Our recent HR Blog about the rise of the social enterprise defined this as the overarching theme of Deloitte's 2018 Human Capital Trends Report. The rise of the social enterprise reflects the fact that social capital is achieving a newfound status alongside financial and physical capital as a measure of the value of a business. This change is being driven by many factors, with trust being one of the leading metrics. Ernst & Young's global study on trust in the workplace poses the question 'could trust cost you a generation of talent?' The subtext being that businesses that don't take the trust issue seriously could suffer long-term consequences. Edelman's annual trust barometer for 2019 presents a more positive view for employers. Despite a high lack of faith in 'the system' and institutions overall, there is one relationship that remains strong, and that is the one individuals have with their employer. So how can HR Professionals ensure that these big picture signals aren't ignored in the rush to tick items off ever lengthening to do lists? Let's unpack the headlines so that you have a clear picture of how the world of work is evolving and which HR trends matter to your business in 2019.
Way back in 2014 we blogged about 'The Human Era' and the role that building trust would play as the Human Era evolved. Back then, the trust factor (and even the concept of the Human Era) were somewhat fringe concepts, but we called out their importance when very few others were talking about it. Fast forward five years, and those themes are now headline acts. Make no mistake, trust is the critical lens through which organisations will need to calibrate culture and operations if they want to succeed in business going forward. Before we take a look at the HR trends emerging from the current trust crisis, let's unpack the current research about trust, in the workplace and more broadly.
Trust in the Workplace
Ernst & Young's most recent global trust in the workplace report surveyed approximately 9,800 adults aged 19 to 68 employed full-time across a variety of companies in Brazil, China, Germany, India, Japan, Mexico, the UK and the US. EY also surveyed more than 3,200 younger adults—Generation Z, aged 16 to 18—to understand how these 'soon-to-be professionals’ perception of trust might influence their future employment decisions. Despite the fact that these results are a couple of years old, the realities of global social, political and business experiences in the last couple of years make the results more relevant than ever. Here are the headlines:
Less than half of global professionals trust their employer, boss or team/colleagues. Less than half of global respondents have a “great deal of trust” in their current employers (46%), boss or team/colleagues (both 49%).
What causes a lack of trust? The top five factors leading to respondents’ lack of trust in their employers were:
Unfair employee compensation,
Unequal opportunity for pay and promotion,
Lack of leadership,
High employee turnover, and
A work environment not conducive to collaboration.
Which factors promote trust? The leading aspects that were “very important” to a majority of global respondents in determining the level of trust to place in their employers were:
“Delivers on promises” (67%).
“Provides job security” (64%).
“Provides fair compensation and good benefits” (63%).
“Communicates openly/transparently” (59%).
There was a tie for fifth place between “provides equal opportunity for pay and promotion for all people regardless of differences” and “operates ethically” (both 57%).
The top factors Gen Z respondents globally said were “very important” in trusting an employer were “provides equal opportunity for pay and promotion” and “provides opportunities to learn and advance in my career” (both 66%).
Edelman's 2019 Trust Barometer Report may present a more positive set of results about trust in the business context, but the measure of trust in government and the media are still (unsurprisingly) low.
Here are the top 10 highlights from the report:
Return to record-high trust inequality.
The system isn’t working.
News engagement surges.
Trust in search at highest-ever level.
“My Employer” widely trusted.
CEOs expected to lead on change.
The new employee-employer contract.
Trust cements employer-employee relationship.
Trust divided along gender lines.
Companies can improve society —and do well as a result.
Notice the number of workplace and business related topics in that list. Their prevalence indicates that in building on the strong foundation of trust employees have in their employers, and taking up the mantle of the social enterprise, businesses have a massive opportunity on their hands. If you can navigate the unfolding world of work and help transform your business, everyone can benefit.
HR Trends That Matter in 2019
The HR trends that matter to Australian businesses during 2019 and beyond should be considered through these lenses of trust and the shift towards social enterprise. Before we dive deeper, here's how Deloitte defines social enterprise in their 2018 report:
"A social enterprise is an organisation whose mission combines revenue growth and profit-making with the need to respect and support its environment and stakeholder network. This includes listening to, investing in, and actively managing the trends that are shaping today’s world. It is an organisation that shoulders its responsibility to be a good citizen (both inside and outside the organisation), serving as a role model for its peers and promoting a high degree of collaboration at every level of the organisation."
