11 HR Trends for 2022: Driving Change and Adding Business Value
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While 2021 was a year of reinventing HR and solidifying its new role, 2022 is going to be all about pushing the boundaries of how HR can add value. In this article, we will review 11 HR trends that are impacting the way we manage Human Resources.
In my regular interactions with our clients and HR professionals from around the world, I’m constantly reminded of two facts:
- Nothing has changed more in the past two years than the way we work, and companies operate.
- No other business department has been under more pressure to keep up with this fast pace of change than Human Resources.
From the initial shift towards the full remote working setting, the numerous lockdowns, and health concerns, to the Great Reopening (only to be swiftly followed by the Great Resignation and talent shortages), the disruption to our economies and to every organization has been continuous rather than episodic.
That’s why it is even more crucial to be aware of these HR trends and understand how to leverage them to drive change and add more business value in 2022 and beyond.
Let’s dive in.
Contents
1. HR as a product
2. Collaboration by design
3. Talent marketplaces & talent allocation
4. Career experiences
5. HR owning business transformation
6. Preparing for multiple futures
7. HR tech for good
8. From DEI to DEI&B
9. The shift from people analytics to data literacy
10. Impactful rewards
11. The skills economy
Discover the HR trends for 2023 here!
1. HR as a product
One of the most notable HR trends we are seeing right now is the shift away from HR focused on projects towards HR focused on products.
This represents a fundamental change to how HR operates. Traditionally, HR functioned with a project mindset. A project has a clear timeline, set deliverables, a predefined set of resources, and is aimed at being run efficiently.
A product, on the other hand, is ongoing. It doesn’t necessarily have an end and aims to provide value, with (additional) resources being allocated as impact increases.
This shift in mindset will not only increase HR’s service delivery quality, it will also enable HR to better build the capabilities that help improve the businesses’ bottom line.
Such a shift, however, will require an upgrade on the side of HR professionals. They will need to better understand their company’s internal customers, their changing habits and preferences. What’s more, they will need to step up their game in delivering a more personalized and unique employee experience.
2. Collaboration by design
The role of the office has fundamentally changed. It no longer holds that excellent work can only happen in the office, let alone inside an office cubicle. In fact, 77 percent of people have seen their productivity rise during the pandemic. Almost one-third of workers have been able to do more work in less time.
The drawback is that remote work has shrunk employees’ networks and made organizations more siloed. Data from ADP suggest that remote workers have fewer ad-hoc conversations with colleagues than those working on-site (60 percent vs. 77 percent respectively). All of this has a negative impact on collaboration and innovation.
That’s why in 2022, HR will need to become a lot more deliberate and involved in helping organizations reshape the way collaboration, co-creation, and innovation happen.
HR can help create conditions that will allow employees (and HR professionals, for that matter) to work on different projects across the organization or even trans-organizationally (see our next trend on talent marketplaces).
Human Resources practitioners can do this through:
- Designing a workplace (both physical and digital) that helps teams work together and connect regardless of where they sit;
- Organizational designs that drive cross-functional teams. These incorporate traditional employees, gig-workers, and contractors to intentionally drive collaboration and diversity of thought;
- Talent programs that allow for rotation (see our trend on career experiences);
- Leveraging digital platforms to connect employees asynchronously so that they can work together anytime, anywhere;
- And so on.
By taking a design approach to collaboration, HR can help build an organization that provides the comforts of working from home while ensuring that collaborative practices keep delivering value and innovation to the organization. This is an HR trend that we’re expecting to see much more of in 2022.
3. Talent marketplaces & talent allocation
One of the biggest lessons learned from the pandemic is the fact that companies can no longer solely rely on buying their talent externally. Instead, the tight labor market has forced them to make better use of the talent they already have.
Cue in our next HR trend which involves better talent allocation through talent marketplaces. In a word, talent marketplaces help connect employees within an organization or a sector to internal career opportunities. These include job openings, but also cross-departmental projects, temporary assignments, and other initiatives.
In some sectors, talent allocation has happened organically.
