20 New HR Trends & Predictions for 2021 You Should Be Thinking About

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The march of technology seems unstoppable, which will be key to navigating a challenging job market that the COVID-19 pandemic has brought upon virtually all industries. HR trends indicate that talent experts will have to rethink their strategies in the coming years to cope with pandemic-related workforce changes. Even as unemployment rates spike, HR will remain crucial in boosting employee engagement and supporting business growth for the companies that have managed to stay afloat.

We’ve gathered the top HR trends for 2021 to help managers and specialists prepare themselves for the work ahead. Likewise, companies can use these trends to ensure that their corporate strategies involve more than using the best HR software to streamline workforce management.

It can be difficult to properly manage a company’s most valuable assets: its employees. To be more effective at their jobs, HR teams often turn to technology such as HR software to automate tasks wherever possible.

This way, HR professionals can focus on achieving higher-value objectives like keeping employees happy and engaged, improving employee retention, and recruiting the best talents (Effectory, 2018). It also helps them to prioritize reskilling employees in response to the uncertainty and changing needs of the job market that were brought about by the pandemic (Mercer, 2021).

Top HR trends indicate even more things to add to the HR manager’s to-do list. Generational differences in the workplace, for instance, require HR professionals to be more agile in their strategies for meeting each generation’s expectations (Orange Business Services, 2017). HR teams must also learn to leverage technology, such as artificial intelligence and analytics, to create data-driven action plans and forecasts.

1. Understanding Younger Workers

These are truly exciting times to manage the workforce, as many organizations have as many as four generations in their ranks: traditionalists, baby boomers, Generation X, and millennials, which make up over half of the employees today. In recent years, Generation Zers have been slowly joining the mix. The growing number of employed millennials and Generation Z will eventually result in the rise of a younger workforce whose values and career priorities are different from those of the previous generations (CNBC, 2019).

For instance, the younger generations prioritize work-life balance, indicating a preference for flexible schedules and remote work options. Millennials and Generation Z employees also place importance on collaboration and feedback. The youngest generation particularly loves touching base with their superiors, as 60% of Gen-Zers want to check in with their managers daily, if possible (The Center for Generational Kinetics, 2018).

By learning about younger employees’ working styles and career values, managers and HR professionals can craft corporate policies that will help keep them engaged and happy. Aside from accommodating a flexible work schedule, one way HR professionals can ensure that millennials and Gen-Zers can efficiently collaborate is to give them the collaboration tools that agree with their working style.

2. Consumerization in the Workplace

With unemployment rates at an all-time high of 14.8% due to the pandemic (Congressional Research Service, 2021), employees want transparency from their employers about their career paths. People look for a specific employment experience that empowers them to make their own choices when it comes to their tasks and goals so that they can gain new skills and stay with their company (Mercer, 2021). Simply put, people now bring a customer mentality to their workplace.

Along with the generational differences we previously mentioned, this consumerization of human resource management and the workplace in general force HR teams to be more flexible in responding to employees’ individual preferences (Mercer, 2020). You may soon find that a “one size fits all” approach will no longer work for your organization. Employees may now want individualized schedules, benefits, and role content, among other factors.

Generations Y (millennials) and Z, for instance, expect more transparent and collaborative management practices, unlike older generations, who mostly accepted the hierarchical management model. HR teams can use survey software to get a deeper understanding of their employees and develop tailored management approaches as needed.

3. New Ways to Engage Employees

Many current HR trends and challenges involve boosting employee engagement, especially with statistics saying that 84% of employees don’t feel fully engaged at work (Cision PR Newswire, 2019).

One way HR professionals can keep their employees more satisfied at work is to strengthen their corporate social responsibility (CSR) strategies. This can prove to be effective, especially since more employees now feel empowered to speak up. They want to feel like they do more than just work and that they’ve made a difference (SHRM, 2019). A strong CSR program can also prove to be an effective recruitment tool, as employees look for organizations that give them volunteer opportunities.

Another HR trend to anticipate involves changes in organizational culture (Waggl, 2018). Employees want more insights on how companies are run, and they want a say on corporate strategizing and implementation. As a result, organizational culture now moves away from traditional hierarchies and towards flatter, circular structures that include employees in the decision-making process.

