A new report by the Society for Human Resource Management, Future Insights: The Top Trends for 2014, highlights key developments transforming the practice of HR, including nine top trends affecting employee compensation and benefits.
The findings were compiled by SHRM's volunteer Special Expertise Panels, composed of senior HR practitioners, consultants, academics and policy experts who possess advanced HR skills and experience.
SHRM's HR Disciplines Special Expertise Panel identified the following trends for total rewards/compensation and benefits. Hyperlinks to recent SHRM Online articles and resources relevant to the highlighted trend have been added to the panel's findings.
1. Full implementation of the health care reform law between 2014 and 2018 (with the possibility of legislative changes and amendments) will have employers concerned about how to properly prepare for costs, funding and administration of the law, as well as uncertainty about what actually will end up being implemented. (Visit SHRM's Health Care Reform Resource Page.)
2. The focus on wellness and disease management will expand as a way to help prevent and control the cost of major illnesses. Incentives or disincentives will continue and become more elaborate as the goals of keeping employees healthy and knowledgeable about their health become more important. (Visit SHRM's Wellness Programs Resource Page.)
3. Organizations will consider a broader mix of total rewards—such as career development and growth, work autonomy, innovation and other intangible rewards—to supplement the traditional cash compensation and benefits, in order to recruit and retain the best employees. (See "Developing Employee Career Paths and Ladders.")
4. The increasing trend toward linking direct pay to organizational and individual performance through implementation of variable pay programs will continue. (See "Rewarding Stars in the Age of Flat Salary Growth.")
5. As employees focus on family and work/life balance, more organizations will consider and implement family-leave programs with paid-time-off provisions and flexible work schedules, as such programs can be strong retention and recruiting tools. (Visit SHRM's Workplace Flexibility Resource Page.)
6. Organizations will continue to examine their programs for providing retiree benefits and the basis for determining benefit levels. The trend toward replacing defined benefit pension plans with defined contribution plans will continue, and retiree health plans will be canceled or altered to have retirees pay more. (See "Employers Reassess Retiree Health Strategy"; visit SHRM's Retirement Plans Resource Page.)
7. Organizations will continue to increase the use of teams and collaborative work, resulting in performance being defined, measured and rewarded at the group/unit/team and organizational levels as well as at the individual level. (See "Making Team Incentives Work.")
8. As organizations continue to source talent globally, the number of traditional and expensive expatriate assignments will be reduced in favor of short-term assignments, training/development assignments, “global commuters” and virtual workers. The challenge will be determining how to compensate these new global workers. (See "How should we compensate an employee on a foreign assignment?")
9. Accountable care organizations (ACOs) may become more prevalent as organizations work to align health care reimbursements and care delivery with quality measures, resulting in cost reductions. (See "Holding Health Care Accountable.")
Overall HR Trends
The following were among broader HR trends drawn from the findings of all the Special Expertise panels:
- The continuing impact of the economy. Although many aspects of the economy have improved, challenges remain and affect budgets, hiring and HR strategies.
- Competition for in-demand skilled workers. The need for skilled and educated workers is rising around the world. This trend is influencing everything from benefits strategies and employer branding to immigration policies and global relocation of operations.
- The ongoing influence of developments in information and communications technologies. Social media has become especially important as it relates to recruiting.
- Demographic changes. Across the world, workforces are aging. At the same time, the large Millennial generation is beginning to make its mark on the workplace. More generations working together and increased diversity will affect many aspects of employment and HR practices.
- A growing emphasis on measurement. Metrics and more in-depth data analysis are being required to demonstrate the return on investment of key HR expenditures.
- A rise in uncertainty and volatility of markets. Increased globalization, market interdependence and other factors, such as political unrest and partisanship in countries around the world, are making uncertainty the “new normal.”
Each of SHRM's Special Expertise panels (Ethics/Corporate Social Responsibility and Sustainability, Global, HR Disciplines, Labor Relations, and Technology and HR Management) is made up of as many as 15 SHRM professional members who serve a one-year term (up to two terms). Members are identified, reviewed and recommended by the Panel Selection Committee and approved by the SHRM Board Governance Committee. The applications period for 2015 panel terms begins in June.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
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