In the shipbuilding industry, professionals are deployed when a new assignment comes in, only to ‘jump ship’ when the contract is about to complete, and a competitor company gets the next big contract. This way, the employee works on relevant projects and can build their own capabilities. Conversely, the company is able to quickly deploy a temporary but skilled workforce based on the projects available.
What has changed is that HR departments are increasingly conscious of the importance of (planned) skill development. As a consequence, more and more companies are looking into partnering up with their strategic partners to create common talent marketplaces.
Recently, Unilever and Vodacom (a Vodafone subsidiary) initiated a digital marketing exchange program. This initiative not only helps build more diverse capabilities but also provides the opportunity for cross-pollination of ideas and innovation.
But Unilever and Vodacom are not the only ones. In fact, according to a Harvard Business School report, almost two-thirds of businesses now prefer to borrow or rent people with certain skills from other companies, instead of recruiting new full-time staff.
Under this model, organizations bring workers in on an as-needed basis to consult or to work on a specific assignment – one of the HR trends that we will see much more of in 2022.
4. Career experiences
Another key trend that addresses the topic of skill building are career experiences.
Traditional life-long career development programs run by companies like IBM, AT&T, and GE, where talent was identified, developed, and provided the experience needed for career progression within the organization are now mostly outdated.
Workers are now less likely to dedicate their entire careers to one employer. In fact, on average, people now change jobs every four years. Employees between the ages of 18 and 24 change jobs 5.7 times in their career.
To adjust to this reality, organizations are increasingly investing in employees’ career experiences. The goal is for the organization to expand its capabilities while enriching the employee’s career with new learning opportunities.
Companies have defined different experiences: lateral, vertical, rotational, and boomerang. The latter involves someone leaving the organization for a couple of years, only to come back with more experience.
Each of these experiences helps enrich the employee, offers them new learning opportunities, and results in additional capabilities for the organization.
In 2022, the focus will continue to be firmly on employees – and it will be through employees that businesses will be able to also build organizational capabilities. That is because offering and facilitating career moves for individuals is not only beneficial to employees themselves (as they have the opportunity to grow professionally), but it is also good for the business as it will improve the quality of work, delivery, and service.
Organizations that support career moves will enjoy more engaged, experienced, and skilled employees, making themselves more competitive on the whole. That’s why career experiences will become one of the most important HR trends in 2022.
5. HR owning business transformation
When I recently asked a room of ten CHROs to raise their hands if they were in some sort of transformation, nine hands went up. Afterward, the tenth person told me he had missed the question.
When it comes to HR’s role in transformation, HR is often involved late and mostly for topics revolving around people management. This limited involvement, however, is unfortunate because HR has a large set of tools to add tremendous value to these projects.
These tools include skills in organizational design, development, and transformation, expertise in building culture, and the capability to design collaboration.
With transformation becoming increasingly common, there is a role for HR to take ownership of these change processes and measure their impact and progress. Given its expertise, HR should play a key role in leading these change efforts.
This will require a much closer interaction and cooperation with departments across the organization. HR needs to connect the leadership and business needs with employees’ capabilities.
Whether it’s helping create internal talent marketplaces, ensuring better collaboration in the new hybrid era of work, weaving purpose through the organization’s business culture and activities, or driving more data-driven decisions, HR will need to own many of these essential processes going forward because business and reality demand it.
6. Preparing for multiple futures
The future of work, above all else, is flexible and ambiguous. The world has become too unpredictable to only be prepared for one possible future.
Employees increasingly demand more flexibility around where, when, and how they work. On the other hand, companies themselves are having to learn to become more flexible, agile, and resilient. The same goes for HR.
By leveraging data-driven workforce and scenario planning, among other things, companies can create more adaptive strategies that develop as the business environment evolves. This won’t happen unless HR itself and its own strategy become adaptive and agile.
Take the example of a major hotel group within the hospitality sector that predominantly caters to business travelers. As the external environment changed due to COVID-19, the company faced a difficult question: Will the business traveling volumes return after the pandemic, making it possible for the company to stay the course? Or should it instead anticipate that the business won’t recover and also prepare for a different future scenario?
The first scenario might, on balance, appear more likely. However, the mere fact that the second scenario was possible prompted the leadership and HR into action. They developed a corresponding strategic response that ensured the group was ready to deal with this eventuality.
