The Year of the Employee: Human Resources, Leadership and HR Technology Predictions for 2014

In 2014 the world of Talent, Leadership and HR will undergo dramatic change.   (Download our 66 page Predictions Report here.)

The economy will accelerate its growth.  Global growth will create a new level of competition for people. People will look to change jobs and seek better opportunities. HR organizations will shift their focus from cost reduction to retention and engagement. Technology will continue to make the world a smaller place, forcing companies to improve their employment brand in every possible way. Data will become a new currency. Leadership will continue to be in short supply. And HR organizations will have to innovate to stay ahead.

In this blog I summarize our ten predictions for 2014, detailed in the report linked here. This is our tenth year publishing these predictions, and I hope you find them educational and valuable as you plan your strategies for the year ahead.  And to keep you current, look at my most recent presentation on 21st Century Talent Management for guidance.

2014: Empowering People and Focus on the Employee

Attraction, Retention, and Engagement Will Really Matter

For the first time in nearly a decade, this year you will find the issues of retention, engagement, and “attraction of talent” to be top on your priority list. We are just completing a major global study (Deloitte’s Human Capital Trends 2014, coming soon) and found that the top two people issues facing organizations in 2014 are leadership and retention. These are the problems we face in a dynamic, growing global economy.

“The war for talent is over, and the talent won.”

This year, for the first time in more than five years, employees are in charge. Companies have reduced costs, restructured, rationalized spending, and pushed people to work harder than ever. More than 60% of organizations tell us one of their top is dealing with “the overwhelmed employee.”

This year the power will shift: high-performing employees will start to exert control. Top people with key skills (engineering, math, life sciences, energy) will be in short supply. Thanks to the US healthcare laws, people will feel more free to change jobs. And companies who can’t engage and attract Millenials will lose out.

While there will still be high levels of unemployment in places, generally people have changed their perspectives. They want work which is meaningful, rewarding, and enjoyable. Top performers will seek out career growth. Mid-level staff will strive for leadership development. And you, as an HR organization, will have to compete, adapt, and innovate to stay ahead.

Our Top Ten Predictions for 2014

1. Talent, skills, and capability needs become global.

In 2014 many skills will remain scarce.  Software engineering, energy and life sciences, mathematics and analytics, IT, and other technical skills are in short supply.  And unlike prior years, this problem is no longer one of “hiring top people” or “recruiting better than your competition.” The solution is to think about building a global supply chain for skills.

Much has been written about the freelance economy, tours of duty, and the trend toward contract work.  While these are definite trends, the opposite is happening too – big companies find it takes 3-5 years for an employee to become fully productive.  An oil company I recently met with told me it takes them 5-7 years for a senior geo-physicist to become fully familiar with all their proprietary processes, procedures, and systems.  What this means is that successful companies must be in the capability building business all the time.

Sourcing key skills is now key as well – people in Eastern Europe, Asia, and other countries often have a more rigorous education and are key to global success.

2. Integrated capability Development Replaces Training.  Enter the MOOCs.

The “training department” will be renamed “capability development.” Companies will find skills short and they will have to build a supply chain for talent. Partner with universities, establish apprentice programs, create developmental assignments, and focus on continuous learning. Companies that focus on continuous learning in 2014 will attract the best and build for the future.

The MOOC explosion, which many of us see as a reinvention of online learning from the late 1990s, is taking hold. Millions of young (and older) people are now taking courses online – and while completion rates are still low and accreditation is not available yet, this is a huge shift in how people learn. The days of going to a lecture for hours are going away – replaced with “flipped learning” where you watch the lecture before you come to class.

This simple shift in blended learning will push corporate training the same direction. We saw companies doing this early in the 2000s as e-learning started to grow, and it’s time to go back to managing online content as a core of organizational learning. Why should it be easier to find content on Youtube than your corporate portal? There’s no excuse for this any more.

3. Redesign of Performance Management Accelerates.

The old-fashioned performance review is slowly going out the window. In 2014 companies will aggressively redesign their appraisal and evaluation programs to focus on coaching, development, continuous goal alignment, and recognition. The days of “stacked ranking” are slowly going away in today’s talent-constrained workplace, to be replaced by a focus on engaging people and helping them perform at extraordinary levels.

I had a recent dinner with a senior head of research at a large financial institution. He told me that the worst part of his job is the need to stack rank his 150 global analysts against each other. They’re all superstars – but every year 10% of them feel like failures. This process has to go.

4. Redefine engagement: Focus on Passion and the Holistic Work Environment.

Engagement and retention will become a top priority. But rather than focus on engagement surveys, you will expand your horizons to look at engagement from a holistic standpoint. Your work environment, management practices, benefits and recognition programs, career development, and corporate mission all contribute to engagement. As you seek to attract and grow Millenials, you will re-imagine employee engagement in a new, integrated way. And rather than survey annually, new tools will let you monitor engagement continuously.

