The New Frontier

Technology and analytics are among the main drivers shaping the future of HR.

By Karen Crone

What challenges do leaders face and what steps are they taking to best position their organizations for success? These are the questions a recent survey from Paycor was looking to answer when it asked leaders of U.S.-based small and medium-sized businesses (SMBs), or those with less than 1,000 employees, to share their thoughts about the present and future of HR. While the feedback from the front lines confirmed and amplified the findings of other researchers, several new and telling details have emerged.

Here are the top takeaways.

1. The next 36 months will see heavy investment in talent management technology. Over the next three years, SMB leaders say that they plan to invest in four main areas: recruiting, learning and development, compensation management, and data analytics. All of these investments have one thing in common: people management. Whether it’s finding the right talent, developing and compensating people, or using data to predict labor trends, SMBs see talent as integral to future success.

This is no surprise considering that unemployment is near a 50-year low and turnover has reached historic highs, with the Bureau of Labor Statistics reporting that 3.5 million employees quit in early 2019. Given the talent shortage in nearly every industry, SMBs are looking for a competitive edge wherever they can find it, especially in learning and training.

A MetLife survey from 2019 found that 91 percent of employees say career development is an important factor when deciding whether to take a new job or stay in their current role. Employers are investing in learning now precisely because it hits so many critical objectives; not only does it increase retention and attract new people to the organization, it also helps businesses upskill and train their existing workforce to meet the future demands of the business.

2. HR leaders have become savvy consumers of analytics software. In the next three years, nearly half (48 percent) of HR leaders say they’ll be more data-driven. To achieve that goal, they’ve educated themselves on the role technology plays as an organization grows and matures to fully embrace the power of data and analytics.

HR hasn’t always been the primary user of data technology, but increasingly, HR teams are in the driver’s seat—and they expect a lot from their analytics software. From analyzing headcount and monitoring turnover to deep benchmarking capabilities so they can see how they stack up against their competition, HR leaders will only invest in analytics that clearly make a decisive organizational impact.

3. Compliance is still a top concern. Do current political trends change the way SMB leaders feel about compliance? Only 20 percent say they’re less concerned while 43 percent feel the same and 37 percent are more concerned.

SMB leaders report that the patchwork of regulations at the state level regarding issues such as paid sick leave and pre-employment drug testing adds significant complexity. Thirty-nine percent of American workers in the private sector do not have paid sick leave, according to a 2018 Bureau of Labor Statistics study. Will paid sick leave become a federal regulation in the future? It’s impossible to predict but there’s definitely a bottom-up movement as 11 states and Washington, D.C., as well as 30-plus localities, now require paid sick leave.

Similarly, drug laws, especially as they relate to hiring, are in a state of flux. Currently, 33 states have legalized medical and/or recreational marijuana. SMB leaders are wrestling with what all that means to their business. In the coming years, employers are going to be forced to make tough decisions about whether pre-employment drug testing makes sense for their business.

4. HR as we know it may be coming to an end… but most HR leaders feel fine with that. Forty-eight percent of HR leaders believe many core HR functions will be fully automated by 2022 and 47 percent expect their jobs to become more “big picture” and strategic. It’s true that many HR departments are still held hostage by rigid legacy systems, but don’t expect that to last. In the next three years, look for HR teams in the SMB world to use technology to do two things: automate routine, repetitive tasks and augment their ability to forecast and plan with data-driven decision-making tools.

Automation might sound scary, but it’s actually the door HR will walk through to get to a new place in their organization—a wide-open place that gives them the breathing room they need to coach and develop, retain, and grow their company’s greatest asset: their people.

It’s certainly an exciting time to be in HR and the future of small and medium-sized businesses is bright, though not without challenges.


Karen Crone is CHRO of Paycor.

Posted March 30, 2020 in Enabling Technology

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