Moreover, because of the collective trauma that the pandemic has brought upon employees and employers alike, practicing compassion in the workplace will be a key trend in employee engagement this 2021. In these difficult times, it is crucial for employers to check not only what their employees are doing, but how they are doing (Bonusly).

4. Embracing the Gig Economy

The days of traditional employment may be long gone as the gig economy continues to grow (Gallup, 2018). More employees are choosing the flexibility of gig work; in fact, the gig economy currently claims a third of all workers in the US. Employees enjoy this work arrangement because of its high degree of autonomy and flexibility, which results in a better work-life balance.

Today, over one-third or 36% of Americans are part of the gig economy (Fortunly, 2021). Moreover, 52% of gig workers said that they have lost their job or had their work hours reduced because of the pandemic (Statista, 2021).

To cope with this shift away from traditional, long-term employment, HR professionals and senior management must seek new ways to keep their workforce agile and efficient.

Software and apps for employee monitoring and onboarding and offboarding may take the place of traditional worker management methods. Moreover, freelance platforms will soon become a mainstay in companies’ arsenal of recruiting tools.

5. Employee Wellness is a Priority

As part of employee engagement, employee wellbeing will continue to be one of the core areas HR professionals will focus on. Today’s employees are more stressed than ever, and the pressure is on companies to offer workplace wellness programs. These wellness programs promote employee wellbeing and help workers remain in good health, which helps them be more productive and feel more engaged at work.

Aside from pushing initiatives that foster employee wellbeing and health—like on-site fitness classes, healthier lunch options, and support programs for stopping smoking—more HR professionals will also focus on promoting mental health among their employees. This supports survey findings by the Global Wellness Institute that 65% of companies are increasing spending on mental health wellness for their employees (Global Wellness Institute, 2018).

6. Modern Benefits to Boost Retention

Research indicates that more than a third of organizations offer improved benefits compared to the previous year (SHRM, 2018). Companies are adjusting their compensation and benefits packages to be more attractive to the modern worker.

The pandemic has also caused a shift in how employees perceive benefits. Instead of tangible office-based perks like free snacks or exercise sessions, employees nowadays are looking for substantive benefits like healthcare, paid time off, parental leave, and support for mental health services (Bonusly).

Aside from newer perks like parental leaves and flexible time, many companies now offer benefits that support a wider variety of critical life events. For instance, companies may now include gender reassignment and transformation assistance and expanded fertility benefits. Non-health-related benefits include casual dress at the office and financial wellness programs.

HR professionals and recruitment specialists can use these modernized benefits to improve employee retention. A comprehensive benefits offering can also give companies a competitive edge in hiring the talent they need.

7. More Data-Driven HR

HR departments heavily deal with data, and it’s high time to put all that valuable information to good use through HR analytics (HR Technologist, 2021). With HR analytics, professionals can get deeper insights into the data they collect so they can use them to make smarter decisions and predictions about the workforce. These data-driven insights will also prove to be valuable to business leaders.

Analytics can be applied to a wide variety of metrics such as turnover rate, offer acceptance rate, absenteeism, and revenue per employee. With HR analytics technology, HR professionals will not only be able to provide numbers on these metrics but also figure out the reasons behind these numbers. Advanced predictive analytics will also enable HR professionals to make predictions on these metrics to come up with actionable solutions.

We’ve already talked about the various benefits HR analytics can bring to a company. For instance, HR professionals can use HR analytics to find correlations with metrics such as voluntary turnover rates, pay increases, and promotion wait times. This can provide insights on reasons for employee resignation and help HR teams create employee retention plans that are more likely to succeed.

8. HR Teams Powered by AI and VR

Today’s HR teams have plenty of advanced technology at their disposal. Three of the main HR technology trends gaining traction in workplaces today are robotic process automation, AI, and virtual reality (VR).

Robotic process automation

HR professionals will see the growing adoption of robotic process automation (RPA), AI, and VR in the workplace. RPAs, for instance, make employee onboarding easier for HR teams.

Once an applicant is hired, RPA tools can automatically update the applicant tracking system, make a new employee record for company use, and gather the employee’s necessary documentation. With this automation of low-level tasks, recruiters and HR professionals can focus on higher-value tasks (Forbes, 2018).

