2019 looks set to bring talent shortages, so it's time for creative and innovative HR practice

Blog posts

15 Jan 2019

Dan LucyDan Lucy, Deputy Director, HR Consultancy and Research

Picking three key issues for HR to focus on in the year ahead is the standard formula for blogs in January, and we’ve probably all read a few by now. But it seems to me that there is one large, looming challenge that will require HR’s focus in the year ahead. That is the challenge of finding, recruiting and retaining talent.

Doom and gloom, perhaps, but we think this fundamental challenge may encourage greater HR innovation and further attention to better quality work amongst UK employers.

Last month’s labour market statistics reported vacancies at their highest ever level, unemployment at its lowest since the 1970s, redundancies at a record low, and widespread skills shortages. In a recent survey conducted by the British Chamber of Commerce, four-fifths of manufacturing organisations and nearly the same proportion of services firms reported difficulties in finding workers with the right skills. Add to that falls in the numbers of EU nationals coming to the UK, presumably as a result of Brexit, and it is easy to see why this is likely to be a central concern for HR in the coming months.

The government’s immigration proposals are unlikely to offer much help for employers in addressing these issues, so I think the key question we’ll face this year is whether all of this might prompt wider changes in employer policy and practice.

In particular, will 2019 see more employers focusing even greater attention on creating the kind of good work and leadership capabilities that can retain staff?

Will employers dedicate as much care and attention to the employee experience as they do the experience of customers, whilst also thinking more creatively about how to source and make best use of untapped potential in the labour market?

Will we see more employers more willing to design jobs flexibly, in order to attract, retain and make use of diverse talent?

We certainly see lots of examples of this already. The budget hotel chain Travelodge has made news with their strategy, in response to anticipated post-Brexit staff shortfalls, of attracting parents back to work through the provision of work opportunities that fit around the school run. 2019 could, then, be a year in which we start to see increasing amounts of innovation from HR in this space.. Indeed, we hope this is the case.

One early indication of whether talent is rising up the HR agenda will be in the next round of gender pay reporting. This is the second year of mandatory pay reporting, with so far 700 out of about 10,000 employers having submitted their data. The first round last year put the spotlight on the issue effectively, and led many boards and senior leaders to take this issue seriously for the first time. The second year’s reports will give us the first signs of how the numbers have changed and there will be keen interest in how employers support and explain the changes through their narrative commentaries. Hopefully, there will be evidence of positive change and employers starting to tackle the underlying structural and cultural issues that have contributed to the gaps in pay that we see. A recent survey by the Confederation of British Industry (CBI) has highlighted that most employers report having taken action to address gender diversity, although some employers are now concerned that by taking steps to address gender diversity in entry level jobs they may in fact end up reporting wider pay gaps than before.

So, we will be looking out for changes in the proportions of women and men in different income quartiles, but also at employers’ narrative reports on how diversity is being supported and facilitated – for example, through making more senior-level roles available on a flexible basis.

On a longer track, we will also be looking out for the extent to which HR starts to take the lead in conversations about the opportunities and challenges that technology, automation and artificial intelligence will present for talent management.

Having initially emerged as a narrative of dystopian job losses and a workless future, more recent analysis and commentary has thankfully focused on how technology can liberate workers from the mundane to focus on higher value-added, human, and engaging work. Have a read of some of the implications that we’ve set out for employers and, specifically, HR functions.

This year, we would expect to see more discussion, ideas and innovation around the role of technology and work – with more employers taking proactive steps to protect and enhance the futures of their workforces.

There are so many other issues in the coming year, from the challenges of supporting the progression of low-skilled staff, runaway executive pay, the ethical and practical challenges of greater adoption of artificial intelligence in HR, and dealing with the consequences of Brexit – as well as the perennials of performance, pay and engagement.

Across all of this, though, will be how employers manage talent. This will require a continued and increased focus on better work, and workplaces supported by an ever-more professional community of HR practitioners.

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Any views expressed are those of the author and not necessarily those of the Institute as a whole.