HR: What’s the future for 2022 and post-Pandemic? Part 2 - The Seven HR Priorities

How has the pandemic affected the work and priorities of the HR function and what is the function’s future and focus as we (hopefully) emerge from it in 2022?

Reviewing a range of research sources, survey findings and employer experiences, Dr Duncan Brown looks at the impact of the past 18 months on HR. In the second part of the blog I describe the seven priorities resulting for HR through 2022 and beyond.

In Part 1 I summarised the general praise for HR functions resulting from their overwhelmingly successful responses to the pandemic and increasingly optimistic forecasts for our role and contribution in the future. But how best to take this optimism and opportunity and turn it into successful and impacting people management in reality in the future?

I would highlight seven areas for HR leaders and functions to prioritise in 2022 and beyond, so as to deliver on a strategic agenda of enhancing organisational performance through people-oriented and aligned policies, as well as to maximise the learning on people management that we have obtained from the Crisis.

1.????People strategies and workforce planning

‘Stop dithering, start planning’, was the frustrated admonition to HR professionals from my IES colleague Wendy Hirsh, an expert in workforce planning and development, in a recent blog. While the pandemic could never have been anticipated by even the most forward-thinking function, more than five years after the Brexit vote our current tight labour market should have been foreseen and alternative sources of recruitment and resourcing considered long ago.

As our people strategy research highlighted just before the Crisis struck, ‘You need a strategy to define how your people investment can best develop and sustain an engaged, healthy, productive workforce’. And our research during ‘The pandemic has highlighted the traditional, reactive, ‘muddling through’, ‘sector-convoy’ approach to HR?cannot withstand the pressures of a major crisis. Policy responses need to be co-ordinated and aligned. The case for investing in your people, the risks of cost-minimisation, have been brutally highlighted’.

The uber-flexible, just-in-time, ultra-short-term-efficient people resourcing models, just like overly-complex poorly-monitored outsourced international supply chains, have been well and truly exposed. In those sectors such as hospitality and deliveries experiencing some of the worst staff shortages, the trend towards these strategies needs to and is reversing now back towards more secure, resilient and engaging employment models.

Successful people strategies we have found to be based on ‘a genuinely people-named-and-focused approach, characterised by: in-depth labour supply and workforce planning, sustained training and development investment; combined with a genuinely employee empowering and wellbeing-focused, ‘living-our-values’ set of HR policies and practices, so as to produce significant gains in employee loyalty, engagement and now performance’.

A workforce plan is a key component of these people strategies, specifying your firm’s job/skill requirements for the next one to three years and the internal and external pipe- and supply-lines. The IES/CPD guides on workforce planning describe the typical components and the mechanics of doing so, with plenty of examples provided. Like the well-known chain of bars and restaurants which added monthly staffing plans to the financial budgets and stocking forecasts of each outlet, resulting in significant reductions in staff shortages and highly positive feedback from bar managers.

2.????Working, health and wellbeing benefits

In the aptly titled ‘Shortage of Vision: Solving the labour market crisis’ published last month, Autonomy reported that their survey of staff turnover had found that:

?‘The majority of people considering leaving report being offered no incentives to stay. Workers reported that a pay rise, shorter hours, and better in-work benefits such as pensions, and work-life balance would keep them working’.

Employers originally introduced employee benefits to help provide security and protect their employees; and the importance of such protection has been highlighted by Covid-19.

While many employers had been reducing the value of their pension and benefits spend over the previous decade, often under the banner of providing more choice and personalisation of the package, 2020 – 21 can in many senses be described as seeing a ‘back to basics’ trend in employee benefits. 72% of UK employers have changed their benefits (Howden, 2020) and two-thirds have upped their total spend on employee benefits, compared to less than 20% who have reduced it (REBA, 2020).

IDR found that one fifth of employers have improved their sick pay provisions since the pandemic began last year. Harmonising provisions for lower-paid and often more at-risk employees with the commonly superior, status-driven terms of senior management has been a key component of such changes.?This also illustrates that 41% of HR and reward leaders will be prioritising ‘benefits equity’ in their future policies according to REBA.

While the pandemic has led some employers to review the blanket provision of more recently introduced benefits, which were often driven by the central office-location of their now more home-based staff, such as free food and gym memberships, addressing the needs of more isolated homeworkers has become vital in many large employers during Covid. This emphasis seems set to continue well beyond it.

