Every year, the UKG Workforce Institute releases our “Megatrends and Workforce Predictions” report to provide HR and business leaders with data-driven insights about the changing world of work. An international team of UKG executives, researchers, and advisors meet with hundreds of business leaders, economists, futurists, and analysts to identify the top challenges and opportunities facing businesses.
Heading into 2024, these conversations were mostly optimistic. Inflation is easing globally, and especially in the U.S., dropping from a 2022 high of 8.7% to its current 3.2%. Unemployment levels are stable within a healthy 3-5% figure. Most economists now expect that the Fed has achieved its desired “soft landing” and that a severe global recession has been avoided.
Additionally, the fact that I’m not immediately referring to the pandemic shows how much progress we’ve made. Most people now view COVID-19 as a minor threat, which has spurred a return to normalcy for both people and organizations. Business and HR leaders have shifted from acute crisis-management back to long-term strategic priorities.
With this backdrop—amid many other factors, such as the proliferation of generative AI, global conflicts, an upcoming U.S. election year, and more—we identified three primary trends requiring a roadmap for decisive action.
1. Redefining the Employer/Employee Relationship
The formal employee/employer relationship has existed for at least the last 250 years. But while work environments, products, and technology tools have evolved significantly in that time, the basic premise of this dynamic remains the same: We are, essentially, trading time for money. But is that all?
When I ask executive clients what they want most from their people, the concept of time rarely comes up—it’s a given. Instead, business leaders cite engagement, productivity, retention, and discretionary effort. And if you ask employees what they want, of course they will mention good pay and benefits; that’s the primary reason they’re working, after all. But when you dig deeper, you’ll find employees also expect everything from transparent communication and great leaders to personalized flexibility and growth opportunities.
What we see in the traditional employee/employer dynamic is that employers fail to fulfill all their employees’ expectations, focusing mainly on providing the “money and benefits” side of the equation. As a result, employees focus mainly on the “time,” providing the proverbial butt-in-seat or green-light-on-Slack, while feeling little loyalty or drive to excel. American workers’ productivity declined for the 5th straight quarter in 2023, the fastest decline in 75 years. And just 33% of U.S. employees said they were engaged in their work in the latest November 2023 Gallup poll.
We know employee expectations play a significant role in engagement, so my colleague Michael Puck developed a research-validated model that identifies and weighs 12 different employee expectations in the post-pandemic world. “Fair pay and relevant benefits” make up the single most important category, representing 37% of employee expectations, but the other 11 categories represent nearly two-thirds of what employees are hoping to receive from employers. This is good news for most employers, who have been challenged to cut budgets. More money is never a bad thing, but this research shows that once a certain level of financial wellbeing is established, employees are highly motivated by other factors.
Some of the other 11 categories, such as intentional DEI&B, shared value alignment, and environmental, social, and governance (ESG) initiatives, require buy-in from senior leadership. But most of them—personal influence and autonomy, empowering environment, holistic support—require a personalized approach and rely on a meaningful relationship between employees and their direct managers. Businesses must provide their managers with the tools needed to understand their direct report’s personalities and preferences and seek to meet their expectations wherever possible.
A recent UKG Workforce Institute study found that nearly three in four employees are motivated to go above and beyond because of their manager’s support, encouragement, and leadership. This research validates similar findings and highlights the incredible impact good managers (and a personalized approach) have on employee productivity, commitment, retention, and engagement—and of course, the bottom line.
A recent UKG Workforce Institute study found that nearly three in four employees are motivated to go above and beyond because of their manager’s support, encouragement, and leadership.
Personalizing your approach to meet your employees’ expectations can be difficult to scale without the right tools. Here are some ways to act:
- Conduct regular anonymous pulse surveys to identify where your employees are happy, and areas that need more support. Be sure to drill down into targeted regions, departments, and managers to learn where pain points and opportunities exist.
- Establish comprehensive leadership training courses that teach managers foundational emotional intelligence and how to ask the right questions to effectively engage with their teams.
- Apply GenAI tools to offer personalization via digital systems, such as recommending shift swaps, customized manager recommendations, and streamlined information sharing. This is all based on real-time understanding of employee, customer, and manager patterns and needs.
2. “Mining” for Talent: Pairing Skills Inventories with Internal Mobility
You may be familiar with the “buy, borrow, or build” concept of talent acquisition; you either hire, contract, or train your people to fill critical roles within your organization. But considering the ongoing talent and labor shortage most organizations are grappling with, it’s clear that upskilling and reskilling efforts are more urgent than ever thanks to a growing divide between existing skills and those that are needed.
According to the World Economic Forum (WEF), approximately 1.1 billion jobs are likely to be radically transformed by technology in the next decade, and employers and their people are vastly unprepared for this change. Currently, just 0.5% of global GDP is invested toward adult lifelong learning, but a 2021 WEF research report found that investment in reskilling and upskilling the global workforce has the potential to boost GDP by $6.5 trillion by 2030. The WEF is responding to this crisis with an ambitious “Reskilling Revolution” initiative, whose roadmap for 2023-2024 includes reaching at least 300 million workers and adult learners through global reskilling and upskilling efforts and promoting skills-based labor markets.