Taking all of the above into account, which HR trends matter to HR Professionals this year and beyond? Below we've outlined the consensus based on HRD's preparatory research for the annual HR summits this year.
HR Trend #1: Preparing for the future of work
As the business environment continues to chance apace, HR has no choice but the change with it. With shifting workforce demographics and work practices being transformed, companies are turning their attention to prepare for the future world of work.
On average, HR professionals are generally positive about their preparedness for the future of work. With an uptick in HR budgets and more support from leadership to drive workplace transformation, HR departments are embracing automation and new technology to enhance the employee experience. However, uncertainty around the future skills needed by tomorrow's workforce remains. There are still factors that are difficult for HR to predict and plan for, meaning that preparing for the future of work will continue to challenge HR teams for some time yet.
73% of HR professionals profess to feeling somewhat prepared for the future, with 17% feeling very prepared and a very small minority of just 10% feeling not prepared at all.
HR Trend #2: Diversity and inclusion
Workplace diversity has been on the HR radar as a contributing factor in building successful businesses for some time. However, the last 18 months have seen a sharpened focus on diversity and inclusion as a more imperative part of organisational culture. Since the spread of the #MeToo movement in late 2017, many HR teams around the Asia Pacific region have received support from their CEOs to enhance workplace sexual harassment and gender equity programs. Many Australian businesses already had diversity practices in place, but since 2017 companies have expanded their diversity and inclusion programs to focus more broadly on ethnic, sexuality and disability inclusion.
HR Trend #3: HR technology
Everyone in HR is going (or doing) digital. Digital technologies are changing how work gets done and necessitating a different skill mix and strategies to either attract or develop those skills. The critical component in this transformation isn't just the technology, it is the mindset change required to go along with the introduction of HR tech.
With more virtual working arrangements and tech savvy employees than ever before, HR departments are working hard to keep up with the pace of change. HR departments are increasingly championing HR technology right across the Asia Pacific region, and the digital transformation of HR is gathering momentum.
The good news is that CEOs are empowering their HR teams with increasing budgets to purchase best-in-class HR tech platforms and systems. According to HRD's research, HR directors are rising to the challenge, with 74% of HR professionals planning to increase their spend on HR tech over the next 12 months.
HR Trend #4: Driving Cultural Change
Just when HR felt like it was getting on top of the disruption created by HR software, we're teetering on the precipice of another digital workplace revolution, with automation, artificial intelligence, and the Internet of Things (IoT) set to shift how businesses function again. As such, HR has the perfect opportunity to further redesign processes to bring out the best in people, and to ensure that technology serves employees and not the other way around.
More than ever, consumers and employees are driven by values. Employees and applicants are aware not only of an employer's advertising campaigns and brand communications, but the charitable giving an employer does, the messages it sends and the way it treats its partners and contractors. People want to align with companies that share their values, and it is easier than ever to find out if a company matches your value set.
Cultural change is perhaps the most important building block in becoming an organisation of the future and making it possible for employees to navigate the changes outlined above. This means that just as an organisation’s goals and strategies develop over time, so too must culture. And if you’re at the top, it’s your job to lead such change. HR has the opportunity to support senior leaders, drive change and teach decision makers how to change. Culture is the container inside which transformation is possible and HR is in the hot seat for the foreseeable future.
HR Trend #5: Building Leadership
The perspective that employees should get promoted up the hierarchical ladder based on meeting KPIs and historical definitions of merit is a normalised aspect of the internal promotion process. It is often assumed that leaders and managers who do get promoted will also be good coaches (or will be coached to become so if not). However, the reality is that many individuals who get promoted based purely on meeting KPIs and narrow definitions of merit are neither good leaders, nor good coaches (no matter how much coaching they receive themselves). The internal biases that result in the promotion of such individuals can have negative ramifications on culture, and movements like #MeToo are calling for an overhaul of how managers and leaders are selected, assessed and rewarded.
