The COVID-19 pandemic created a whirlwind of changes for businesses. From stay-at-home orders to completely overhauling seemingly sound technologies, there hasn’t been a dull moment. But, thanks to talent management software, you may have been able to keep your head above water. After the dramatic shifts from the past year, managing your people has never been more critical. That’s why we’re exploring the top talent management trends to impact companies this year.

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These are the three talent management trends we’ll be evaluating in this article:

• Emphasis on the human element
• Evolving workforces
• A new era of recruiting

Key Takeaways

• Over 80% of HR leaders say organizational success is mainly dependent on nailing the employee experience
• The freelance revolution is transforming the workforce ecosystem
• Two-thirds of companies realize the importance of managing contingent workers, yet less than one in 10 is prepared enough
• A total of 74% of employers want to shift at least 5% of their previously on-site employees to full-time remote work post-COVID

Industry Market

Before we journey through a world where technology and people intersect, it’s good to establish a broad view of the market.

Traditional methods of talent management are taking the backseat while non-traditional methods are becoming increasingly popular, according to the Sapient Insights Group 2020-2021 HR Systems Survey (gated behind form).

• 15% of companies plan on decreasing traditional HR technology spending in 2021, by an average of 23% of their current budgets.
• 28% of organizations plan to increase non-traditional HR spending in categories such as infrastructure and remote working tools.
• Over 30% of companies are rethinking learning, time and recruiting tools.

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According to the latest market research conducted by Meticulous Research, the LMS market is expected to be worth $28.1 billion by 2025.

From a broader viewpoint, HR technology is a fundamental part of remaining competitive. According to a Gartner survey, two in three business leaders agree that their companies have to embrace technology or risk becoming irrelevant.

The talent management landscape is constantly changing. Therefore, companies need to adapt TM to stay in step with trends in digital and human spheres.

Top Talent Management Trends

Now that we have a brief knowledge of industry market let’s dive deep into the current talent management trends.

1. Critical Nature of the Human Element

Managing the Skills Gap and Reskilling

Between mandated stay-at-home orders forcing individuals to take on multiple roles and the continued evacuation of baby boomers from the workforce, the difficulties companies face in the talent shortage are compounding. These two forces have led to an increasing skills gap.

The SHRM Global Skills Shortage report from 2019 found that more than half of respondents think the issue has “worsened or greatly worsened” over the past two years.

A recent study by Wiley Education Services found that more than half of its 600 plus respondents reported having skill gaps within their organization.

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Furthermore, the same study found that 57% of respondents chose upskilling and or reskilling as their top choice for addressing the skills gap.

Companies have several options to address the skills gap, according to the SHRM report. Strategies include ramping up training efforts, tapping into the contingent workforce and putting measures into place that encourage employee retention.

However, SHRM warned that the above fixes, while more effective, aren’t methods companies turn to first. When evaluating your options to bridge the skills gap and the software available to do so, keep in mind that casting a wider advertising net and, using staffing agencies aren’t always the best.

Another factor at play is the need for reskilling due to changing job demands. Fifty-four percent of respondents to the 2019 Deloitte Human Capital Trends report indicated their organization would moderately or significantly increase investments to conduct “workforce reskilling.”

With reskilling in mind, organizations must now implement modern technology to keep up with the transforming job forces. Because of this, AI technology has become one of the most relevant tools in the talent management industry. According to Semrush, 54% of executives say that implementing AI in their workplace has increased productivity.

When AI first burst onto the scene a few years ago, it induced panic that robots were coming for our jobs. But, as it turns out, the worry was overhyped. Instead, AI should be viewed as augmenting — not replacing — human workers. According to the Deloitte report, “While some [jobs] may be eliminated, our view is that many more are changing.”

Cleary AI is something that companies should want to get their hands on. The good news is that most LMS systems come with AI integrations, making it that much easier to take advantage of its technological perks. Reskilling and closing the skill gap isn’t easy, but that doesn’t mean it has to be any harder either.

