getting used to them is going to take time and lots of communication.

Dealing with burnout is going to be a priority, and helping employee’s maintain mental health and wellness will remain an important part of HR moving forward. Building a culture of achievement, inclusion, and empathy with a dash of flexibility will be a must. Motivating employee development and upskilling are top priorities for respondents of the survey. It means that companies recognize they have to prepare their workforce for what’s coming, whatever that might be.

“I remember my early roles in the personnel department. HR as we know it today was an administrative function. We were responsible for completing forms, hiring employees, and the most senior roles were held by operations executives,” says Eric Torigian, Vice President and Assistant General Manager of Global Human Resources at Akebono Brake Corporation. “Over the past 30 years that has transformed, and HR is now seen as a true strategic partner. While HR took a central role during the COVID pandemic, I believe that we are at an inflection point. HR was thrust to the forefront of leadership as we shutdown offices, established workfrom-home practices, supported remote work, and now facilitating the orderly return. It will be critical for us to take this newfound responsibility and do something meaningful. The real measure will be what HR is able to accomplish over the next 18 months.”

Clearly, leaders in Human Resources have their work cut out for them. HR leaders said that changing employee expectations will have the biggest impact in 2022. Certainly, the end of 2021 points to that being true. Employees, not to mention recruits, are in the driver’s seat. Employers who get on board will arrive at their destination.

Q&A with Oracle

Cara Capretta

Vice President – HCM Transformation Practice for Oracle

Cara Capretta, Vice President – HCM Transformation Practice for Oracle, has more than 25 years of experience in the HR space. She is a recognized speaker and thought leader in the field of talent management. She is regularly featured at Argyle, Evanta, Conference Board, and HR Tech Conference, as well as Oracle events. Capretta leads a team of former HR executives who are evangelists for HR transformation and share HR best practices with Oracle clients in North America.

The labor shortage and retention of top talent are the biggest challenges facing employers today. Employee expectations and the nature of the market as organizations continue to confront the challenges associated with the pandemic are rapidly changing. Organizations have to quickly adapt and adjust strategies. What are some solutions for businesses trying to recruit and retain talent amid this evolution?

Recruiting efforts have become far more experiential and social in nature. Candidates care more about the culture of the company and alignment to their values. A boring job description won’t cut it. Organizations are doing a better job of “telling their story” to entice candidates. Candidates are looking for community in an organization. Can they easily find others who are like them or care about the same causes? Transparency into diversity and continual progress in diversity efforts have become mission critical.

Some organizations have decided to throw money at recruiting efforts. The trucking industry is offering drivers $10,000 sign-on bonuses to stay competitive. Hourly employment like quick service food and grocery stores are offering $500 to $1,000 sign-on bonuses for new hires. The real ROI sits with retention. It is expensive and time consuming to hire and onboard new talent. Therefore, retention efforts need to improve. Many organizations are hyper focused on career mobility. Some are calling it an “open talent marketplace”, “internal marketplace” or good old-fashioned career development.

Also read: The Business Case for Diversity Equity and Inclusion

One of the lowest scored items on most engagement surveys is “Is your promotion and career path clear to you?” If it’s not clear, people will look elsewhere and ultimately leave. Most research says about 75% of employees want opportunity for career growth. Therefore, we need to do more.

Organizations are turning to AI to help employees match their skills and experiences to other opportunities in the organization. Employees can’t depend on their boss for their next career move, especially in big organizations. It needs to be easier to find a job on the inside of your organization than it is on the outside.

The culture of a company needs to adjust to make this happen. Leaders need to be willing to let go of their people to make cross-functional moves. It’s much better to lose talent to yourself than a competitor.

Among the top priorities of employers is employee engagement and productivity. If organizations remain all-remote or hybrid workplaces, which many expect will be the case, how do you suggest businesses improve employee engagement, so that employees can be more productive?

Most companies are surveying employees to get feedback on the future of work. The pandemic created A-HA moments for leaders and organizations regarding the productivity of remote work. Many companies suggest they will be identifying intermittent required work onsite for key project, planning, innovation, etc., but will be embracing remote work for the unforeseeable future. However, as the “Great Resignation” continues, it will be important for new employees to meet their colleagues to develop relationships, build trust, and form community. We have to find ways to still have fun and to eliminate Zoom fatigue.

Remote work isn’t going anywhere. Even if people end up heading into the office a few days per week, they will likely do some of their work exclusively online. Every organization has to be ready to return to a remote workplace in case of emergency. What would you say is the biggest lesson about maintaining a remote or hybrid workplace? Why?

The biggest lesson has to be that productivity did not drop during the pandemic. In fact, most studies indicate people are working more hours and are more productive because drive time, get ready time, etc. decreased significantly. Many workers in big cities gained four hours of their life back a day! Despite the many challenges of the pandemic (stress, loss of work, anxiety, mental health), working from home allowed many people to be “present” with their family, whether sharing meals or attending activities they normally missed, etc. In addition, many people took up new wellness routines - sales of Peloton and Mirror spiked.

After more than 19 months since the pandemic turned lives upside down, burnout has become a major problem for employees. HR leaders are looking for ways to take off the pressure and address the wellbeing of individuals and the organization. What are some innovative solutions for affecting change and addressing burnout?

Many CHROs I’ve talked to have “pushed” employees to use their PTO. Some even changed their PTO policies to make sure employees were getting the “down time” they needed. Many benefits packages are increasing access to “tele-heath” solutions that are focused on mental health resources because access is not evenly distributed, especially in rural areas.

The skills gap is real. Businesses are having a hard time hiring people with the skills fit for the future (even the near future). Data analytics, cybersecurity, blockchain, AI, and more are among the specialty skills that few possess, and many will need or already need. As a result, even before the pandemic, businesses were looking for ways to reskill and upskill employees. Now, job applicants are looking to get hired by companies that are investing in them and their career growth. What’s your advice for companies aiming to enhance learning and development and use L&D programs as a recruiting tool?

Broadcast this as an aspect of your company culture. “We will invest in you”. This is a great recruiting tool that will resonate especially with anyone who has been downsized, left the workforce for a while or who has been in the same job/company for a long time and not current.

What do you see around the corner? What do you think will be the biggest challenge and solution for employers in the next year? In other words, what might we be talking about then?

Recruiting efficiency. Recruiters are stressed and overwhelmed trying to find talent. We have to keep finding ways to make it as easy as possible for them to process candidates before they lose them to another opportunity. I also think there will continue to be a lot of focus on culture. The Great Resignation has all ages and all tenures of people leaving their companies. Those cultures will change with their departure. Longer tenured leadership is predictive of slowness in change.

On the flip side, the culture of companies with lots of new hires will change.

Customer Support – Turnover has the potential to impact customer satisfaction. New employees will have a learning curve. Clients will be losing many of the account execs/reps they are used to working with. We will need to keep an eye on customer temperature.

Onboarding will need to be refined and easily accessible.

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