The 3 HR Megatrends that will impact businesses long-term in 2022
Every year, an international team of UKG researchers, thought leaders, and social scientists partner to reflect on the previous year’s developments, evaluate the implications for business and HR teams, and predict how these forces will shape organizations and the industry for years to come. With a backdrop of a global pandemic, historic talent shortages, and widespread demand for progress on a variety of social and environmental issues, employers are facing a reversal in the balance of power — and this will have significant, long-term repercussions.
Let's take a look at the three HR Megatrends we've selected for 2022 and how you might see them impact your business in the coming year and beyond:
1. The growing dependence on grey-collar workers
If you’ve never heard the term “grey-collar worker,” you’re not alone. Workforce conversations have traditionally centered around either white- or blue-collar workers, with extra attention — and investment — gifted to white-collar employees. This is problematic for several reasons, but particularly because these generalizations overlook many crucial — and growing — subsets of our workforce that don’t fit nicely into either category. Back in 2004, the moniker “grey-collar” started being used to bridge the gap, but it still isn’t widely known. And unfortunately, employers have been overlooking this population’s unique needs and potential as well.
Grey-collar workers often find themselves at the intersection of technology and service with both white- and blue-collar elements to their jobs. In most cases, these are positions that require some combination of physical and technical skills — like teachers, firefighters, non-doctor healthcare professionals, and government service workers — and they are often the result of increased digitization (which, of course, was fast-tracked during the pandemic). This hybrid functionality also makes these roles difficult to fully automate, and as a result, their prevalence is (and will continue to be) skyrocketing. Of the Bureau of Labor Statistics’ top 20 fastest-growing roles, 13 fall under the “grey-collar” category.
And while these industries are ripe with predicted job growth, these are also the fields where many employers are finding it incredibly challenging to both hire and retain their people. In addition to the general talent shortage plaguing employers of all industries, grey-collar employers are facing an uphill battle due to pandemic-related burnout (many grey-collar roles also fall under the “essential worker” umbrella), widespread demand for remote and hybrid options (usually not feasible with these workers), and an aging workforce.
What’s more, employers around the world are facing a reskilling emergency, particularly when it comes to technological skills gaps. Korn Ferry predicts the talent shortage will likely reach 8.5 million people by 2030, resulting in $8.5 trillion in unrealized annual revenues. Grey-collar workers are at the forefront of this crisis — and by recognizing, respecting, and investing in these roles, employers can start to reverse these concerning trends.
In order to remain competitive long-term, organizations will need to do a much better job of attracting, developing and investing in this crucial segment of their workforce. Specifically, organizations will need to rebrand these jobs to attract younger workers and those from other industries to move into these fields. Career inflation has seeped into some of these roles, creating potential barriers when college degrees for these fields are often unnecessary due to the significant amount of on-the-job training required. As such, employers should carefully consider whether degree requirements are appropriate for each role and simultaneously incorporate skills-based assessments as part of their interviewing process.
Reskilling and upskilling is crucial within these roles, which can be accomplished through creative ways such as apprenticeships, internal gig work strategies, learning and development courses, and intrapreneurship. But most importantly, employers must respect and retain their people by investing in their most-desired benefits, such as flexibility, autonomy, and increased compensation. A past that showed disregard with respect to these workers needs to be replaced with recognition of how they’ve supported us through one of the most trying times in history, and how vital they are to our future.
2. The new ethics of leadership
Ethical leadership has become more important, and more challenging, than ever before. New ethical challenges face leadership daily, from which algorithms to create for self-driving cars to how to allocate scarce medical supplies during a pandemic. Social justice, AI, climate change, and employee wellbeing continue to be hot-button issues, and both employees and society are holding leaders accountable for the impact their organizations have on their people, society, and the environment. This is clearly a new era of social activism, and companies need to embrace that fact.
And we predict the extent to which they embrace these trends will reflect directly on the long-term success of many organizations. People-purposed leadership will be required to succeed in the future of work.