Example interventions included preparing to freeze all vacancies, realign existing workforce’s skills with a new company strategy, and organizational design that relied less on business travelers and the exploration of other lines of business, such as gaming and conference facilities.
In other words, some previously held truths and beliefs about running companies and managing employees become redundant due to external circumstances. For this reason, many companies will have to reinvent themselves – oftentimes on the go and without much warning.
And unless companies are prepared for different scenarios and are agile enough to react swiftly, they will not last long enough to survive the fast-paced reality. That’s why HR needs to keep its finger on the pulse of its organization and the world beyond it and get ready for multiple futures.
Given that the world is increasingly unpredictable, preparing for multiple futures is going to be among the key HR trends in 2022.
7. HR tech for good
The list of companies that (unintentionally) misuse technology in managing their talent or operations grows every year.
Whether it is now the infamous case of Amazon’s biased hiring algorithm or the more recent example of Uber’s facial recognition app feature allegedly discriminating against drivers from racial or racial-ethnic underrepresented groups, we are reminded that whenever we use technology, we have a responsibility to use it for good.
This trend also includes more widely accepted HR technologies. According to a 2021 report by Accenture and the Harvard Business School, there are as many as 27 million so-called hidden workers in the US alone. These workers do not show up on companies’ radars. It is often because of inflexible Applicant Tracking Systems (ATS) that automatically exclude them due to missing credentials (despite having relevant capabilities), skills, or gaps in their employment history.
Many of these stories have created awareness and urgency around this topic. Of all the departments, HR should be the steward of ethical technology. And as more and more HR departments use technology in the hiring workflow (55 percent of HR leaders in the US already use predictive algorithms) or other purposes (such as using AI to assess people’s existing skills), they need to be vigilant and certain that AI and algorithms are delivering their intended goal instead of shooting past it.
To that end, HR professionals will need to become more tech savvy as HR tech is evolving fast. They must develop digital proficiency to be able to understand the basics of algorithms. That will also enable them to ask vendors the right questions when choosing the right technology for their organizations.
Currently, only 41 percent of HR professionals possess these competencies. The rest need upskilling to be able to use technology as a force for good. As there remains a lot of work to be done, tech for good is going to be one of the trends that will dominate the HR world in 2022 and beyond.
8. From DEI to DEI&B
One of the benefits of the hybrid era of work where more and more people work remotely and where geography and physical distance have become less of a factor is easier access for companies to more qualified and diverse talent.
Yes, the field of diversity and inclusion has never evolved more rapidly than in the past two years. We have learned that more traditional ‘diversity and inclusion’ (or D&I) is not enough in a society that is inherently biased. This has helped the field move towards ‘diversity, equity, and inclusion’ (or DEI).
But, being diverse, equitable, and inclusive is not enough to create a work environment that helps people get the best out of themselves and one that will be fit for the new era of work. Even a workplace that intends to be diverse, equitable, and inclusive sometimes fails to retain employees from underrepresented groups because they don’t feel like they belong.
Belonging at work adds to the DEI equation. On the one hand, it is about “longing to be”, while on the other hand, it is about “being for long”, representing an affective and a temporal dimension. Belonging in the workplace brings a shift towards psychological safety and real inclusion.
DEIB represents being a long-term, integral part of the organization. This is what organizations and HR teams are increasingly realizing, and it is, therefore, one for our HR trends list for 2022.
9. The shift from people analytics to data literacy
People analytics has made a tremendous impact on the way we manage people in the last five years. However, while organizations were mostly looking for people analytics expertise only a couple of years ago, this has now shifted.
Increasingly, businesses realize that they need more to effectively implement people analytics in their (HR) organization.
One of the key bottlenecks is general data literacy among the wider HR professionals. For example, HR business partners need a better understanding of data to effectively implement people analytics findings in their organizations.
HR managers need to be able to access dashboards and retrieve relevant data to give better advice. Also, HR analysts will be more effective when supporting their analyses with business and financial data.
That is not to say that HR professionals will need to become experts in data collection – something that is nowadays done through technology and automation – or data analysis – with most companies already having strong data analytics teams sitting outside of HR.
