March 11, 2021
Looking Ahead: HR Leaders Focus on Virtual Working, Diversity and Culture in 2021
By
Spencer Stuart's Human Resources Practice
Human resources leaders were tested as never before in 2020, playing a critical role in companies’ response to the COVID-19 pandemic to protect the health and well-being of employees and keep the business running. The longer-term implications of this period are just beginning to emerge. To learn more about how HR leaders are thinking about the year ahead, Spencer Stuart and Kincentric surveyed CHROs and talent leaders of 137 organizations employing some 3.5 million people to understand the impact of the COVID-19 crisis on their organizations and their priorities for 2021.
The following top themes for 2021 emerged:
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Leaders and their role in employee experience
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A permanent virtual workforce
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Increasing investment in diversity and inclusion
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Growing attention to culture and employee “listening”
Helping leaders improve employee experience is a top priority
Leaders’ care and concern for employees — the unprecedented empathy, understanding, candor and resilience they displayed — were key to the high employee engagement marks companies received for their early COVID response. Now that employees have seen that leaders are capable of leading with a more caring, connected style, there is no going back. The employee contract has changed.
HR leaders confirmed the link between leaders and employee experience in sustaining high employee engagement. Sixty-one percent (61%) said their top employee experience priority is to develop managers’ capability to deliver a strong employee experience, especially in the areas of onboarding and training/coaching. The most effective leaders during times of uncertainty keep people focused on the organization’s long-term mission and objectives with positivity, communicate with candor and authenticity, stay accessible, check in, understand the challenges employees may be facing and proactively identify and remove obstacles in the workplace. In an era of ongoing uncertainty and disruption, more organizations will prioritize developing the capabilities in leaders that enable them to create a positive employee experience that sustains employee engagement and performance.
About one-third of employees will continue to work virtually even once COVID is behind us.
HR leaders, working with their C-suite peers, responded swiftly to redeploy some or most of the workforce to remote working in the early days of the pandemic. Virtual work increased from an average of 10% of employees before COVID-19 to 60% at the time of the survey. Looking ahead, HR leaders expect that more than one-third of employees (34%) will continue to work virtually once the pandemic is over. And, at some organizations, virtual work may become the standard; about 10% of survey respondents expect their virtual workforce will increase significantly — from 20% or less virtual to more than 65%.
The move to a larger permanent virtual workforce is possible because HR leaders and employees have viewed virtual working during the crisis as successful overall, with a few notable exceptions. Six out of 10 HR leaders in our survey said the shift to virtual working had a net positive impact on them and their organization. The shift, for example, has helped increase access to learning and skills development and technology, increased productivity and, for some (42%), helped achieve better work/life balance. Yet, as more organizations shift to a permanent virtual work model, the survey revealed a few “watch-outs” for HR leaders that require ongoing monitoring. In particular, more than one-third (36%) of respondents reported that work/life balance has been negatively impacted and 53% reported increased stress levels. Other challenges include a loss of personal connections among employees and more difficult employee onboarding.
Diversity, equity and inclusion will continue to be a high priority in 2021
Racial inequity, diversity, equity and inclusion moved higher on the leadership agenda in 2020, and survey respondents strongly agreed that diversity will remain a high priority in 2021. Nine of 10 respondents said their organizations plan to increase DE&I investments this year. Diversity and inclusion priorities varied, with 30% saying they will focus on increasing diversity at the senior leadership levels and 20% saying the goal will be building more diverse talent pipelines generally.
Among the challenges HR leaders cited were attracting diverse talent in particular industries, leadership awareness/ownership of diversity, equity and inclusion objectives, and limited financial and people resources for implementing a DE&I strategy in a short span of time. As organizations grapple with these challenges, we have seen a dramatic increase in demand for chief diversity officers and other diversity and inclusion leaders, as well as widespread demand for business and functional leaders with diverse backgrounds.
Culture and employee experience are growing areas of focus for HR leaders
Previous research found that 8 out of 10 employees had positive feelings about their experience during the early stages of COVID. Yet, if historical patterns repeat, employee engagement will likely decline, as added stress, larger workloads, less human connection and prolonged uncertainty increase burnout and dissatisfaction.
Given the loss of in-person connections and disruption to traditional operations, the HR leaders we surveyed have their eyes on company culture and employee engagement. Nearly a third of respondents (30%) felt that virtual work has had a net positive effect on company, 21% said it’s had a net negative impact and 49% said it’s had no change. But culture will be an area of increased focus for about 74% organizations, our survey found, and 74% of HR leaders anticipate increased investment in employee listening and pulsing efforts in 2021. The majority said their top employee experience priority for 2021 is defining a measuring strategy.
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COVID-19 ushered in profound changes in the way people work and their expectations of their organizations and leaders. Even as the effects of the pandemic wane, organizations will face ongoing uncertainty and unpredictability. In this environment, leaders will be critical to providing the employee experiences that sustain high employee engagement and strong company performance. We will continue to monitor the impact of these developments on HR leaders and their priorities.