In the coming years, offices throughout the world will become emptier, but they will also contain a more mixed bunch of people. Data from HR trend research and statements from personnel experts have all reached this conclusion.
1. Career starters outnumbered by new retirees
“The population is falling and getting older,” says Katharina Heuer, chairperson of the German Association for Personnel Management (DGFP), which – in its latest survey – identified demographic change as the mega trend that will have the greatest impact on HR management in companies in Germany over the next three years. According to the Fraunhofer IAO, there are – for the first time in Germany – fewer career starters than people entering retirement this year. In 20 years, it is predicted that there will even be two new pensioners for every person who joins the workforce.
Similar developments can be observed worldwide. Birth rates are falling, the baby-boomer generation is approaching retirement age. As a result, the working population is declining in many developed countries, especially in the United States and Europe, as Claire Lacroix-Bouchardie from consulting company Mercer writes. Lacroix-Bouchardie also expects that Asia will soon follow suit, and that the trend will hit Latin America in the slightly more distant future.
Next page: Shortage of talent a worldwide problem
2. The war for talent goes global
Companies are finding it increasingly difficult to keep their offices staffed and to fill vacancies with qualified young professionals. In a global survey of 4,300 HR managers by recruitment consultancy Michael Page, half of the participants described the search for suitably qualified staff as difficult or very difficult. In its Human Capital Trends 2013 study, the consultancy Deloitte named the “war for talent” as one of the five most defining developments globally.
3. Work-life balance is more important than status
At the same time, a shift in values is taking place. According to the DGFP, this is the trend with the second biggest influence on HR work. In his presentation at this year’s conference of the Society for Human Resource Management in Chicago, HR strategist Gary Kushner looked back at how his grandfather once described his life to him as the sum of the achievements he had accomplished for his employer. But those born after 1980 view things very differently indeed, and this Generation Y has been part of the workforce for some years now. “Their philosophy is: live first, and then work. One of the criteria in choosing an employer is lifestyle,” observes Katharina Heuer. According to the Deloitte study, work-life balance is more important to the digital natives of Generation Y than conventional promotion up the hierarchy accompanied by salary increases.
Generation Y also works differently than companies may be accustomed to. This young generation strives for independence and prefers collaborative forms of working, as Claire Lacroix-Bouchardie from Mercer states. She compares members of Generation Y with wild bees, who do not like to have demands made of them or become attached. “They feel more obligated to their own needs than to their employer and a traditional career path, so they fly wherever they want,” Lacroix-Bouchardie writes. One the one hand, this makes them more difficult for companies to handle. On the other hand, the generation brings with it a new approach to efficiency, thanks to its desire for a good work-life balance: The faster the work is done, the sooner you can devote yourself to other interests. That’s why Generation Y looks for all possible ways to complete its work more effectively using new communication tools and ways of sharing information with others.
4. The era of an open talent economy is on the horizon
The virtualization and digitalization made possible by modern technology – the DGFP’s third most-important mega trend – coincides well with this attitude to work. Digital natives work locally and at flexible times. For a long time now, companies have been getting work done not only by permanent employees and service providers but also – for a fixed period and according to need – by external talents with specific skills, Gary Kushner explains. The Deloitte study suggests that this development could bring about an “open talent economy” in the future, with much more open forms of cooperation than today. Increasingly, work will be done in networks. And this development too will lead to a fall in the number of staff who sit at the same desk for the same number of hours every day.
However, work organized this way is still the exception rather than the rule and digital natives are a long way from forming the majority of the working population – even if Deloitte maintains they will make up three quarters by 2025. According to Katharina Heuer, companies will also have to cope with more generational diversity. After Generation Y, Gary Kushner can even see a Generation Wireless advancing, which will evidently be even more communicative and for which desk work will be an absolute exception. Katharina Heuer regards HR management as an organization’s “developer of culture.” Together with managers, its task is to shape a culture of good cooperation between the generations, but also between different nationalities, cultural circles, religions, and the genders.
