LACE Partners shares its HR trends for 2021 and beyond

04 February 2021 11 min. read
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The current crisis is disrupting the way people work, what consumers expect from brands and employee expectations of employership. For HR functions, 2021 is therefore set to be another year of major change. Experts from LACE Partners share what they believe are the top HR trends for 2021 and beyond, and how HR Directors can navigate these trends.

Powering business change

The scale of business change during 2020 has been monumental. Some sectors have been devastated whilst others have accelerated their digital and operational transformations by years. In 2021, businesses are continuing to accelerate their shift to a digital environment and new operating models. As a result, the demand for support from HR is ramping up in areas such as organisational design, workforce productivity and effectiveness.

There will be more pressure for HR to provide transformational support to the business and to a higher standard than ever before.

LACE Partners shares its HR trends for 2021 and beyond

Developing your new organisation – How will you be structured?

All this pressure to change has meant one thing: businesses need to look again at how they are structured, how work is done and how their organisations responded during the crisis. Organisational effectiveness and organisational design will be high on the agenda of many companies and HR will need, more than ever, to drive the design and implementation of organisational change to allow for growth beyond the Covid-19 pandemic.

Additionally, there will be an acceleration of the already challenging digital talent demand; we’ll see more scrum masters and more software engineers who are central to supporting the optimised digital working environment. There is a dearth of talent in this space at the moment and so differentiating yourself as an employer to better attract key resources will be an important accountability.

In its ‘2021 HR Priorities Survey’, Gartner found that 68 percent of HR professionals will be focused on enhancing critical skills and competencies in the workforce this year, with a particular emphasis on digital skills. Kropp anticipates more organisations will close many of those skills gaps through recruiting rather than by reskilling existing employees. However, there is a finite amount of experience in the market and relying on external talent pools alone may not be the most cost effective and efficient approach. Organisations need to find a way to re-skill their own employees.

2020 has proven that businesses can work remotely so there is an opportunity to source talent from further afield rather than expensive, high-cost office locations.

Competition through differentiation – What do you stand for?
All the uncertainty of Covid-19 and the move to remote working at scale has distanced employees from their businesses physically and, for new hires, made acclimatising to the company culture harder. Sustaining engagement in an ongoing hybrid working model requires concerted focus and planning to ensure employees stay connected. As people begin to move jobs in a post Covid-19 world, the importance of a company’s employer value proposition (EVP) and its promise to its people will come under more scrutiny.

Differentiating yourself as an ‘employer of choice’ is not just limited to that new wave of talent needed to support digital change; you need to be able to deliver differentiation for all aspects of your workforce. Being able to explain what you stand for and the employee ‘deal’ is going to be key to setting yourself apart from the competition.

Sustaining the health of your business – How will you show you care?
There has been a greater emphasis than ever for HR on wellbeing with so many people working remotely. The care of colleagues and employees going forward will also take greater significance. While the end feels like it is starting to appear on the horizon, companies will be judged by their employees (and potentially customers) on how they have cared for their staff.

To ensure this forms a strong pillar of the way people are managed going forward, HR Directors need to think through what this looks like – how will your wellbeing policies need to change, what support will line managers need, how will operating and caring in a hybrid working environment affect your costs of benefits, operating cost and insurance?

Re-establishing company culture – Who are you now?
Post Covid-19, companies will want to accelerate and cement their positions in their respective markets through exploring new ways of working (keeping the best of what we have learned) and reimagining the way they operate and use their physical space.

Businesses will be asking HR to make a concerted effort to shape and manage their target culture. Asking the question “what did we have before, how do we want it to change and how will we get there?” is important. Culture grows and changes over time so it is incumbent not just on HR, but also leaders at all levels, to be clear on the cultural goals and represent this in the way they operate and manage the business and its people.

There will be a greater emphasis on workforce engagement. Businesses will need to change up a gear to bring workforces back together post-Covid-19 through leadership, people management, feedback channels and proactive support. There will also be a focus on workplace design. Thousands of businesses across the UK saw their offices rendered redundant as thousands of people had work from home for the best part of 2020.

HR will need to play a greater role in shaping the new workplace than ever before given its impact on culture, engagement and wellbeing as well as ensuring it brings the anticipated uptick in innovation and collaboration.