Companies can use LMS software (learning management system), learning experience platforms (LXPs) and other tools to combat the skills gap and tackle reskilling. Such systems can provide micro-learning, which gives users immediate access to small pieces of information, such as videos and articles. They also offer macro-learning, where users dive more deeply into a topic, MOOC (massive open online course) or other delivery mechanisms that help them develop new skills.

Continued Focused on Consumer-Grade Experiences

While the marketing world pushes to be more customer-centric, the HR industry becomes more people-centric.

Today, job seekers and employees want more than satisfaction in their current role and two weeks of vacation. They want a positive experience across every phase of their career, from the recruitment process to their position in a company.

Steven Cates, Graduate Professor of Human Resources Management at Purdue University Global, believes this will be a focus in the coming year.

“Human Capital Management software will be swiftly moving from electronic file-keeping to embracing and crossing over into marketing. It will do this by using Consumer (internal customer, as in employees) Relationship Management that will encourage and enhance collaboration and engagement by employees with these HRIS Systems.”

It’s no surprise that companies are making the candidate experience, specifically in recruiting, a primary focus this year. The 2020 Talent Board Research Report found that great candidate experience increased from 25% to 31% since 2019.

Zooming out from recruiting, 83% of HR leaders see the value a positive overall experience plays in a company’s success. That’s why organizations need to create an engaging culture where employees feel empowered and can be productive.

To that end, a range of tools is available, including performance management and succession management. Look for systems that allow regular performance reviews, feedback mechanisms such as surveys, reporting capabilities to track progress and other features.

These will serve you in providing an atmosphere where employees feel heard and cared for, which ultimately will motivate them and enable a first-rate experience.

Employee Benefits

Employe benefits go hand-in-hand with overall employee experience. Now, more than ever, workers’ mental and physical health should be at the forefront of every manager’s mind. According to a 2020 study conducted by Deloitte, 80% of respondents reported that well-being is important or very important to their organization’s success.

As we’ve observed in the past year, work from home orders had a range of effects on workers. Individuals now even have more complications to manage work and home life balance. Between finding a stable environment to work in and taking care of family members in the home, it can quickly become a stressful situation. Regardless of where your employees stand, it’s vital to keep up with their wants and needs to boost morale.

Surveying your current employees to get an idea of their top priorities is a great place to start in your journey in implementing employee benefits. According to LinkedIn, companies rated highly on compensation and benefits saw 56% lower attrition. This stat shows the importance of providing supportive opportunities to keep employees incentivized and willing to work.

Another excellent way to keep everyone satisfied is through eLearning employee reward programs. By performing well on tests and other training programs, employees can collect points redeemable for prizes. It also stimulates healthy competition amongst peers by using leader boards to track employee progress.

Many companies make good employee health a priority through initiatives such as supplying mental health coverage, creating spaces for healthy communication with peers and offering customizable benefits packages that meet their exact needs.

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2. “Alternative Workforce”

We’re shifting away from the corporate job environment to one where the lines between work and home life are increasingly blurred and where teams and companies are becoming simultaneously more connected and more fragmented.

One of the biggest trends happening right now is the evolving workforce. And two of the driving factors are the freelance revolution and the related talent economy.

Impact of the Freelance Revolution

The explosive growth of freelancing has garnered a lot of attention (just search “freelance revolution”) along with claims about its rapid growth. But, as Jon Younger, Founder of the Agile Talent Collaborative, describes in a Forbes article, the hype was partially unfounded.

However, even if the original statistics had some faults, Younger explains “Like any innovation, freelancing has an adoption trajectory.” The S Curve is one helpful way to explain that pattern.

Younger goes on to say:

“It would not be unreasonable to view the freelance revolution as past the early adopter stage, and generally in the process of expansion. But … expansion is not the same as maturity.”

Younger says the back-and-forth over the exact numbers of freelancers will likely continue until there’s a standard way “to define, describe and measure the freelance revolution.” He concludes, “What we do know is that, despite the conflict on how to count freelancers, it certainly seems to be an essential and growing phenomenon.”

And a central part of that growth is the talent economy.