71% of employers plan to increase their spend on mental health and financial wellbeing benefits over the next 12 months (REBA); while CIPD’s 2021 reward management survey published in March revealed that 12% of the 420 employers had introduced a new Employee Financial Wellbeing Policy in the prior 12 months and that twice as many were planning to introduce one in the next 12.

Home and flexible working has of course become a major area of HR work since Covid struck and is increasingly recognised as a vital part of an effective wellbeing policy. While a few financial institutions such as?Goldman Sachs and J P Morgan seem set to try to turn the clock back and force all of their employees back into the office once Covid allows, most employers appear to be assuming a permanent change and more extensive flexible and home working policies continuing into the future. Surveys show the vast majority forecasting a hybrid-style set of arrangements.

The CIPD’s?Embedding new ways of working post-pandemic?report shows that some 40% of employers said they expect more than half their workforce to work regularly from home after the pandemic has ended and the majority of their employees favouring this mode of work.?ONS data indicates that the numbers working at home jumped from 11% at the start of 2020 to 48% during the first lockdown in April.

?On a recent Financial Times Global Boardroom webinar questioning ‘Can hybrid working really work?’, the global vice-chair of consulting at EY Errol Gardner described how offering potential recruits and staff flexible work arrangements has rapidly become a ‘needed to play’, an essential factor in recruiting in competitive markets such as consultancy.

CMI Chief Executive Ann Francke claimed that more extensive flexible working has generally resulted in productivity improvement as well, finally consigning business cultures of presenteeism to history and heralding in her view ‘a broader definition of the workplace’, recognizing that what is important is ‘how and how well you do the work, and not where you are’. The other participants however, highlighted the challenges, particularly for line managers, of making this hybrid model work, requiring significant input and expertise from the HR function and major training input and upskilling for those managers.

On the productivity issue, before the pandemic in 2019 Ricardo Peccei and his colleagues at Kings College London assembled a range of 40 research studies demonstrating that leveraging the links between people management and business performance requires policies and attention to employee wellbeing (Peccei et al, 2019), linkages that are likely to have been strengthened even further by Covid. Three-quarters of us in HR (73%) think the pandemic will mean a long-term, permanent change in the way their business supports the health and wellbeing of their staff according to group risk industry body GRiD, 2021, which noted that that ‘employers consider the measures they’ve put in place over the past twelve months to be positive changes and not simply short-term fixes to get through the Crisis’.

3.????Skills, Learning and Development

Hardly surprisingly, the last 18 months have seen a major and almost certainly irreversible shift towards digital learning, as well as further boosting the digital economy and the importance of digital skills within it.

Our?research on ‘Digital Learning in the Post-Pandemic Economy’?in the midst of Covid revealed ‘a remarkably swift hurdling of many of the traditionally-reported barriers to e-learning’. One head of learning reported ‘A decade’s progress made in the last three months’. We found that 80% of employers had increased their digital learning provision since early 2020, in amount and range of applications, and that there had been wider demand for digital learning from learners at all levels (71%). Nationally, the Chancellor also announced a 400% increase in places on digital skills ‘boot camps’ for young people in his recent October Budget.

We summarised evidence showing that good-quality digital learning can be just as effective as traditional in-person/classroom learning; and that it can generate significant returns on investment –it typically takes less time and retention of learning is often improved. But successful applications require investment in learner support, and generally work as part of a wider L & D strategy, blending synchronous and asynchronous learning, which is required to increase and sustain learner engagement.

Developing this type of comprehensive L & D strategy covering training investments across the entire workforce might appear to have been strongly reinforced by the pandemic and the labour and supply issues now resulting from it. And certain aspects of investing more in ‘growing your own’ and developing a more diverse range of talent, rather than buying in experienced professional hires expensively, or contracting out lower skilled work, are evident from surveys and research studies over the last 18 months. But the current picture is a mixed one.

The CIPD’s Learning and Skills Survey at Work Survey 2021?finds more employers with a learning strategy and more of them believing that it is better aligned with the business strategy than pre-pandemic, so making clearer how learning adds value to the organisation. Just 18% of heads of learning think their learning strategy and investments will go back to what they were before the pandemic.

