Top priorities and trends for CHROs in 2021

The agenda for chief human resource officers (CHROs) in 2021 will be shaped by expectations for ongoing disruption, but in a very different way from 2020. Whereby 2020 was “disruptive down” in terms of shocks to growth, market stability and wellbeing, we expect 2021 to be “disruptive up” in terms of non-linear renewal as countries and companies around the world restore constancy of markets, societies and institutions.

As validated by Willis Towers Watson’s CHRO Thinking Ahead Group, we expect to see the following six themes emerge as the top priorities and trends for 2021:

Acceleration in new ways of working
Wellbeing and resilience (organization and employee) stay at the forefront
A new lens develops for equitable/sustainable Total Rewards
Diversity, equity and inclusion efforts become more ingrained
Human capital measurement and governance takes clearer shape
Focus on program financing and cost flexibility continues

Acceleration in new ways of working

Remote work: The percentage of employees globally working remotely surged to 65% during pandemic, compared to 11% pre-pandemic. Indications suggest that post-crisis instance of permanent remote working could be around 30% — nearly three times higher than pre-crisis levels.
Flexible work: The demand for flexibility will continue to grow and support a diversity of workstyles. This includes the ability to work “anytime, anywhere” for select roles and populations, which also may include flexible shift schedules, caregiving leave policies, updated performance management guidelines and collaboration technology.
Work design and architecture: Smart companies will ramp up investments in automation, artificial intelligence, digital transformation and new work practices to offset the cost of reconfiguring operations and shifting talent work preferences.
Reskilling: Organizations will prioritize career enablement and career equity programs that create greater job access and long-term employability for employees, and skill availability for employers. To achieve this, organizations likely will focus on reskilling and upskilling to offset broad scale layoffs, sector shifts and restructuring. Additionally, employers may make changes to work design and architecture and establish new skill requirements for the virtual and hybrid world.
Reopening workspaces: 2021 will represent an inflection point where, to quote one Thinking Ahead Group member, “We’ll go from talking broadly about our plans to reopen to debriefing how it went.”
Global supply chain: Establishing longer-term plans to stabilize and increase resilience to global supply chain strategy and operations will be a central pillar of organizational strategy. This may include a shift in sourcing and reshoring with continued focus on long-term sustainability.
Reimagined employee experience: Creating a new employee experience in 2021 puts the employee at the center of program and culture design under the assumption that different components matter to different people in increasingly unique ways.

Wellbeing and resilience (organization and employee) stay at the forefront

The pandemic accelerated urgency around prioritization of wellbeing and resilience at the organization and employee levels, and 2021 will provide the platform for addressing physical, financial, social, and emotional wellbeing. 2021 also will provide the platform for institutionalizing resilience through:

Healthy company culture: Supporting dignity, psychological safety, inclusion, wellbeing, physical safety, agility, and innovation.
Equitable/sustainable Total Rewards: See next section.
High-performing employee experience: Prioritizing sustainable practices that connect human capital strategy, culture and the employee value proposition to drive desired and measurable business outcomes.
Innovation: Using disruption to positive ends. According to one CHRO, “Innovation is really what 2021 will be about — leveraging purpose, psychological safety, technology and speed to both engage employees and push us through the disruption and into a post-pandemic world.”
Organization and individual purpose: Determining ways for employees to identify individual purpose and meaning in work, and then connecting those purposes with company purpose and broader impact, “even (or especially) where it may be less obvious,” according to one interviewee.

A new lens develops for equitable/sustainable Total Rewards

2021 provides an opportunity to reframe sizable spending in Total Rewards to support flexibility, wellbeing, new ways of working, and diversity, equity and inclusion with the goal of longer-term workforce sustainability commensurate with the expense.

