The years 2015-2016 saw a number of dramatic changes reshaping the workplace as we know it. As HR takes on a more strategic role in the new organization, it’s necessary to look back and take stock so that we can begin to root out obsolete practices and redesign them to fit this new reality. We’ve come up with a list of the five most important trends that will impact HR in 2017 to help you get started.
1. Millennials become the “older” generation in the workplace
While in the past few years all the buzz has surrounded the wants and needs of the millennial workforce, you may feel surprised to find out that it’s already time to welcome in the next generation. In 2017 the oldest members of Generation Z will be turning 21-23 (there is some debate whether the new generation begins in 1994 or 1996). This means they will begin joining the workforce as interns and even entry level employees. This will present new challenges within the workplace as we begin to figure out what it is that this new generation will bring and whether or not millennials are ready to lead them.
2. An even stronger focus on culture & ethics
A string of big company scandals in recent years, including Zenefits, Wells Fargo, ANZ Bank, Mitsubishi, Volkswagon and Toshiba, have all been attributed to toxic cultures that encouraged unethical business practices. The majority being linked to impossibly high standards set by executives and upper management, leading employees to cut corners to reach them.
A combined Columbia and Duke University study, found that a focus on figures over people can encourage unethical behavior. Shiva Rajgopal of Columbia University explained, “Our research provides systematic evidence – perhaps for the first time – that effective cultures are less likely to be associated with short-termism, unethical behavior or earnings management to pad quarterly earnings.”
In the last few years, culture has been in the top or top 3 positions of importance for HR and executives. Perhaps, what these scandals have revealed is that creating a strong ethical work culture cannot be done with a surface level view of the organization alone, but with deeper company-wide input. As a result, finding ways of collecting honest employee feedback about business practices will be an important challenge for HR in 2017.
3. The annual review honeymoon is over
In 2015 and 2016 a number of big name companies announced their decision to ditch the annual performance review (for example Deloitte, Adobe, Accenture, GE and more recently SAP). This led many others to follow suit making the last few years all about breaking with the old. However, about a year on we have seen that not every company has reached the promised success this switch was supposed to provide. In fact, some have actually experienced a drop in performance and engagement.
What’s being realized now is that it’s not simply about getting rid of outdated systems, but designing a strong alternative and leading a thorough and inclusive transition process. This trend will see HR spend more time on data collection and change management in order to successfully redesign and transition their companies towards a modern performance management system.
4. Decoupling performance from pay
One primary issue these companies have come across is what to do about pay. The departure from the traditional annual performance review has left this question up in the air. Should those which have switched to continuous and/or peer-based systems continue to make compensation decisions in the same way? How can it be calculated in companies that have taken the extra step of ditching ratings?
It is now widely believed that linking performance management to compensation will actually hinder the intended purpose of ditching the annual review: to create a more learning based approach with increased feedback conversations. There are five trends that companies are now following to decouple pay from performance management.
5. Re-designing traditional practices to fit the modern workforce
We are seeing a break from traditional teams, types of employees and even job roles. A study by Fieldglass revealed that in 2015 the average business workforce consisted of 54% traditional full-time employees, 20% contingent workers (such as freelancers, interns and contractors) and 26% that work in a grey area in between (such as remote and part-time workers). In 2017 they predicted that the number of “non-traditional” workers would grow to 25% contingent, 34% gray area and 41% traditional workers. With over half of the workforce working in non-traditional positions, HR will have to focus more on developing innovative ways to engage and integrate this new workforce into their company’s culture.
This, in turn, is also contributing to the increasing reorganization of traditional static teams into structures which are cross-functional, ad hoc and self-steering. In 2016, Deloitte found the number one most important issue facing survey respondents was the need to redesign their organization to fit this new reality, with 80% stating they are currently restructuring or have recently completed the process.
Similarly, traditional job descriptions are going out the window. What these new types of teams are doing is utilizing the full skill set of each employee, rather than limiting them to a narrow range of tasks and skills. This means that an employee with a passion for PR and a talent for graphic design will be able to utilize both skills on a project needs basis.
For HR, this new reorganization means they will have to shift performance management to a more fluid system that meets the needs of the new workforce. Whether or not employees have a manager, multiple or none they need to get feedback to continue learning and improving. In the new workplace, peer feedback will, therefore, be more important than ever. Development information cannot be siloed within the boundaries of traditional teams. Employees must be free to ask for feedback from whomever and whenever they want, resulting in a shift towards self-steering learning & development. HR will have to facilitate this process by removing barriers and providing employees with the training and tools they need.