It feels like the HR industry has entered the realm of science fiction. Thanks to talent management software, we interact with chatbots, depend on AI applications to help source candidates, and train employees using virtual and augmented reality. But despite the digital disruption, managing your people has never been more important. We’ll explore the top talent management trends set to impact companies heading into 2020.
We’ll evaluate three talent management trends to be aware of in 2020:
- The emphasis on the human element
- An evolving workforce
- A new era of recruiting
- Nearly 80% of North American companies face challenges in finding talent
- Over 80% of HR leaders say their organization’s success is largely dependent on nailing the employee experience
- The freelance revolution is transforming the workforce ecosystem
- Two-thirds of companies realize the importance of managing contingent workers, yet less than one in 10 is prepared enough
- Millennials and Gen Z combined will account for 59% of the workforce by 2020
- More than 70% of talent professionals consider anti-harassment to be one of the most important factors influencing recruiting and HR in the coming years
The Talent Management Market
Before we journey through a world where technology and people intersect, it’s good to establish a broad view of the market.
Talent management (TM) spending is on the rise, according to the Sierra-Cedar 2019–2020 HR Systems Survey White Paper, 21st Annual Edition.
- Respondents indicated a 57% spending increase over the previous year, the top priority for small, medium and large companies.
- The survey also found that profile management (19%), succession management (13%) and compensation (10%) are expected to have the highest adoption increases.
- TM applications mostly meet needs for 58% of organizations and always meet needs for another 20%.
- However, TM also has the highest replacement plans of any HR application, with 31% of companies evaluating or planning to replace their current solution within two years.
Overall, the talent management software market is expected to reach $16 billion by 2023, a Compound Annual Growth Rate (CAGR) of 16% from 2017 to 2023.
From a wider viewpoint, HR technology is a fundamental part of remaining competitive. According to a Gartner survey, two in three business leaders agree that their companies have to embrace technology or risk becoming irrelevant.
The talent management landscape is constantly changing. Companies need to adapt how they approach TM to stay in step with trends both in the digital and human spheres.
1. The Critical Nature of the Human Element
The Talent War Continues
People are the foundation of an organization. And that foundation has been increasingly difficult to build in the past couple years.
“The first six months of 2020 will be interesting to watch as business cope with unprecedented skill set shortages,” says Dorothy Dalton, CEO of 3Plus International and the owner of her own coaching and consulting firm, DDTM.
The national unemployment rate in the U.S. has hovered at or just below 4% since March 2018. That, combined with high turnover has spurred a battle as companies fight to attract and retain top talent.
A 2018 workforce trends survey by Allegis Group found that 79% of North American respondents have faced challenges in acquiring talent. The graphic below outlines the influencing factors.
A related battle in the talent war, Dalton notes, is the increasingly casual way candidates are treating the process:
“Hiring managers are reporting behavior more commonly associated with dating sites such as Tinder, than with recruitment processes. Terms such as ‘ghosting’ and ‘benching’ are creeping into the lexicon when candidates just drop off the radar for no apparent reason, or manage multiple options simultaneously.”
This leaves companies in the lurch, unable to effectively plan and facing constant disruptions to their time-to-hire cycles. In light of this, Dalton says, “Many companies are finding it easier to promote from within, which doesn’t always enrich or diversify their talent pool. How long this bubble will last before it bursts is something even the experts can’t answer.”
Given the current climate, it’s no surprise that nearly seven in 10 employees are “optimistic or very optimistic” they can find a new job, per a survey conducted by staffing agency Addison Group.
However, while the market is favorable for those on the hunt, organizations have suffered the impact. A 2018 Korn Ferry study found that if nothing changes, there will be over 85 million vacant jobs globally by 2030, leading to an estimated “$8.5 trillion in unrealized revenue” across three major sectors.
As companies look for ways to fill roles and reduce attrition, technology will play a vital role in accomplishing those goals. Our article on HR trends for 2020 identified the impact AI and machine learning technologies are poised to have. Notably, screening and sourcing candidates were the top two recruiting tasks where AI can bring extensive value.
