Welcome to 2020: HR trends that will define the new decade

According to a recent WorldatWork study on financial well-being conducted at the end of 2019 in partnership with Computershare, life events (39 percent), rising health care costs (34 percent) and personal debt (22 percent) were identified as leading stressors in the workplace. In a tight labor force where retaining key talent is crucial, Total Rewards leaders will be challenged to align their employee experience with what the workforce expects and needs.

It is also time to find much more effective solutions on pay for performance programs. A study by Mercer shows the mountain they'll need to climb to meet it: it found that only 2 percent of companies believe their performance process delivers high value and fewer than 3 percent believe they have excellent feedback practices. Here are six trends that will drive change in 2020:

1. Pivot to become chief reskilling officers.

This will be HR's biggest challenge of 2020. We essentially have two massive buckets of workers in the US: Routine/lower paid (i.e. fast food, receptionists, data analysts) and unique skilled/higher paid, but not much in the middle. As routine tasks/jobs become obsolete, it's HR's responsibility to lead the way in reskilling workers and to influence colleagues in hiring, finance, training/development to more rapidly respond to the ever-growing skill gaps. The proverbial train has already left the station and we are already behind. Total rewards and HR professionals must lead the way to solve for reskilling by engaging their own organization with a level of urgency that has yet to be demonstrated.

2. Most direct path to optimal performance is through total rewards

HR leaders must innovate and reduce their intense focus on "employment." The traditional focus of HR on compliance, policies, processing forms, and oversight of performance processes must end. Every HR person must shift their focus to shaping how and why their people work—and that, is all about Total Rewards. Creating a new employee experience linked directly to the brand experience will ultimately add the most value to an organization.

HR needs to understand that their corporate/brand promise (how good of an organization they are to their community or to the world they are serving) is now on par with going after profits. This actually gives HR a new entry point into influencing leadership. In fact, it may be the biggest opportunity for an HR moment that we have ever had. We don't like to admit this, but not all HR functions deliver the same amount of value to individuals, teams and the organization. Total Rewards (compensation, well-being, benefits, development and recognition) are the premiums. If a company is interested in productive, committed, inspired employees, the only way to achieve that is through an integrated Total Rewards program. People need to care about the work they are doing, and they need to know you care about them.

3. More human, less employee

Workplace flexibility is no longer a reward: it's a mandate. We won't see the traditional 9 to 5 schedule completely disappear, but you will see that mentality dismantled. Managers who focus on the clock (who is on time and who leaves early) will continue to decline in importance. The emerging on-demand model will allow people to figure out how they can do their work at the time and place when they can be most effective. Even in manufacturing, there will be a demand to look at different ways to get products made, whether that means different shifts, 3 or 4-day work weeks, or any number of options.

Whole-person thinking moves the equation from an employment focus to a human focus, making it a big win for human engagement. People are willing to give more when they have permission to be themselves and this trend is going from nice-to-have to must-have. Focusing on employees is fine, but "fine" won't get you to awesome, and that is where the growth, innovation, and high performance sits.

4. All about choice: Health plan deductibles will decrease

Policies and benefit programs that were designed for the masses (like HDHP) rather than to meet individual needs will continue to be dismantled. This trend will continue because as talent becomes tighter and unique skills harder to find, the needs of people are becoming more important. A premium will be placed on employers who take the extra step to understand what their people need and then deliver it.

Employers will move toward more choice and more plan options including telemedicine, partnering with health clinics, creating on-site options, all with the goal of meeting the broader needs of individual employees. According to WorldatWork's Financial Well-Being Study, HSAs (Health Savings Accounts) programs are being offered by 73 percent of companies surveyed. Programs like this give more choices and higher value to employees since the funds, if not used, roll into an investment account for use later in life.

5. Standing for something: focus on corporate conscience and business purpose

The Gen Z and millennial workforce (which now comprises the largest number of workers in the US) wants to align work with something important to them. They bring with them higher expectations of doing the right thing and it's all linked to their beliefs and what they find important. And, at the same time, they will want to know what is important to you, as a potential employer. They won't want to compromise their own values for the sake of a bonus or profit of an organization. They are asking questions when evaluating a potential employer such as: "How good of a corporate citizen are you? Do you have women in the C-Suite or an identified path for people of color? Do you have core values that stick as an organization? Do you provide compensation for being a good person (i.e. providing bonuses for time given back to the community)? Does that show up in your Total Rewards program?"

They look at Return on Promises (ROP) rather than ROI. Companies that take on social issues and focus on conscious business and purpose instead of just shareholder value and profit will experience the strongest financial performance. Perceived greedy corporations in 2020 and beyond will be outliers.

6. More bonuses to more people

Variable pay will play a bigger role in getting money to more people and validate them more frequently. We will see broader inclusion of bonus programs based on new paradigms (speed up output, think more creatively, challenging the status quo). There's a growing need to access more cash at specific life points. For example, those in midlife may be buying homes, cars, paying for college, etc.

Compensation needs to be modeled for life rather than on a standard monthly schedule. As a result, companies will have to outwit competition in compensation programs in ways they never had to before. As an example, Uber dominated the car service business in Singapore up until Grab entered the market and gave their employees access to daily cash via a bank card (speed and direct linkage to output that day) and thereby crushed Uber.

The mandate for HR professionals in the new decade is an exciting one: keep the focus on the people and the work. Today, human capital remains the biggest asset for most companies. With the focus on the human, not just the employee, the profits will follow.

Dr. Scott Cawood is president and CEO, WorldatWork, a nonprofit professional association in compensation and total rewards. We serve those who design and deliver total rewards programs to build productive, committed, and inspired people that work. Founded in the United States in 1955, today WorldatWork serves total rewards and HR professionals throughout the world.

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