Talent Trends: How HR Leaders are Leveraging AI Insights to Support Critical Talent and Business Decisions

ChapmanCG along with Kate Bravery, Global Head of Talent Advisory and Insight at Mercer, brought together a group of senior HR leaders in New York to talk about the year’s talent trends and challenges for the future. They discussed how HR is driving the talent agenda to ensure their businesses are building agile workforces that can deliver against strategic objectives and how AI is playing a major role in delivering meaningful insights to support critical talent and business decisions.

As we look to the emerging trends for 2024 and beyond, organizations are facing headwinds with geopolitical uncertainty, higher operational costs, and nervous financial markets – all of which are shaping people’s needs and expectations and making the HR agenda especially tough. The pandemic is now (thankfully!) in our rear-view mirror, but with that, the alignment between CHROs and executives on what talent priorities will deliver the biggest return is diverging: executives are focused on sustainability reporting and AI, while HR continues to place its bets on enhancing the EX and moving to skills-powered talent and reward practices. With future-fitness in mind, organizations are considering how best to integrate AI to reduce pressure on productivity, while simultaneously considering the best strategy to retain key talent given changing expectations of employees about work and the work deal.

Topics discussed included:

Organizational Agility

Business leaders continue to focus their efforts on driving operational efficiencies and productivity. This is an expectation that HR leaders often inherit and must execute as they right-size for tomorrow. Focuses on delivering on the skills agenda and building the right capabilities to deliver on the overarching strategic plan is part of the solution, but realizing the benefits will take more time to embed. Greater impact today might be achieved by focusing on capacity released within roles to allow people to engage in gigs and learning following focused work redesign. We discussed how leading companies are disaggregating jobs into tasks, using AI to figure out where machines and humans perform best and taking redesign efforts as an opportunity to create‘better jobs’ – jobs that are part of careers that people crave, jobs that are less mundane and exhausting, and jobs that solve talent scarcity challenges by building better succession planning and skills development into the design. As Kate shared, you can unlock up to 80% capacity in the workforce via work design and deliver cost savings of 40% per person from reskilling and redeploying instead of retrenching and hiring fresh. The cost equation is there, but it takes bold moves to actually redesign work and move towards skills being the currency of work. In conclusion, we discussed that delivering on the skills agenda has never been tougher. Increased talent insights are certainly part of the answer, as is work design, but the real solution lies in the intersection between work design and workforce planning efforts in a sustainable manner.

As organizations conduct the necessary skills gap analysis to ready themselves, it is clear that there are not enough good tools available to help inform the process. Also, it’s critical to understand what skills organizations need to measure against. While most organizations have a vision, the biggest concern is the pace of change and disruption impacting the company’s ability to deliver on that vision.

With the focus shifting towards skills, alongside the recognition of rising healthcare costs, there is also an impact on the total rewards proposition, requiring the adoption of reward programs that both incentivize skill development and potentially reward the deployment of skills. We discussed the pros and cons of paying for “badges” versus actual work that directly contributes to revenue. During the conversation, we discussed companies with particularly strong reskilling programs including Amazon, Standard Chartered Bank and Infosys.

The Rise of Pay Transparency

Preparing for greater pay transparency is also on the minds of HR. As organizations look to retain key talent, provide upskilling opportunities, and offer individual growth and career development opportunities, the question of internal pay equity is raising its head. Equity between new hires and legacy staff pay, equity between blue- and white-collar workers on flexibility, and equity between different demographics is key. As pay transparency laws take effect and people have more readily available access to pay information, managers’ ability to hold good conversations around the companies reward philosophy and making aligned hiring, off cycle and promotion decisions will be critical. While many employees choose to stay because of job security, perceived lack of fairness in pay remains one of the top reasons employees leave. With the shift to a skills-based analysis, rather than a job-first approach, and AI tools that can nudge managers to ensure that they don’t make off cycle decisions that widen gaps, we are on the right track. But pay is often the last part of the puzzle. Equity gaps occur because we’ve not done enough earlier in people’s careers to keep in step with outside talent’s capabilities, or failed to address systemic bias in who gets choice opportunities and promotions. Internal labor market maps that show who is being hired, promoted and exiting at each level by different populations (e.g., by gender, high potential, tech talent, etc.) can help any manager see the true picture of bias and acceleration. When combined with external market data and pay information about trending skills, this helps to inform build-borrow-buy strategies.

Addressing the Needs of the Multi-Generational Workforce

Employers are having to be mindful of the needs of all generations in the current workforce if they are to have enough talent to meet their future growth needs. It is critical for HR to work with leaders to help them recognize and acknowledge those different needs and create work environments that appeal to each generation, while fostering intergenerational working. With the move to more prompt-based environments and the automation of coding, it will be a leader’s business acumen and leadership knowhow that will have an increased premium. Given the challenges of the last few years, some of the Baby Boomers retiring over the last few years are looking to return to the workforce or are putting off retirement for now. Younger generations are just as focused on financial matters but are also prioritizing companies that align with their personal values, where they can bring their true selves to the workplace and where there is an openness to talk about the importance of mental health and well-being – issues they care deeply about. Many Gen Xers are feeling burdened by dual caring responsibilities and feel left behind in terms of tech innovation. Engaging in regular conjoint analysis or on-demand employee listening can help shape an EVP that truly resonates while optimizing benefit costs.

Members of the younger generations are looking to get back into the office. Being alongside colleagues helps foster a sense of belonging and equips them with role models and mentors to learn from. That being said, the hybrid model remains the preferred option for employees overall, giving flexibility where needed in roles where this is possible. The impact of this is often felt when considering employee mobility—how does that desire for a hybrid work solution sit comfortably with getting maximum benefit from a stretch assignment in a new location?

Conclusion

While AI has already delivered significant insights to leaders resulting in quicker and more informed decision making, there is still a long way to go in developing solutions that deliver an everyday time advantage to our people, improve productivity, and increase organizational agility. The shift from a job-based approach to a skills-based mindset is creating competitive advantage for those organizations that are doing it well and an even bigger uplift for those embarking on work redesign before they make the move. Reskilling allows an organization to pivot more quickly to meet new challenges, increases retention and can significantly reduce the costs of talent acquisition. At the same time, employers need to focus on building a culture where employees feel valued and recognized for their contribution and find new ways to increase their sense of belonging and organizational commitment through lateral career moves.

While there is some skepticism about AI and the possible negative impact in terms of job elimination, there does seem to be a sense that there are more positives overall both for the HR function and the workforce as a whole. There is still work to be done to educate employees on how AI will help them work smarter and create the space for them to experiment with new business applications. Adding AI and a skills-powered model into an already untenable workload is the fastest route to burnout and workforce depletion. Increased focus on reskilling and well-being needs to go hand-in-hand with work redesign if we are to build businesses that the next generation are excited to work in. Doing this requires us all to think different, and to work different.