Challenges Facing HR Over the
Next 10 Years
November 1, 2012
Key Findings
• What will be the three biggest challenges facing HR executives over the next 10 years?
Retaining and rewarding the best employees (59%), developing the next generation of
corporate leaders (52%), and creating a corporate culture that attracts the best
employees to organizations (36%).
• What will be the biggest investment challenge for organizations over the next 10 years?
About two-fifths (43%) of HR professionals indicated that obtaining human capital and
optimizing human capital investments will be the biggest investment challenge.
• Which tactics will be the most effective in attracting, retaining and rewarding the best
employees over the next 10 years? The top four responses were providing flexible work
arrangements (40%); creating an organizational culture where trust, open communication
and fairness are emphasized and demonstrated by leaders (37%); providing employees
with opportunities for career advancement (26%); and offering a higher total rewards
package than organizations that compete for the same talent (26%).
• How do HR Professionals expect the future workforce to evolve over the next 10 years? In
terms of workforce size, the majority (69%) of HR professionals expect their organization to
have a larger workforce in 10 years. Just over one-half (54%) indicate that their use of
contract/temporary employees will not change, and 29% expect a growing proportion of
contract/temporary employees. Nearly one-half (47%) indicate that over the next 10 years
there will be a greater proportion of full-time employees, whereas the other half believe
the workforce will stay the same (27%) or have more part-time employees (26%).
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Key Findings (continued)
• Which HR competencies will be most critical 10 years from now? Over one-third of HR
professionals think that the four most critical competencies in 10 years will be business
acumen (42%), organizational leadership and navigation (40%), relationship management
(37%), and communication (35%).
• What components (subcompetencies) of business acumen will be most critical in 10
years? HR professionals expect the top three components to be HR and organizational
metrics/analytics/business indicators (45%), knowledge of business operations and logistics
(41%), and strategic agility (41%).
• What bodies of knowledge do HR professionals rate as being the most important in 10
years? The four bodies of knowledge that were rated as most important were strategic
business management, talent management, change management, and workforce
planning and employment.
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Challenges in HR
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Over the next 10 years, what do you think will be the three
biggest challenges facing HR executives at your
organization?
59%
Retaining and rewarding the best employees
51%
Developing the next generation of corporate
leaders
52%
29%
Creating a corporate culture that attracts the best
employees to our organization
36%
44%
34%
Remaining competitive in the talent marketplace
21%
Finding employees with the increasingly
specialized skills we need
33%
41%
Creating smooth and efficient HR processes that
ensure a good employee experience
15%
33%
Creating an employee-centric, service-oriented
HR organization
13%
12%
Breaking down cultural barriers that make it
difficult to create a truly global company
Other
2010 (n = 465)
20%
17%
Finding the right employees in the right markets
where we do business around the world
2012 (n = 483)
11%
24%
6%
1%
Note: Percentages do not total 100% due to multiple response options. Respondents who answered “don’t know” were excluded from this
analysis.
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Over the next 10 years, what do you think will be the three
biggest challenges facing HR executives at your
organization?
Comparisons by organization sector
• Publicly owned for-profit and privately owned for-profit organizations are more likely than nonprofit organizations to
indicate that finding the right employees in the right markets where we do business around the world is one of the
biggest challenges facing HR executives.
Comparisons by organization sector
Publicly owned for-profit (24%)
Privately owned for-profit (19%)
>
Nonprofit (8%)
Note: Only statistically significant differences are shown.
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Over the next 10 years, what do you think will be the
biggest investment challenge facing organizations?
43%
Obtaining human capital and optimizing
human capital investments
47%
22%
Obtaining financial capital and optimizing
financial capital investments
29%
19%
Obtaining technology and optimizing
technological capital investments
11%
2010 (n = 449)
14%
Obtaining intellectual capital and optimizing
intellectual capital investments
Obtaining physical capital and optimizing
physical capital investments
2012 (n = 484)
12%
3%
2%
Note: Percentages do not total 100% due to rounding.
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Talent Management Tactics
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Over the next 10 years, which of the following tactics do
you believe will be most effective in attracting, retaining
and rewarding the best employees in your organization?
40%
Providing flexible work arrangements
37%
Promoting a culture of trust, open communication and fairness
Providing employees with opportunities for career advancement*
26%
Offering a higher total rewards package than competitors
26%
23%
Demonstrating a commitment to employee development
24%
Providing meaningful work with clear purpose in meeting organization's objectives
24%
17%
Creating a stimulating and attractive organizational culture
Having latest tools/technology to maximize work efficiency and effectiveness
11%
47%
29%
40%
21%
17%
2012 (n = 486)
2010 (n = 449)
15%
15%
Encouraging employees to make decisions and to take risks
14%
Providing employees with recognition based on job performance*
13%
13%
Developing human capital managers at all levels of the organization
11%
14%
Providing employees with better opportunities to use skills and abilities
11%
11%
Creating a highly inclusive culture that uses diverse perspectives
Being committed to corporate social responsibility and sustainability
58%
7%
4%
Note: Percentages do not total 100% due to multiple response options. An asterisk (*) indicates option was not included on 2010 survey.