As you evaluate your ability to gain an edge in the talent war, consider the role your talent management software plays.
Do you have an ATS (applicant tracking system) equipped with AI capabilities? ATS software provides tools for tasks such as filtering candidates and parsing resumes, but AI speeds up the process and offers capabilities that extend to things like scheduling interviews.
With a shortage of workers, retention is more important than ever. AI-enabled recruiting solutions can pinpoint the best candidates, so your company has a better chance of landing employees who are a good fit and less likely to leave.
It can also free hiring managers to focus more time and attention on interviews, where a human touch is most critical.
Managing the Skills Gap and Reskilling
The continued evacuation of baby boomers from the workforce is compounding the difficulties companies face in the talent shortage. These two forces have led to an increasing skills gap.
The SHRM Global Skills Shortage report from 2019 found that more than half of respondents think the issue has “worsened or greatly worsened” over the past two years.
Furthermore, a 2019 study by Wiley Education Services and Future Workplace found that the skills gap is growing wider. Sixty-four percent of organizations reported having a skills gap, compared to 52% in 2018.
Companies have a number of options to address the skills gap, according to the SHRM report. Strategies include ramping up training efforts, tapping into the contingent workforce and putting measures into place that encourage employee retention.
However, SHRM warned that the above fixes, while more effective, aren’t methods companies usually turn to first. When evaluating your options to bridge the skills gap and the software available to do so, keep in mind that casting a wider advertising net, using staffing agencies and other approaches aren’t always the best.
Another factor at play is the need for reskilling due to changing job demands. Fifty-four percent of respondents to the 2019 Deloitte Human Capital Trends report indicated their organization would moderately or significantly increase investments to conduct “workforce reskilling.”
When AI first burst onto the scene a few years ago, it induced panic that robots were coming for our jobs. As it turns out, the worry was overhyped. AI should be viewed as augmenting — not replacing — human workers. According to the Deloitte report, “While some [jobs] may be eliminated, our view is that many more are changing.”
Companies can use LMS software (learning management system), learning experience platforms (LXP) and other tools to combat the skills gap and tackle reskilling. Such systems can provide micro-learning, which lets users get immediate access to small pieces of information, such as videos and articles. They also offer macro-learning, where users dive more deeply into a topic via a course, MOOC (massive open online course) or other delivery mechanism that helps them develop new skills.
A Continued Focused on Consumer-Grade Experiences
There’s a push in the marketing world to become more customer-centric. In the HR industry, a similar trend is underway: becoming more people-centric.
Today, job seekers and employees want more than satisfaction in their current role and two weeks of vacation. They want a positive experience across every phase of their career, from the recruitment process to their role in a company.
Steven Cates, Graduate Professor of Human Resources Management at Purdue University Global, believes this will be a focus in the coming year. “Human Capital Management software will be swiftly moving from electronic file-keeping to embracing and crossing over into marketing. It will do this by using Consumer (internal customer, as in employees) Relationship Management that will encourage and enhance collaboration and engagement by employees with these HRIS Systems.”
It’s no surprise that companies are making the candidate experience, specifically in recruiting, a primary focus in the forthcoming year. Seventy-four percent of respondents to the 2018 Talent Board CandE Benchmark Research Report listed the candidate experience as their top focus.
Zooming out from recruiting, 83% of HR leaders see the value a positive overall experience plays in a company’s success. Organizations need to create an engaging culture where employees feel empowered and can be productive.
To that end, a range of tools is available, including performance management and succession management. Look for systems that allow regular performance reviews, feedback mechanisms such as surveys, reporting capabilities to track progress and other features.
These will serve you in providing an atmosphere where employees feel heard and cared for, which ultimately will motivate them and enable a first-rate experience.
2. Talent Management and the “Alternative Workforce”
We’re shifting away from the corporate job environment to one where the lines between work and home life are increasingly blurred, and where teams and companies are becoming simultaneously more connected and more fragmented.
One of the biggest trends happening right now is the evolving workforce. And two of the driving factors are the freelance revolution and the related talent economy.