Artificial intelligence

Many HR teams across the world have started to introduce AI to their work processes. The technology proves to be highly beneficial to recruiters, who can use AI-powered tools for applicant sourcing, assessment, and screening. Moreover, AI can also help improve the candidate experience. This is important because a well-managed candidate experience can give companies the edge they need in getting the talent they want.

Interestingly, artificial intelligence can also help HR teams identify employees who may be considering handing in their resignation (CMS Wire, 2020). Certain AI systems can analyze employee computer activity to flag and report outliers in normal activity patterns for the organization. Advanced AI can also detect changes in the tone of employees’ communications.

Virtual reality

Again, VR technology can be a valuable tool for recruiting and training employees. The technology is particularly useful in screening employees that require hands-on labor. For instance, VR technology enables candidates in demonstrating practical skills (ICS Learn, 2018).

Aside from talent acquisition, VR can also help with onboarding and training, especially in high-risk or high-stress professions. The technology allows managers to introduce new hires to the work environment in a safe and controlled way.

9. Blockchain Improves Security

Given the amount of data HR teams handle, it’s not surprising that many experts expect blockchain technology to make an impact on the sector (SHRM, 2017). With its decentralization methodology, blockchain shows promise in providing much-needed, long-term security for sensitive employee information. Data security is an even more pressing issue these days, thanks to the increasing use of employee self-service platforms, the growing adoption of cloud-based software, and the implementation of GDPR.

Through blockchain technology, HR teams can build secure, highly detailed employee records, verify applicants’ identity and employment history, and even automate data-heavy processes like tax administration and payroll.

Similarly, blockchain-based tools such as smart contracts also streamline contract management for HR teams. These contracts make it significantly easier for all parties involved to record and verify transactions and track alterations. These contracts also eliminate the need for manual intervention in approving transactions for contracts.

10. Deeper Role in Corporate Strategy

Though the importance of HR professionals in an organization can’t be underestimated, many experts predict human resource management to take a more involved role in corporate strategy (Great Place to Work, 2019). After all, HR professionals can provide valuable insights and projections on workforce performance and its effects on the company’s bottom line. By increasing its strategic value to organizations, HR teams can take a more active role in driving business growth.

Likewise, HR professionals can expect new human resource jobs or specializations to develop in the future. Companies may soon have HR data scientists, employee experience specialists, and talent acquisition technology and candidate experience specialists in their HR departments. To increase their strategic value, more HR professionals will also get certified in the coming years.

Most Popular HR Software

1. ClearCompany. Offers robust talent management features for streamlining the entire employee life cycle. Learn more about it in this ClearCompany review.
2. Workday. This HR software is designed to work with a company’s financial transactions. Our Workday review discusses its core functions, including predictive analytics and real-time insights.
3. When I Work. An HR solution and time clock tool in one. Know how it simplifies HR management in this When I Work review.
4. Freshteam. Integrates various core HR processes in a single, easy-to-use interface. For more details about this newest addition to the Freshworks suite, read this Freshteam review.
5. Homebase. A cloud-based HR software with robust time clock and timesheet features. This Homebase review presents its benefits, pricing, and other features.

11. A Focus on Reskilling Workers

With HR teams facing a shortage of talent, trends indicate the rising importance of reskilling (PwC, 2019). Instead of increasing efforts to hire talented workers, more CEOs, executives, and HR teams are focused on reskilling and upskilling their workforce to fill their organizations’ needs for innovation and meet corporate goals.

This push for additional learning for the workforce is compounded by survey findings that indicate the current workforce’s insufficient digital competency and the need to develop soft skills like creativity. To address these concerns, more HR teams will focus on finetuning their learning and development (L&D) strategies.

One L&D strategy that’s gaining traction is learning in the flow of work (Whatfix, 2019)<. Through this method, employees can access bite-sized pieces of knowledge to resolve the skills-related issues they encounter as they work. This creates an environment where employees can learn as they work and at their own pace.

Technology such as LMS software platforms can support learning in the flow of work by providing employees with on-demand access to curated content.

