Global HR Outlook Q1 2024

Early in 2024, we have noticed that the pace of change is picking up in global human resources. Below we cover four core areas where we see this dynamic occurring.

Market in a State of Flux

The HR talent market is very much in a state of flux. Around the world, we are seeing a growing number of HR professionals looking for new challenges, along with some who feel the need to seek a new position due to reorganization or a fear of redundancy. We are also observing well-regarded blue-chip multinationals losing increasing numbers of key HR talent after many years of relative stability (excluding peak COVID-19). The reasons for this seem to vary; however, a common theme is the growing amount of HR transformation that is taking place, driving the removal of reporting layers in some organizations and the opportunity for career advancement elsewhere.

“Return to the office” continues to be an important topic which is having a polarizing effect. There is an ongoing evolution of remote and hybrid work models, with a focus on optimizing productivity, collaboration, and employee well-being. Countries around the world report a strong return-to-office movement with many companies back at 4 or 5 days per week. Employees seem to be coming to an acceptance of the need to increase office attendance. The current “sweet spot” seems to be 3 days a week, with candidates ideally wanting autonomy over their own schedules. Overall, this issue continues to significantly affect company retention/attraction capabilities.

Focus on Specialist Functions

Specialist HR leadership roles are featuring heavily for global businesses which want to be the most progressive and make the most impact in their sectors. Coming out of the COVID period, and in anticipation of AI-driven transformation, these leading businesses have looked to elevate their HR functions. In tandem, we are seeing a closer linkage between topics such as culture, engagement, EVP, sustainability, and social responsibility and KPIs for HR and business leadership teams.

We continue to see total rewards professionals as the most in-demand of the COE functions, especially those with executive compensation experience and particularly stock plan global roll out experience. Related to this, we are observing the use of RSUs and stock options as an increasingly important part of compensation plans outside of the US. Traditionally, while LTIs generally have been a ‘core’ part of compensation in the US, this has been less true across other major regions.

The topic of pay transparency/pay equity is looming as a big topic for HR especially in industries which have a large proportion of blue-collar workers. We also anticipate it will become a growing pain point in the PE/VC world, where at the executive level there is generally less reliance on cash compensation and more on longer-term incentives which historically tend to be appreciated by some groups more than others. We expect this subject will put pressure on already stretched global total reward leaders.

With a growing number of companies transforming HR and moving to leading cloud platforms, HR Technology/HRIS professionals are also in demand. It is also good to see that leading companies are becoming less inclined to house HRIS under Total Rewards. There is a growing desire to give HR technology the stature and attention it needs and deserves and while there are exceptions, HRIS tends not to be an equal priority versus compensation and benefits for global reward leaders.

Finally, uncertainty requires greater flexibility for talent acquisition teams. The external market context means that businesses are having to be more reactive and as a result forecasting hiring requirements becomes more challenging. TA functions are therefore being tasked to be even more responsive and flexible—in both operating model and mindset. HR is still grappling with what “back to the office” really means and how this impacts location and office strategies. As organizations shift (and re-shift) on this topic, TA will need to keep pivoting in response.

HR Operating Model Shift Gaining Momentum

With a growing investment in the HR tech-stack, CHROs are measuring the true ROI and if these advanced technologies have provided any major enhancements to customer and employee experience and overall efficiency. They will be considering the opportunity to offset this investment with cost savings on headcount within the function. There are discussions taking place around the future operating model of HR services/people operations, which has been largely unchanged for many years. There needs to be further levelling-up and automation within this area to justify the costs of current and future investment of technology.

More organizations are moving into the model of separating HR business partners and people advisors to allow HRBPs to focus on core organizational strategies while the HR services team plays the role of delivering and enhancing the employee experience. On the HR business partner side, we are seeing an increase in demand around the world for organization design capabilities and experience in highly matrixed, global reporting structures.

Many businesses have been trimming their early careers budgets in recent years. However, with shrinking talent pools, organizations will eventually need to double-down on their investment to attract early career talent. Arguably, this group also represents the only sustainable way to get ahead in the battle for elite, diverse talent. Meanwhile, in some companies we are seeing specialist early careers teams take on broader remits. Going forward, this skillset might dovetail into broader entry, re-entry, and career-switching programs.

Less AI Panic

The pace with which artificial intelligence (AI) accelerated last year took many by surprise. Within HR, 2023 saw a lot of talk, some panic, but very few HR teams implemented much AI successfully.

2024 should start to see the emergence of a more planful and complete approach by HR leaders. We expect that organizations will start to think about right-sizing their workforces as they determine the potential benefits of AI while evaluating economic conditions. We can also anticipate more legislative guidance including the extension of existing privacy laws into AI systems processing personal data.

In the medium term, greater integration of AI and automation in HR processes, including recruitment, employee engagement, performance management, and data analytics will make for less laborious and more informed decision-making by HR teams.

While AI offers immense potential, HR will need to address ethical concerns related to bias, privacy, and transparency. Ensuring fairness and accountability in AI-driven decisions will be high on the HR agenda as early as 2024. HR leaders should stay informed about AI capabilities, evaluate use cases, and collaborate with IT, legal, and compliance teams as they evolve their plans and offerings.