UKG's 2021 HR MegaTrends: 3 critical focus areas for the new year

Each year, my colleagues and I reflect on the previous year’s developments and imagine how these forces will shape organizations and the industry for years to come. While none of us had predicted a global pandemic transforming the workforce and triggering an overnight recession, our 2020 MegaTrends emphasized the need for accessible, flexible, and adaptable workforces — a feat that, arguably, many organizations pulled off remarkably well (under extraordinary circumstances) last year. 

From COVID-19 to civil unrest and natural disasters, this past year proved how precarious (and precious) our health, safety, economy, and democracy are. Yet despite its challenges, 2020 also provided business leaders the rare opportunity to reinvent what wasn’t working before. Executive buy-in is at an all-time high as CHROs continue to lead the pandemic response, support inclusive and responsive cultures, and fuel both corporate responsibility and overall growth strategies.

After months of research and collaboration, we’ve identified three major trends affecting organizations on a global scale. By digesting these trends and implementing strategic, meaningful change, companies have the opportunity to create empathetic, industry-leading workplaces that protect their people and the bottom line.

1. People before profits: Businesses will adopt a greater purpose

Corporate social responsibility (CSR) has gained momentum as customers, employees, and investors pressure companies to consider their overarching impact on society. A 2019 Deloitte survey revealed that more than half of business leaders surveyed were already devoting between one and five percent of their revenues to programs with a purpose, and two-thirds planned to increase their budgets for these programs in 2020 and 2021.

There are many contributing factors here, including evolving social norms and the pervasive threat of global challenges like climate change, rampant inequality, and sweeping technological advancement. Confronting these increasingly pressing problems demands a shift from a short-term focus on shareholder profits to a long-term view for all stakeholders. These initiatives are also good for business — good corporate citizenship improves everything from marketing and sales to employer brand and retention.

Last year, economic, social, and political upheaval thrust organizations into the driver’s seat of social change. Walkouts and leaked employee letters at major corporations proved that many employees feel comfortable — if not obligated — to publicly support or criticize their employers’ actions when it comes to controversial social issues. And 76 percent of customers would refuse to buy products from organizations that went against their core values.

Conscious capitalism and CSR are no longer optional.

Looking forward, organizations will need to embed social-impact agendas into their corporate identity and mission. They should also evolve the scope of their initiatives; for example, rather than organizing single-day volunteer events to build houses or serve meals, leaders should be investing in long-term programs designed to address underlying systemic issues like climate change, generational poverty, and hunger.

Unsure where to start? Historically, Americans expect employers to prioritize taking good care of their people. Even the most generous donations won’t matter if employees are saddled with miserable working conditions or paid poorly. Business continuity efforts that help leaders build safe, healthy, connected, and resilient workforces — despite environment and/or social crises — have become a critical aspect of CSR, as has investing in employees’ long-term success through training and re-skilling opportunities. Empowering employees to make a difference in their own communities through volunteer opportunities or charitable giving campaigns also has been shown to have a positive impact on corporate culture.

2. Life-work synergy: Work and the workplace will be more centered around employees' lives

When many organizations announced work-from-home orders in March, a common hope was that, without a commute or school drop-offs to contend with, attaining the elusive “work-life balance” would be easier. But as months passed amid an unsteady economic climate, there seemed to be an almost counterintuitive impact on those fortunate enough to retain their jobs and work from the safety of their homes.

Work became omnipresent as physical separation between work and life was lost. Kitchen tables and bedrooms became offices; kids became coworkers; Zoom became the hangout of choice for work, family, and friends.

These unusual circumstances highlighted the fallacy of seeking an impossible equilibrium of “work-life balance.” In the age of email-enabled smart phones, work and life are rarely separate domains, even under “normal” circumstances.

Instead, organizations should support work-life negotiation, where employees have the freedom to intentionally and flexibly negotiate the various roles they play in their lives. Blanket one-size-fits-all policies are difficult to enforce in the new world of work; each employee faces unique circumstances and needs, such as the 72 percent of workers with children under the age of 18 who are anxious about performing with limited or unreliable access to childcare.

Of course, this flexibility requires a high level of trust; managers must trust their people to manage their time efficiently, and employees must trust their employers to reward production and impact more than butt-in-seat (or green-light-on-Slack) “facetime.” But when successful, the result is life-work synergy, and it’s beautiful.

Supporting the people experience with a mix of value currencies like compensation, benefits, recognition, and growth is a necessary foundational step. For many organizations, this year’s unforeseen challenges may have reverted the status quo back to survival mode, where creating a supportive yet transactional  employee/employer relationship is the best-case scenario. Your people can’t thrive if they can’t be sure whether or not they’ll be paid fairly or on time — these needs come first.

But the best companies, and those who strive to engage and retain their people long-term, must go beyond the basics to truly welcome and celebrate people as they are and take a vested interest in supporting them in all areas of their lives. Giving employees the power to flexibly manage their own schedules, actively play a role in their own growth and development, and take on “gig” assignments to increase their skills and visibility are some ways organizations can set the stage for mutually beneficial relationships based on trust, purpose, and longevity.

3. The rebirth of HR: HR will begin reinventing itself to lead these efforts

Just as the 2008 financial crisis highlighted the importance of CFOs, 2020 was the year many CEOs fully appreciated HR’s impact and innovative potential. Merging the powerful skills of process champions and people scientists, HR leaders are finally widely regarded as both strategic and tactical people advocates driving tangible business results.

Yet, to fully realize its potential, HR must change its nature and language. Rather than treating people like “capital” or a “resource” — something to be managed, to extract value from, a commodity — today’s organizations and HR leaders must put their people at the center of their purpose. A panel of 600 senior executives recently estimated that 72 percent of their company’s value was directly attributed to their people. It’s time to think differently about employees, about their relationships and impact on organizations, and ensure we’re creating the right conditions that allow them to thrive. 

Consider, for example, a 2020 McKinsey & Company study designed to evaluate employee well-being and work effectiveness during COVID-19. Ten employee experience elements accounted for approximately 60 percent of the differences in outcomes. In addition to basic human needs, such as safety and security, the key drivers observed were trusting relationships, social cohesion, and individual purpose. If HR doesn’t prioritize enabling these drivers across every level of the organization, who will? And who really stands to lose the most if they don’t?

As technology continues to automate manual processes, HR has the opportunity — rather, the obligation — to focus primarily on serving and enabling their people through meaningful strategic initiatives like well-being and long-term growth and development. The foundational levels of safety and security are still important, and employees and leaders alike will continue to expect convenience, speed, and accuracy from HR processes.

With today’s workforce more dispersed than ever, HR teams are increasingly relying on online tools like HR, payroll, and compliance automation, self-service, mobile access, and instant communication tools to effectively manage their people and workload. Combined with powerful internal benchmarking and AI-powered business optimization insights, HR and business leaders are able to holistically evaluate and understand the intricacies of their organizations and their people’s needs.

Many emerging technologies are also designed to serve employees, such as easing financial strain through on-demand pay, monitoring and improving mental health through pulse surveys, proactive conversations, and charitable giving, and keeping up with employee sentiment so leaders can act on the topics that matter most to their people.

Conclusion: 2021 is the year to build deeper meaning into work experiences

Today’s employees desire, and deserve, much more out of work than a paycheck. Armed with innovative life-work tech and a renewed focus, HR departments have never been more capable of building diverse, engaged, and empowered workforces that are agile, flexible, and responsive to changing business demands.

And if 2020 has taught us anything, it’s that we need more of that.