12. An Increasingly Diverse Workforce

Though this isn’t a new trend, the coming years will see renewed efforts from HR teams to create and maintain a diverse workforce in terms of factors like gender, race, and nationality.

The increased push for diversity may be caused by heavier scrutiny of the bias HR teams may have during hiring. Unfortunately, like many people, HR professionals themselves are susceptible to unconscious biases that influence the hiring process (Ideal, 2020). These unconscious biases can be difficult to overcome, but one way to minimize their effects on recruitment is to use AI. Artificial intelligence can objectively use data points to screen applicants and predict the most suitable candidates.

More importantly, HR professionals can program AI-powered recruitment tools to ignore demographic information such as race, gender, and age. Companies that don’t want to face racial discrimination lawsuits would do well to develop recruitment strategies that ensure equal opportunities are given to all applicants.

13. Increased Investment in Leadership Development

Surveys indicate that HR executives have increased spending on leadership development by more than 170% in the past two years, from $797 in 2017 to $2,169 in 2019 (Inside HR, 2019).  Spending may increase even more in the coming years, as HR teams address the skills gap caused by the spread of technology in the workplace. In fact, as of 2020, 94% of learning organizations have plans to increase their budgets for leadership development (Forbes, 2020).

The increased focus on leadership development will be even more crucial in the coming years. Millennials may be poised to take over the workforce soon, but 63% of these younger workers feel that their leadership skills aren’t being fully developed by their employers.

With this evident gap in leadership, HR teams will be more focused on strengthening their organization’s leadership development strategies. Aside from reskilling or upskilling, one strategy that has proven effective for some companies is complementary leadership.

Complementary leadership involves pairing leaders with complementary skill sets so they can share responsibilities. This leadership style helps teams remain agile and efficient despite disruptions in the future.

14. The Growing Market for HR Outsourcing

As HR roles become more complicated, more organizations seek to make their HR departments more efficient. Interestingly, this contributes to a shift towards outsourcing HR functions to professionals with the required expertise. Research findings corroborate this trend, as the global market for human resource outsourcing is expected to reach $43.8 billion by 2024.

The increase in HR outsourcing may also be affected by the growing role of human resources in corporate strategies and the spreading use of HR tech. Similarly, the complexity of modern benefits and employment regulations may push companies to seek professional services outside their workforce.

However, this doesn’t mean that organizations will cease to maintain internal HR departments. HR teams will continue to be crucial in internal processes like managing employee relations issues.

15. Growing Opportunities for ONA

Organizational network analysis (ONA) isn’t exactly a new trend, as the concept has been on lists of HR trends for years. However, the move towards non-traditional organizational structures and the growing importance of HR analytics may make more HR professionals recognize the importance of ONA (HR Analytics, 2019).

As we’ve previously discussed, the hierarchical organizational structure is becoming more circular. There’s no one person at the top running the show. Through ONA, HR professionals can get insights on how information flows and how decisions are made within the organization. This method can help HR teams identify employees that influence groups and share information as well as outliers who may be turnover risks.

There are several ways for HR teams to do ONA for their organizations. Surveys can help reveal employees’ working relationships with their colleagues. Technology these days allow companies to cast a wider net for ONA by tracking data on employees’ email inboxes, calendars, and phones, as well as monitoring activity on collaboration platforms.

A combination of these methods may yield the best results for HR teams wanting to discover and tap into the employee networks in their organizations.

16. HR Chatbots Become the Norm

Aside from blockchain and VR, chatbots are another technology expected to help HR teams improve the employee experience and boost productivity. Research already indicates that 25% of high-impact HR organizations use chatbots (Deloitte). This came in handy particularly during the COVID-19 pandemic when majority of companies decided to roll out work-from-home policies (Artificial Solutions, 2020).

Usually powered by AI, chatbots automate tasks that can eat up HR professionals’ time, including answering questions on company policies and benefits. These intelligent assistants can also be used to deliver relevant information for employee onboarding and training, saving time for all parties involved. Companies have also been able to use chatbots in self-service portals for high-volume tasks such as updating benefits information and scheduling.

Aside from internal use, chatbots also show promise in streamlining the candidate experience. More advanced chatbots can handle initial applicant screening and schedule interviews. This way, recruiters can focus their time on higher-value tasks like looking for talent for hard-to-fill roles.