But the survey results were that only 36% of employers increased their investment in learning last year, while a similar one-third proportion cut their overall training budgets and 32% reduced their specialist training staff, possibly leading to a questioning of the view that this is a permanent and pervasive shift driven by Covid towards greater employer investment in skilling and re-skilling.

Arden University’s research similarly found demand for learning up at 60% of firms, but only 30% had increased their training spend. Most diverted existing resources to new programmes and channels. Even at executive level, the latest FT survey of?executive education in 2021 found?a quarter of employers planning higher spending in the next year, around half maintaining their 2020 spend; and 17% planning training cost reductions.

The Chartered Management Institute (2020) described the Covid-19 crisis as:

‘the ultimate test – a sudden, dramatic, life-threatening upheaval, where the outcomes are uncertain. In this extraordinarily difficult time, the value of great leadership is being demonstrated every day’.

And below the ‘heroic leader’ level, Zofia Bajorek?(2021) astutely notes the enhanced ‘importance of (particularly first-level) line management in the virtual world (of homeworking) for employee wellbeing and performance’, making for a widespread requirement for the upskilling of managers and supervisors moving forward beyond Covid. Whether this is recognised and will in fact be invested in post-Covid on a widespread basis is much more questionable.

At the other end of the organisational hierarchy, young people have suffered unduly in the employment market, with new apprentice starts down by 30% this year and half a million 18- to 24-year-olds unemployed by June 2021. Employers complaining about skill shortages would do better to boost their reskilling/upskilling activity coming out of Covid, and recognise the benefits, for employees/the employed and the unemployed/wider society, from giving disadvantaged groups and particularly young people with little bargaining power in the employment market, in CIPD’s words ‘a (fair) chance’. They have established a ‘One million chances’ scheme to give up to a million extra young people jobs and work experience.

The pandemic has also highlighted the importance of investing in developing lower paid workers in particular, with?many people shocked?last year at the low rates of pay and insecure conditions that the majority of our keyworkers, for example in care and customer service roles, who kept society functioning during last year’s lockdowns, have to endure. Ex-Bank of England governor Mark Carney in his recent book Values, writes the pandemic has shown the importance of ‘solidarity, fairness and responsibility’ and argues against the widening of pay differentials and worsening of conditions for the lowest paid evident over the prior decade.

There are some signs now of a trend to more commonly offering pay and career progression opportunities to these lower paid, often part-time, majority female workers. IES’s research found employers are taking a wide range of actions to support progression of low-skilled workers, further encouraged now by the staffing shortages for many of such roles. These include:

-???????Contracted minimum hours and the removal of zero-hour contracts to help to address costly staff turnover;

-???????The redesign of jobs to facilitate the progression of part-time workers into specialist and supervisory and management roles;

-???????Structured career development, career pathways mapping of different roles and the competencies required;

-???????Regular career conversations and the development of wider skills and management capability.

Our research has identified a range of benefits to such changes, including: reduced turnover and recruitment costs; better employee retention rates; improvements to service quality; and enhanced employer brand and reputation. And if labour shortages are, rather than being a temporary phenomenon resulting from the general return to the work after the disruptions of Covid, more of a longer-term trend reflecting on the loss of migrant workers and reduction in the size of the total UK employed workforce (which IES estimates to have fallen by around one million workers over the past 18 months), then hopefully more and more employers and HR functions will be making such policy initiatives and investments over the next year and beyond.

4.????Diversity, equality, inclusion and fairness

Rather than being ‘the great leveller’ of the bubonic plague in Daniel Defoe’s time, what has been christened as ‘this unequal pandemic’ three centuries later has exposed and deepened existing health and economic inequalities in this country.

According to the Equalities and Human Rights Commission chair, this has stimulated ‘an important national debate on fairness at work’, made people more aware of these inequalities and more willing to push back against them. This has been most evident perhaps in the impact around the world of George Floyd’s murder last May and the Black Lives Matter movement. As one popular placard carried by protestors put it, ‘Racism is a pandemic!’.

Race discrimination tribunal claims increased by 48% in the UK in 2020 and 130,000 people rapidly?signed a parliamentary petition demanding compulsory ethnicity pay gap reporting in the middle of the year. The UK’s gender pay gap reporting regulations were controversially suspended for last year and the UN’s new gender response tracker highlighted the widespread failure of governments and employers to address the differential impact of the crisis on women and girls.

