Join America Back to Work, a weekly podcast, video, and blog series that covers timely and relevant topics affecting the labor market and workforce with industry experts. The series includes recruiting, hiring, retention, employee satisfaction, customer service, background screenings, and more.
Trend Report: HR Challenges, Opportunities, and Priorities In 2024
We recently surveyed HR leaders (C-suite, managers, administrators, and procurement specialists) from across the country, in industries ranging from financial services to construction to fine arts, at companies of all sizes ranging from three employees to 7,000 to take a pulse on the current state of HR and what HR departments are gearing up for in 2024.
From compliance to HR technology, discover the top priorities and forecasted challenges for 2024, and learn exactly what’s driving those trends below.
Recruiting Will Be the #1 HR Priority (Again)
In 2022, the U.S. had the biggest labor shortage since World War II. That’s why recruiting was one of the primary priorities for employers in 2023.
Interestingly, even with the cooling of the U.S. labor market, solving the hiring and recruiting conundrum remains at the top of the list for HR leaders regarding how they’ll spend the budget and time in 2024.
Fifty-two percent of respondents selected hiring and recruiting as the most significant challenge/concern, with hybrid and remote work at number two (14%) and retention in third (10%). That’s likely because recruiting is tied to many other HR goals and priorities; a quality hiring program can help promote retention, improve workplace culture, drive key DEI metrics, and more.
Additionally, the workforce is getting younger. Gen Z is expected to surpass Boomers in the workforce in 2024, and employers are gearing up to recruit and retain a new workforce demographic with unique tastes and attitudes toward work.
Gen Z brings unparalleled digital literacy to the workplace. They prioritize work-life balance and flexibility, often seeking remote or freelance opportunities. They value salary less than every other generation, caring more about whether the work is interesting, values-aligned, and purpose-driven—and doesn’t hurt their mental health.
In 2024, you can expect to see more companies tailoring their employer brands and recruiting tactics toward these preferences to optimize hiring.
Most HR Leaders Don’t Feel Prepared
Only 17% of HR leaders believe their departments are fully prepared and optimized for the coming year. Beyond the major recruiting challenges listed above, HR leaders are concerned about their preparedness for solving hybrid and remote work, keeping top talent engaged, and securing employee/HR data to remain compliant.
On top of that, HR leaders will be expected to handle this increased list of responsibilities on tighter budgets as companies face uncertain financial futures. The ripple effects of wars in Ukraine and the Middle East, the upcoming presidential election, a problematic inflation dynamic, a potential recession, and other disruptions are expected to complicate planning and budgeting activities for 2024 further—leaving HR with less financial resources for a longer to-do list.
Office-First Policies Will Be Back
When the pandemic hit, and employers sent their workforces home to work in their home offices, kitchens, and bedrooms, many organizations announced that the change would be permanent—such as Airbnb and Twitter.
But, as time has passed, many organizations have walked their initial work-from-home proclamations back—and that’s a trend expected to continue in 2024, likely because American worker productivity is declining at the fastest rate in 75 years.
In fact, 90% of companies say they’ll return to the office by the end of 2024. Here’s the breakdown of what office policies employers and HR departments will be offering employees in 2024:
28%
Office-First Policy
Employees will spend most of their time onsite with remote work as an option when needed.
17%
Full Time in Office
No exceptions or flexible, hybrid options.
17%
Fixed Hybrid Policy
Employees will work onsite for a fixed number of days on a specific schedule
14%
Flexible Hybrid Policy
The office is open five days a week, and employees can come and go as they please
14%
Remote-First Policy
Employees will be expected to work off-site most of the time with the option to come into the office when needed.
7%
Other
Special requests, exceptions, and approvals for one remote workday.
3%
Fully Remote
No exceptions or flexible, hybrid options.
Employers Will Leverage Purpose to Improve Retention
The cost of turnover is extremely high: it’s estimated that losing an employee can cost a company one-half to two times the employee’s salary. Depending on the individual’s level of seniority, the financial burden fluctuates. For hourly workers, it costs an average of $1,500 per employee. For technical positions, the cost jumps to 100 to 150 percent of salary. At the high end, C-suite turnover can cost 213 percent of salary.