Rise of the Talent Economy

Everyone talks about the gig economy. And rightly so. When stable employment isn’t certain, companies like Uber and freelance platforms like Upwork significantly impact how people work, providing greater flexibility and more autonomy.

But the gig economy is only one side of the coin, according to Younger and Micheal Kearns, VP of Enterprise Strategy at Toptal. The other? The talent economy. They demonstrate the difference in their article, “The End of Traditional Employment—The Other Gig Economy.”

Kearns and Younger make the case that the talent economy benefits employers and freelancers. Talented workers have greater control over which opportunities to pursue and can shape a fulfilling life based on their individual preferences.

And that means employers benefit from ready access to experts who have the skills needed to accomplish specific objectives. Kearns and Younger write, “With a more efficient market for talent, companies can build teams with exactly the right talent they need, exactly when they need it.”

In today’s fast-paced world, where change is the rule rather than the exception, the ability to tap into a highly skilled talent pool is critical. The key is that organizations need to learn to operate in this new ecosystem.

Your talent management system must have the ability to support this approach. Here are a few questions to consider:

• How will you conduct onboarding for contract or freelance workers?
• Do you have any tools that support part-time workers?
• Can your software handle contract management? (This doesn’t fall under the purview of HR the majority of the time, but it’s an essential piece of working with freelancers.)
• How will you source contract workers? Some solutions create talent pools to draw from.

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As the workplace evolves, talent management processes, systems and software are following suit. Because of the constant change, your company will need to be aware of developments and ensure any talent management solution is worth the investment.

Using resources like our Talent Management Leaderboard is a good way to stay informed, and sending RFPs is an important part of rounding out your software selection process.

New Way to Work

Things took a dramatic turn at the beginning of 2020, changing the dynamic of the workforce as we knew it. Despite this, work never stopped. Now businesses are employing new strategies to keep up with the ever-changing environment.

On the one hand, the freelance revolution has led companies to seek out external sources for highly skilled functions. And on the other, the way employees work has redefined. Some companies, such as Buffer, are entirely remote. That begs the question, how are companies responding?

According to Cates:

“HRM will be faced with the need to reinvent the performance management systems and employee engagement strategies to respond to the future needs of its talent. AI and other forms of technology will enable a much higher level of personalization than previously offered to redesign talent management for widely dispersed and contingent workforces.”

The “alternative workforce” is critical, according to the 2019 Deloitte Global Human Capital Trends report. Forty-one percent of survey respondents consider it crucial issue, yet less than 30% are prepared to handle it. Additionally, the data showed that over half of respondents (54%) have inconsistent to non-existent processes for managing such a workforce.

Josh Bersin’s HR Technology Market 2021 report suggests a grimmer picture. According to the study, only 16% of companies have a strategy for managing gig work and only 12% qualified as high-performers in an assessment of their capabilities in this area. While some systems provide the functionality needed, the market is still in its infancy.

However, Bersin sees the vendor market poised for rapid expansion due to the increasing demand for tools that facilitate managing a contingent workforce. As your organization looks for solutions in this emerging market, it will be important to understand your requirements and conduct thorough research to successfully navigate the landscape of new products.

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The new work lifestyle combined with the abundance of freelancers and contractors means companies need to rethink talent management and the software used to make it happen.

“It’s no longer about redesigning process,” says Art Mazor, Deloitte’s HR Transformation Global Practice Leader. Instead, the focus is on, “reimagining the work.”

In Mazor’s view, companies need to find ways to “blend this mix of workers from so many different sources and blend those with the varieties of tech that are available in the HR space and more broadly.”

At the global scale, Cates believes sourcing talent worldwide will be a major opportunity for companies in the next year:

“Large databases that capture interest in the organization at specific locations globally are critical to follow-up, engagement and assessment of fit with the organization. This will require IHRM [International HRM] strategic focus. For companies seeking to compete in multiple countries, this will be critical for not only attracting but retaining the best talent.”

Managing At-Home Workforces

One of the most significant shifts in this past year is the work from home orders that changed life for millions. A total of 88% of organizations worldwide made it mandatory or suggested that employees work from home after COVID-19 was declared a pandemic, according to Gartner.