The Impact of the Freelance Revolution
The explosive growth of freelancing has garnered a lot of attention (just search “freelance revolution”), along with claims about its rapid growth. As Jon Younger, Founder of the Agile Talent Collaborative, describes in a Forbes article, the hype was partially unfounded.
However, even if the original statistics had some faults, Younger explains that, “Like any innovation, freelancing has an adoption trajectory.” The S Curve is one helpful way to explain that pattern.
Younger goes on to say, “It would not be unreasonable to view the freelance revolution as past the early adopter stage, and generally in the process of expansion. But … expansion is not the same as maturity.”
Younger says the back-and-forth over the exact numbers of freelancers will likely continue until there’s a standard way “to define, describe and measure the freelance revolution.” He concludes, “What we do know is that, despite the conflict on how to count freelancers, it certainly seems to be an important and growing phenomenon.”
And a central part of that growth is the talent economy.
The Rise of the Talent Economy
Everyone talks about the gig economy. And rightly so. Companies like Uber and freelance platforms like Upwork have made a significant impact on how people work, providing greater flexibility and more autonomy.
But the gig economy is actually one side of the coin, according to Younger and Micheal Kearns, VP of Enterprise Strategy at Toptal. The other? The talent economy. They explain the difference in their article “The End of Traditional Employment—The Other Gig Economy.”
The gig economy provides customers “with on-demand access to broadly available and undifferentiated services.” In this model, “the ease of access and low cost is the differentiator, not necessarily the individual who provides the service.”
By contrast, the talent economy places the emphasis on the individuals. The “customer is actually buying the skill and expertise of the talent.” In the talent economy, the platform used is only a means for customers to find “talent that is otherwise invisible.”
Based on this, Kearns and Younger make the case that the talent economy benefits employers and freelancers. Talented workers have greater control over which opportunities to pursue and can shape a fulfilling life based on their individual preferences.
And that means employers benefit from ready access to experts who have the skills needed to accomplish specific objectives. Kearns and Younger write, “With a more efficient market for talent, companies are able to build teams with exactly the right talent they need, exactly when they need it.”
In today’s fast-paced world, where change is the rule rather than the exception, the ability to tap into a highly skilled talent pool is critical. The key is that organizations need to learn to operate in this new ecosystem.
Your talent management system must have the ability to support this approach. Here are a few questions to consider:
- How will you conduct onboarding for contract or freelance workers?
- Do you have any tools that support part-time workers?
- Can your software handle contract management? (This doesn’t fall under the purview of HR the majority of the time, but it’s an important piece of working with freelancers.)
- How will you source contract workers? Some solutions already exist that let companies create talent pools to draw from.
As the workplace evolves, talent management processes, systems and software are following suit. Because of the constant change, your company will need to be aware of developments and ensure any talent management solution is worth the investment.
Using resources like our Talent Management Leaderboard is a good way to stay informed, and sending RFPs is an important part of rounding out your software selection process.
The New Way to Work
Ninety-nine out of every 100 people want the chance to work remote part of the time. That stat, from the 2019 Buffer State of Remote Work report, says it all. The traditional 9 to 5 job doesn’t cut it anymore.
Thanks to technology, we can work from a beach in Mexico, hop on a video call to meet with a client — the possibilities are nearly endless.
So on the one hand, the freelance revolution has led companies to seek out external sources for highly skilled functions. And on the other, the way employees work has become redefined. Some companies, such as Buffer, are entirely remote. That begs the question, how are companies responding?
According to Cates:
“HRM will be faced with the need to reinvent the performance management systems and employee engagement strategies to respond to the future needs of its talent. AI and other forms of technology will enable a much higher level of personalization than previously offered to redesign talent management for widely dispersed and contingent workforces.”
The “alternative workforce” is critical, according to the 2019 Deloitte Global Human Capital Trends report. Forty-one percent of survey respondents consider it an important issue, yet less than 30% are prepared to handle it. Additionally, the data showed that over half of respondents (54%) have inconsistent to non-existent processes in place for managing such a workforce.
