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2018 HCM Trends & Forecasts, Part 2

By Steven T. Hunt, Ph.D. & Lauren Bidwell

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.

Fading ideas

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. 

2018 Predictions

2017 Predictions

2016 Predictions

Using AI/Machine Learning to Improve HCM processes

Artificial Intelligence, Machine Learning and Predictive Analytics

Data Driven Decision Making

Greater Staffing Complexity

Transforming Organizational Structure

Growing Skill Shortage
Developing Talent Pools
Recruiting Marketing
Virtual Organizations

Increasing HR Analytics


Workforce Analytics

Improving the Employee Experience


Technology Enabled HCM/Easier HR

Transforming Compensation & Rewards

Employee Recognition

Measuring & Rewarding Performance

Growing Legal Challenges

Employment Legislation 

HR Legislation

HR Driven Technology Innovation

Digitalization of Human Resource Functions
Digitalization of Human Resource Expertise

HCM Technology Transformation

Performance Management Evolution

Performance Management Transformation

Continuous Coaching

Increased Focus on Wellbeing

Workforce Health and Wellbeing

Providing Effective Healthcare

Developing HCM methods for Contractors

Better tools for feedback    

More Flexible Work Arrangement

Fluid work arrangements

Flexible Work Models
Fluid Organizations

Tools for Teams


Improving Collaboration

Getting Serious about Diversity & Inclusion

Workforce Inclusion

Embracing Diversity

Rethinking Retirement


Workforce Aging

More Accessible Learning Content


Creating Employee Development Culture

Manager Development

Managing Job Automation


Continued to Shiftto the Cloud


Creating Engaging Cultures

Culture & Engagement

Employee Retention
Hiring for Potential & Culture

Managing Cyber Security Risks


Managing Employer Brand

Organizational Transparency


Business Oriented Human Resources

About the Author

Steven T. Hunt, Ph.D., SPHR
Senior Vice President, Human Capital Management Research

Dr. Steven Hunt's role at SAP SuccessFactors is focused on guiding the development and implementation of technology-enabled solutions to maximize workforce engagement and productivity.

Lauren Bidwell, Ph.D.
Research Scientist, Human Capital Management Research

Dr. Lauren Bidwell is an Experimental Psychologist with a specialization in Decision Making research. Her role involves driving innovative thinking and best practices around talent management and the use of technology to support effective talent decisions. Lauren has engaged with dozens of customer organizations around the world and is an active author and presenter.

About SAP HR Research

Our research team advances the art and science of Human Capital Management by studying the relationship between technology, workforce psychology, and business performance. Our researchers and psychologists uncover trends to keep you on the cutting-edge of technology and thought leadership – and help shape the design of SAP SuccessFactors HCM software.

About SAP SuccessFactors

SAP SuccessFactors Human Experience Management (HXM) Suite helps you completely reinvent the entire employee experience. You can shift from traditional HR transactions to engaging, end-to-end experiences, using intelligent technology to make each interaction simpler and more meaningful. And by linking employee feedback to operational data, you’ll understand what’s happening and why, so you can continuously deliver unexpectedly exceptional experiences that keep your business growing.

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