Research
The CHRO Agenda: 2024 Human Resources Key Issues
Expectations have never been higher for human resources (HR) teams. In the face of continuing economic uncertainty – coupled with new and ongoing geopolitical events – HR teams are feeling increased pressure from business stakeholders. As experts predict a stall or slowdown for global economic growth in 2024, our findings from The Hackett Group’s 2024 Key Issues Study indicate that HR leaders have shifted their priorities for this year.
What’s changed
Like 2023, developing effective leaders remains the top priority, while creating and maintaining a high-performing organizational culture moved up three spots. Aligning workforce planning and strategy to business planning and improving employee, manager, and candidate experiences are new to the top 10.
While priorities are relatively evenly split between enterprise-level human capital business goals and HR function goals in 2024, four of the top five priorities are human capital-related, reflecting the function’s broader mandate for enabling business success.
Developing effective leaders is top priority
Leadership is perennially a high priority for organizations, but challenges posed by continued business disruption and workplace transformation has made leadership the top HR issue for the second year in a row. HR executives clearly see the importance of this objective, and 65% plan a major 2024 initiative to address this objective – higher than for any other objective in the top 10. Confidence in the ability to deliver improvement in this area, however, is low. HR executives not only must commit resources to leadership development but also sustain their focus to achieve this objective.
Technology reinforces organizational culture change
There is renewed focus on corporate culture as a competitive advantage, and changing workforce values and employee expectations are putting pressure on organizations to critically assess and improve their culture. In an increasingly digital environment, technology can help reinforce culture change. Digital learning platforms and tools enabling hybrid work are the most pervasive among digital workforce enablement technologies. Both can help shift the skills and behaviors needed to power culture change. This level of deployment of digital technologies promises to improve not only employee experience, but also talent management and HR service delivery.
It is not enough to have a seat at the table; HR must be able to influence the conversation
People-related issues can have a major impact on organizational performance. HR must be able to guide business leaders, and shape new strategies and policies to reinvent work and the workplace. Only 29% of HR organizations, however, have a major 2024 initiative planned to upgrade staff skills and support capabilities to successfully play this role.
A cooling labor market may affect talent recruitment
For recruiting and retention efforts to succeed, HR must lead in creating compelling candidate and employee experiences. Confidence in the ability to deliver is a concern, though, while only about one-third of organizations have a major improvement initiative in 2024 to address this objective – down from nearly two-thirds of respondents in last year’s study. This may reflect several trends, including a cooling labor market and lower turnover levels, as well as the impact of last year’s efforts to shore up capabilities for addressing this objective.
Aligning workforce and business planning remains challenging
Ever-changing business dynamics, labor supply and demand gyrations make aligning workforce skills with business needs a constant challenge. Digital World Class® HR organizations have a significant advantage over the peer group, investing 56% more in strategic workforce planning (SWP) capabilities as a part of overall talent management cost. They are also more than two times as likely than peers to have deployed a common set of SWP analytical tools used by subject matter experts, HR business partners and business unit leaders.
Doing more with less through digital transformation
HR organizations are cautiously trying out generative artificial intelligence (AI) technologies in low-risk activities, such as answering common HR-related questions embraced by 36% of respondents. Many HR organizations have automated this capability already with non-AI technology, but generative AI can handle detailed follow-up questions with ease. One-third of HR organizations are using generative AI to create consistent job descriptions.
Creating better talent outcomes garners more investment
HR recognizes the importance of increasing not just its own talent management capabilities but also those of people managers across the enterprise. Nearly two-thirds (61%) of HR organizations have a major 2024 initiative to address this objective – up from one-third of organizations last year. Emerging technologies are enabling organizations to scale talent management across the enterprise in a consistent way, though AI-enabled human capital management tools still fall in the emerging category, with adoption below 10% at this point – but a healthy 13% projected adoption in 2024.
Businesses still struggle to fill key roles
Increased employee attrition, combined with failure to reskill or upskill current workers, has left many organizations struggling in their attempts to fill critical roles. Only 32% of HR organizations, however, have a major improvement initiative for this area in 2024. Instilling a long-term view of talent development is critical – ensuring that stakeholders understand the central role it plays in enabling major investments in technology and digital transformation. While training is often an easy target for short-term financial wins, this can backfire down the road.
Retooling the operating model helps improve employee experiences
As expectations and demands of key stakeholders rise, HR organizations must design and deliver compelling experiences. This requires constant evolution of the operating model, proficient deployment of new technology and productive focus on skilled HR staff. When asked about 2024 initiatives, 88% of HR executives said they planned to expand opportunities for learning and development. Another 64% intend to improve the quality of manager-employee relationships. More than one-half (58%) cited greater recognition of behaviors and performance, while 55% intend to take steps to create a more engaging organizational culture.
Businesses struggle to adapt to new labor market realities
Faced with talent demand that still exceeds supply in many labor categories and evolving employee expectations, organizations are struggling to adapt their talent acquisition strategies to the new realities of labor markets. Only 32% have a major initiative to address this objective – one of the lowest levels of commitment among the 10 top priorities. Improving insight is crucial for delivering on this objective, and adoption of data-related and emerging technologies is increasing, but the learning curve remains steep for some HR organizations. Pilot and small-scale deployments of data-related technologies are still the norm, although executives expect healthy adoption growth levels for this year. This is good news because the effective use of these tools is a critical prerequisite for enabling future digital and generative AI transformation.
Technology can help improve HR efficiency
Human resources organizations are placing increasing focus on using technology to deliver HR services with more efficiency and increase staff productivity. Cloud-based, core human capital management applications are most widely implemented of core technologies, but some HR groups may be over-relying on them. In fact, 37% of respondents said these systems fell short of delivering the expected benefits. Adoption of AI-enabled emerging technologies is increasing on a small scale and with modest growth expectations. Many survey respondents, however, stated that these technologies have fallen short of their usage expectations.
Transform your HR capabilities in 2024
As economic disruption and potential geopolitical risk remain prominent features in the 2024 outlook, HR teams will need to adjust their priorities to ensure that they are able to support the success of their business stakeholders. We believe most HR teams can make meaningful progress toward achieving their priorities by focusing in seven areas:
- Provide ample training and development experiences for organizational leaders and people managers.
- Be prepared to play a lead role in guiding your organization through the process of assessing and improving, if not transforming, its culture.
- Prioritize improvement opportunities ruthlessly based on importance, value, time to benefit and opportunity cost. Seek not to just understand limitations and constraints, but to manage or reduce them.
- Determine workforce strategies based on potential business scenarios, and identify and nurture critical talent, especially in roles critical to business success.
- Assess and adjust talent models to make them sustainable by evaluating talent management strategies to ensure the right mix of internal development and external recruiting.
- Perform a comprehensive assessment of HR skills to identify gaps, redesign roles to better leverage technology, and reskill and upskill HR staff to leverage intelligent automation technologies, such as generative AI.
- Use technology to improve efficiency, effectiveness and experience. Start by fully utilizing the capabilities of your existing platforms, and then accelerate the adoption of new tools and applications.
Download the full report to learn more about the top priorities of CHROs for 2024, including developing effective leaders, creating a high-performing organizational culture, aligning strategic workforce planning, and leveraging technology to improve efficiency and effectiveness.