As the technological, market, and social landscapes continue evolving, organizations and their people cannot afford to be left behind. Yet, when meeting with leaders I find that very few businesses are actively building a skills inventory and even fewer are asking their existing talent to share skills beyond the scope of their current role. Building a skills inventory is a critical and under-utilized way business and HR leaders can “future proof” their business, especially when paired with a comprehensive “skills mining” strategy.
A well-designed skills inventory enables strategic workforce planning by identifying skills gaps, true talent shortages, and areas for development. Leaders can leverage this data to make informed talent decisions that align their current workforce with future business goals.
A well-designed skills inventory enables strategic workforce planning by identifying skills gaps, true talent shortages, and areas for development.
With a skills inventory in place, HR leaders can efficiently match job requirements with the existing skills of internal employees—even if they are not currently in related roles—which is a process we are terming “mining for talent.” This reduces the need for external hiring and promotes internal mobility, engagement, retention, and culture, all while saving money.
Additionally, when HR leaders understand their employees’ current skillsets, they can design targeted learning and development programs to align learning paths with organizational objectives. Skills inventories also come in handy when identifying and developing candidates for succession planning. And when external hiring makes sense, a well-designed skills inventory provides valuable insights for attracting and selecting candidates with the desired skill sets.
Building a skills inventory from scratch is a time-consuming and expensive investment, but its insights are invaluable. Here are some steps to get you started:
- Identify key job roles
- Define required skills
- Assess current employees
- Conduct a gap analysis
- Prioritize skill development
- Plan training and development initiatives
- Track and update the inventory
- Encourage continuous learning
- Monitor progress
- Integrate skills inventory into HR processes
3. Weathering ESG and Political Backlash
ESG initiatives have become standard business practice. More than 90% of S&P 500 companies now publish ESG reports, as do approximately 70% of Russell 1000 companies. At UKG, we’re committed to publishing our own ESG journey, and data shows that global consumer support of ESG efforts remain strong.
However, within the U.S., there is a growing political backlash to ESG efforts and the primary target of these pushbacks has recently been DEI&B efforts. The U.S. Supreme Court’s 2023 decision banning affirmative action in education immediately led to scrutinization of companies’ DEI&B programs. And while 89% of employees work for companies with DEI&B programs, the majority (62%) believe that these programs are not doing what they were designed to do.
Unfortunately, there’s data to support this belief. According to Gallup, 84% of CHROs say their organization’s investment in DEI&B is increasing, but the research notes that many employees still report discrimination at work, believe they lack opportunities for advancement, and don’t think their employers care for their wellbeing. Harvard Kennedy School’s Iris Bohnet calculated in 2017 that U.S. companies spend roughly $8 billion a year on DEI training, but, in her words, “I did not find a single study that found that diversity training in fact leads to more diversity.”
Her research validates earlier findings—a 2009 Harvard meta-analysis, for example, found little proof that prejudice-reduction interventions, such as workplace diversity trainings and media campaigns, were effective.
Clearly, it’s not just investment that’s important but investing in high-quality and meaningful programs that improve outcomes for diverse populations.
Advocates in the U.S. and abroad are demanding better high-quality and meaningful diversity programs from C-suite leaders, who find themselves facing a dilemma. Data clearly shows the competitive advantage of diverse workforces, such as Great Place to Work’s research showing that companies who value diversity and inclusion outperform the market by as much as 400%. But with increased political division and extremism, there is a strong temptation for leaders to stay silent on controversial topics rather than risk angering customers or prospects.
Rather than reacting to current events, organizations and business leaders will need be proactive and identify their authentic positions on ESG and DEI&B and stay committed to maximizing the value of their programs.
Fortunately, researchers have made significant progress when it comes to effectively designing, conducting, and evaluating DEI&B programs during the past decade—many organizations just need to update their current models to more modern and data-driven best practices.
Successful diversity programs tend to follow this framework:
- Track outcome metrics: These metrics keep track of how many employees come from underrepresented groups, and which positions they are in. These data are critical but represent a lagging indicator, letting leaders know that a problem exists but not how to fix it. Outcome metrics are best used for benchmarking purposes and goal development.
- Track process metrics: Process metrics provide more qualitative commentary than outcome metrics. Examples of process metrics include the percentage of diverse applicants who make it to the interview stage, the percentage of diverse applicants who are hired, pay disparities between similar roles, and average time for promotion.
- Use bias interrupters: Research shows that giving managers criteria and asking for specific evidence to support each objective ranking in the performance review process can significantly mitigate bias.
- Aim for measurable wins: Use outcome and process metrics to identify key areas of focus and initiatives which can move the needle. Just as with other forms of change management, using data-driven feedback and celebrating small wins are essential.
- Share results: Transparency is an area many leaders are doubling down on this year following several years of reduced trust in leadership. Communicate regularly with your employee population about your initiatives and the outcome you’re hoping to receive. Keep expectations reasonable and ensure training and education is available for those who are interested in learning more.
- Stay committed to the process as an organizational imperative. Just as asking for employee feedback will backfire if you don’t act on the results, paying lip service to DEI&B and other ESG initiatives will have a negative impact on your employer brand and culture. Regularly assess your progress and course-correct when needed.
When others revert to the status quo, organizations can achieve a competitive advantage by reaffirming their commitment to their employees and the communities they serve.
To learn more about the 2024 HR Megatrends:
- Read: 2024 Megatrends ebook
- Watch: Webinar Replay
- Listen: The People Purpose Podcast
- Tune in: LinkedIn Live on demand
