11 Trends that Will Shape Work in 2022 and Beyond by Brian Kropp and Emily Rose McRae
At the start of 2021, many of us expected the world to return to normalcy. Vaccines were starting to roll out, and many executives felt like it would be a matter of a few short months before we would all return to the workplace.
But 2021 was more volatile than expected, with the rise of new Covid variants, a massive war for talent, quit rates at an all-time high, and the highest inflation levels in a generation.
The level of volatility will only increase in 2022. New variants will continue to emerge and may cause workplaces to temporarily go remote again. Hybrid work will create more unevenness around where, when, and how much different employees are working. Many employees will be greeted with real wage cuts as annual compensation increases fall behind inflation. These realities will be layered on top of longer-term technological transformation, continued DE&I journeys, and ongoing political disruption and uncertainty.
Here are 11 underlying trends that will shape workplace volatility in 2022:
1. Fairness and equity will be the defining issues for organizations.
Debates that have fairness at the core, whether it’s around race, climate change, or Covid vaccine distribution, have become flashpoints in society. According to our analysis of S&P 500 earnings calls, the frequency with which CEOs talk about issues of equity, fairness and inclusion on these calls has increased by 658% since 2018.
And questions of fairness and equity are emerging in new ways:
Who has access to flexible work? We’ve seen organizations where some managers allow their employees flexibility while other managers don’t.
What happens when employees move to locations with a lower cost of living? Should employers lower their compensation even though the impact of their work hasn’t changed?
In today’s labor market, companies are paying 20% compensation premiums to hire new employees. Is it fair to pay new employees so much more than established employees?
Companies are offering new, targeted investments for specific segments of their workforce (e.g., additional financial resources to support employees with children). While these investments are critical to help those employees do their job, employees without children have asked “Why are employees who are parents getting something and I’m not?”
In 2022, executives will need to address how they are managing fairness and equity across the increasingly varied employee experience. In fact, this will be the number one priority for HR executives next year.
2. Despite a strong push from the Biden administration, a significant number of employers will not adopt a vaccine mandate, instead relying on testing to keep their workplaces safe.
In January 2021, less than 2% of companies were planning to implement a Covid vaccine mandate. That number steadily increased across the year before plateauing at the end of 2021 at less than 50%. Even with the rise of the Omicron variant, 2022 will not see a significant increase in the number of companies putting a mandate in place. Instead, roughly half of large employers will maintain a testing option in order to comply with the Biden administration rules.
There are several factors causing this. First, employers are concerned that a vaccine mandate will cause a mass turnover event. A Gartner survey found that heads of HR expect to see nearly 7% of the workforce quit if they put a mandate in place. While 7% may not seem like a significant number, and might be an overestimate, whatever turnover occurs will not distribute evenly. Some departments in some geographies might see turnover rates of 15%.
Second, many employers are concerned that a vaccine mandate might not survive a series of ongoing court challenges. Given that risk, they are hesitant to adopt a mandate that may be reversed at some point in the future.
Third, some employers don’t feel that they have the right to make this decision for their employees and contend that it is still an issue of employee choice.
Finally, uncertainty over what being vaccinated means (e.g., do you have to have a booster shot in order to be considered vaccinated?) creates complexity in managing the entire process. Despite the additional effort of managing a testing process, a significant percentage of companies will continue to do so rather than implement a full vaccine mandate.
3. To compete in the war for knowledge worker talent, some companies will shorten the work week rather than increase pay.
Employers are offering significant compensation increases to attract and retain talent in today’s market. Our research has shown that in the U.S., year-to-date salary increases have been more than 4%, compared to a historical norm of 2%.
But when we also consider inflation, real wages have declined. And if inflation continues to rise, employers will find the compensation they offer will be worth less and less in terms of purchasing power for employees.
While some companies are able to compete for talent through compensation alone, others don’t have the financial resources to do so. Rather than trying to win the war for talent by increasing compensation, we are seeing some employers reduce the number of hours worked by employees and keeping compensation flat.