As one HR manager recently put it,

Our employees are no longer looking for a career, they’re looking for an experience.

Your job in 2014 is to make sure that experience is rewarding, exciting, and empowering.

And by the way, one of the big things which has changed is the need to look at engagement holistically. We just completed a global talent trends research in Deloitte and found that more than 60% of companies are urgently concerned about retention but less than 1/3 have a retention program or plans in place.

Every part of your company plays a role: management, rewards, incentives, feedback, career opportunities, workplace flexibility, the working environment, diversity and inclusion, and development opportunities. And remember that autonomy, freedom, and choice are important as well – fewer and fewer people want jobs where they are told what to do. In a recent Deloitte survey more than 70% of Millenials want to either run their own companies or work for small businesses, primarily because they want more choice.

5. Take Talent Mobility and Career Development Seriously.

Talent mobility is with us for good:  thanks to tools like LinkedIn, Twitter, and Facebook people can find new jobs in a heartbeat. This means you, as an employer, need to provide internal talent mobility and career growth in your own organization. 2014 is the time to build a “facilitated talent mobility” strategy which includes open access to internal positions, employee assessment tools, interview guides, and leadership values that focus on internal development.

Are your managers paid to “consume talent” or “produce talent?” Remember the best source of skills is within your own organization – if you cannot make internal mobility easy, good people will go elsewhere.

6. Redesign and Reskill the HR Function.

Surprise: in our global Human Capital Trends research the need to “Reskill HR” was rated one of the top five challenges in every geography around the world. Why?  Because HR itself is changing dramatically and we need to continuously skill our own teams to maintain our relevance and value.

Our new High-Impact HR research, scheduled for launch in early 2014, shows statistically that high-performing companies invest in HR skills development, external intelligence, and specialization. In 2014 if you aren’t reinvesting in HR, you’ll likely fall behind.

7. Reinvent and Expand Focus on Talent Acquisition.

As the economy improves you will need to more aggressively and intelligently source and recruit. The talent acquisition market is the fastest-changing part of HR: new social recruiting, talent networks, BigData, assessment science, and recruiting platforms are being launched every month.

In 2014 organizations will need to integrate their talent acquisition teams, develop a global strategy, and expand their use of analytics, BigData, and social networks. Your employment brand now becomes more strategic than ever – so partner with your VP of Marketing if you haven’t already.  Today your ability to recruit is directly dependent on your engagement and retention strategy – what your employees experience is what is communicated in the outside world.

8. Continued Explosive Growth in HR Technology and Content Markets.

The HR technology and content markets will expand again in 2014. ERP players (Oracle, SAP, Workday, ADP) are all delivering integrated solutions now.  IBM, CornerstoneOnDemand, PeopleFluent, SumTotal, and dozens of other fast-growing talent management companies are now offering end-to-end solutions. And most now offer integrated analytics solutions as well.

Mobile apps, MOOCs, expanded use of Twitter, and an explosion in the use of video has created a need to continuously invest in HR technology. In 2014 the theme is “simplify” – understand technology but keep it simple. Employees are already overwhelmed and we need to make these tools and content easy to use. The word for 2014 is “adoption” – make technology easy to use and it will deliver great value.

9. Talent Analytics Comes to Front of the Stage.

Talent Analytics is red hot. More than 60% of you are increasing investment in this area and company after company is uncovering new secrets to workforce performance each day. In 2014 you should build a talent analytics center of excellence and invest in the infrastructure, data quality, and integration tools you need. This market is finally here, and companies that excel in talent analytics have improved their recruiting by 2X, leadership pipeline by 3X, and financial performance as well.

10. Innovation Comes to HR. The New Bold, CHRO.

One of the top three challenges companies now face is “reskilling their HR team.” This points to the issue that HR itself, as a business function, is undergoing radical change. Today’s HR organization is no longer judged by its administrative efficiency – it is judged by its ability to acquire, develop, retain, and help manage talent. And more and more HR is being asked to become “Data-Driven” – understand how to best manage people based on real data, not just judgement or good ideas.

As a result of these changes, our research shows a new model for HR emerging – one we call High-Impact HR. In this new world HR professionals are highly trained specialists, they act as consultants, and they operate in “networks of expertise” not just “centers of expertise.” And driving this new world is a strong-willed, business-driven CHRO. In 2014 organizations should focus on innovation, new ideas, and leveraging technology to drive value in HR. This demands an integrated team, a focus on skills and capabilities within HR, and strong HR leadership.

Bottom line:

2014 looks to be an exciting and critically important year for Human Resources. The economy will grow, employees will be in charge, and HR’s role in business success will be more important than ever.

(Click here to download the entire 66 page Bersin 2014 Predictions Report.)

You can follow me to stay up to date on trends, research, and news in all areas of HR, leadership, and talent management on twitter at @josh_bersin or on LinkedIn at http://www.linkedin.com/in/bersin.

For more information on Bersin by Deloitte, please visit http://www.bersin.com .
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