Fair, flexible pay and performance management: Organizations are likely to reframe pay as both a competitive and wellbeing issue with a direct impact on financial, emotional, and social wellbeing. They also will increase efforts to align flexible pay and performance management programs with flexible ways of working, including how people are paid (e.g., pay for skills vs. pay for value, and geographic differentials), and how performance is measured (e.g., remote work output) and rewarded (e.g., merit, and incentives).
Inclusive, flexible benefits (health and wealth): During the next 12 months we will continue to see organizations incorporating wellbeing into their overall benefit strategies through more inclusive benefits, building on the significant changes made to benefits in 2020. Specific areas of focus will include health care changes, voluntary benefits, caregiving benefits and retirement and savings benefits. We also will see more efforts to align flexible benefits with flexible ways of working (e.g., benefits for “work from anywhere” employees).
Inclusive, equitable careers: 2021 will be a year of rethinking what it means to offer equitable career opportunity, through greater focus on representation, flexibility, access to opportunity and skill enhancement.

Diversity, equity and inclusion efforts become more ingrained

Efforts to address diversity, equity and inclusion more broadly throughout organizations and programs were focused trends of 2020. Those efforts will redouble in 2021:

Cultures of inclusion: Look for organizations to increasingly emphasize meeting employees “where they are” and “where they want to go” through an inclusive mindset, behaviors, and programs/practices/polices (e.g., equitable Total Rewards) that enable and celebrate authenticity, while creating an inclusive experience for all cohorts.
Equitable programs and policies: In 2021, equitable programs and policies (especially those related to pay and benefits) will support a focus on race and ethnicity, as the pandemic continues to shed light on the impact of COVID-19 and socioeconomic status on more vulnerable members of society.
Preserving and advancing diversity progress: Organizations will take action to ensure that strides made in 2020 on diversity commitments and goals (especially in terms of gender and racial equity) do not lapse in 2021 amidst the external disruption.
Inclusive leadership: A common goal in 2021 will be modifying, emphasizing and activating inclusive leadership under renewed and purpose-driven assumptions.
Employee listening: The trend to prioritize listening strategies to understand preferences across a diverse workforce (building on efforts to address racial equity in 2020) will continue in 2021 in order to better identify what actions to take for whom and how to drive meaningful change.

Human capital measurement and governance takes clearer shape

The current focus of investors and regulators on human capital measurement and governance will continue to grow in 2021:

ESG: Investors and boards continue to focus on environmental, social and governance imperatives. The “year of the ‘S’” will not only continue in 2021, but also will add social imperatives that tie more directly to business imperatives.
Sustainable human capital value: The broader focus on human capital measurement and valuation will lead to formal workforce valuation, both for operational and financial priorities.
Human capital metrics and disclosure: With the increased focus on human capital metrics and disclosure by regulatory bodies in the U.S., U.K., and European Union, leading organizations will champion transparency as a fundamental competitive differentiator.
Stakeholder governance: More investors, boards, consumers and employees will seek to hold companies accountable for driving shareholder value by more effectively managing multiple stakeholders.

Focus on program financing and cost flexibility continues

Flexible program design, financing and capital allocation strategies used during the pandemic will become institutionalized during 2021.

Health benefits funding and governance: Consistent with our research, companies generally have maintained or enhanced benefits during the pandemic, with a focus on wellbeing and resilience. In 2021, organizations will look to identify new and creative financing and capital allocation strategies in order to ensure long-term affordability.
Retirement benefits funding and governance: Most temporary reductions to retirement benefit program funding in 2020 to address cash flow concerns will be restored in 2021, which also necessitates identifying new and creative financing and capital allocation strategies.
Pay funding and governance: Facing evident challenges for the upcoming pay and bonus seasons, organizations will develop new strategies to drive both fairness and pay for performance amidst potentially severely impacted budgets.
Career and learning program funding and governance: The same is true for career and learning program funding, much of which was modified or put on hold in 2020. Organizations will re-engage on these issues in 2021 and develop a more flexible and enduring approach for the future.

Overall, the common denominator for CHROs in 2021 will be impact — creating an environment where human capital is valued, wellbeing is prioritized and innovation thrives. Organizations will rely on the flexibility, equity and trust that they developed during the pandemic to forge a path for future success.

Authors

John M. Bremen

Managing Director and Chief Innovation & Acceleration Officer

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Amy DeVylder Levanat

Senior Director, Innovation & Acceleration