Historically, as wages rise, leisure time becomes more valuable and appealing to workers. Reducing the hours employees need to work gives less liquid employers a better chance to compete with organizations that offer higher overall compensation but don’t offer reduced hours. Ultimately, we’re likely to see a handful of organizations adopt 32-hour work weeks with the same compensation as a new way to compete for knowledge workers.
4. Employee turnover will continue to increase as hybrid and remote work become the norm for knowledge workers.
Flexibility around how, where, and when people work is no longer a differentiator, it’s now table stakes. In the U.S., employees expect flexibility within their job as much as they expect a 401(k). Employers that don’t offer flexibility will see increased turnover as employees move to roles that offer a value proposition that better aligns with their desires.
Unfortunately for many organizations, increasing flexibility will not slow turnover in today’s tight labor market; in fact, turnover will increase, for two reasons.
First, there will be weaker forces keeping employees in seats. Employees that work hybrid or remotely have fewer friends at work and thus weaker social and emotional connections with their coworkers. These weaker connections make it easier for employees to quit their job by reducing the social pressure that can encourage employees to stay longer.
Second, there will be stronger forces enticing employees away as the pool of potential employers increases. With hybrid and remote work as the norm, the geographic radius of the organizations that someone can work for also expands. This increased attrition risk remains even in a hybrid model where employees are expected to come into the office at least once a week. Employees are much more willing to take on a longer commute when they must do so less frequently; the pool of potential employers expands alongside employees’ commute tolerance.
These factors will lead to sustained, higher turnover rates compared to any historical norms. The great resignation will shift to the sustained resignation.
5. Managerial tasks will be automated away, creating space for managers to build more human relationships with their employees.
The manager-employee relationship has become more important than ever; for hybrid and remote employees, their managers are the primary connection through which they experience their employer. Managers are also the first line in surfacing and elevating fairness concerns and can make the difference between a highly public walkout or a co-created solution to employee concerns.
At the same time, HR tech vendors have been creating products that replace an increasing number of repeatable managerial tasks, such as scheduling, approving expense reports, and monitoring direct reports’ completion of tasks. The next generation of technology will start to replace additional managerial tasks, such as providing performance feedback and supporting employees in building new peer-to-peer connections. Our research shows that up to 65% of the tasks that a manager currently does has the potential to be automated by 2025.
With this growth in automation, companies will be faced with a choice: decrease the number of managers or change the expectations of what it means to be a manager.
Organizations that stretch managers’ spans of control across more direct reports will enable companies to decrease labor costs as they will need fewer managers. Organizations that choose to change the expectations for their managers will need to change managers’ mindsets and skill sets from managing tasks to managing the full experience of employees. This goes beyond managing employees’ specific responsibilities and extends to managing their perception of their career trajectories, the impact of work on their personal lives, and their relationship with the organization as a whole. While this shift may slow attrition, it requires substantially empowering managers.
6. The tools that we use to work remotely will become the tools that help measure and improve performance.
When work becomes more geographically dispersed, managers have less insight into what work their employees are doing. This leads to inaccurate and potentially biased performance ratings based upon where employees work rather than the impact they are having. A Gartner survey in the fall of 2020 of nearly 3,000 managers revealed that 64% of managers and executives believe in-office employees are higher performers than remote employees, and 76% believe in-office workers are more likely to be promoted.
Moving forward, the same tools that employees are currently using to work in a virtual environment will be used to assess the contributions that employees are making. For example, during virtual meetings, new technologies will be able to provide background information about the other people on the call. By knowing more about who is on the call, participants will be able to focus on the issues that are of the most importance to them.
Collaboration technology can also nudge employees to behave in different ways that improve the overall set of interactions across employees. For example, it can nudge managers to call on people who have not been as active in the meeting compared to other people. These nudges will cause participants to adjust the types of interactions they have to improve the quality of the meeting.