While we climb our way out of the trenches of stay-at-home orders and businesses open their doors again, many companies made remote work a permanent part of their operations. Upwork’s “Future of Workforce Pulse Report,” stated that by 2025, 36.2 Americans will be working from home, an 87% increase from pre-pandemic numbers.

Why is this the case, you ask? Well, stats prove that working from home is just as effective as in-office, and there are incentives for both employers and workers. For example, employers can save tons of money on expenses such as office spaces and team building events, while employees can create a better work-life balance and gain greater flexibility in their schedules.

A total of 74% of employers intend to shift at least 5% of on-site employees to full-time remote work post-COVID, according to a recent survey by Gartner. It’s time to start assessing how this new “normal” works for your organization.

Deloitte’s 2021 report found the most important factors for making at-home work sustainable. The top elements included the introduction of digital collaboration platforms, allowing employees to choose how work gets done and establishing new scheduling and meeting norms.

Communication applications such as Slack, MicrosoftTeams, Google Meet and more will be at the forefront of your tools for keeping your talent up-to-date and engaged with their work. Unfortunately, “86% of business owners and staff attribute workplace problems to inadequate or poor communication tools,” according to one study. As a result, organizations need to replace in-person communication and team-building activities to create a fluid environment for effective collaboration.

HCM software is your right-hand man when it comes to managing employees working from home. Look for talent management software that allows for seamless, remote onboarding and training.

Now that you can’t hover over an employee’s shoulder in the office, performance management software has become increasingly important for managers to ensure employees stay on track and achieve their full potential at home. Implementing frequent team meetings and one-on-one check-ins can also prove highly beneficial to keep up with staff.

3. Shift in Recruiting Practices

Call for Greater Diversity

The past couple of years have seen a tsunami of events that put the diversity discussion square in the spotlight. Diversity, inclusion and belonging (DIBs) issues are top of mind. According to LinkedIn, 77% of talent professionals say diversity will be very important to the future of recruiting.

Another key trend to watch for, according to Dalton, is how organizations are responding in the wake of the #MeToo movement. “Many companies are happily being more vigilant about their policies on sexism and harassment and monitoring their talent management systems for unconscious bias.”

One way this will play out is with employers focusing on branding that avoids “gender washing.” The impetus? “Organizations such as Nike and McDonald’s [are] seeing class action for allowing or even facilitating toxic workplace cultures,” Dalton says. “[Companies] are going to have to walk the talk.”

The #MeToo movement has drawn much of the attention, but workplace diversity extends to other areas. Zoe Hart, Senior Vice President of Human Resources at Upwork, says HR leaders look beyond the common issues that include race and gender. Writing in Forbes, she identified education levels, geographic location and generational affiliation as factors in the diversity discussion.

If your company is looking to foster greater diversity, ATS solutions can track the percentage of hires are from minority groups and display hiring trends in dashboards for easy viewing. You may want to consider the current capabilities of your systems and whether they support diversity initiatives.

However, showing favoritism in hiring is often illegal, so it’s equally important to develop a diverse talent pipeline to draw from. In response to diversity and inclusion (D&I) struggles, a new technology market has risen to help organizations combat shortcomings.

Mercer covers this market in depth. Here are a few highlights:

• By 2044, groups formerly seen as “minorities” will reach majority status.
• Before 2020, only 11% of tech companies had dedicated DEI staff. In 2020, that statistic increased to 24%and is expected to grow to 35% in the next year.
• Diverse companies enjoy 2.3 times higher cash flow per employee.
• Racially and ethnically diverse companies are 35% more likely to perform better.
• Inclusive companies are 1.7 times more innovative.

This growing market reflects the need for systems that can aid companies in tackling D&I issues. Organizations such as Accenture and Johnson and Johnson have seen gains by using D&I technology. Going forward, implementing such solutions will be key for companies to foster a more diverse workplace.

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Branding Matters

One of the defining factors of successful marketing is a deep understanding of the target audience. In a world where job seekers are also consumers — and have the same expectations — the importance of that approach has spilled over to talent acquisition.

