The Future Of HR Is Being Forged Now

Navigating demands for flexibility and purpose to attract and retain talent

Even in the face of cooling wage pressure and rising unemployment, the talent shortage rages on. Human resources (HR) executives are struggling with the dual challenges of a job seeker’s market and structural labor problems that promise to last for years if not decades.

Among other factors, the Great Reconsideration is driving historical highs in the ratio of job openings to job seekers. Although there has been some improvement since last year when there were two open jobs for every worker, the country is still quite a distance from the one-to-one ratio needed to align labor demand with supply. At the same time, there is compelling evidence that the labor pool is shrinking. (See sidebar)

Workers today are demanding remote working opportunities; learning paths and career growth; competitive compensation and benefits; and, perhaps above all, a sense of meaning and purpose in their work.

If their employers fall short, many – particularly in the younger demographic – are looking elsewhere.

HR functions have to stay one step ahead of these challenges to attract, retain, and provide compelling reasons to consider their organizations. According to our recent Future of HR survey of 300 Chief Human Resources Officers (CHROs), 61 percent say they need to remain flexible with their Employee Value Propositions (EVPs) to the external labor market

In addition to the EVP, our survey uncovered six key themes on which CHROs expect to focus over the next two years (click here to read the full survey report). In this article, we provide insights on three of them -- building talent marketplaces to support agile growth, integrating digital technologies to enhance the HR function and the employee experience, and making the organization’s purpose real.

The Talent Marketplace: A Fresh Approach to Workforce Shaping

HR professionals are realizing that the historical paradigm of matching people to jobs is giving way to models centered on aligning skills with tasks. Many are experimenting with talent marketplaces, which involve comprehensive datasets of the organization’s people and their capabilities, linked to an understanding of where and when those skills are needed across the organization. The skills-first approach underpinning this model is being embraced by 46 percent of CHRO respondents to our survey.

One example of a company that has been an early adopter of the talent-marketplace model is biotechnology company Genentech. Genentech is one of the companies with an HR leader who we view as a “pathfinder” who takes innovative approaches to emerging challenges. The company’s need for agility in the current economy led them to begin fluidly assigning people with the right skills to projects – which they call “gigs”.
 

In tandem with the talent-marketplace model, future-oriented HR practices are elevating learning and development to the same level as policies and compensation. Remote and hybrid work models have largely erased ad-hoc learning and, to some degree, human-to-human collaboration. This has increased the need for CHROs to advocate for targeted career development activities that will ultimately enrich the talent marketplace, as employees pursue career paths even within a more transactional model.

The Digital HR Function: A Means to a Better Employee Experience

Given the competitive labor market, HR professionals recognize that legacy technology solutions and processes can be off-putting to today’s employees and prospects. Therefore, they prioritize creating consumer-grade, seamless working environments that are tailored to employees and driven by data and the latest digital technologies. Thirty-nine percent of CHRO respondents to our survey said digitalization was a top area of focus for the next three years.

Over the past two years, many technology investments were made reactively to facilitate remote work. However, many of these solutions had a relatively small impact on productivity and employee experience. Companies are now shifting to a more strategic mode and intentionally building upon this foundation to get more value from advanced technologies. Digitally driven workplaces allow for automation of administrative tasks; seamless integration of information across platforms; predictive staffing analytics; and people analytics to better understand the employee experience.

The good news is that 39 percent of CHRO respondents to our survey said digitalization was a top area of focus for the next three years. Although this commitment is encouraging, it is worth noting that only 10 percent said they can deliver on this imperative today.  Clearly, there is work to be done.

The Purpose-driven Organization: A Key Commitment for Attracting Talent

Forward-thinking HR leaders are committed to organizational purpose. They engage their employees in environmental, social, and governance (ESG) programs, including net-zero strategies and robust diversity equity and inclusion (DEI) programs.  

Although 60 percent of the respondents to our recent CEO Outlook Survey say they are considering pulling back on ESG and DEI commitments during the economic downturn, faltering on these pledges could exacerbate the talent shortage. Younger workers view sustainable DEI and ESG programs as non-negotiable aspects of the employee value proposition (EVP).

In this regard, HR leaders are functioning as marketers – ensuring that the employment brand remains strong and advertising the “why join this firm” value proposition. Encouragingly, 57 percent of CHRO respondents to our survey said ESG and DEI would remain top areas of focus for the next three years.  

Electric truck company Tevva imbues its purpose in the fabric of the organization. The company hopes to expand its net-zero aspirations beyond its own trucks by working with suppliers and customers on more environmentally friendly ways to package and transport their materials. The company’s HR function, led by another pathfinder, is at the forefront of these efforts, ensuring that job candidates align with the company’s mission and holding managers to a high standard in terms of evangelizing the purpose and making decisions that align with the company’s values.

Conclusion

In a time when staffing shortages and the Great Reconsideration are making it more difficult than ever to attract, recruit, and retain employees, HR leaders have a critical role to play in ensuring the right talent is in place to bring their companies into the future. They can encourage senior leaders to support new models of workforce shaping like the talent marketplace. They can guide their organizations in the integration of digital technologies that enhance HR effectiveness and employee experience. And they can play a key role in ensuring that the company’s purpose is “real” and meaningful to employees. These and other progressive initiatives will help HR professionals guide their organizations from flux to a state of genuine flow.

Author Bio

John Doel is the Human Capital Advisory Principal at KPMG LLP.