Unfortunately, many organizations and leaders are failing in this regard, particularly when it comes to taking care of and fostering cultures of trust and resiliency. Countless studies suggest employees want more transparency than their employers are providing, and according to The Workforce Institute, the vast majority — 86 percent! — feel that people at their organization are not heard fairly or equally. In particular, essential workers, grey-collar workers, younger workers, non-caregiving employees, and employees who identified with underserved races and ethnicities felt significantly less heard than their workplace counterparts. What’s more, almost two-thirds of employees felt like their voice had been completely ignored, leading to predictable and devastating impacts on retention as well as engagement, productivity, and more.
Transparency and listening are foundational to trust, and it’s clear that many organizations are falling short when it comes to building a culture where employees trust their leadership directives. But at the same time, the pandemic has brought to light another unsettling truth: Far too many leaders and managers don’t trust their own people.
In fact, in the same Workforce Institute study, 55 percent of leaders agreed that it was easier to trust employees they could physically see. This runs counter to the fact that many employers saw record engagement and productivity increases when their workforces moved remote in 2020, but is likely responsible for a record increase in the use of employee surveillance technology. According to Gartner’s Chief of HR Research, the use of surveillance technology has doubled from 2020-2021, primarily for office workers but also for delivery drivers, warehouse workers, and more. These technology tools are intended to assist managers by keeping track of employee productivity, but their utilization can potentially do more harm than good.
Monitoring and data privacy risks are further eroding already precarious levels of trust, and what’s more, these surveillance tools often fail to provide a clear representation of an employee’s true value or level of impact within the organization. Instead, leaders should focus on building a culture of outcomes-based leadership and investing in tools designed to truly serve employees while providing valuable insight to leadership, such as HR Service Delivery and case management.
3. The rapidly changing compliance landscape
The frequency and speed with which new workforce legislation is rolled out has been increasing steadily since 2008. As a result, employer fines and penalties increased 92 percent from 2018 to 2020, a trend that was only amplified during the pandemic. With increased OSHA activity, vaccine mandates, and heightened lawsuits, the rapidly changing compliance landscape looks like it will only continue to become more volatile in future years.
Unfortunately, it’s become clear that HR and business leaders need to completely rethink their approach to compliance. Rather than viewing it as a set, stagnant force to react to from time to time, leaders will need to become agile to stay ahead of the law.
Businesses should get ahead of compliance trends by watching where the industry and legislation are headed and take proactive steps before they are legally required to. This not only helps by preparing the organization for the future, but also typically results in employee goodwill and positive PR in the present. A great example here is minimum wage: an organization that waits until legislation forces their hand to increase wages will receive no positive press or employee gratitude because it’s clear that the organization only did so because it had to. If that organization increased wages proactively, however, or did so above the suggested minimum wage, it’s likely that employees would be excited and grateful, as well as allowing the company to potentially be seen as a positive player in the industry as well. There are countless examples of organizations successfully implementing this strategy who are witnessing a range of positive impacts as a result.
What’s more, while reporting on environmental, social, and corporate governance (ESG) metrics is currently voluntary, we expect to see these metrics becoming mandatory, standardized, and audited sometime in the next decade or so, similar to how financial reporting metrics became standardized approximately one hundred years ago. Businesses should begin auditing their own metrics now to understand where their baseline is and where they need to improve. Progress is already being made on this front: in September 2020, four of the world’s top accounting firms released suggested ESG metrics, and more than 60 organizations (including Unilever, Sony, and PayPal) have agreed to start reporting on these metrics.
Finally, there’s the issue of data privacy and data security. Due to the historic increase in cyberattacks as well as new compliance legislation related to data, data privacy has become far too important to be relegated just to HR and IT’s responsibility. Data privacy should be part of everyone’s job, and embedding best practices throughout the organization and enlisting employees’ support and agency will be critical.
Conclusion: Prepare today for the future of tomorrow
The workforce has undergone a historic change during the past two years, but in many cases the pandemic fast-tracked pre-existing trends rather than creating entirely new ones. As the balance of power continues to shift and CEOs and organizations continue to play a role in navigating complex social and environmental challenges, HR and business leaders face more challenges — and opportunities — than ever before.
Want to learn more? Download our 2022 Megatrends whitepaper for more details on how business leaders can take action to cement themselves as organizations of the future.