Branding now extends beyond marketing and PR efforts to encompass HR-related activities. As Rebecca Skilbeck writes in Forbes, “To attract top talent in a competitive labor market, it’s necessary for organizations to cultivate a strong employer brand.” Companies need to explain specific reasons why it’s worth working there.

Skilbeck goes on, “It’s clear that the focus is on making the employee experience personalized and authentic. Candidates want an application process that fits into their busy lifestyles, and they want an authentic employer brand that reflects what they value in a workplace.”

“In order to engage candidates we’re trying to attract,” Cates says, “we will see increased communication and engagement in the form of texts and SMS messaging.” This, he says, will enable companies to re-engage applicants at any point in the recruitment process.

In terms of talent management software, this means you need to deliver the type of experience job seekers are after. So, what does that look like?

In Cates’ opinion, organizations will personalize elements like job openings and the branded content to provide “world-class experiences.”

This can be accomplished, he explains, by capturing and using data:

“Candidates who job filter will be determined by factors such as geography; knowledge, skills and abilities (KSA’s); or demographic information. With the ability to analyze this career center data, HR professionals can gather insights into applicant behaviors.” This will, he says, let companies leverage that data to create pipelines that are tailored to both existing talent and prospects.

Consider whether your current system needs additional capabilities, or if your organization needs to upgrade its ATS to create these experiences.

As more talent acquisition tools enter the market, many aimed at solving specific pain points, important to keep the end goal in mind: branding your company appropriately using the tools in your HR arsenal. This will help you filter products and align with so the platform fades to the background while providing an exceptional candidate experience.

Understand Who You’re Trying to Attract

One of the central aspects of understanding the current talent pool is getting inside the minds of today’s job seekers — millennials and Gen Z. Millennials currently account for 35% of the total global workforce and are estimated to make up 75% of the workforce by 2025.

What do these generations value, and how can companies position themselves to speak the language of this rising workforce?

The Deloitte Global Millennial Survey 2019 has several noteworthy takeaways:

• Seeing/traveling the world is the top ambition for both generations.
• What businesses prioritize isn’t aligned with what millennials think businesses should prioritize.
• Seventy percent of respondents think they lack some or most of the necessary skills required in Industry 4.0, the newest phase of the Industrial Revolution based on the innovations and use of cyber systems.
• Millennials believe employers should be most responsible for preparing the workforce for Industry 4.0 (30% of respondents), while Gen Z puts the greatest expectations on educational institutions (36% of respondents).
• “Dissatisfied with pay,” “not enough opportunities to advance,” and “lack of learning and development opportunities” are the top reasons both generations would leave their current jobs over the coming two years.
• Becoming a gig worker is a realistic option for more than 80% of both millennials and Gen Zs.

Millennials also care about purpose, according to experts at the London Business School (LBS). Professor of Management Practice Lynda Gratton says the contract between employers and employees is changing. Before, people worked to “buy stuff that [made them] happy.” Today, however, the focus rests on gaining happiness from the work itself.

Increasingly, job seekers are turning to social media, a familiar environment for millennials and Gen Z. While job boards remain the top choice (69%), according to the 2019 Job Seeker Nation Survey from Jobvite, more than one-third of respondents find job opportunities on social media. And younger workers are the most common group looking (41%). Talent management tools that can connect to these sites will help increase your brand’s visibility and cater to the modern candidate.

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Need for Agility

As the boomer generation continues to retire, millennials and Gen Z will play a more significant role in shaping the workplace environment. And, whether companies like it or not, job-switching is the default for both generations.

According to a study from IBM’s Institute of Business Value, one in four workers plan on switching jobs, 33% of those identified as Gen Z and 25% as millennials.

In this new age, agility will be key in helping organizations counter the job-hopping tendency. That includes investing in software solutions that cut down on onboarding and training costs. It also requires companies to foster an environment that draws rather than repels the new workforce.

This employee engagement issue is a significant challenge facing companies, says Dalton.

“Despite full employment, productivity is down. The challenge in TM is whether the solution lies with tech, more traditional ways or a mix of both. Engagement surveys and pulse taking are always helpful, but probably no substitute for meaningful connection based on trust, recognition and respect.”

