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11 Trends that will shape work in 2022 and beyond

January 15, 2022
Borderless Future

At the start of 2021, many of us expected the world to return to normalcy. Vaccines were starting to roll out, and many executives felt like it would be a matter of a few short months before we would all return to the workplace.

But 2021 was more volatile than expected, with the rise of new Covid variants, a massive war for talent, quit rates at an all-time high, and the highest inflation levels in a generation.

The level of volatility will only increase in 2022. New variants will continue to emerge and may cause workplaces to temporarily go remote again. Hybrid work will create more unevenness around where, when, and how much different employees are working. Many employees will be greeted with real wage cuts as annual compensation increases fall behind inflation. These realities will be layered on top of longer-term technological transformation, continued DE&I journeys, and ongoing political disruption and uncertainty.

Here are 11 underlying trends that will shape workplace volatility in 2022:

1. Fairness and equity will be the defining issues for organizations.
Debates that have fairness at the core, whether it’s around race, climate change, or Covid vaccine distribution, have become flashpoints in society. According to our analysis of S&P 500 earnings calls, the frequency with which CEOs talk about issues of equity, fairness and inclusion on these calls has increased by 658% since 2018.

And questions of fairness and equity are emerging in new ways:

Who has access to flexible work? We’ve seen organizations where some managers allow their employees flexibility while other managers don’t.
What happens when employees move to locations with a lower cost of living? Should employers lower their compensation even though the impact of their work hasn’t changed?
In today’s labor market, companies are paying 20% compensation premiums to hire new employees. Is it fair to pay new employees so much more than established employees?
Companies are offering new, targeted investments for specific segments of their workforce (e.g., additional financial resources to support employees with children). While these investments are critical to help those employees do their job, employees without children have asked “Why are employees who are parents getting something and I’m not?”
In 2022, executives will need to address how they are managing fairness and equity across the increasingly varied employee experience. In fact, this will be the number one priority for HR executives next year.

2. Despite a strong push from the Biden administration, a significant number of employers will not adopt a vaccine mandate, instead relying on testing to keep their workplaces safe.
In January 2021, less than 2% of companies were planning to implement a Covid vaccine mandate. That number steadily increased across the year before plateauing at the end of 2021 at less than 50%. Even with the rise of the Omicron variant, 2022 will not see a significant increase in the number of companies putting a mandate in place. Instead, roughly half of large employers will maintain a testing option in order to comply with the Biden administration rules.

There are several factors causing this. First, employers are concerned that a vaccine mandate will cause a mass turnover event. A Gartner survey found that heads of HR expect to see nearly 7% of the workforce quit if they put a mandate in place. While 7% may not seem like a significant number, and might be an overestimate, whatever turnover occurs will not distribute evenly. Some departments in some geographies might see turnover rates of 15%.

Second, many employers are concerned that a vaccine mandate might not survive a series of ongoing court challenges. Given that risk, they are hesitant to adopt a mandate that may be reversed at some point in the future.

Third, some employers don’t feel that they have the right to make this decision for their employees and contend that it is still an issue of employee choice.

Finally, uncertainty over what being vaccinated means (e.g., do you have to have a booster shot in order to be considered vaccinated?) creates complexity in managing the entire process. Despite the additional effort of managing a testing process, a significant percentage of companies will continue to do so rather than implement a full vaccine mandate.

3. To compete in the war for knowledge worker talent, some companies will shorten the work week rather than increase pay.
Employers are offering significant compensation increases to attract and retain talent in today’s market. Our research has shown that in the U.S., year-to-date salary increases have been more than 4%, compared to a historical norm of 2%.

But when we also consider inflation, real wages have declined. And if inflation continues to rise, employers will find the compensation they offer will be worth less and less in terms of purchasing power for employees.

While some companies are able to compete for talent through compensation alone, others don’t have the financial resources to do so. Rather than trying to win the war for talent by increasing compensation, we are seeing some employers reduce the number of hours worked by employees and keeping compensation flat.

Historically, as wages rise, leisure time becomes more valuable and appealing to workers. Reducing the hours employees need to work gives less liquid employers a better chance to compete with organizations that offer higher overall compensation but don’t offer reduced hours. Ultimately, we’re likely to see a handful of organizations adopt 32-hour work weeks with the same compensation as a new way to compete for knowledge workers. READ MORE

by Brian Kropp and Emily Rose McRae

Source: hbr.org

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