But with their resumption and evidence of a worsening of pay gaps in the interregnum, there is now renewed pressure to enhance these reporting requirements to cover ethnicity and disability groups and to mandate action plans on employers to address their identified gaps. As the UN’s fifth Sustainable Development Goal describes, ‘Gender equality?is not only a fundamental human right, but a necessary foundation for a peaceful, prosperous and sustainable world’.

The widespread ineffectiveness of HR and equality policies to impact on representation and pay gaps over recent years has also been more forcefully highlighted during Covid. CIPD’s CEO Peter Cheese questioned powerfully last Summer in a webinar series following George Floyd’s murder:

‘Have?our D&I efforts just been scratching the surface, applying sticking plasters to wounds?on racism that?we haven’t understood??Has the diversity agenda not really been central to the business agenda??Or has it been?a case of?complacency?or?discomfort in dealing with ‘inconvenient truths?’????????????????????????????

The business and moral case for addressing these inequalities has been strengthened and we have seen since then financial commitments and targets for improvement being set from a much larger numbers of major employers, ranging from Starbucks (where the new promises include ‘cultivating a culture of inclusion, with a focus on partner retention and development’) to J P Morgan (putting its proverbial ‘money where its mouth is’ by committing $30 billion to promoting racial equity). Signatories to the BITC’s Race at Work Charter increased significantly over the past year to more than 600 employers by mid-2021.

But HR functions need not only need to give greater priority to addressing these inequalities and unfairness, they need to focus on taking actions which actually make a difference and drive progress. Both BLM and #MeToo have highlighted an HR say/do, policy/practice gap, with common practices such as contractual ‘gagging clauses’ arguably reinforcing existing discriminatory cultures and behaviours rather than redressing them.

The pattern of existing actions most commonly majors on voluntary, training-focused, ’soft’ initiatives such as Unconscious Bias Training . Research has shown UBT to have a highly questionable impact on equality and representation and pay gaps, and this pattern leads McKinsey to call for a fundamental shift in diversity strategy and a ‘new gender equality playbook’. The majority of UK employers continue to refuse to publish ethnicity pay and representation data (despite support from business and employment groups,); and most last year also didn’t publish their gender pay gap data.

IES’s research supports HR in future pursuing a broad range of initiatives across a full range of HR/employment areas for a sustained period. It also suggests that this needs to include compulsory ‘hard’ initiatives, at least initially, to support and drive culture change, such as:

-???????‘blind’ recruitment procedures,

-???????salary history discussion bans and raising minimum pay levels, with

-???????pay and career progression opportunities for all,

-???????training and nurturing talent from under-represented groups; and

-???????‘Rooney rule’ minority group shortlisting, particularly for senior jobs, combined with

-???????regular data publication and transparency on progress and targeting increases in representation at these levels.

5.????Voice

Reviewing the evidence that: more companies (at least one-third) have been regularly surveying the attitudes and engagement of their often more home-based workforces during Covid; involving them in discussions on hybrid working as some return to the office; and even a modest reversal of the decline in UK trade union membership - which has grown by over 100,000 during 2020 to go back over 6.5 million members - my old CIPD colleague Mike Emmott is optimistic about employee involvement. In an article for the IPA he writes:

?‘During the pandemic calls for a shift away from shareholder primacy and towards more responsible, long-term and stakeholder-oriented business models have now become mainstream… the concept of employee voice has been increasingly recognised as the right starting point for individual employers to consider what works best for them, whether it’s informal consultation processes, training line managers or works councils’.

The?effort is undoubtedly worth it. In the evidence review carried out as part of the IPA’s original research for the government on employee engagement, voice and employee consultation and communications emerged as one of the four main ‘enablers’ (along with integrity and leadership) of engagement levels, which in turn correlates with a range of business and employee performance outcomes. The EHRC’s research shows that transparency and involvement correlate additionally with employee perceptions of fairness and fair treatment.

So employers and their HR functions should definitely be prioritising employee voice in support of higher employee engagement and performance. This has been reinforced during the pandemic as a number of studies demonstrate that almost by necessity, employee levels of autonomy have often increased.