Josh Bersin’s HR Technology Market 2019 report suggests a grimmer picture. While the majority (65%) of respondents think managing gig and contract workers is important, a mere 8% consider themselves prepared to do so. The problem, he explains, is the lack of tools necessary to carry out the job properly. While some systems provide the functionality needed, the market is still in its infancy.
However, Bersin sees the vendor market poised for rapid expansion due to the increasing demand for tools that facilitate managing a contingent workforce. As your organization looks for solutions in this emerging market, it will be important to understand your requirements and conduct thorough research to successfully navigate the landscape of new products.
The new work lifestyle combined with the abundance of freelancers and contractors means companies need to rethink talent management and the software used to make it happen.
“It’s no longer about redesigning process,” says Art Mazor, Deloitte’s HR Transformation Global Practice Leader. The focus, he believes, is on “reimagining the work.”
In Mazor’s view, companies need to find ways to “blend this mix of workers from so many different sources and blend those with the varieties of tech that are available in the HR space and more broadly.”
At the global scale, Cates believes sourcing talent worldwide will be a major opportunity for companies in 2020:
“Large databases that capture interest in the organization at specific locations globally are critical to follow-up, engagement and assessment of fit with the organization. This will require IHRM [International HRM] strategic focus. For companies seeking to compete in multiple countries, this will be critical for not only attracting but retaining the best talent.”
3. A Shift in Recruiting Practices
One of the defining factors of successful marketing is a deep understanding of the target audience. In a world where job seekers are also consumers — and have the same expectations — the importance of that approach has spilled over to talent acquisition.
Branding now extends beyond marketing and PR efforts to encompass HR-related activities. As Rebecca Skilbeck writes in Forbes, “To attract top talent in a competitive labor market, it’s necessary for organisations to cultivate a strong employer brand.” Companies need to explain specific reasons why it’s worth working there.
Skilbeck goes on, “It’s clear that the focus is on making the employee experience personalised and authentic. Candidates want an application process that fits into their busy lifestyles, and they want an authentic employer brand that reflects what they value in a workplace.”
“In order to engage candidates we’re trying to attract,” Cates says, “we will see increased communication and engagement in the form of texts and SMS messaging.” This, he says, will enable companies to re-engage applicants at any point in the recruitment process.
In terms of talent management software, this means you need to be on the lookout for solutions that deliver the type of experience job seekers are after. What does that look like?
In Cates’ opinion, organizations will personalize elements like the job openings they post and the branded content they use in order to provide “world-class experiences.”
This can be accomplished, he explains, by capturing and using data:
“Candidates who job filter will be determined by factors such as geography; knowledge, skills and abilities (KSA’s); or demographic information. With the ability to analyze this career center data, HR professionals can gather insights into applicant behaviors.” This will, he says, let companies leverage that data to create pipelines that are tailored to both existing talent and prospects.
Consider whether your current system needs additional capabilities, or if your organization needs to upgrade its ATS in order to create these attracting experiences.
As more talent acquisition tools enter the market, many aimed at solving specific pain points, it will be important to keep the end goal in mind: branding your company appropriately using the tools in your HR arsenal. This will help you filter products and align with so the platform fades to the background while providing an exceptional candidate experience.
Understand Who You’re Trying to Attract
One of the central aspects of understanding the current talent pool is getting inside the minds of today’s job seekers — millennials and Gen Z. It’s estimated that by 2020, millennials will account for 35% of the total global workforce, while Gen Z will add another 24%.
What do these generations value, and how can companies position themselves to speak the language of this rising workforce?
The Deloitte Global Millennial Survey 2019 has several noteworthy takeaways:
- Seeing/traveling the world is the top ambition for both generations.
- What businesses prioritize isn’t aligned with what millennials think businesses should prioritize.
- Seventy percent of respondents think they lack some or most of the necessary skills required in Industry 4.0.
- Millennials believe employers should be most responsible for preparing the workforce for Industry 4.0 (30% of respondents), while Gen Z puts the greatest expectations on educational institutions (36% of respondents).