Sustaining the strategic people function

During the pandemic, HR functions the world over stepped into the driving seat in the way CFOs did during the banking crisis. There is no doubt HR has proved its worth. What does 2021 hold in store for HR: a return to the old ways, or a sustained change with direct value to the business?

Adapting and upskilling – What do we need to learn now?
In 2021, we will see new skills requirements for HR. Responding to the events of 2020, a focus on corporate culture, wellbeing, business restructuring and differentiation means that HR teams will need new or stronger skills.

Centricity and choice – Empowered employees: what will they want?
In 2020 we started to see how businesses needed to shift the way in which they listen to and communicate with their people. Your people will continue to want flexibility and choice, both in terms of how they engage with the business and do their work. Operating in a way that is tailored to their needs so they feel empowered will drive engagement and productivity. HR needs to identify how to best deliver against this demand and use the right digital tools and service solutions to enable employee choice.

Delivering shared services – realising the value?
The pandemic has proven HR’s ability to deliver its services remotely. Line managers and employees are now used to accessed HR via digital and virtual channels. HR functions have a golden opportunity to expand the role of their HR Shared Services teams to take on more of the advisory support that local HR teams may have owned up to now, particularly with coaching and supporting people managers.

In the view of LACE Partners, if you aren’t looking at your options for overhauling shared services and refocusing your business HR teams, you are missing a trick.

HR tech – seizing the opportunity?
No prediction for 2021 would be complete without a refence to HR technology. From a core HR system perspective, the basic requirement to have the right data, reports and insights to drive effective people management is key. In 2020, the Covid-19 response effort shone a spotlight on how well existing HR systems and data were performing.

The amount of manual intervention required to keep track of workforce numbers and costs, furlough employees and communicate effectively should be compelling enough to secure the investment required to upgrade to a core HR system that is fit for purpose.

The delays 2020 brought to many HR system projects has left the software providers in a tricky spot, with depressed sales. All hope lies on a bumper year in 2021 which makes it a great time to buy.

In addition, we might well be seeing the end of the reign of dominance of Workday. More players will enter the Enterprise market and challenge the big three of Oracle, Workday and SuccessFactors. There was already a trend – pre-Covid-19 – in which Oracle was gaining traction. But the likes of Ceridian, Sage People and CoreHR are catching up on functionality and price. With players jostling for attention and forced to be competitive, it's a buyer’s market.

Who knows what you know – will you have Data-fuelled acceleration?
2020 was the year that HR’s control of people data came to the fore. It showed the value of those businesses able to use people data to model their business impacts and to drive the agility needed to navigate uncertain times. Data centricity is key in 2021 and beyond. Getting the data right is as important as the toolkit for your business.

Digital is just a channel and without the right (accurate) data in the right format, it is just a pretty veneer over broken processes. As a profession we have shown the power of HR data: what are you doing to use it?

Surfing the waves of political change

The third set of predictions for HR and its 2021 agenda come in the form of external influencers; elements at large which will consume HR’s time and set the tone for years to come. Social change is always hard. HR has a big seat at the table and a moral role to play in realising that change.

Bastions of diversity and inclusion
The pandemic, lockdowns and the Black Lives Matter movement all made us sit up and take stock of our lives and approaches to work. It also made business leaders take a long hard look at themselves and start to take accountability to make things change. 2020 gave diversity and inclusion a major boost and 2021 will be no different.

We will see C-suite led initiatives that will focus on accelerating diversity and inclusion with clearer metrics, targets and business-wide programmes that will make a difference at a much faster rate than ever before through top level sponsorship.

Also watch this space: social mobility and financial wellbeing will also take on more importance on the HR agenda in the next three years. Get ahead of the curve in 2021 and differentiate with a clear stance into the market.

IR35: are you ready to change your hiring model?
The HMRC is still determined to revamp the independent contractor market in the UK. There is no doubt that IR35 will change the way that the employment market functions. We hear more and more stories of people who have been contractors for a number of years forced into looking for permanent opportunities, with compromises in terms of the freedoms and incomes they are used to.

How will you ensure you can attract the skills you need and build sufficient flexibility into your workforce model post IR35?

Brexit, down but not out
2020 will be remembered for so many things. Not least as the year we left the EU. Now with the initial negotiations over, you might be assuming that is the end of it. You would be wrong. Brexit will lead to the need to grow new sources of talent as European supply dries up and as we look increasingly inward to the UK’s own resources.