2022 Promises to Be Another Challenging Year for HR Organizations

HR organizations have full plates. So, what else is new? After nearly two years of helping organizations steer through complex COVID-driven operational issues, such as the shift to remote work, testing and social distancing, return to the office versions 1, 2, 3, etc., hybrid working, vaccination policies, numerous strategic challenges including the Great Resignation, employee well-being, future of work, diversity, equity, inclusion and belonging, and upskilling and/or reskilling needs, HR organizations are more than ready for a well-earned, end-of-year break. Or maybe take a sabbatical for all of 2022? Unfortunately, HR will need to take a deep breath and call forth a second (or third) wind because 2022 is shaping up to be just as hectic, unpredictable and exhausting as the past two years.

2022 HR Agenda

The Hackett Group’s 2022 Key Issues Study reveals the top 10 objectives on HR’s to-do list for the new year. HR’s uppermost aims reflect the ever-widening span of its responsibilities ranging from supporting enterprise priorities, fulfilling business-critical needs and pursuing internal HR transformation goals.

Upgrading HR’s role and skills

HR groups are again prioritizing their role as strategic advisors to the top leaders of the business and the need for the function to grow and recalibrate its skills base to keep pace with the ever-changing demands of the business and workforce.

Priority 1. Act as a strategic advisor to the business: This goal remains at No. 1 in 2022. Workforce-related operational challenges have persisted throughout 2021 and remain top of mind for businesses and HR leaders. Moreover, strategic challenges related to talent, such as hiring and retention crises, pressure for greater workforce diversity, equity, inclusion and belonging, and continued challenges related to remote and hybrid working are keeping HR’s role as trusted advisors in the forefront. HR has much work to do to improve its ability to excel as strategic confidants to business leaders. Given the high stakes, a majority of respondents have specific initiatives planned to improve in this area.

Priority 10. Align HR skills and talent with changing business needs: HR staff have perennially lagged in the key business- and technology-related skills needed to operate successfully as businesses becomes more digital. Competencies, such as the ability to derive meaningful insights from data, proficiency using digital technologies, critical thinking and adaptability to changing priorities, remain underrepresented among HR groups, as are highly-prized skills like business acumen and ability to innovate. Despite the growing criticality of upgrading HR skills, only 39% of respondents said that they have skills development initiatives planned. This is the most worrisome finding of our study. Without enough of the right talent and skills, HR organizations are sure to fall short of achieving their goals for 2022 and beyond.

Effects of COVID persist

Of the items on the top 10 list, four arise from the continued effects of COVID on the business, and are directly related to HR’s ambition to facilitate enterprise transformation and respond to critical workforce-related challenges.

Priority 4. Enable enterprise growth strategies and initiatives: COVID-driven disruptions forced many companies to pivot their business strategies and rapidly launch new digital initiatives. As these strategies and initiatives continue to evolve rapidly, HR must be on the alert to adjust talent management policies and processes to ensure that the leadership and workforce skills needed to achieve growth goals are in place. To succeed, these must closely align with business leaders and supply data-driven insights to inform people strategies and their execution. Our study shows organic growth as the top objective for the enterprise in 2022, with 69% of HR participants planning improvements of their ability to enable it.

Priority 6. Monitor and increase employee engagement: The continued strain of working in uncertain and stressed conditions, whether remote, hybrid or on-premises has created a new set of challenges to sustaining engagement among many segments of the workforce. Employee engagement is increasingly recognized as a key driver of performance and is strongly correlated to the retention of talent. HR needs to take the lead in developing strategies to continuously measure and increase engagement. Central to success will be taking steps to improve the people management skills of leaders, which disproportionately impact employee engagement and performance. Despite the importance of engagement, only half of organizations aim to improve their ability to track and improve it in 2022.

Priority 8. Maintain employee well-being and resilience: The immense strains that were on the workforce and organization leaders throughout the pandemic have been well documented. Therefore, moving forward, it is important that organizations be vigilant about maintaining workforce well-being and avoiding burnout. HR must lead the charge by proactively identifying and monitoring key indicators of the physical and emotional state of the workforce, while getting ahead of issues that impact the well-being of employees. For example, HR must be prepared to adjust support programs as needed, as well as confront those aspects of the corporate culture and the work environment that diminish employee well-being, such as poor management, work overload, insufficient worker flexibility, autonomy, and failure to provide diverse, inclusive, and equitable workplace experiences.