- “Dissatisfied with pay,” “not enough opportunities to advance,” and “lack of learning and development opportunities” are the top reasons both generations would leave their current jobs over the coming two years.
- Becoming a gig worker is a realistic option for more than 80% of both millennials and Gen Zs.
Millennials also care about purpose, according to experts at the London Business School (LBS). Professor of Management Practice Lynda Gratton says the contract between employers and employees is changing. Before, people worked to “buy stuff that [made them] happy.” Today, however, the focus rests on gaining happiness from the work itself.
Increasingly, job seekers are turning to social media, a familiar environment for millennials and Gen Z. While job boards remain the top choice (69%), according to the 2019 Job Seeker Nation Survey from Jobvite, more than one-third of respondents find job opportunities on social media. And younger workers are the most common group looking (41%). Talent management tools that can connect to these sites will help increase your brand’s visibility and cater to the modern candidate.
The Need for Agility
As the boomer generation continues to retire, millennials and Gen Z will play a greater role in shaping the workplace environment. And, whether companies like it or not, job-switching is the default for both generations. Forty-three percent of millennials expect to leave a job within two years. For Gen Z workers, that number climbs to 61%.
Overall, the number of employees who left jobs hit a 17-year high of 2.4% in the summer of 2018, as reported in Reuters. That monthly quits rate has only dropped to 2.3% as of September 2019, according to the monthly Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics.
In this new age, agility will be key in helping organizations counter the job-hopping tendency. That includes investing in software solutions that cut down on onboarding and training costs.
It also requires companies to foster an environment that draws rather than repels the new workforce.
This employee engagement issue is a major challenge facing companies, says Dalton. “Despite full employment, productivity is down. The challenge in TM is whether the solution lies with tech, more traditional ways or a mix of both. Engagement surveys and pulse taking are always helpful, but probably no substitute for meaningful connection based on trust, recognition and respect.”
For companies looking to retain their talent, Gartner research suggests that stability, compensation and work-life balance are the top ways to attract workers.
As your company seeks to stay ahead of the curve, consider a few ways your HR software impacts retention:
- Implement solutions that include health and wellness programs, which rank among the top benefits that employees value according to a 2018 Aflac study.
- Use an employee training system to help attract and retain employees. Things like LMS software and virtual reality platforms can equip your workforce to succeed.
The Role of Technology
The AI trend is nothing new, but Cates sees it becoming the main focus of 2020. “As AI improves based on ‘learning’ experiences, we will see how it creates a seamless process from candidate attraction to onboarding.”
Recruiting is a commonly recognized HR function where AI is making a significant impact — and offering high value. Per the LinkedIn 2018 Global Recruiting Trends report, time-saving is the primary benefit of AI (67%), followed by removing human bias (43%).
Another report, from Talent Board, found that chatbot recruiting usage jumped 69% from 2017 to 2018. Companies use chatbots to answer general questions, giving their recruiting teams extra time with candidates in the pipeline.
However, Cates believes improving the use of chatbots and scheduling bots will become a priority in 2020. “This can be done to scale and can handle large numbers of applicants,” he says.
The gains AI brings in terms of speed and automation are a major reason why companies are turning to it to handle the broad range of steps involved in recruiting. And with the increased use of AI tools comes the need for people to manage those tools.
As with any cutting edge technology, AI comes with warning flags attached. A commonly highlighted issue is that, despite the ability to address hiring bias, AI platforms may unknowingly have the programmers’ bias built in. It’s best to thoroughly vet the AI-enabled solutions you’re considering and look for any holes that could undermine your efforts to strengthen your talent acquisition game.
Despite the concerns, AI’s benefits outweigh its shortcomings. Companies should look to talent management platforms that have AI capabilities to streamline the recruiting process and improve the quality of hires while cutting costs.
A Call for Greater Diversity
The past couple of years have seen a tsunami of events that put the diversity discussion square in the spotlight.
Anti-harassment issues are top of mind. Seventy-one percent of talent professionals in LinkedIn’s Global Talent Trends 2019 report think anti-harassment will be a focal point going forward.
