HR's done crisis management. Now it's all about critical skills, change and costs

Here’s a conundrum. Only 21% of HR leaders say peers share accountability or partner with HR to determine future skill needs. Some 36% don’t know what skills gaps their employees have and 31% can’t create skills development solutions fast enough to meet evolving skills needs. Yet 68% of HR leaders say building critical skills and competencies is their number one priority in 2021.

Here’s another. Organisational design and change management is the second highest priority for 2021 according to a study by Gartner, with 46% of respondents citing this. Yet 37% of these HR leaders say their organisation’s managers aren’t equipped to lead change. And in 2020 the amount of change the average employee can absorb without becoming fatigued has been cut in half compared to 2019.

And what about the future of work? A third of HR leaders say this is a priority for the year – in fact it’s the fourth biggest priority. Yet 62% say their organisation does not have an explicit future of work strategy.

It is clear there is a gap between the business and HR priorities of 2021 and the reality on the ground. But this gap cannot remain. For if your leaders are waiting the pandemic out, thinking things are going to ‘go back to normal’, they are going to be sorely disappointed. As vice president of advisory in the Gartner HR practice Mark Whittle says, there has been a “stepwise change”.

“Employees are expecting more from their employers than before. It's out of the box and we can't put it back in the box. And for those employers who are saying everything's just going to go back to normal as soon as we vaccinate everybody? If you do that, you're going to lose employees because your talent competitors are changing their employment value proposition. They're changing the experience that they want their employees to have. This has changed for good. There's a new employment deal out there.”

Acceleration of need for new skills

So what does this mean for HR leaders? Let’s take skills. Separate research from Gartner shows 33% of skills present in an average job posting in 2017 won’t be needed by 2021. The number of skills required for a single job is increasing year-on-year by 10%. And 29% of HR leaders say more than 40% of the workforce has needed new skills as a result of the COVID-19 pandemic.

“The average number of skills that workers need today keeps going up every year. And there's also a trend that skills that you have are being replaced by new ones. So it makes it more and more difficult for employees,” says Whittle.

“The pandemic, certainly, has accelerated some of this need for new skills. So for example, we're needing managers and leaders to have more empathy. We're seeing a different need for collaboration in a remote or hybrid workforce that requires us to work differently. We’re seeing agile skills and more innovation. I need to do things differently in a faster and more urgent way than maybe I needed to do before. Reskilling is not new, but yet the lens through which we're looking at these things is a little bit different.”

So what can you do as an HR leader? Whittle says some of the best-in-class organisations are taking a more prescriptive approach for inventorying skills.

“Before it was, let's let learning and development figure this out. Here’s a new skill that we're hearing about, let's roll out some training. Now we’re taking a networked approach where we're using more players rather than just L&D. We're asking the business, we're asking other people in HR to get together and plan what these new skills might look like two to three to five years out, then we inventory them.”

Acceleration of change comes with more employee overwhelm

Planning this reskilling is only going to get more vital as change accelerates. But HR should be mindful of the impact on employees, who are fatigued and overwhelmed.

“We asked HR leaders what their big challenges around organisational design and change are and basically everybody's saying we're just really bad at change. Our managers are bad at change, our leaders are bad at change. Our employees are tired of all the change and we're just really bad at it,” says Whittle.

“Which is amazing because we've been dealing with change for years. And it seems every year we're surprised by the amount of change that we have to do. So that is a serious problem. I think that the pandemic has exposed the fault lines. We see from our research that the best organisations are doing some out of the box thinking into what are the things that are most frustrating our employees, what are things that are getting in the way of our employees doing things?”

According to Gartner research there are 12 friction points with employee work that can be put into four categories. The first one is around misaligned work design. As work changes the way we design the work and the processes always follows much later. We only tend to do a major change in work design when there's some big triggering event but work keeps changing all the time. So HR needs to build in a process that is making small changes and iterations to work design more constantly rather than wait for those big triggering events.

The second one has to do with overwhelmed teams and the fact that our employees have more work to do than ever. “We need to help our employees better prioritise what they're doing. Not everything is urgent, not everything is as important for the business and the best organizations are helping their managers and their leaders and employees figure out how do we prioritise better,” explains Whittle.

The third is around trapped resources. “This is where in a more dynamic world we need to be more nimble and quicker, we need to change decisions around how we resource people and budgets in a new and different way so we don't have these traps and siloed processes.”

The last friction point is around rigid processes. “We have these processes that we've had for ages that are so rigid. It's too hard to get approval for an exception, to do something different, a new idea needs to go through levels of review. The best HR organisations are focusing on fixing all these things rather than running to our tried-and-true strategies that we've always done and that we're good at.”

Acceleration of the 'future of work'

Much of the change organisations are facing comes under the catch-all term of ‘future of work’, which is the third biggest priority for 2021 according to the Gartner Top HR Priorities Report. According to Whittle, the COVID-19 pandemic will have a lasting effect on the future of work, accelerating trends such as more employees working remotely and increased use of employee data, and creating new impacts, for example an organisation can distinguish themselves as a top-tier employee brand based on their crisis response. However, nearly two-thirds of HR leaders say their organisation does not have an explicit future of work strategy.

While future of work is a somewhat amorphous term, the lens through which HR leaders must understand the relevance, impact and opportunity of each future of work trends for their business is critical to strategic planning and scenario planning. The best HR functions are broad in their approach to it, says Whittle.

“There are a lot of ways and angles that could go into future of work but the best HR organisations are focused on how do I think about the ones that make the most sense for me? They are starting to partner with their peer functions, realising that future of work involves all of us. It's not a silo in HR. So for example, have we ever gone to our strategy group in our company and said, you're really good at looking at macro trends and thinking about strategy. Can we work with you to think about future of work? And in the examples that we've seen where that's happened it's been incredibly valuable because you find that your strategy group has a lot of templates and tools for taking macro mega trends and screening them down into what's relevant for you.”

All this needs to be done at a time of cost optimization and operational efficiency. As Whittle says, smart CHROs recognise that no HR strategy lives in a vacuum and their priorities must support the business priorities.

“So for example, if my organization is really focused on optimising costs and efficiencies and improving margin, then all of my value story in HR should be showing how we're supporting reducing costs and making our employees more productive. If it's around improving operational excellence, then it needs to be shown this is how we from an HR perspective are contributing toward operational excellence. The best CHROs prepare their HR strategy to really tell the story of how we are going to contribute from an HR function to what the business is trying to achieve. That's where the magic happens.”

For more on CHRO priorities including employee experience, wellbeing and diversity, equality and inclusion, look out for the full interview on our video channel shortly.

Mark Whittle, pictured below, is vice president of advisory in the Gartner HR practice