For Human Resources executives, the new year arrives amid a slew of contradicting trends. Revenue streams are flowing steadily for many businesses, yet their company stock performances have underwhelmed. Despite perceptions of a weakened economy, firms are struggling to fill vacant job openings amid a low unemployment rate.
Well-managed remote workplaces increase productivity, but executives are pushing employees back into the office en masse to address teamwork and collaboration issues.
Some of these phenomena are easier to explain than others. All have important implications for HR executives, and deserve attention as the top trends to watch as the calendar turns to 2024.
1. Talent Supply Issues Will Continue …
While some businesses and industries continue to sputter, most CEOs and CHROs continue to list talent shortages as one of their most critical business challenges.
The problem is a simple matter of math.
The latest data from the U.S. Chamber of Commerce indicates 9.5 million job openings, but only 6.5 million unemployed workers. That labor shortage gap might take more than a year to correct, placing it among the top challenges facing hiring companies in 2024.
A recent Gartner study revealed 36 percent of CEOs rate talent and workforce shortages as a top-5 concern, behind only “growth” as a key imperative. Nearly three-quarters of HR leaders stated talent gaps as the biggest challenge they are tackling for their organization, according to a survey conducted by Boston Consulting Group.
The organizations that will emerge successful will be more disciplined at building needed skills from within – upskilling – and by more effective long-term workforce planning, looking at emerging required skills and capabilities, and developing a purposeful plan around how to buy, build or borrow the talent they need.
Organizations can also get more creative to find alternative sources of talent. Qualified retirees might be willing to come back part-time.
Adjunct hires ― employees who work 25 to 50 percent of the time, to fill a specific need or timeframe ― might be more readily (and cheaply) available than full-time employees.
2. … But The Push For Efficiency Will Remain
Most organizations are under significant pressure to manage or improve their margins. This perpetual concern has been heightened by a series of factors: a depressed stock market, rising interest rates requiring higher returns, rising prices on supplies, and increasing costs to recruit and retain talent.
As a result, organizations will continue to look internally for ways to cut costs, whether that be in technology, people or processes. From a talent perspective, this means companies will increasingly differentiate their approaches to critical talent segments, continue to invest in teams driving the most product innovation or revenue, and continue to trim or find more efficiencies with teams that are more administrative or supportive in nature.
3. Efficiency Imperatives Will Require Companies To Advance Their AI “Battle Plan”
Around this time a year ago, the rapid advancement of user-friendly AI tools had some HR professionals salivating at the technology’s potential, and left others feeling their job might be in danger. What have we learned since?
Even outside the tech sector, many companies are starting to work generative AI tools into their internal systems. Some have trained ChatGPT on their own intranet, allowing it to learn the language of their company’s internal systems in order to automate routine tasks.
Applied correctly, these kinds of AI tools will increase margins, empower workers to focus on what matters, and allow for more innovation.
Organizations should be aggressive looking into their “AI Battle Plan,” evaluating which areas will best benefit from AI, how to outcompete utilizing AI, and investing in skill-building for employees to develop, train, and utilize these AI tools to meet their ongoing challenges.
4. Gaps Between Labor And Management Will Continue To Grow
Unionization, labor stoppages, and other factors point to a disconnect between executives and laborers. Workers are increasingly feeling “squeezed” for efficiency amid rising costs and demands, and will continue to ask for better pay and better working conditions in spite of the risks.
We are already seeing industries like healthcare, media, and other businesses where the recent private equity investment spree created a backlash. Increasingly, employees feel their managers or ownership are disconnected from the reality of their day-to-day jobs, driven solely by profits over the mission or purpose employees bought into when they began their careers.
The best organizations will be recognizing this gap, and working hard with employees and first-level managers to understand their needs and proactively address them — particularly for critical talent segments.
5. Organizations Will Rethink Equity Incentive Awards
During the pandemic and during times of low interest rates, an increasing reliance on equity compensation and on free-flowing incentives created significant opportunities for companies to deliver compensation efficiently.
Now that stock market returns are down and a recovery is likely slow, the same upside opportunities don’t exist. Companies as a result will continue to look into “full value share” programs like restricted stock or restricted stock units, and will be evaluating how to insulate their annual and long-term incentives from market volatility.
The organizations at the forefront will be proactively analyzing the trade-offs between salaries, bonuses and equity to determine the right mix that maximizes effectiveness (talent attraction/retention) and efficiency from a cost and tax perspective.
Jesse Meschuk is a Senior Advisor with Exequity and a career and HR expert, with more than 20 years of consulting and human resources experience. Jesse specializes in helping companies define and execute their human capital strategy across the entire employee value proposition in a wide variety of industries including technology, entertainment, gaming, retail, hospitality, manufacturing, and sports. His work has spanned across the Americas, Europe and Asia.