Massive turnover. Rapid market shifts. Disruption of global supply chains. Organizations are dealing with constant and rapid change. And HR teams must prepare for what’s ahead to help leaders of all levels handle the impacts. To stay ahead of the curve, DDI research points to HR leadership challenges teams need to know to help leaders and organizations thrive in 2022.
DDI’s HR Leadership Insights Report analyzes responses from over 15,000 leaders in over 1,700 organizations to examine how HR has been impacted by rapid change. The report also identifies opportunities for HR teams to make the most of this continued state of disruption. In this blog, I’ll discuss three major HR leadership challenges and what HR teams can do to be ready to tackle these challenges in the year ahead, as many continue to move forward with hybrid work models and begin to re-assess strategic objectives for the future.
3 Major HR Leadership Challenges: What to Focus on for 2022
Not much can be done to prevent disruptions from happening, but the way organizations respond is critical. While HR alone may not determine the response to every major disruption, HR’s role in how they play out affects every employee. Here are three of the major challenges ahead.
1. HR Has to Sharpen Its Strategic Edge
Right now, companies are desperate for great talent and need HR to be at the top of their game. But with lean teams and so many competing priorities, HR is having a tough time playing the role they want to play to address urgent talent needs. Instead, many have been forced into more reactionary roles.
Specifically, we categorize three roles HR teams typically play:
- Reactors: Respond to business needs.
- Partners: Collaborate with leaders towards business goals.
- Anticipators: Proactively predict future talent gaps in relation to business goals.
We’ve been tracking these three roles for several years, and expected to see HR steadily marching toward a more strategic role as anticipators. But in 2021, only 10% of organizations reported being able to play the role of anticipators. This is a 40% decrease from 2018. This drop is largely impacted by the recent global pandemic, which forced many HR organizations to focus on how to maintain a healthy workforce to support critical operations.
Organizations positioning HR to be anticipators are more likely to make good hiring decisions. They are also more likely to have a strong leadership bench and manage change effectively. However, these organizations may be forced to be reactors when encountering disruptions.
When disruptions occur, HR needs to be able to flex to meet the talent needs that arise. At times, they will be forced to flex to be more reactive. But HR should also not neglect playing an anticipatory role at the same time. Organizations where HR plays the role of reactor are three times less likely to effectively manage and respond to change compared to others.
These benefits extend beyond the immediate team as well. In fact, in companies where leaders manage change well, turnover is 15% lower on average than those with leaders who struggle with it.
2. Stem the Tide of Turnover Through Leadership
The pandemic has caused more resignations than ever before, overwhelming organizations with alarming increases in turnover. In fact, 53% of HR respondents told us they have seen increased turnover in the past year. And 20% said that they’ve seen it increase significantly. Other statistics on the Great Resignation show as many as 40% of workers are planning to leave their jobs in the next year.
Some of these departures may be unavoidable as employees re-negotiate what they want out of work and life. But as HR works to stem the tide of turnover, they should look first to leadership.
First and foremost, what skills do leaders need to address the issues? In our Global Leadership Forecast 2021 we pinpointed key skills that help leaders proactively address burnout and turnover, including empathy, coaching and delegation, and influence.
But some reasons for turnover may be outside of leaders’ control. In our HR Leadership Insights Report, we also identified key skills that help leaders manage teams during periods of high turnover:
- Delegation & empowerment: These two skills help leaders ensure their teams are capable of handling the increased workload.
- Leading virtually: As more employees ask for flexibility, managers who are strong in virtual leadership skills have a better shot of building strong relationships with remote and hybrid teams.
- Digital acumen: In some cases, leaders may have to compensate for lost employees by increasing their use of technology to facilitate better efficiencies on their team.
Lastly, you need to pay close attention to retaining leaders themselves. While turnover is lower among leaders than frontline employees, our data still showed an 18% increase in leadership turnover during the last year. When talent is sourced externally to fill these vacancies, a risk is being taken that they will be able to fit within the new culture while also bringing novel ideas and perspectives. And yet, many struggle to do so, as internally hired leaders are 25% more likely to be successful than those recruited externally.
