8 Top HR trends in 2017

The labor market is affected by global economic changes, in particular those associated with the growth in digital technology, which has radically changed how human resources are managed.

What are those “new game rules” we need to know, and how do we apply them to HR processes? We have considered these issues, drawing from the knowledge of our expert analysts and from our experience in business process outsourcing, financial and HR consulting, and have identified 8 top HR trends in 2017 which we present below.

Екатерина Овчинник, директор по персоналу Интеркомп
Ekaterina Ovchinnik
HR Director Russia and CIS

1. Decrease in layoffs

Most companies reduced their staff in 2014–2015 to optimize costs and wages, and an optimization trend was observed in 2016 making teams “flexible” and easy for training, sharing information and skills.

HeadHunter experts say that there will still be some layoffs to improve business performance, but only people who perform badly are sacked now although previously poorly performing employees used to remain in employment.

Our experts have also noted this stable trend in staff reduction which had already decreased by the end of 2016.

There is an acute shortage of skilled staff as people do not manage to adapt quickly and learn the necessary skills. And, if previously it was possible to hire 2-3 specialists to fulfill the functions of one role, thus artificially inflating staff numbers, now companies invest only in skilled people with potential.

Our clients have noted a shortage of skills in project management, specialized knowledge, communication skills, teamwork and fluency in foreign languages.

Staff downsizing primarily connected with the crisis is over now, and in 2017, companies endeavor to retain their skilled and valued staff, not so much by increasing their fixed salary, but rather by offering more benefits and training opportunities.

Read more about Intercomp wages review.

2. HR automation – introduction of digital technology

Modern HR is rapidly adopting “smart solutions”. Heads of HR management are expected to introduce a culture of “digital organization”. HR focuses not only on employees, but also on operating platforms.

According to Deloitte, automation, cognitive computing, and mass data are radically changing the concept of human resources. Companies must choose and use cognitive tools, train staff to work with these tools, as well as reorganize work taking into account the growth in automation.

Leading companies already use digital technology to recruit staff, manage teleworkers, assess work performance, as well as calculate salaries and bonuses.

According to a survey conducted by HeadHunter, as early as 2015, over 88% of employers used 1С, SAP and Excel for HR management purposes. New HR applications considering involvement and gamifying feedback were launched in 2017. The automation of business processes through cloud technology such as, for example, HRIS, Google Apps for work will be a marked trend in HR and IT industries in 2017. HR tasks are currently handled through systems such as Jira/Asana.

3. Internal recruitment

The shortage of skilled staff is problematic even in an employers market as numerous responses to vacancies do not guarantee that employers will find suitable candidates.

According to HeadHunter, 79% of Russian CEOs consider the current shortage of skilled staff as a core business risk, and 58% of companies will use staff assessment tools for internal recruitment as well.

Measurable results are important for business hence the propensity to evaluate and train staff.

Companies try to retain their current employees and develop their skills by offering training and development plans. HR departments invite internal and external trainers to fulfill the development programs they have devised. Mentoring programs, working with university students and open days are all becoming increasingly popular.

Based on annual staff performance reviews, we devise training and development plans for employees, and based on performance indicators, we build a “talent pool” from which we can draw to fulfill our internal recruitment needs. We look forward to sharing our talent pool expertise and experience with companies for which this is a new concept. We have set up a “Corporate University” which has been running for over 3 years and generates excellent results.

According to Zarplata.ru survey, companies are planning to spend more on staff training and development in the long term by devising training programs and emphasizing bonus and career progression.
According to PwC Saratoga survey, the number of training hours per employee has increased from 15.2 hours to 19.2 hours.

To be of value today, HR specialists need to be able to evaluate training effectiveness, adopt online formats, as well as manage knowledge and continuity in their company.

4. Strengthening of HR branding

Building productive relationships with employees is known as H2H or human to human. Applicants choose their employer consciously, relying on personal values, goals and behavior hence the growing importance of the role of employer’s brand in attracting and retaining talents.

The idea is not new, of course, but companies are currently clearly divided into those with appealing HR brands and the rest. The best candidates pay attention to guarantees and prospects which is exactly what a strong HR brand offers.

HeadHunter experts consider that companies which only offered money to their employees are now suffering enormous losses. More and more money is needed to appeal to employees from the “Facebook generation”, and this does not even guarantee that they will stay. The value of money depreciates. Money has long become something that employees need but are not necessarily motivated by.

Companies need to have a broader view of the offer they make to their employees, and it would be useful for employers to find out from their employees the top factors that would attract and motivate them to stay.

We pay particular attention to Intercomp internal brand and conduct annual surveys of employee satisfaction. Another sign of strong branding is when former employees return to work for us. Our business is very tough, and it is difficult to overestimate the meaning of “deadlines” or “team”. More often than not we cannot compete with large businesses as far as remuneration is concerned, but for many employees, trust, openness and mutual support are equally important.

5. Wages or bonus?

According to HeadHunter survey, the trend of cost reduction by saving on wages should slow down in 2017. Almost half of the respondents plan to increase payroll expenses in their company although this will be a small indexation rather than a major increase.

These trends are also confirmed by our survey. We saw already in 2016 a slight increase in fixed salaries by 5-6% on average, and although this growth will continue in 2017, it will be negligible.

According to our data, salaries will increase in 2017 by about 7% compared to 2016.

When companies raise their requirements for employee performance, they also put in place quite flexible bonus schemes as well as financial incentives which are no longer formal but tied to final results.

This is confirmed by the results of 2016. The variable part of the total salary of wholesale and IT staff grew by 32% and 33% respectively. For example, the average bonus for wholesale employees grew from RUB 24,940 to RUB 38,363.

According to HeadHunter, employers are not willing to give away money for nothing. They need measurable results, and this has given rise to the propensity to evaluate, train staff and use KPI. These processes are gradually gaining popularity and require more engagement, professionalism and constant development from employees.

Outsourcing non-core processes like those outlined above always cuts costs and generates significant savings for companies.

6. HR analytics behind management decisions

Approximate assessments and empty reports are things of the past. HR analytics is a real business function for decision making based on numbers, and the priority of the day is to incorporate this function into the operational processes of companies.

HR Departments address many issues. In particular, they determine the grading system that works best for their company, wh ere promoted employees go, and many others.

The proper collection and management of analytics is a new cost-saving tool so basic platforms can be used with the help of a consulting company.

7. Clear business processes

The principle whereby we pay either in time or in money is as relevant as ever. Clear business processes, very detailed job descriptions, extensive additional materials for projects, clearly measurable indicators and targets all ensure top performance.

RBK experts have confirmed that business process facilitation helps saving staff, spending fewer resources on mentoring and training, as well as hiring employees without experience.

8. Cross-functional business processes

When information is exchanged easily between departments and employees, this obviously results in better business operations as added value is created using data.

This is relevant not only to corporations, but also to small companies. Small businesses should not, indeed, replace efficient processes with a policy of personal relations.

HeadHunter experts say: “Another culture of openness and motivation will become a challenge, what is needed is another corporate design for selection, induction, evaluation, development, and motivation system.”

It is not that simple to put in place obvious things because the new rules for work are not completely clear: “How to keep deadlines with freelancers? How to protect information when a team is scattered around the world? How to bring cross-country teams together and take their different cultures into account?”

These changes often occur against a backdrop of pressure on HR budget. Outsourcing some HR functions is becoming increasingly popular as well as using common service centers in order to cut costs, as doing so allows focusing on core business tasks.