Priority 9. Support enterprise digital transformation: Digital transformation of all aspects of the enterprise, such as market offerings, external and internal processes, ways of working, continues apace with significant impact on the workforce. HR organizations must step up their game in areas that directly affect the success of these initiatives, including leadership, culture, skills development and change management. More than two-thirds of HR organizations are planning to upgrade their ability to support enterprise digital transformation in 2022.

Not forgetting the foundation

Two other objectives on the top 10 list represent areas that are foundational to achieving the business and workforce goals discussed above.

Priority 3. Create and/or maintain a high-performing organizational culture: Building a positive, engaging, high-performing culture remains a top objective in 2022. It is more challenging by the growth of remote and hybrid working environments. Maintaining strong cultural ties and connections among employees, when many are not physically with one another, continues to challenge leaders and HR groups. As more companies take a harder look at barriers to greater diversity, equity, inclusion and belonging in their organizations, culture change has emerged as a chief structural impediment to progress. It’s not surprising then, that 65% of respondents have earmarked this area for improvement in 2022.

Priority 7. Develop executives who can lead effectively in a changing business environment: This issue returns to the top 10 after dropping off the list last year. Unpredictable business operating environments, changing workforce expectations, and the challenges of managing remote or hybrid workforces call for nontraditional leaders who are both decisive and agile. They must be comfortable allowing workers to have high levels of autonomy, have a willingness to experiment and greater tolerance for failure. At the same time, they must be comfortable communicating via all digital channels and acting as role models for the behaviors they want others to exhibit. Leaders like this are uncommon, and organizations continue to struggle to develop them within their ranks. HR needs to step up its ability to grow these new types of leaders and it’s concerning that only 53% of respondents are targeting this area for improvement in 2022.

Tending to talent management

Additionally, HR executives recognize the urgent need to deliver on talent- and skills-related targets, affecting the level of value that HR contributes to the business.

Priority 2. Recruit and retain staff in key business positions and with critical skills: Amid record numbers of open positions, HR organizations recognize the impact of this problem on the enterprise and are feeling tremendous pressure to solve it. However, our study shows that they are not confident in their ability to deliver on inflated expectations. In addition to employing new strategies for finding and hiring talent, fresh approaches to develop, retrain, upskill and redeploy talent are urgently needed. Moreover, many organizations need to assess the employee experience that they are providing, pinpoint shifts that staff value most and modify their employee value proposition to meet changing labor market realities. Fifty-five percent of respondents are relying on improvement initiatives planned for 2022 to enhance their recruiting and retention success.

Priority 5. Improve talent management capabilities: Nearly two years into the COVID-driven business environment, virtual recruiting, learning, onboarding and collaboration have become the norm. Yet, talent recruiting and retention problems, struggles to determine practical hybrid and remote working strategies, and increasing levels of workforce burnout are some of the talent problems that require more than digital technology to solve. HR recognizes the importance of increasing, not only its own talent management capabilities, but also those of people managers across the enterprise. Sixty-two percent of participants are aiming efforts at advancing critical talent management capabilities in 2022, including strategic workforce planning, learning and performance management.

HR’s capabilities need to match its ambition

The list of objectives discussed above indicates that HR organizations have great ambitions for what they hope to accomplish in 2022, but lack confidence in their abilities to deliver on this agenda. To have any chance of success, HR must accelerate its transformation efforts. This means digitizing service delivery so that the bulk of HR transactions and administrative tasks are fully automated or easily done directly by managers and employees. Smart investments in technology will be essential. HR’s operating model must be fully integrated to enable flawless delivery while shifting focus of more staff to high-value activities, such as problem solving, coaching and using analytics-driven insights to produce better business and talent decisions. Chronic HR skills gaps must be closed now. This means redesigning HR jobs and providing more training and/or upskilling, better tools, and more purposeful on-the-job learning, as well as a greater influx of new talent, especially with technology, analytics and business acumen.

The future is without doubt bright for HR. But it must be prepared to seize this opportunity and do what’s necessary to deliver to the expectations of leaders, managers and employees.