Frameworks like 'agile' and 'lean' are fundamentally transforming the way organisations operate. The Lean principles of continuous improvement, respect for people, and a relentless focus on delivering customer value are making teams rethink the practices that have guided them for decades, including the way 'leadership' operates within an organisation. The lean leadership model is based on one crucial belief – the leader’s goal is to raise new leaders.
To grow, each person needs to feel challenged by their work in order to look for better ways of doing it. Operating in this manner isn't always easy for the leader whose entire work life has been built on micromanagement or command and control. Leading in this way results in a team that will not bother to do anything outside instructions given by a leader. When challenged and given the liberty to seek improvement, an employee (or team) has the opportunity to develop a mindset focused more on solving problems instead of just following instructions. However, leaders need to build the capacity to be able to guide teams in this manner and the transition from old ways of working isn't always easy. If businesses want to build leadership capabilities, then it is necessary to look to alternative models that represent a step change in the way team are managed (or coached to manage themselves).
HR Trend #6: HR Data and Analytics
Big data continues to be one of the most pressing HR issues, not just for HR teams, but organisation wide. Despite the evolution of increasingly sophisticated HR systems, HR Professionals still struggle with developing the infrastructure, teams and processes needed to collect and analyse HR data. Without doing so, their capacity to accurately inform leadership decision-making is impaired.
The most critical data an analytics success factors identified by HRD's annual research were:
Choosing the right tools to collect reliable, accurate data.
Accuracy and data integrity –issues of honesty and transparency.
Comparing various data mining tools and solutions.
Flexible reporting versus customised reports – choosing the right reporting method.
Developing the technical and human infrastructure to capitalise on data.
Designing and creating useful, customisable and dynamic HR data sets.
Linking employee data with client and financial data.
Using data to understand customer experience (CX) and employee experience (EX).
HR Trend #7: Reducing Bureaucracy
Organisations are increasingly being asked to shape internal operations in a way that mirrors external business trends. To that end, executives have taken to terms like 'agile' and 'lean' with more than 80% of C-level executives in one survey calling agility the most important characteristic of a successful organisation. But what exactly does that mean?
Frameworks like lean and agile are pretty well-defined. However, according to HR Dive, C-level interpretations of these terms are often understood to mean flexibility and resilience in the face of change. From small startups to international behemoths, companies love to think of themselves as nimble, agile and lean. Founders and CEOs alike worry that too much bureaucracy will kill what’s special about them and take away their competitive edge. However, Mikaela Kinear points out that what too many leaders get wrong is mistaking process for bureaucracy. We know bureaucracy when we see it — layers of approvals, endless red tape and a feeling that it’s all to no end.
She goes on to illustrate that defined HR processes free up time by reducing bureaucracy. Applying the 80/20 rule, processes that work at least 80% of the time keep you from having to reinvent the wheel. Creating a process does not lock you into a box, or prevent flexibility. Just the opposite — relying on a process frees you up to spend time thinking creatively about the rest of your business. You’ll spend energy where it’s needed most, which is thinking through exceptions. Well executed and automated HR processes will go a long way to reducing bureaucracy.
HR Trend #8: Enhancing Credibility
While many high-profile CHROs have strong influence within their executive teams, there are still numerous HR Professionals across Australia who struggle with internal credibility issues. According to HRD's research, even when HR managers and directors have won the coveted seat at the table, they sometimes struggle with securing support for their initiatives.
This is not a new issue. For sixteen years, HR professionals have been telling HRD that the biggest barrier to their success is often their lack of credibility as business partners. Things do seem to be improving, but there are residual issues of HR departments being seen as policemen, fire fighters or problem solvers.
To continue the work to resolve this issue, HR Professionals need to continue to incorporate external trends, perspectives, and voices by maintaining positive relationships, not just with customers and employees, but also with local communities, regulators, and a variety of other stakeholders. Building these relationships challenges business leaders to listen closely to constituents, act transparently with information, break down silos to enhance collaboration, and build trust, credibility, and consistency through their actions.
This is not a matter of altruism or virtue signalling: doing so is critical to maintaining an organisation’s reputation; to attracting, retaining, and engaging critical workers; and to cultivating loyalty among customers.
One last thing - let's not forget that there is a Federal election in Australia this year. A change in government could have a significant impact on the workplace from industrial relations perspective.
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