For companies looking to retain their talent, Gartner research suggests that stability, compensation and work-life balance are the top ways to attract workers.

As your company seeks to stay ahead of the curve, consider a few ways your HR software impacts retention:

• Implement solutions that include health and wellness programs, which 69% of employees say increases loyalty to their employer, according to MetLife.
• Use an employee training system to help attract and retain employees. LMS software and virtual reality platforms can equip your workforce to succeed.

Role of Technology

The AI trend is nothing new, but Cates sees it becoming the main focus. “As AI improves based on ‘learning’ experiences, we will see how it creates a seamless process from candidate attraction to onboarding.”

Recruiting is a commonly recognized HR function where AI is making a significant impact — and offering high value. According to Ideal, 96% of senior HR professionals believe AI has the potential to greatly enhance talent acquisition and retention.

Another report, from insideBIGDATA, reports chatbots on career sites convert more candidates than those without, increasing the number of job seekers turned into leads by 95%. Companies use chatbots to answer general questions, giving their recruiting teams extra time with candidates in the pipeline.

However, Cates believes improving the use of chatbots and scheduling bots will become a priority. “This can be done to scale and can handle large numbers of applicants,” he says.”

The gains AI brings in terms of speed and automation are a major reason why companies are using it to handle the broad range of steps involved in recruiting. With the increased use of AI tools comes the need for people to manage those tools.

As with any cutting edge technology, AI comes with warning flags attached. A commonly highlighted issue is that, despite the ability to address hiring bias, AI platforms may unknowingly have the programmers’ built in. It’s best to thoroughly vet the AI-enabled solutions you’re considering and look for any holes that could undermine your efforts to strengthen your talent acquisition game.

Despite the concerns, AI’s benefits outweigh its shortcomings. Companies should look to talent management platforms that have AI capabilities to streamline the recruiting process and improve the quality of hires while cutting costs.

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To Wrap It Up

The HR industry, and specifically talent management, is in the midst of massive change. From expanding AI functionality to the difficulties surrounding talent and the skills gap, everything is in flux. Executing effective talent management practices is no picnic.

At the same time, the industry is ripe with potential. There’s an impressive amount of innovation allowing companies to solve specific problems such as hiring bias and lack of workplace diversity.

The companies that embrace these shifts and continually reinvent their talent management will be better positioned for lasting success. And that process starts with picking the right software.

Our goal is to help you succeed on that journey and more easily navigate the turbulent — and often confusing — tides of talent management software. If you’ve just begun, our free comparison report can help you compare top products. If you’ve reached the vendor shortlisting stage, grab our requirements template to help manage the process. And our pricing guide will ensure you don’t fall in love with a solution only to find out it’ll cost an arm and a leg more than your budget allows.

Talent management in the next year may be arduous, but that doesn’t mean your software selection should be. Put the right tools in place and reap the rewards throughout your organization.

What talent management trends do you think will move to the forefront in the next year? Have we missed any? Let us know in the comments below!

SME Contributors

Dorothy Dalton is a global talent management strategist who focuses on executive search, coaching, training and HR consulting. She speaks at conferences, runs workshops, and designs and delivers career coaching programs to corporations and business schools. As Co-Founder and CEO of 3Plus International, Dalton is passionate about supporting the advancement of women in the workplace and organizations that commit to gender equality.

Steven Cates serves as a Graduate Professor of Human Resource Management in the School of Business and Information Technology at Purdue University Global. He has over 30 years of managerial experience in all facets of HR and over 20 years of collegiate instruction experience. He holds a Society of Human Resource Management certification, has authored over 100 publications in the field of HR management and marketing, and has served on dissertation committees.

Art Mazor is Deloitte’s HR Transformation Global Practice Leader, part of the Global Human Capital Executive, and member of Deloitte Consulting’s Global Leadership Team. His professional journey of nearly 25 years has been exclusively focused on human capital management. He has held senior HR leadership, outsourcing executive and human capital transformation consulting roles.