This does not mean, however, that external hires are always the wrong answer. If you need to onboard new leaders, the following practices help to improve success rates:
- Use assessments to help leaders understand their strengths and weaknesses before beginning their role.
- Encourage leaders to regularly review their development plans with their managers.
- Support leaders with on-demand learning tools that can help them in the moment (although these tools work best when leaders have already built foundational skills proactively).
3. The Ripple Effect of Misalignment
Misalignment between HR and the business can become exacerbated during disruptive times. And then it becomes even more likely for CEOs and CHROs to not be on the same page, causing a ripple effect throughout the organization.
According to the CEO Leadership Report 2021, when CEOs and CHROS are aligned, their organizations are 1.5 times more likely to be among the top financial performers compared to peers. Conversely, when alignment is not present, rifts between HR and the business may exist. And this can foster an “us versus them” type environment, making acting with agility more challenging.
To help HR overcome alignment challenges, executives should work together to co-create a strong leadership strategy. Doing so enables the CHRO to weigh in on talent strategies to help support strategic objectives. C-level leaders should also establish clear expectations and leadership competencies. Additionally, C-level leaders should agree on key diversity goals. Alignment in these areas helps to create cohesion that cascades through other levels in the organization.
Use These 4 HR Practices to Stay Ahead
In addition to the recommendations above, there are things HR can do to help their organizations stay ahead of HR leadership challenges and thrive in the year ahead.
1. Teach Leaders to Manage Change
As deep shifts take place in your business strategy, offer leadership training on managing change. Offering training consistently across all levels of leadership can help the collective organization manage change effectively. Even in HR, managing change can be a challenge. And with the increasing frequency and rapidity of changes, it is risky for any group to be unprepared.
When training on managing change is offered in organizations, the likelihood of having strong leadership effectiveness doubles—from 25% to 50%.
2. Ensure Leaders Get Transition Support
In addition to training on managing change, HR needs to keep a pulse on leadership development offerings. During disruptive times, priorities fluctuate so much that leadership development may be missed. According to the Leadership Transitions Report 2021, the percentage of recently transitioning leaders who received leadership skills training dropped from 61% in early 2019 to 48% in 2020.
HR teams should evaluate their talent programs to make sure leaders are being set up for success. And they should pay special attention to making sure leaders get transition support during disruptive times. These are the times when leaders will need it the most.
3. Focus on High-Quality Diversity and Inclusion Programs
Diversity and inclusion (D&I) programs accomplish far more than just improving specific demographic numbers in your company. These programs have a strong effect on the overall culture of the workplace, and help to attract and retain talent of all backgrounds. In fact, our report showed that companies with strong D&I programs are 9X more likely to have overall high-quality leadership, and 28% more leaders ready to fill critical roles.
By focusing on upping the quality of current D&I programs, or starting one if it is currently nonexistent, HR teams can change the culture of their organizations for the better. In changing the culture to one that’s more inclusive and diverse, the organization will be more likely to recruit from a diverse pool, which opens the door to find more qualified talent, faster.
4. Use a Consistent Process for Hiring and Promotions
Inconsistent hiring practices are inefficient and make implicit bias easier to creep into your process. And this can make it harder to make the right hiring decisions. As HR teams struggle to replace leaders, having a structured selection process in place will minimize potential bias and improve the quality of hiring and promotion decisions.
Overcoming Disruption: Preparation and Alignment Are Key
Though the speed and intensity of disruptions have increased over the past several years, some organizations have managed to act with agility. These organizations fundamentally rely on HR to provide the opportunities to learn what they need to make it through these times.
Senior leadership and HR need to work together on establishing a solid foundation to work with each other in preparation for any future disruptions. Keeping a focus on current events while also working towards aligned strategic objectives will enable organizations to be more resilient when encountering disruptions in the future.
To get more research, download DDI’s HR Leadership Insights Report.
Rosey Rhyne is a senior research manager on DDI’s Center for Analytics and Behavioral Research (CABER) team. With a background in HR, Rosey is passionate about uncovering opportunities to improve the leadership and employee experience.