17. Wider Adoption of NLP Solutions

As organizations deal with more data, HR professionals will be looking for more tools that will help draw insights from the information they collect. Natural language processing (NLP), a branch of artificial intelligence, can help in this aspect. The technology allows algorithms to interpret written and spoken languages.

More advanced NLP algorithms today can analyze data consistently, without bias, and are capable of deciphering intent. Aside from the technology’s application in chatbots, many AI-powered tools use NLP to provide HR teams with insights into employee sentiments. Advanced survey software, for instance, can analyze employee comments to identify the most relevant keywords. In turn, HR teams can use the data to finetune employee engagement strategies.

With HR tech taking over the workplace and the growing responsibilities of HR professionals, more HR teams are expected to take full advantage of the benefits of NLP solutions soon (HR Technologist, 2019).

18. Text Message Recruiting is On the Rise

With statistics saying that SMS messages have a 98% open rate, it’s not surprising that text recruiting is expected to grow even more in the coming years. Plus, as more people opt to stay home during the pandemic, this, alongside online recruiting, have become the go-to strategy of many organizations. Companies say that their recruiters get faster responses when they text candidates compared to calls and emails (SHRM, 2019). Advanced text recruitment platforms harness the power of AI to allow HR teams to simultaneously reach out to multiple candidates.

Along with chatbots and candidate-centric recruitment strategies, HR professionals can use texting to ensure that applicants remain engaged throughout the hiring process. For instance, recruitment specialists can use text messages to share relevant content about company culture or updates on the application process.

Text messages also allow HR teams to directly get in touch with potential candidates and help them get started on the application process right from their phones. This can go a long way in candidate engagement.

19. Focusing on Internal Talent Mobility

With unemployment figures at an all-time low and talent markets getting tighter, HR teams are forced to explore more ways to source the talent they need while ensuring employee retention. Internal talent mobility is one area that’s seeing more focus from HR professionals and management today, with 20% of survey respondents rating it in the top 3 most urgent issues for their organization (Deloitte, 2019).

More companies today are looking inward for the talent they need, with HR teams developing internal mobility programs for employees. Such programs allow employees to experience several roles outside their own and tackle new challenges.

Meanwhile, HR teams can get insights on how employee performance varies with each role and create a pool of employees that can be tapped for leadership roles. This means companies can always get the talent they need despite changes in the job market.

Done right, internal mobility programs keep employees engaged and committed to their work while providing HR departments with a steady source of talent.

20. Moving Towards Continuous Performance Management

With most companies thinking that their performance management approach fails to provide value to the business, it’s understandable why more HR teams are working towards developing new strategies for managing employees’ performance (Mercer, 2019).

These days, companies are shifting away from annual appraisals and towards continuous performance management. Employees want instant feedback and coaching on their performance, as it helps further their professional development and encourages career growth. Moreover, managers are expected to provide sufficient guidance not only for performance improvement but also for the learning of new skills.

HR professionals can help change performance management strategies by ensuring that organizations have a culture of open communication and collaboration.

Preparing for the future workforce

As the foregoing HR trends and predictions show, the future holds many exciting opportunities as well as formidable challenges for HR teams. These factors push HR professionals to find and adopt new ways of maintaining productivity and efficiency in their core functions, especially in employee engagement and retention. 

Technology is also revolutionizing the way HR professionals do their work. While HR software can ease the burden of time-consuming tasks, more advanced technologies such as AI and VR technology will bring more benefits that HR teams can leverage for activities such as talent acquisition and analytics.

By being updated on these HR trends, HR professionals can anticipate changes in the human resource industry and start adjusting business processes as needed to prepare your workforce for the new normal in response to the pandemic. 

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By Astrid Eira

Astrid Eira is a resident B2B expert of FinancesOnline, focusing on the SaaS niche. She specializes in accounting and human resource management software, writing honest and straightforward reviews of some of the most popular systems around. Being a small business owner herself, Astrid uses her expertise to help educate business owners and entrepreneurs on how new technology can help them run their operations. She's an avid fan of the outdoors, where you'll find her when she's not crunching numbers or testing out new software.