When Kleiner Perkins Caufield & Byers analyst Mary Meeker said 2013 will be the year of re-imagining everything in a recent, highly publicized presentation at Stanford University, she was talking about Internet trends. But she could have been describing workforce management.
In the next 12 months, companies will re-imagine how work gets done, who does it and what tools they use to accomplish the task. Workforce changes that started during the recession will intensify, including offering more flexibility over where and when their people work, and relying on more contingent and contract workers.
And, mobile devices and social media-infused software will be everywhere. “Companies are being more open-minded about embracing changes in technology,” says Razor Suleman, chairman of employee rewards software-maker Achievers.com.
In the United States, companies will re-examine employee benefits as the next wave of health care reform takes hold, while simultaneously monitoring progress of much-anticipated reforms to the country’s immigration policies. At the same time, more businesses at home and abroad will use global human resources systems and “Big Data” workforce analytics to better gauge their current and future workforce needs.
Human resources won’t escape this re-thinking of the status quo. HR staff will see continued consolidation of the vendors they buy from. More departments will move from HR software they maintain on site to services that live in the cloud. “As every single consumer uses the cloud every day, for iTunes, LinkedIn and Twitter, there’s more trust at businesses that they can use it, too,” says Jason Averbook, chief business innovation officer at HR analyst firm Knowledge Infusion.
Here are some other major workforce and HR trends to watch for in 2013:
Hiring will remain flat as more companies distinguish between jobs and work. Close to three-quarters of U.S. employers plan to maintain current, minimal hiring levels, at least through the early part of the year, according to the Manpower Employment Outlook Survey for the first quarter of 2013. More companies will fill vacancies with contingent workers or independent contractors. That’s in keeping with a continuing separation of jobs from work, says Ravin Jesuthasan, a compensation expert and managing director at consultancy Towers Watson & Co. Jesuthasan adds that companies are breaking down jobs into discrete activities that can be parceled out to contractors or partners, and using employees to oversee or assemble that work, whether it’s software code or cars.
Salary increases will return to pre-recession levels. Median increases for 2013 will hover around 3 percent, up slightly from 2 to 2.5 percent in the years immediately following the recession, according to a Buck Consultants compensation survey. High achievers will do better, receiving about 50 percent higher pay increases than average workers, says Kerry Chou, a compensation practice leader for WorldatWork, the nonprofit human resources researcher. Chou also expects companies to hand out more bonuses and other incentive pay in 2013.
Companies will emphasize their employer brands. To appeal to top prospects, companies will sell themselves using the same tactics they now use to sell products. “The world’s best recruiters are increasingly thinking like the world’s best marketers,” LinkedIn CEO Jeff Weiner told attendees at the company’s corporate user conference this fall. Game developer Electronic Arts Inc., for example, created a career site inside its EA Sports website and holds “hackathons” to get the attention of avid gamers who might want to work for the company.
Companies will grapple with instituting health care reform. With elections over and more court challenges ahead, companies will do their best to start incorporating Obamacare. Some say they’ll cut hours so employees won’t be eligible for benefits or companies will take different steps to curb a potential financial hit, while others “are wanting to provide benefits but struggling to figure out how to afford that,” says David Van De Voort, a Buck Consultant compensation consultant and principal.
Immigration reform will move to the front burner. President Barack Obama’s re-election paved the way for action, which among other things could mean a federal mandate governing E-Verify. With the number of illegal immigrants entering the United States at a 10-year low, however, the focus of reform could turn to the country’s millions of long-term illegal residents. Also in the spotlight: quota restrictions on skilled workers that have hampered companies’ ability to fill positions in science, technology, engineering and math—the so-called “STEM” jobs—with qualified candidates from China, India and elsewhere.
Boosting technical training programs here is the long-term solution to that problem, Jesuthasan says. But shorter term, “We need to make it easier for them to come back,” he says. “There’s a business imperative to do that quickly.”
HR departments will do more with less. The long-term outlook for workforce management professionals is good, with HR specialist jobs forecast to increase by 21 percent through 2020, according to the U.S. Bureau of Labor Statistics’ biennial Occupational Outlook Handbook. But much of that growth will come from third parties that employers contract with to take over HR management functions, including professional employer organizations, staffing firms and recruitment process outsourcers.
Smartphones will take over the world. That’s an exaggeration, but not by much. In 2012, smartphones accounted for only 17 percent of mobile subscribers worldwide, but penetration grew by 42 percent, according to Kleiner Perkins’ Meeker, who has tracked tech trends since the 1990s. With more people using smartphones for play and work, more businesses will use smartphone apps and mobile-enhanced websites for everything from recruiting and workforce management to payroll and benefits.
Social software will infiltrate more nooks and crannies of workplace technology. The fancy term for this is “consumerization” of enterprise software. In layman’s terms, it means more enterprise software-makers are using the mass appeal of Facebook and Twitter to build social-network features into their products. It started with a trickle of applicant tracking and collaboration tools, but now social software has turned into a flood of offerings for wellness programs, employee rewards and recognition, and more. “Companies like 3M, KPMG, Cox Communications,” are using these tools, Suleman says. “We’re now seeing this as mainstream adoption.”
The flexible, virtual, wall-less workplace will go mainstream. Silicon Valley startups run by 20-somethings no longer represent the majority of companies where employees make their own schedules, work from home or share open-plan office spaces that promote collaboration. Companies that want to hire millennials or other top talent are offering work-flex programs and cultivating workplace cultures that value communication, trust and respect, says Robert Levering, co-founder of Great Place to Work Institute. “Maybe 20 years ago, a great workplace culture wasn’t on a job seeker’s radar,” says Susan Lucas-Conwell, the institute’s global CEO. “Now it’s very routine. It has become a criteria, it’s up [higher] on the scale of what’s important when you’re looking.”
More companies will take to the clouds, and go “glo-cal.” From the smallest businesses to major enterprises, companies will adopt human capital management, enterprise resource planning and other HR “cloud” services that live on the Internet. “Vendors who are cloud vendors, this is their year,” Averbook says. Workforce management software provider Workday, buoyed by proceeds from a gonzo IPO, will lead the pack of U.S. HR technology vendors setting their sights on global domination. They’ll juggle the needs of customers who want workforce management and other systems that are global and local, or as some pundits have started calling it “glo-cal”—”global” so they have up-to-the-minute data on employees, and “local” to account for country-by-country differences in payrolls, taxes, government regulations and workforce customs and culture.
IPOs and mergers and acquisitions will continue. A more stable business climate as well as successful stock offerings from Workday as well as Cornerstone OnDemand Inc. and LinkedIn Corp. will lead more HR technology vendors to go public. Industry watchers also expect to see a continuation of the buying spree of the past 18 months, which saw SAP acquire SuccessFactors Inc., Oracle Corp. snap up Taleo Corp. and IBM Corp. buy Kenexa Corp., among others.
Michelle V. Rafter is a Workforce contributing editor. Comment below or email firstname.lastname@example.org.