As companies rapidly adapted to the global health, financial and social crises in 2020, their learnings now shape how they approach restoring stability in 2021 and set the stage for post-crisis operations. Based on extensive research conducted by Willis Towers Watson and more than 200 formal discussions with senior human resources leaders at companies around the world, we expect that people practices in 2021 will continue to face ongoing disruption, but in a very different way from 2020.
As indicated in last month’s blog, Top priorities and trends for CHROs in 2021, last year was “disruptive down” in terms of shocks to safety, performance and stability, and 2021 will be “disruptive up” in terms of rethinking and reconfiguring how work gets done, building human capital resilience and optimizing capital investments in people.
We know that the pandemic accelerated many of the trends that started long before the crisis, such as flexible work arrangements, remote work, wellbeing, and diversity, equity and inclusion. The events of 2020 also reinforced that people matter: In 2020, the health and contributions of human capital had a clear impact on business performance, company success and the global economy.
Key lessons learned in 2020
Among the lessons learned:
- Flexibility, adaptability and technology are key to getting work done.
- Employee wellbeing is a real thing and critical for driving company performance and creating resilience.
- Benefit program design (e.g., pandemic coverage), promotion (e.g., personalized communication), delivery (e.g., telehealth) and management (e.g., negotiations with providers and insurers) are equally vital to help ensure that employees know what benefits they have and how to use them effectively when needed.
- Employees value the stability and security offered by their jobs/careers, base pay, and health, risk and retirement benefits.
- Equity, fairness and dignity at, in and from work are necessary to create a meaningful and productive employee experience.
- Culture and leadership are the organizational glue that helps companies successfully navigate challenges and emerge stronger from crises.
- Building cost flexibility into work and Total Rewards design is important to manage business volatility during crises.
- Sustainability is here to stay and will require a strong commitment and governance.
For the next several years, a number of factors will shape emerging trends, including the challenges of vaccination, continued geopolitical tensions, economic uncertainty, disruptive innovation, stakeholder capitalism, and environmental and social concerns.
Trends we are monitoring in 2021 and beyond
COVID-19 challenges are expected to continue well into 2021 as the vaccine is distributed. Among the continuing trends we’re watching are:
- The focus on employee safety and avoiding work disruptions as companies face spikes in infections and continued lockdowns and delays in mass vaccination
- Personalization of policies and programs to protect and support employees such as extended coverage, remote and flexible working, caregiving leave policies to meet diverse needs and preferences
- Talent disruption due to factors such as reconstitution of the workforce; accelerated automation and digitization of work; demand for digital talent; use of alternate sources of talent; shifted preferences regarding remote and flexible work; retention challenges after supressed movement; offshoring of transactional jobs; and within some industries, laid-off workers changing direction and not returning to their old jobs
- The need for managers and leaders to buy into the new paradigms of work, learn new skills and support the transition away from the traditional approaches of managing teams to performance coaching and supporting employee wellbeing
- The importance of understanding employee preferences to avoid missteps, acknowledge the diverse views and needs of employees around working, health and safety, and the value placed on different elements of Total Rewards
- Employees increasingly placing higher value on reskilling and upskilling programs to ensure their relevance and job security
- Shifts in the orientation of pay for performance to balance safety, fairness and upside potential
- Employees placing higher value on the protection offered by traditional benefits such as health care, risk and retirement programs among employees
- The need for companies to demonstrate a genuine commitment to wellbeing as leaders recognize the interconnectivity of emotional, social, financial and physical wellbeing, and the close correlation between wellbeing, resilience and business performance
- The integration and growing importance of diversity, equity and inclusion as companies implement flexibility in how work is done and strive to build diverse teams
- Greater personalization – both in terms of design and delivery – of pay, leave policies, benefit and career enablement programs to address diverse needs and preferences
- A continued focus on cost management as leaders seek to free up funds to invest in human capital strategies and rewards that matter amid budget constraints
- Human capital measurement and governance taking clearer shape as the relevance of human capital strategies to business stability become visible to investors and other stakeholders
- Greater convergence between what employees define as the “benefit” of working for an employer (e.g., flexibility, growth opportunities, purpose, people they get to work with, work content, strong leaders) and how employers define employee benefits
- Importance of strategic and operational collaboration across different HR functions to create a meaningful and high-performing employee experience
What’s next: Operating post-crisis and beyond
In the coming weeks, we plan to publish a practical guide to post-crisis preparation that addresses suggested actions at the program level in three key categories:
- Reimaging work and Total Rewards
- Build employee safety and resilience
- Cost flexibility and optimization
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