To improve retention and reduce costly turnover in 2024, companies will pull levers that target the more intangible qualities of the employee experience rather than quantitative measures like better salary or benefits.
Most HR departments (26%) intend to strengthen internal communications and emphasize company purpose, mission, and values to improve employee engagement, productivity, and, ultimately, retention. This move is likely in response to the fact that eighty-nine percent of employees desire a sense of purpose at work, as reported by McKinsey in a recent report titled Help Your Employees Find Purpose–Or Watch Them Leave.
According to a recent Forbes study, almost half of U.S. workers (46%) have left a job because they felt unappreciated, and another 65% of respondents said they would work harder if they felt like their contributions were noticed by management. As such, our survey results show that HR professionals will rely more heavily on employee recognition and rewards to improve loyalty and retention numbers in 2024 (19%).
Adding Employee Recognition Solution to the HR Tech Stack
On that note, when asked to rank the most critical HR tech solutions for effectively executing all HR tasks and strategies in 2024, HR leaders chose employee rewards and recognition solutions as their number one priority.
HR professionals and procurement specialists will be shopping for tech products that help them automate and optimize an employee rewards and recognition program that acknowledges, celebrates, and amplifies employee achievements and accomplishments among their colleagues and peers—encouraging desired behaviors and improving engagement, productivity, and retention.
Enhanced Analytics for Employee Happiness and Satisfaction
With all this added focus on employee experience, retention, and recognition, it is no surprise that HR departments will spend 2024 setting up a more comprehensive system for measuring, analyzing, and acting on employee happiness and satisfaction.
The majority of HR leaders (23%) reported that employee happiness and satisfaction will be their top priority in focus areas for data analytics and metrics to measure HR effectiveness in 2024—followed by training effectiveness and completion at 15% and retention rate at 12%.
Data Security Will be the #1 Compliance Threat
While pay equity (24%) and minimum wage (17%) will be top of mind for HR departments everywhere when managing compliance risk in 2024, safely and securely managing HR data comes in at number one for the biggest compliance concern for HR leaders. 28% of HR leaders report that data security will be their top compliance activity in 2024.
Employers collect significant amounts of private, sensitive information when screening candidates and employing workers (social security numbers, addresses, driver’s license numbers, salary data, and more). Primarily stored digitally, protecting this data can be a challenge––but protecting it (the right way) is the key to staying compliant.
Beyond the Fair Credit Reporting Act, which promotes the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies, the U.S. lacks a comprehensive federal law regulating how employers collect and use personal information. Instead, state laws–which vary drastically–offer specific requirements and restrictions on how employers use, store, and transmit employee information. For example, an employer’s liability for data breaches varies from state to state.
For most companies, staying compliant in 2024 will mean adhering to FCRA guidelines and adjusting to ever-evolving state guidelines about how and when data should be collected, stored, and disposed of for maximum security.
The Clock Is Ticking on Pay Equity Compliance
Despite the sharp compliance focus on data security, another interesting, timely trend is developing in HR compliance in 2024.
Pay transparency, also known as salary transparency or wage transparency, refers to the practice of openly sharing information about compensation with employees and job candidates. While transparency varies from company to company, it generally involves providing details about how salaries are decided and disclosing salary ranges to create fairer pay practices and bring more pay equity to the workplace.
Today, 17 states in the U.S. have some sort of pay transparency law in place, with states like California, Colorado, and Connecticut leading the way. In November 2022, New York City also started requiring employers to post salary ranges for every job posting, and more cities and states are expected to follow suit in 2024.
To prepare for a future with stricter pay transparency laws and get ahead of pay equity compliance, more and more companies are expected to audit their pay structures for disparities and start the tricky work of job leveling in 2024. These organizations will also likely develop change management plans that prepare managers to support leveling initiatives when they’re eventually rolled out.
To stay current on how these HR challenges, opportunities, and priorities play out in 2024, subscribe to America Back to Work by clicking here.
Every week, S2Verify co-founder and chief strategy officer, Arnette Heintze, discusses timely and relevant topics affecting the labor market and workforce with industry experts. The series covers recruiting, hiring, customer service, employee satisfaction, and more.