In 2023, the professional workforce landscape underwent substantial changes, and many of these trends will continue through 2024. Adapting to evolving standards and employee mindsets in work environments necessitates flexible and resilient approaches. It is vital for success, particularly for roles like chief human resources officer (CHRO) and chief diversity officer (CDO), among other executive leadership positions.
For planning with key stakeholders and to better equip you for 2024, we are proud to share the predictions below so, as leaders, you can share the potential future state of your organization. Our insight is informed by conversations with Blue Rock clients and candidates and benefits from depth and breadth of view. We can parse and delineate emerging topics and concerns from these interactions that we believe to be relevant and timely to professionals in the talent acquisition arena. Below, we explore seven key predictions that we think are poised to significantly influence leadership behavior and organizational performance in 2024.
More organizations will have to navigate the return-to-office paradox.
In 2024, organizations will look to migrate the path to return-to-office (RTO) while combatting related factors, including employee retention, engagement, and cultural impact. Unispace found that nearly half (42%) of companies with RTO mandates witnessed higher employee attrition than anticipated, and almost a third (29%) of companies enforcing office returns are struggling with recruitment. Our conversations corroborate these findings, and we are being asked to help attract talent in spaces where companies traditionally felt they could be independently successful. Focusing on strengthening culture and change leadership, led by the CHRO, will be paramount in 2024 to come out the other side successfully. Areas on which to focus include workplace safety and well-being, avoiding proximity bias, investing in upskilling staff as they return, and creating flexible hybrid models that focus more holistically and intentionally on ‘connection.’
Hybrid work continues to be a significant sticking point. Among HR leaders whose companies plan to implement RTO in 2024, just 19% say a full five-day in-person week will be required. However, recent neuroscience research from Yale shows that remote ‘connection’ tools, like the now-ubiquitous Zoom, are “an impoverished social communication system relative to in-person conditions.” This evidence causes CEOs and CHROs to have sleepless nights as they try to balance conflicting wants with achieving corporate goals.
Human Resource professionals must lead and educate the company about workforce planning and talent retention.
What employees want and what companies can, or are willing to, fund for personnel development in the workforce may not correlate. CHROs and other HR leaders will examine what they have available, what resources are being used, and where development gaps can be filled to ensure the company is internally self-sufficient via career development and talent mobility. Candidates inform our team about their extreme desire to have professional development opportunities. Those seeking a change in employment often cite the lack of their company investing in them as people as to why they plan to leave. However, when we talk to hiring managers and clients, we hear the need to contain budgets, manage expenses, and show higher profit margins. These conflicting expectations can create contentious situations.
Today’s employees have come to expect some form of career development and reskilling as part of their benefits. An IBM study found that employees are 42% more likely to stay with a company long-term if they receive training to help them perform their work at a higher level. The rise of AI has made it even more imperative for companies to offer upskilling opportunities. Although the speed of skill obscurity is likely to increase as technology advances, it can also be used to encourage growth; automating the most repetitive and low-interest portions of jobs can free employees to focus on the more complex skills and job aspects that require human touch. In this way, focusing on talent development and reskilling can address multiple HR challenges simultaneously.
There will be a compensation correction toward more modest pay increases.
Unlike previous years, employers are planning more modest pay increases in the year ahead, with an average merit increase of approximately 3.5% compared to 3.8% in 2023. According to Lattice, pay was the most significant turnover driver in 2023, with 55% of departing employees leaving for better-paid opportunities. If a compensation correction comes to fruition, we will see a more level playing field among employers for the first time in three years, causing less employee turnover in the market.
People ask about compensation early in the recruiting process, often on the first call. Expect many highly qualified people you want to hire to be wary of moving for anything less than an exceptional compensation package. In other words, be ready to compete for your talent by budgeting beyond merit increase levels for new talent. The good news is that salary is clearly an essential part of the equation, but it isn’t the only benchmark; expect more questions about ongoing developmental reviews, non-monetary benefits, cost-of-living adjustments, and expense reimbursement for roles requiring a move.
While compensation matters, we see two other significant factors that encourage passive candidates to show interest in a new job. The first is when the culture within the current organization is perceived negatively. The second is a lack of personal and professional growth opportunities (seen at much higher rates for Gen Z and cusp Millennials). Companies that offer candidates competitive compensation and clear examples of positive culture and career development are the most likely to attract—and retain—top talent, even if the pay increases are slightly smaller moving forward.
A stronger focus on change management will be needed to address change fatigue.
According to Gartner, 77% of HR leaders say their employees feel fatigued by change, but 82% say their managers aren’t effectively equipped to manage change. Similar opinions are shared In our conversations with clients and candidates. What is critically important to note is that change fatigue also makes employees 42% less likely to stay, leads to 30% lower levels of trust, and corresponds with 27% less sustainable effort, among other negative outcomes. We spend a lot of time coaching and motivating to these effects, and we expect you will, too.