Another key trend to watch for, according to Dalton, is how organizations are responding in the wake of the #MeToo movement. “Many companies are happily being more vigilant about their policies on sexism and harassment and monitoring their talent management systems for unconscious bias.”
One way this will play out is with employers focusing on branding that avoids “gender washing.” The impetus? “Organizations such as Nike and McDonalds [are] seeing class action for allowing or even facilitating toxic workplace cultures,” Dalton says. “[Companies] are going to have to walk the talk.”
The #MeToo movement has drawn much of the attention, but workplace diversity extends to other areas. Zoe Hart, Senior Vice President of Human Resources at Upwork, says HR leaders are looking beyond the common issues that include race and gender. Writing in Forbes, she identified education levels, geographic location and generational affiliation as factors in the diversity discussion.
If your company is looking to foster greater diversity, ATS solutions can track what percentage of hires are from minority groups and display hiring trends in dashboards for easy viewing. You may want to consider the current capabilities of your ATS and whether it can support diversity initiatives.
However, showing favoritism in hiring is often illegal, so it’s equally important to develop a diverse talent pipeline to draw from. In response to diversity and inclusion (D&I) struggles, a new technology market has risen to help organizations combat shortcomings.
The report “Diversity & Inclusion Technology: The Rise of a Transformative Market” covers this upcoming market in depth. Here are a few highlights:
- Unconscious bias is the top problem (43%) D&I tech seeks to solve.
- The top success measures are greater employee engagement scores and more diversified talent pipelines (55% each), as well as a decrease in unconscious bias (50%).
- Sixty percent of vendors are less than four years old.
- Talent and acquisition solutions account for 43% of the market.
- Of those solutions, 53% address candidate selection while 47% address candidate sourcing.
This growing market reflects the need for systems that can aid companies in tackling D&I issues. Organizations such as Accenture and Johnson and Johnson have seen gains by using D&I technology. Going forward, implementing such solutions will be key for companies to foster a more diverse workplace.
To Wrap It Up
The HR industry, and specifically talent management, is in the midst of massive change. From expanding AI functionality to the difficulties surrounding talent and the skills gap, everything is in flux. Executing effective talent management practices is no picnic.
But at the same time, the industry is ripe with potential. Alongside the change, there’s an impressive amount of innovation happening that’s allowing companies to solve specific problems such as hiring bias and lack of workplace diversity.
The companies that embrace these shifts and continually reinvent their talent management will be better positioned for lasting success. And that process starts with picking the right software.
Our goal is to help you succeed on that journey and more easily navigate the turbulent — and often confusing — tides of talent management software. If you’re early on, our free comparison report can help you compare top products. If you’ve reached the vendor shortlisting stage, grab our requirements template to help manage the process. And our pricing guide will ensure you don’t fall in love with a solution only to find out it’ll cost an arm and a leg more than your budget allows.
Talent management in 2020 may be difficult, but that doesn’t mean your software selection should be. Put the right tools in place and reap the rewards throughout your organization.
What talent management trends do you think will move to the forefront in 2020? Have we missed any? Let us know in the comments below!
Contributing Thought Leaders
Dorothy Dalton is a global talent management strategist who focuses on executive search, coaching, training and HR consulting. She speaks at conferences, runs workshops, and designs and delivers career coaching programs to corporations and business schools. As Co-Founder and CEO of 3Plus International, Dalton is passionate about supporting the advancement of women in the workplace and organizations that commit to gender equality.
Steven Cates serves as a Graduate Professor of Human Resource Management in the School of Business and Information Technology at Purdue University Global. He has over 30 years of managerial experience in all facets of HR and over 20 years of collegiate instruction experience. He holds a Society of Human Resource Management certification, has authored over 100 publications in the field of HR management and marketing, and has served on dissertation committees.
Art Mazor is Deloitte’s HR Transformation Global Practice Leader, part of the Global Human Capital Executive, and member of Deloitte Consulting’s Global Leadership Team. His professional journey of nearly 25 years has been exclusively focused on human capital management. He has held senior HR leadership, outsourcing executive and human capital transformation consulting roles.