Human Capital Intelligence - 11/20/2023
Slow HR tech adoption | New hires still quitting | Remote friendly companies see higher sales | IBM drops 401k
Welcome to the latest edition of Human Capital Intelligence. As always, we would love to hear from you at ken@stibler.me with news ideas, feedback and anything else you find interesting.
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By Ken Stibler; Powered by Reyvisum Analytics
What’s Working
Companies Fail to Adopt HR-Tech Despite Looming Talent Challenges
Despite the increasing need for digital transformation in HR, only 35% of HR professionals believe their people management functions are utilizing relevant digital technologies according to a report by Boston Consulting Group and the World Federation of People Management Associations.
The report highlights that just 30% agree that HR is effectively using data and analytics to anticipate people challenges. With 72% citing people challenges and talent gaps as the primary obstacle, the findings underscore a significant gap in HR tech adoption, hindering proactive solutions to imminent talent challenges.
Separate research from the Massachusetts Institute of Technology, found that the use of AI tools is already raising productivity, decreasing inequality between workers and enhancing job satisfaction. In fact, 75% of respondents who implemented ChatGPT saw improvements in team morale, collaboration and collective learning.
Strategic workforce planning and upskilling are crucial have become crucial arenas for tech upskilling and the use of tech itself, yet ranked only 18th and 9th, respectively, in terms of current capabilities according to the BCG study.
"Everything's going to have an effect on culture. AI is definitely going to change a lot about jobs as we know them, but it's not going to replace core human creativity, communication and connection — all of the things that make a culture."
— Anny Gutknecht, CEO of Pathways, a human resources platform.
Despite the acknowledgment of these priorities, HR leaders' current capabilities in these areas are considered weak. The report emphasizes the need for proactive investment in digital and data capabilities to enhance HR's organizational impact.
The five recommendations for HR leaders include leveraging data for talent planning, improving talent acquisition, investing in upskilling, unlocking value through AI, and focusing on change management and organizational development.
BCG suggests that the impact of the pandemic has demonstrated HR functions' ability to respond to acute stimuli, but the greater challenge lies in planning for the long-term future. By shifting focus to topics that yield medium to long-term results, HR functions can build the right capabilities to shape their company's overall people agenda differentiating.
Employee reviews fall flat despite rapidly digitizing workplace.
Despite the ‘data-driven’ mantra of today’s businesses, several surveys reveal that less than half of companies believe their performance review systems effectively measure staff's work. This echoes earlier research highlighting the stress, unfairness, and inefficiency associated with performance reviews.
Confirm, a performance review platform, suggests that 15% of workers contribute 50% of value, while 5% generate 50% of problems. Notably, Confirm emphasizes the disproportionate time spent on self-reflections, with employees dedicating 7.5 minutes while managers invest only eight seconds in reading them.
While financial performance is easily measurable, evaluating those who facilitate efficient work or prevent issues is challenging. Many unsung heroes in the workplace often go unrecognized in traditional performance reviews and continuous feedback systems.
Office politics, visibility bias, and resistance to kissing up to superiors further hinder the acknowledgment of these valuable contributors, showcasing the limitations of existing performance assessment methods.
New hires are still quitting despite softening labor market
Despite a softening labor market, nearly 40% of employees with less than six months in a company plan to leave within the next year, marking a 6% increase from last year, according to a report from Qualtrics.
The honeymoon phase for new hires is short-lived, with dissatisfaction often stemming from insufficient support after onboarding. With the labor market providing ample opportunities, new hires maintain a cautious eye on alternative roles, emphasizing the need for a balanced focus on recruitment and retention efforts, including comprehensive onboarding and team-building resources.
Gartner research highlights a related trend of new hires declining job offers even after acceptance, with 51% either rejecting the offer or disappearing before the start date. The competitive labor market, economic uncertainty, and frequent layoffs contribute to new hires' lack of loyalty, reflected in a substantial percentage remaining open to other job offers.
This turnover trend poses challenges for employers, incurring costs ranging from $4,000 to $20,000 for recruitment and onboarding. As the job market evolves, HR leaders must prioritize transparency, connection-building during the interview process, and ongoing efforts to sell the job and organization to improve the stickiness of job offers.
The future poses additional challenges to new hire retention, with potential economic improvements diminishing stickiness, growing mistrust of employers, and the rise of remote work contributing to job-hopping. HR leaders must adapt strategies to keep candidates engaged, emphasizing flexibility in working hours as a crucial aspect to meet employees' needs and enhance job satisfaction.
