The Future of Personalized HR Services and Experiences 2023-24

Provide personalized HR services to enhance employee retention and engagement

Work-related needs and desires vary widely from employee to employee due to several factors such as personality, age, ethnicity, and socioeconomic background. What retains one employee may not have the same effect on another. On the other hand, organizations do not want to offer so many choices that both the employer and employees become overwhelmed.

So, what should organizations do to satisfy employees and achieve strategic goals? 

In the pursuit of meeting diverse employee needs, organizations must delicately balance personalized HR services with practical options. To better understand personalized HR services and experiences in organizations, the HR Research Institute conducted an exclusive study in collaboration with BambooHR titled, The Future of Personalized HR Services and Experiences 2023-24

1. While there’s still much room for growth, personalized HR services are increasing in importance.
2. A variety of challenges hinder personalization.
3. Employee retention and engagement are the top goals when implementing and designing a personalized HR experience.
4. Organizations take advantage of a variety of approaches to personalize HR services better.
5. Some HR functions lend themselves better to personalization than others.

The Importance of HR Personalization Is Rising

The majority (71%) of respondents say their organization offers personalized HR services and experiences to only a moderate extent or less, with 9% saying they do not offer personalization at all. In contrast, under a third (30%) do this to a high or very high extent. We’d like to note, this is an improvement from last year when only 21% offered personalized services to the same extent.

For many organizations vying for talent in this tight labor market, personalized HR services have gone from being ‘nice-to-have’ to ‘need-to-have.’ So, it’s no surprise that the majority say the importance of personalized HR services and experiences increased over the past two years (62%). Moreover, HR professionals tend to believe this importance will continue to rise over the near future. 

Retention Drives the Need for Personalized HR Services

When it comes to designing and implementing personalized services, two goals that were selected by more than half of the respondents are:
 

• increasing employee retention (63%)
• boosting engagement levels (59%)

Employee retention is at the top of the mind for many organizations. This is no surprise as younger generations are making up an increasing percentage of the workforce. And these workers are less likely to stay in a job as long as previous generations. A 2022 LinkedIn study found that 25% of Gen Zers and 23% of millennials said they hoped or planned to leave their current employers within six months.

While still among the top five responses, fewer than half say they are doing this to enhance employee well-being (46%), accommodate individual needs/desires/experiences (46%), or maximize individuals' full potential/capabilities (44%). Meaning, personalization is more focused on the organization’s goals than the employee's experience.

Personalization Works Well in Multiple HR Functions

Not every HR function can be personalized with ease, but which ones are best suited for personalization? Respondents say learning and development (76%) and wellness, health, and well-being (68%) are the two functions that best lend themselves to personalization. While L&D may be the easiest to personalize, it doesn’t necessarily mean that organizations have the capabilities to do it.

A majority of respondents also say employee engagement (57%), rewards and recognition (58%), and benefits (58%) best lend themselves to personalization. Work arrangements (60%) were the third most widely cited HR area.  
Lateral moves as well as customized career paths and development plans are the most common approaches to personalizing career pathing. Seventy-three percent say their organizations offer lateral moves. Lateral options are a great way to retain employees. According to a study done by MIT Sloan Management Review, lateral career opportunities are 12 times more predictive of employee retention than promotions. Falling second to lateral moves, 61% cite customized career paths and development plans.  

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