Instead, the added value of HR professionals is in translating analytical outcomes and insights into actions, so data is put to good use. To that end, however, the majority of HR professionals will need to improve their capabilities in data literacy. Currently, only 4 in 10 are able to read, apply, create, and communicate data to influence decision-making.
10. Impactful rewards
The pandemic has fundamentally shifted not only where, when, and how people want to work but also why they want to work and what they value in their jobs.
Before the pandemic, companies’ focus on wellbeing and inclusion was largely seen as an employee perk. All that changed with COVID-19 as people increasingly demand more from their work than the 9 to 5 grind.
The employee value proposition has shifted. Employers need to do more to differentiate and create a compelling employer brand. Moreover, long-term incentives have lost much of their attraction. Instead, there is more emphasis on flexibility, supporting employees, and creating purpose.
Employers also need to decide how they want to offer inclusive benefits, holistic employee wellbeing, and mental health support, which might lead to rethinking and overhauling their rewards policies.
Examples include pay for remote workers (location-based or not, with Google’s recent decision being a notable example), increasing base salaries to attract talent (e.g., Target, Bank of America), and sign-on bonuses.
When it comes to inclusive benefits, they are a crucial part of a company’s broader DEI&B strategy. They specifically focus on the needs of underrepresented groups – something that many organizations have not yet addressed.
Examples of inclusive benefits include:
- Ensuring there are no disparities for race and ethnicity in health care plans.
- Selecting healthcare providers on their culturally and linguistically appropriate care.
- Choosing solutions that address social determinants of health to ensure equitable outcomes.
Depending on how equitable an organization’s benefits are, we distinguish between three levels:
- A reactive organization that does not consider inclusive benefits to be important and does not offer any.
- A proactive organization that recognizes the need for inclusive benefits and is ready to address this need.
- An equitable organization which has introduced inclusive benefits and reviews them on a regular basis.
However, the most significant change to how HR manages rewards will come from the fact that organizations will increasingly remunerate employees based on their skills rather than on their job title or previous experience.
Creating strategic, impactful rewards is thus one of the biggest trends in HR for next year and will continue to be on every CHRO’s mind in 2022.
11. The skills economy
Skills have never been more subject to change. Where the half-life of professional skills used to be 10 to 15 years, IBM has now estimated it to be about five years, with more technical skills at just two and a half years.
In addition, skills more and more determine how people are rewarded. A self-taught data analyst without a university degree may earn more than a graduate in history or law. This has given rise to providers that offer specific upskilling tracks with the promise of a new career in information technology or other fields after completing the track.
In the European Union, citizens can make use of the Europass. This document contains the CV, language passport, diplomas, and certificates that a person obtained, as well as proof of their international work experience. All of this makes it easier to identify specific and relevant skills.
For organizations, it becomes increasingly crucial to accurately map available internal skills. The benefits of mapping skills at an organizational level, however, also extend to employees. The skills one has are more and more tied to remuneration and reskilling and upskilling initiatives. Knowing what skills you have is a prerequisite to succeeding in a competitive economy and labor market.
When it comes to hiring, we see a clear trend of organizations moving towards more data-driven skills testing. The relevance of educational history wanes as people’s work experiences increase.
Identifying relevant skills, how and when they were developed, and how they were put into practice helps companies better allocate people to roles best suited to their capabilities, and it helps employees navigate their careers.
Over to you
This wraps up our list of 11 HR trends for 2022. The field of human resource management is changing faster than ever, and we are having a front-row seat to one of the most fascinating transformations in business.
This is an exciting time to be working in the HR function. With challenges abound, never before has HR played a more critical role in helping organizations remain competitive.
Whether it is through driving better collaboration in the new era of work, facilitating better career experience, creating internal marketplaces to ease the pressure caused by talent shortages, owning business transformation, or delivering inclusive and purpose-driven organizations to provide equitable benefits, HR will be part of the solution to and will remain at the forefront of all important business challenges of next year.
Without a proactive and future-proof HR, companies will stagnate. That’s why HR professionals need to build on their success in 2021 and push the boundaries of the possible in 2022 to bring even more added value to their businesses.
You can read about 2021 HR trends here.
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