Whether this shift towards more democratic and ‘servant leadership’ and employee voice is actually happening on a widespread basis is however, more open to question.

The?latest research report by the IPA?for the Financial Reporting Council, on the impact of the 2018 corporate governance reforms designed to promote employee representation and ‘voice’ at board level,?concludes:

‘It is disappointing so many FTSE 350 annual reports downplay the importance of workforce engagement, relegating it to boilerplate language in a formulaic table of stakeholders… widespread and continued resistance and skepticism’.

And whatever the pressures on employers to provide work flexibility to recruit and retain employees in the current tight labour market, Kings College (2021) latest study of working flexibility is depressingly familiar. They found all forms of flexible working bar homeworking had, remarkably, declined during the pandemic. They attribute this to ‘narrowly defined and inflexible working options’, ‘unsupportive cultures’’, ‘ill-informed managers’, leading to poor policy implementation; and a ’common failure to consult individual parents on policies or practice’.

The researchers conclude:

‘Parents want to see lasting changes to improve their working lives after the pandemic, including: more creative thinking, ensuring a gender-inclusive approach, trust & understanding from employers, strengthening employee voice. ‘

PwC, who have moved to offer almost complete choice on work location to their employees, describe this approach as being ‘about meeting people where they are’; and there would certainly seem to be plenty of opportunity for forward-looking HR functions to differentiate themselves and improve employee engagement levels in this way.

On financial involvement, there has undoubtedly been growth in interest in team bonus, profit sharing and all-employee share plans and employee ownership during the Crisis. According to Startups magazine, Covid-19 is ‘driving huge growth in employee share schemes’, or interest in them at least.

6.????Data and evidence

The final two HR priorities have more to do with the processes that underpin all of the other areas of work and capabilities that I am suggesting HR professionals need to prioritise in the months and years ahead. The first is continuing the evolution towards better HR information, supporting more evidence-based HR action, rather than HR policies being driven largely by market practice and history.

The pandemic has clearly highlighted the importance of up-to-date and valid employee and HR information, even just to know where people are working and that they are safe. HR information technology has therefore not surprisingly ‘increased in importance during the pandemic’. This is according to a?recent survey?by XpertHR.?It found that 85% of (mostly larger) organisations now have a formal HR technology strategy in place, or plan to introduce one (25% of them) over the coming 12 months. Almost nine in 10 deployed some form of technology to support HR activities, with the most common being an HR management/HRIS system, used by almost three-quarters (71%) of respondents.?

The CIPD describes how ‘It’s important that people professionals adopt this evidence-based approach because of the huge impact management decisions have on the working lives and wellbeing of people in all sorts of organisations worldwide’. It underpins their profession map of requirements and capabilities for people professionals which requires practices to be principles-led, evidence-based and outcomes-driven’. They set out a six-step process to put the approach into practice, across all areas of HR work.

For example, the CIPD Learning Survey concludes, ‘be evidence-based: define your desired outcomes, engage key stakeholders, gather evidence and measure learning impact on performance’. The CIPD’s reward management survey recommends that you ‘establish an appropriate reward design by collecting, analysing and interpreting the people and business data available. Then, explore and test the available options in various scenarios’.

IES’s values research similarly found that one of the CIPD’s stages ,‘evaluation activities’, were typically ‘used to encourage employees to consider how well they, or the organisation, are demonstrating the values and then discussing their thoughts, enabling the organisation to better put their values into practice’. IES similarly recommends that employers gather and publish their significant employment statistics and ‘analyse and act on the key drivers and demonstrators of success in creating a rewarding, growing and successful organisation’.

An example of this evidence-based and impactful, differentiated HR management, reflecting on learning from the pandemic and the new labour market situation, is provided in the innovative ‘first come, first served’ recruitment practice recently introduced in parts of its operations by retailer The Body Shop.

How can you possibly recruit without any selection?! Well, with a focus on targeting minority and disadvantaged groups and well-directed investment in employee training and onboarding, their initial trials found that monthly turnover in their major distribution centre dropped by 60% to 14% within a year after removing most of the selection process. The Company only had to work with one temp agency instead of three. A supervisor told the researchers, “When you give people access to something that they’re struggling to find, they’re very committed to working hard and keeping it.” The trial has since been rolled out to other locations.

