5 major HR trends of 2017

The years 2015 and 2016 saw a number of changes reshaping the workplace as we know it. As HR takes on a more strategic role, it’s necessary to look back and take stock so we can begin to root out obsolete practices, redesigning them to fit this new reality.

We’ve come up with a list of the five most important trends that will impact HR in 2017 to help you get started.

1. Millennials become the “older” generation in the workplace

While in the past few years the buzz has been around the wants and needs of millennial employees, you may be surprised to find out that it’s already time to welcome in the next generation.

In 2017, the oldest members of Generation Z (the generation following millennials) will be turning 21-23, which means they will begin joining the workforce as interns and entry level employees.

This will present new challenges within the workplace, as we start to understand what this new generation will bring, and whether millennials are ready to become managers.

2. An even stronger focus on culture & ethics

A string of company scandals in recent years, including Zenefits, Wells Fargo, ANZ Bank, Mitsubishi, Volkswagon and Toshiba, have all been attributed to toxic cultures that encouraged unethical business practices. The majority were linked to impossibly high standards set by executives and upper management, leading employees to cut corners to reach them.

A combined Columbia and Duke University study, found that a focus on the bottom line at the detriment of people, can encourage unethical behavior. Shiva Rajgopal of Columbia University explained: “Our research provides systematic evidence - perhaps for the first time - that effective cultures are less likely to be associated with short-termism, unethical behavior or earnings management to pad quarterly earnings.”

In the last few years, company culture has been in the top three priorities for HR and executives. What these scandals have revealed is that creating a strong, ethical, company culture cannot be done with a surface level view of the organization alone. It needs deeper, company-wide input. As a result, finding ways of collecting honest employee feedback about business practices will be an important challenge for HR in 2017.

3. The annual performance review “honeymoon” is over

In 2015 and 2016, a number of big companies announced their decision to ditch the annual performance review (for example Deloitte, Adobe, GE and more recently SAP). This led many others to follow suit.

However, about a year later, we have seen that not every company has reached the promised success this switch was supposed to provide. In fact, some have actually experienced a drop in performance and employee engagement.

What people have come to realize is that it’s not simply about getting rid of outdated systems, but designing a strong alternative and leading a thorough and inclusive transition process. This trend should see HR spend more time on data collection and change management in order to successfully redesign and transition their companies towards a modern performance management system.

4. Decoupling performance from pay

A primary issue these companies have come across is what to do about pay. The departure from the traditional annual performance review has left this question up in the air. Should those which have switched to continuous and/or peer-based systems continue to make compensation decisions in the same way? How can it be calculated in companies that have taken the extra step of ditching ratings?

It is now widely believed that linking performance management to compensation would hinder the intended purpose of ditching the annual review, which was to create a more continuous learning-based approach. Here are five trends that companies are following to decouple pay from performance management.

5. Re-designing traditional practices to fit the modern workforce

We are seeing a break from traditional teams, types of employees, and even job roles. A study by Fieldglass revealed that in 2015, the average business workforce consisted of 54% traditional full-time employees, 20% contingent workers (such as freelancers, interns and contractors) and 26% that work in a grey area in between (such as remote and part-time workers).

In 2017, they predicted that the number of “non-traditional” workers would grow to 25% contingent, 34% grey area, and 41% traditional workers. With over half of the workforce working in non-traditional positions, HR will have to focus more on developing innovative ways to engage and integrate this new workforce into their company’s culture.

This, in turn, is contributing to the increasing reorganization of traditional teams into structures which are cross-functional, ad hoc and self-steering. Similarly, traditional job descriptions are going out the window. These new types of teams are utilizing the full skill set of each employee, rather than limiting them to a narrow range of tasks and skills. This means that an employee with a passion for PR and a talent for graphic design will be able to utilize both skills on a project needs basis.

For HR, this reorganization means you will have to shift performance management to a more fluid system that meets the needs of the new workforce. Whether or not employees have one manager, multiple, or none, they need feedback to continue learning and improving. In the new workplace, peer feedback will therefore be more important than ever.

Development information cannot be siloed within the boundaries of traditional teams. Employees should be free to ask for feedback from whomever they want at any time, resulting in a shift towards self-steering learning & development. HR will need to facilitate this process by removing barriers and providing employees with the training and tools they need.

Performance management is a ever changing landscape, download our 2019 Guide to Modern Performance Management to get you started today.

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