Trends in HR: More people working in part-time jobs than 10 years ago
In HR, Katharina Heuer can also see a trend toward the individualization of working conditions. “This increasing individualization is evident, for example, in the fact that working arrangements – and especially part-time contracts – are now much more varied than 10 years ago,” she says. Today, IT makes communication possible everywhere and at any time. “The boundaries between work and leisure are blurring,” Heuer explains. At the same time, how your working life can be combined with your personal life is an important factor in choosing an employer – not just for the young Generation Y. Companies are therefore called upon to increasingly adjust working conditions to the needs of employees, their stages of life, and the things that happen in their lives.
Next page: Young employees want a say in decisions
5. Conflicts caused by constant availability
According to the Deloitte study, the various generations of the workforce are all in agreement about their desire for more flexibility. At the same time, the authors of the study point out that the disappearance of the regular nine-to-five job can also create pressure to be constantly available, rather than a feeling of freedom. Some employees may be able to deal with this well, but others less so. The boundaries here are not necessarily between the generations. Companies will become more diverse, simply through individualization within the younger generation. So far, Generation Y is the most diverse group there has ever been in the workforce, believes Claire Lacroix-Bouchardie from Mercer.
6. IT supports cultural diversity
In Katharina Heuer’s opinion, increasing globalization is another reason why companies need to get to grips with cultural diversity. But globalization prompts even more questions for human resources: How can an HR policy be shaped that caters to global requirements and regional needs? How can a corporate culture be developed that takes into account the cultural diversity of the sales markets and integrates and binds a diverse workforce with the company? How can international teams from different countries and continents work together? “IT can help tremendously here,” says Katharina Heuer.
HR should have a say in planning social media
Internal social networks are a tool for international and cross-location communication and cooperation that many companies now use. According to Katharina Heuer, human resources should be involved in the planning and determination of these communication and cooperation procedures – because it concerns the management and corporate culture. For HR, this means there is no getting away from social media. “Having social media skills is now a must for HR,” she says. She adds that social media now plays a crucial role in HR marketing. Furthermore, social networks enable people to work in decentralized teams, and particularly young employees want more communication and involvement – which is possible using social tools. Katharina Heuer believes the trend toward a “culture of participation” can be identified in different forms throughout the world.
What’s more, social media projects an image of the company to the outside world. To present themselves and attract new employees, companies use instruments such as company profiles in social networks. According to the software consultancy SoftSelect, 43% of enterprises use social media in employer branding. Here, they must ensure that the image they convey tallies with the reality of working at the company on a day-to-day basis – which is also a job for the HR department. “If the promise they make to the outside world doesn’t match what it’s really like to work at the company, the credibility of organizations can be called into question using social media,” says Katharina Heuer.
According to a survey by SoftSelect covering Germany, Austria, and Switzerland, the use of social media for HR purposes is currently being intensely discussed and providers are increasingly integrating social media functions into their HR software. However, HR software for the more conventional tasks is still the most common. 95% of companies use software for payroll, the Michael Page survey reveals. It also found out that 79% of organizations deploy solutions for personnel administration. Although tools for assessing performance and attracting new employees are much less prevalent, they are still used by more than half the companies (63% deploy the former, 60% the latter).
7. Sales of IT tools profit from the trends
Both the Michael Page survey and the SoftSelect study make one thing clear: Companies are expanding their use of software in human resources. Particularly software for recruitment and talent management “is currently experiencing a real boom,” the writers of the SoftSelect study claim. This is because the shortage of skilled talent and demographic change have made HR planning a success factor. To find the talents of tomorrow, companies are upgrading to the latest applicant management tools.
This article is the first in our topic of the month: human resources. Throughout August, we will be informing you on SAP.info about many aspects of HR, including an overview of SAP’s HR solutions and articles on the growing significance of social media in attracting skilled staff and how to develop talent.