HR Reading List
“Ok, Boomer” is a popular meme and rebuke of older generations by millennials and GenZ. However when agism is allowed to seep into the workplace, it’s costly on many levels. It leads to conflict and low morale, lowers productivity, and may even result in illegal hiring practices. Presenting the disrespect younger employees show to older people as an issue of fairness and equity - in their parlance - can help make one of the many areas of multigenerational conflict a rare source of alignment in a workforce that now includes seven generations. (Ken Stibler)
IBM's decision to replace its 401(k)-matching program with a "Retirement Benefit Account" (RBA) has stirred unease among employees and financial advisors. The RBA, effective January 1, 2024, will offer a monthly account credit and a one-time salary increase to offset the discontinued match. Critics fear this shift will lead other companies to adopt similar measures. Financial advisors express concerns about disincentives to save, loss of investment control, lower returns, increased taxable income, and uncertainties about RBA funding, highlighting potential risks for employees' retirement savings. (USA Today)
Companies embracing remote work or offering fully flexible arrangements have witnessed a remarkable 4x increase in revenue growth compared to those enforcing stricter in-office attendance policies, according to a survey by Boston Consulting Group. Across 554 public companies, the study found that flexible firms, including completely remote and hybrid companies, experienced a 21% increase in sales between 2020 and 2022, surpassing the 5% growth observed in companies with hybrid or fully onsite workforces. The data suggests the ability to hire more quickly and from diverse geographic areas, coupled with higher employee retention, contributes to the superior growth rates among remote-friendly companies. (Bloomberg)
A stark contrast in retirement savings expectations and realities persists among U.S. employees, with just 27% feeling confident in covering their expenses during retirement, while 19% remain uncertain about their savings adequacy, according to Buck, an HR and benefits consulting firm. The research reveals that almost 45% believe they need $1 million for retirement, yet the average retirement account balance is just $65,000, contributing to a challenging landscape where 50% of women and 47% of men aged 55-66 have no retirement savings. Buck underscores a misalignment between employees' retirement aspirations and the current retirement system, emphasizing the need for effective communication and tailored savings strategies. (Saving for Retirement Report)
HP's analysis of over 50 work-related factors highlights that only 27% of knowledge workers currently maintain a healthy relationship with work, impacting productivity, morale, connection, and engagement. The study underscores a strong correlation between unhealthy work relationships and challenges in retaining employees, with a majority already contemplating leaving their current companies. Additionally, the findings emphasize a shifting paradigm where a significant majority is willing to accept lower compensation for a workplace that aligns with their emotional and professional needs, emphasizing the growing importance of emotional connection and empathetic leadership in the evolving landscape of work. (HP Work Relationship Index)
Quote of the Week
While new employees are typically the most happy and excited, they’re often not being set up for success. New employees may be heading for the exit because they’re not getting the support they need after starting their new job.
— Sarah Marrs, director of the employee experience product team at Qualtrics
In Other News
Skill-based hiring can help recruiters can find candidates in unexpected places. (HR Brew)
Job candidates are still ghosting employers — and the interview process is to blame. (Employee Benefits News)
Job references are a hurdle for Gen Z post-pandemic. (WorkLife)
New York, California, Alaska among states with highest worker productivity. (Employee Benefits News)
Top-Performing Companies Say Culture Is Responsible For 30%+ Of Their Enterprise Value. (Allen Austin)
HP’s chief people officer on how HR leaders can maintain a healthy workforce. (HR Brew)
Workers are 40% more likely to skip lunch than they were a year ago. (WorkLife)
More meetings, more loneliness? The risk of 'forced togetherness'. (Employee Benefits News)
How channeling anger the right way can boost productivity. (WorkLife)
The costs of retirement: How new requirements for long-term part-time employees will affect employers. (Employee Benefits News)
Legislative lowdown: Federal government sees pushback on joint-employer, overtime rules. (HR Brews)
Legislative lowdown: California moves to limit arbitration, Minnesota drops degree requirements. (HR Brew)
As the workforce ages, now is the time to normalize dementia care. (Employee Benefits News)
Leaders Guide: Understanding Gen Z and AI. (WorkLife)
‘Hot Desking’ Is the Next Threat to Office Market, Morgan Stanley Says. (Bloomberg)
White House struggles to enforce RTO mandates. (Politico)
Adapting HR and talent in the era of AI. (IBM)