7.????Re-engaging the workforce

I have already described the importance of employee engagement and HR professionals acting through all of their different areas of responsibility and activity – employee relations, reward and wellbeing, learning and development and so on – to maximise engagement levels, especially now that recruitment and retention have become much more challenging in a supply-short labour market. So what impact has the pandemic had on engagement?

While the many and varied models and methodologies show different levels of employee engagement, there appears to be a broad consensus amongst survey providers on two points:

-???????First, overall engagement levels amongst UK employers are generally low by international standards;

-???????Second, they have remained flat through the pandemic.

Qualtrics, for example, reported before Covid struck that ‘UK workers are some of the least engaged in the world… employees in the UK recorded average engagement scores of just 45%, only Hong Kong and Singapore scored lower than the UK.’ Gallup produced their annual ‘State of the Global Workforce, 2021’ report this June, concluding that across the UK and much of Europe:

‘Individual countries generally show little or no change in engagement levels between 2019 and 2020.This stagnation in 2020 follows an even longer decadal trend - engagement in Europe has barely budged in the past 10 years. Across most countries, fewer than two in 10 employees are engaged by their day-to-day workplace experiences’.

The NHS, with one of the world’s largest annual staff engagement surveys gathering 600,000 responses, illustrates this well. Overall engagement levels were flat between late 2019 and 2020, although a higher proportion of staff, 26%, perhaps due to the additional pressures on the Service of Covid, now ‘often think about leaving’. Staff pride in their employer and recommending it as a place to work, one of the key dimensions of their engagement model, increased (from 63% to 66% of staff), as did the proportion who agreed patient care is the top priority in the organisation (up to 79%).

But so did their reported stress and workloads and its negative impact on their health & wellbeing, with 75% for example recording that they were regularly subject to unrealistic time pressures, keeping the overall engagement scores down. Addressing the high vacancy levels in areas such as nursing and reducing employee turnover rates through improvements in employee engagement are therefore top of HR professionals’ priorities in the NHS, and need to be in many other UK employers today.

Gallup emphasise that this stagnation is not inevitable, with improvements recorded in other parts of the world and evident ‘when leaders choose to make work meaningful and make engagement a priority’. The work elements with proven links to performance in their database include: staff knowing what's expected of them at work, experiencing encouragement and development, and knowing how their daily work contributes to the purpose of the organisation. In addition to productivity and performance, they find that employee engagement is related to workers'?wellbeing, for:

‘Unsurprisingly, when people feel supported at work and get to do what they do best every day, they feel better about their lives overall. They're more likely to be considered thriving in their wellbeing and are less likely to report feeling stressed or worried. 51% of actively disengaged European employees say they felt stressed the previous day, compared with 31% of engaged workers -- a finding that has serious implications for their physical and mental health’.

The NHS staff survey has found that those trusts with higher engagement scores achieve higher ratings in their annual health check performance and have lower staff absenteeism and attrition.

Conclusions for HR: Learn from the past, plan for the future

‘If the COVID-19 pandemic has taught us anything, it’s that business is all about people. The virus has destroyed lives, jobs and industries; the lockdown has transformed the way we work, communicate, learn and innovate . . . Matters of leadership, workforce engagement, productivity and skills are suddenly at the centre of organisations’ strategy formulations.’ IBM Report (2021), ‘How HR Leaders are Rewriting the Rules of Work in a Pandemic’

‘UK Employers are at a watershed. The cultural and societal changes caused by the events of 2020 are likely to leave a lasting legacy on the workplace. There will be no stepping back, only consideration of how to step forward.’??????????Udara Ranasinghe, ‘The shape of things to come: A look at the future landscape for employers’. IES HR Perspectives 2021.

So in sum, this horrendous, extended experience of Covid-19 in our lives has at least highlighted the importance of people at work and how they are managed and engaged. Or not.

Too many UK employers in the previous decade had pursued a strategy of minimum cost/minimum responsibility for their workers, in pursuit of maximising short-term margins and returns to shareholders. The short-sightedness of this approach has been fully exposed by the pandemic.

Now, with the right investments in people and a focus on evidence-based HR practice, and with attention to the seven priority issues and areas my research has highlighted, employee engagement levels can be improved on a widespread basis; and thereby individual and organisational health and performance through the most effective and impactful HR management.?