The Top 5 Trends in German HR in the 2020s

The trends in HR that will shape the working life in the coming decade are already here. Here are five that will impact Germany in ChapmanCG’s view.

Digitisation – Germany Late to the Party But Now Embracing It

Digitisation is probably the most popular word in Germany when contemplating the economy and the future of work. In this respect, the landscape is no different to other European or global markets, but we think it’s fair to say Germany has been ‘late to the party’! We have adopted technology very slowly that has been ubiquitous for years elsewhere. Whilst there can be a general conservativism in some areas, once we decide to join a trend we feel the need to master it! In regard to HR it seems many companies are now rolling out HR information systems, cloud-based applications and employee self-service intranets at the same time. It’s a good time for technology and the Human Resources function which will be benefiting from this widespread change in the long-term. The beautiful German word Innovationsstau (innovation pile-up) is especially true for the public sector and SMBs.

The 20s will define the future role Germany and Europe will play in world economics. When we look at other countries, they are already more advanced in technology, with China developing at an explosive rate. German new economy companies like Zalando or Wirecard have been early adopters to digital strategies but even more traditional companies like Bayer and adidas are catching up. German HR can and must play a vital role in this important transition to ensure a holistic approach to talent attraction and digital capability building. This represents a significant step change in the role of HR in Germany moving from the more traditional, heavy labour relations intensive positions to more progressive value-add talent agendas. Relationships with works councils will still be critical, but the crux will be combining this with a commercial business aligned HR agenda. 

Linking Culture Change with Agility

Building Agile environments is another hot topic that has been discussed for many years and now being implemented. In Germany, where a large number of companies are still behind on implementing an Ulrich style model in HR, agility can be seen as the solution to all problems. This can be contrary to traditional models of hierarchy, order and execution which are deeply ingrained in the German working culture. While this has become less strict, work is still seen as to be taken seriously and there is no room for uncertainty. Breaking with those rules and letting people work in squads across divisions or even removing divisions and hierarchy can feel sacrilegious for people who started their careers in the 1980s or 90s undertaking huge efforts to climb the corporate ladder. Companies risk losing some of these talents when introducing agile without a well thought out cultural change strategy. HR directors and executives need to team up with staff to create a vision or purpose. Surveys can help identify needs and requirements for change. Scepticism is part of the German DNA and can help prevent jumping to conclusions. Building rapport to sceptic employees and helping them to participate in change is crucial for implementing a successful change process. Introducing an agile form of organisation has to be evaluated thoroughly. It solves no self-purpose and must serve the needs of the business and culture. Germany has certainly not been an ‘early adopter’ on the agile movement and there will be some resistance, like in any market. Technology and start up organisations are an exception, particularly with more of a millennial workforce in markets such as Berlin where we are seeing the most progressive approaches in this area.

Artificial Intelligence and Blockchain will disrupt life as we know it – here’s how HR can make the most out of it.

While we do not expect the robots to form unions any time soon, Isaac Asimov may not have been too far off the mark in his assumptions. The 20s will see the rise of the quantum computer which will enable artificial intelligence to live up to its name. The shift has already started and the revolutionary aspects included can hardly be overestimated. Imagine the chatbot on your website being able to conduct full-scale interviews, and assess candidates in a more accurate and less biased way than its human counterpart. Germany’s vibrant start-up scene already sees some interesting companies offering solutions that scratch the surfaces of this. But also established players like SAP have gone down the AI lane. Stefan Ries, CHRO, said that “while artificial intelligence and machine learning cannot replace the human factor, they sure will be able to predict individual and collective behaviours soon”. This will offer more possibilities for HR managers, e.g. to customise talent management programs down to every single employee.

By the end of the coming decade, Blockchain is estimated to be a multi-trillion-dollar business, disrupting whole value chains and sectors. Blockchain’s huge advantage to traditional data storage lies in its decentralisation and safety. Once saved data cannot be changed again, only added. This makes it especially interesting for compliance officers and lawyers. In human resources it is expected that this technology will penetrate every aspect, starting with payroll and quickly spreading into talent acquisition and talent management. For HR leaders, the advice has to be: get tech ready now. The HR Director of the 20s must be savvy in technology even more than in labour law, which will also become more automated. We are observing this more in the HR profession and where there is a lack of ‘digital’ experience, the next best trait is to demonstrate learning agility, flexibility and learning velocity. Disruption and innovation in traditional HR are sought after but there is a respectful and pragmatic approach required – the change needs to be fostered with finesse.

Purpose and Sustainability and How HR is addressing this.

German employees in middle and senior management traditionally love their company cars but there’s a noticeable shift away from it. When asking about benefits, questions raised tend to circle more about sustainability, mental wellbeing and the ecological footprint of a company nowadays and this isn’t just the millennials asking.

The green party traditionally has been strong in Germany and the German division of Fridays for Future plays an important role in defining the public discourse about fighting the climate change. The World Economic Forum in Davos recently discussed ways to measure success aside from shareholder value and even BlackRock has stated that it will only invest in companies willing to take sustainability into account. HR and Talent Acquisition leaders must be prepared to answer questions around purpose and the green factor as they will become the norm, not only in exploration and production but every sector will have to explain their plan for sustainability. Do you offer train tickets instead of company cars, do you have electrical chargers in your parking garage, is the cantina serving vegan food, and are you aware of the working conditions throughout your supply chain?  This is just a snapshot of questions we at ChapmanCG get asked for our clients. Germans were early adopters in terms of being environmentally aware but lost a bit of traction in the 2010s. The 2020s will see a rebound of these topics on a local and global level. From an HR perspective, employer branding and engagement are high on the agenda and HR leaders will be required to build the right cultures and EVPs to attract the best talent.

Another roaring 20s in Germany?

From a global perspective, as German companies become more progressive and outward looking, we are seeing a real demand in HR professionals who have had some international experience and may want to . Many of the mandates we work on focus on targeting returnee German talent or international German speakers. This is a trend we predict will continue. Markets like Berlin, Munich and Frankfurt are becoming increasingly international from an HR talent perspective. There is also more openness to explore cross-functional talent and hire for potential, which hasn’t always been the case. We anticipate continued growth and ‘upgrading’ in the HR function, with more specialist roles being created particularly in talent management and talent acquisition.

Conclusion

In terms of the ‘crystal ball’ for Germany, by the end of the decade ChapmanCG believes we will have seen the collapse of industries and organisational structures as we know them, as well as the rise of new, currently unheard of, sectors. As Bill Gates put it:

“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction.”

Change is happening now in Germany and HR can, and will, play a pivotal role in these cultural and technological shifts we are seeing.