To manage this, CHROs and HR leaders must assess and address change costs. Excessive change, particularly without adequate support, leads to significant costs through lack of productivity and turnover. Ultimately, it will fall to the CHRO to make a business case for cultural shifts, if needed, to allow open dialogue and psychological safety and even incorporate proactive rest into the culture. We know of one company in the higher education space that has implemented a no-work zone from sundown on Friday until sunrise on Sunday with much success, resulting in higher work output from their employees throughout the week.
Effective corporate communications are critical to ensuring this process flows smoothly. Employees are more likely to handle change well if they have clear explanations and an in-depth understanding of what’s happening around them. We are already seeing more companies seeking corporate communication experts for HR executive roles because of the skills required to ensure open, bi-directional communication channels for clarity of explanation and receptiveness to feedback. In a recent consulting visit with a client, they touted that they had positioned a senior VP to take over corporate communication to address such issues. If you already have someone with the skillset, empower them.
There will be an increased focus on executive development.
Identifying and developing strong leaders is even more critical in a season of rapid change. HR teams will need a renewed focus on attracting, retaining, and developing executive leaders who not only have the subject matter expertise to lead their functions and businesses but also have self-awareness, audience awareness, and the ability to maintain their composure in difficult situations. The combination of such skills is now called interpretive opportunity (IO).
As a result, expect more attention on ‘soft’ skills during the interview stage and throughout leadership development initiatives. In recent years, research has shown that most hires who don’t work out, as many as 89%, come down to a misfire on soft skills. This indicates how critical this aspect of work is at all levels, especially today when technology can boost ‘hard’ skills but cannot compensate for the profoundly human nature of emotional intelligence (EI).
To be sure, adding soft skills and EI to the repertoire of current employees can be challenging, especially for leaders who are already successful in meeting business goals. The CHRO will most likely be the one to take on this challenge and lead a shift towards people-centric executive development for the future.
The diversity imperative will enter a new stage.
While DEI&B have been hot topics for the past few years, their progress is hitting a rough patch, calling for systemic action in 2024. DEI&B roles saw a 33% attrition rate at the end of 2022, compared with 21% for other roles, according to Revelio. Meanwhile, Gartner reports that 44% of employees say their colleagues feel more alienated by DEI efforts, and 42% view DEI efforts as divisive or even resent them. While this isn’t relayed as such in our client dialogs, it’s interesting that fewer people ask us to present a diverse slate of candidates as part of the initial ask in our scope of work. We find we must explain this opportunity for it to be seen as relevant.
In this environment, we will see – and are already seeing – individuals, rather than entities, championing DEI&B as personal goals rather than organizational expectation. This is even more relevant for rising Millennial leaders, for whom DEI&B is of particular value. Research from Ernst & Young found that 76% of Millennials would leave an employer if DEI initiatives were not offered, and 29% said they planned to leave their companies within a year due to the culture not matching their core values. People committed to real change will work to make their vision come true, bringing everyone else along with them.
Top candidates will care about board diversity.
Minority representation on boards is hitting highs, and court rulings, like the one upholding Nasdaq’s requirement for minority board members, have supported this progress. But these gains are still very uneven between groups, and we have a long way to go before true parity is achieved. Research from Deloitte and the Alliance for Board Diversity suggests that, at the current pace of change, it would be at least two decades before board composition reflects the U.S. population.
CHROs and chief marketing officers, among others, will work even harder to get top leadership and boards to understand how board diversity – and the optics around it – attracts top talent and grows revenue. In-demand diverse talent want to know they’re joining organizations where they can truly belong. Note that the buying power of minority groups continues to rise (Latinos, for instance, have buying power in the U.S. equivalent to that of a G20 country), which means a significant portion of a company’s buyer base will also be looking at organizations that celebrate diversity before they invest hard-earned dollars. Supporting a sense of belonging is critical for growing every aspect of a business, from sales to talent acquisition and retention.
2024 will likely be a year of re-evaluating, reframing, and reconsidering some shifts that have rocked the workplace over the last few years. We’re seeing more people, at every level, grow more thoughtful and reflective in their approach to work, and their employment expectations reflect that. After dealing with so much change in the last few years, the year ahead will also need to address change itself and ensure employees still have what they need to succeed, thrive, and develop. With a meaningful effort and a spirit of collaboration, we can work together to make 2024 a year that helps work evolve for the better.
By Ruben Moreno
About the Author
After a 25-year career in Corporate Human Resources and HR Executive Search, Ruben Moreno and his two partners co-founded Blue Rock Search based on a simple but ambitious vision of creating a firm that would “Change Lives and Organizations One Relationship at a Time.” Ruben leads the Blue Rock HR & Diversity Executive Search practice specializing in the identification, assessment, recruitment, and onboarding of Chief HR Officers and Chief Diversity Officers and their respective teams — inclusive of leaders in Talent Acquisition, Total Rewards, HRBP’s, Learning & OD, HR Technology, HR Operations, and HR Analytics. Ruben has helped place hundreds of HR Executives and built deep relationships within the CHRO community across multiple industry verticals. His clients consider him a trusted partner who takes the time to understand their business and add value beyond executive search.