Part 1 of this review described 24 categories of human capital management (HCM) trends and forecasts identified from 199 specific predictions made by 29 different HCM thought leaders, consultants and associations. Part 2 of this review compares the 2018 predictions with predictions made in 2016 and 2017 to see what’s the same and what's changed over the past three years.
Enduring HCM trends
Eleven categories consistently emerged across the predictions from 2016, 2017 and 2018, although the language used to describe them may change from one year to the next. The following is an effort to describe these eleven themes using the most generic language possible.
- Iterative mathematical algorithms. Artificial Intelligence, Machine Learning, and Predictive Analytics all fundamentally describe the use of iterative mathematical algorithms to interpret data. The people who make HCM predictions seem to focus heavily on the potential of these sorts of algorithms for transforming HR. Yet we still aren’t seeing extensive use of them in companies.
- Building complex organizations. Complex organizations refer to highly collaborative, constantly shifting, team-based organizations that cannot be easily defined using hierarchical organizational charts. These organizations are staffed by workforces that mix together full-time, part-time, remote, and contract employees drawn from a range of labor markets around the globe. This trend has consistently grown in size and impact over the past 3 years.
- Shifting recognition systems. There has been a steady focus on changing how companies recognize and reward employees. This started out with greater use of non-monetary recognition systems, but is increasingly about moving compensation beyond traditional annual merit and bonuses to more continuous and creative compensation methods.
- Legal & regulatory challenges. As long as governments continue to change laws, managing legal and regulatory challenges will be a consistent theme in HCM. The increasing digitalization of HCM is making data privacy, security, and compliance one of the most consistent trends in HR.
- The digitalization of HR. HR is becoming a technological field, much in the same way that finance, supply chain and marketing have become inextricably linked to technology. The move to cloud solutions is furthering this trend by enabling HR to build, deploy, and manage technology systems with much less reliance on the Information Technology (IT) department.
- Transforming performance management. Performance management is steadily shifting from an annual process focused on evaluation, compensation and compliance, to an ongoing process focused on alignment, engagement and coaching. Annual manager ratings are rapidly being replaced by more accurate and meaningful group and team-based evaluation methods.
- Supporting employee wellbeing. Companies need highly engaged, creative and collaborative employees to compete in a digitalized world characterized by constant change and increasingly competition. But employees cannot be fully engaged, creative and collaborative if they are burned out, tired and stressed. Wellbeing is shifting from a “nice to have” aspect of employee benefits to a central priority at the core of HCM.
- Flexible work design. Historically, companies defined jobs and then hired employees to do them. Now it is becoming common for employees and companies to jointly design jobs, working together to develop objectives, schedules and tasks that balance what the company needs to accomplish, what the employee wants to do, and what the employee can do.
- Inclusive & Diverse Cultures. After decades of talking about diversity, companies are finally changing their cultures and decision making processes to be truly inclusive and supportive of employees from different backgrounds, genders and ethnicities. This change is not just about social values. It is equally driven by a growing shortage of skilled labor and greater intolerance of non-inclusive work environments among the next generation of workers.
- Culture management. The faster the world changes, the more important it is to have enduring values and goals that define the purpose and culture of an organization. A strong and effective organizational culture serves as the “glue” that attracts, retains and enables collaboration between the people who ultimately define what an organization is and what it can achieve. Cultures like this do not happen by accident. They must be actively cultivated.
New concepts in HCM
None of the trends identified in 2018 are totally different from things discussed in previous years. But several reflect a different perspective on existing concepts. Five trends stand out as particularly note-worthy:
- Employee Experience. Companies are focusing greater attention on the impact that the employee experience of work has on engagement, productivity and retention. Employees expect the HCM systems used by companies to be as easy and simple to use as the technology they use for their lives outside of work.
- HCM Methods for Contractors. As contractors become a larger portion of the workforce, companies are rethinking the processes used to hire, develop and manage them. Historically, contract employees were often managed by procurement as though they were a standardized commodity rather than people with highly varying levels of skills, competence and motivation. This is changing as contractors become a significant and critical part of the total workforce.
- Greater Feedback. Companies are expanding the concept of feedback as coaching provided by managers to employees, to feedback as information shared up, down, and across the organization. Emphasis is being placed on enabling employees to effectively and constantly provide upward feedback to company leadership about their views, concerns and perceptions.
- Rethinking Retirement. People are living longer than ever before in history. Many of them want to work well past the traditional retirement age, but not necessarily in the same sorts of jobs. Companies are redesigning work so they can tap into the knowledge, skills and experiences of all people, regardless of their age. The concept of retiring from work is being replaced by the idea of transitioning into new types of roles.
- Managing Job Automation. Companies and employees are starting to accept the reality of digitalization and its inevitable impact on certain kinds of jobs. Rather than resisting or denying the elimination of jobs by technology, companies are beginning to work with employees to anticipate and proactively develop the skills needed to work in a digitalized world.
None of the trends identified in 2016 or 2017 have completely disappeared. In fact, most have just grown and evolved over time. But there is one trend that used to be talked about a lot but gets relatively little attention now. This is the importance of linking HR processes and activities to business needs. It seems like this message has finally been fully heard and adopted by HR professionals. The discussion is no longer about getting HR a “seat at the leadership table”, but about giving HR the tools so they can influence the conversation.
Keeping with our wine bottle index analogy, we see the field of HR maturing much like a fine wine. A good wine develops new flavors over time, but also retains elements that reflect its past. The field of HR is constantly changing, but for the most part changing in a productive manner that anticipates the future while building on the past.