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Over the next 10 years, which of the following tactics do
you believe will be most effective in attracting, retaining
and rewarding the best employees in your organization?
Comparisons by organization sector
• Nonprofit organizations are more likely than privately owned for-profit organizations to indicate that creating an
organizational culture where trust, open communication and fairness are emphasized and demonstrated by leaders is
one of the most effective tactics in attracting, retaining and rewarding the best employees.
Comparisons by organization sector
Nonprofit (51%)
>
Privately owned for-profit (33%)
Note: Only statistically significant differences are shown.
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Future Workforce
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Over the next 10 years, how do you expect the size
of your organization’s workforce to evolve?
69%
Larger workforce
48%
2012 (n = 442)
16%
2010 (n = 470)
Smaller workforce
37%
15%
No change
15%
Note: Respondents who answered “don’t know” were excluded from this analysis.
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Over the next 10 years, how do you expect the size
of your organization’s workforce to evolve?
Comparisons by organization sector
• Privately owned for-profit organizations are more likely than nonprofit and government organizations to expect the size
of their organization’s workforce to grow larger over the next 10 years.
Comparisons by organization sector
Privately owned for-profit (80%)
Nonprofit (62%)
>
Government (36%)
• Government organizations are more likely than privately owned for-profit organizations to expect the size of their
organization’s workforce to get smaller over the next 10 years.
Comparisons by organization sector
Government (39%)
>
Privately owned for-profit (11%)
• Nonprofit organizations are more likely than privately owned for-profit organizations to expect the size of their
organization’s workforce to have no change over the next 10 years.
Comparisons by organization sector
Nonprofit (23%)
Note: Only statistically significant differences are shown.
>
Privately owned for-profit (10%)
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Over the next 10 years, how do you expect your
organization’s use of contract or temporary
employees to evolve?
54%
No change
22%
2012 (n = 424)
29%
2010 (n = 448)
Growing proportion of
contract/temporary employees
65%
17%
Growing proportion of full-time
employees
13%
Note: Respondents who answered “don’t know” were excluded from this analysis.
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Over the next 10 years, how do you expect your
organization’s use of contract or temporary
employees to evolve?
Comparisons by organization staff size
• Organizations with 25,000 or more employees are more likely than organizations with 1 to 2,499 employees to expect a
growing proportion of contract or temporary employees over the next 10 years.
Comparisons by organization staff size
1 to 99 employees (25%)
25,000 or more employees (57%)
>
100 to 499 employees (21%)
500 to 2,499 employees (29%)
Note: Only statistically significant differences are shown.
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Over the next 10 years, how do you expect your
organization’s employment status to evolve?
47%
Growing proportion of full-time
employees
19%
2012 (n = 434)
27%
2010 (n = 447)
No change
30%
26%
Growing proportion of part-time
employees
50%
Note: Respondents who answered “don’t know” were excluded from this analysis. Percentages may not total 100% due to rounding.
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Over the next 10 years, how do you expect your
organization’s employment status to evolve?
Comparisons by organization staff size
• Organizations with 25,000 or more employees are more likely than organizations with 1 to 99 employees to expect a
growing proportion of regular part-time employees over the next 10 years.
Comparisons by organization staff size
25,000 or more employees (44%)
>
1 to 99 employees (16%)
Comparisons by organization sector
• Privately owned for-profit organizations are more likely than nonprofit and government organizations to expect a
growing proportion of regular full-time employees over the next 10 years.
Comparisons by organization sector
Privately owned for-profit (58%)
Nonprofit (38%)
>
Government(21%)
• Government organizations are more likely than privately owned for-profit organizations to expect a growing proportion
of regular part-time employees over the next 10 years.
Comparisons by organization sector
Government (50%)
Note: Only statistically significant differences are shown.
>
Privately owned for-profit (21%)
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HR Competencies
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Ten years from now, which of the following competencies
do you see being most critical for the HR professional?
Business Acumen
42%
Organizational Leadership and Navigation
40%
Relationship Management
37%
Communication
35%
Critical Evaluation
30%
HR Technical Expertise and Practice
26%
Consultation
25%
Ethical Practice
Global and Cultural Effectiveness
21%
17%
Note: n = 472. Percentages do not total 100% due to multiple response options.
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Ten years from now, which of the following competencies
do you see being most critical for the HR professional?
Comparisons by organization staff size
• Organizations with 2,500 or more employees are more likely than organizations with 1 to 99 employees to see business
acumen as being most critical for the HR professional 10 years from now.
Comparisons by organization staff size
2,500 to 24,999 employees (56%)
25,000 or more employees (59%)
>
1 to 99 employees (24%)
• Organizations with 100 to 499 employees are more likely than organizations with 2,500 to 24,999 employees to see HR
technical expertise and practice as being most critical for the HR professional 10 years from now.
Comparisons by organization staff size
100 to 499 employees (35%)
>
2,500 to 24,999 employees (14%)
• Organizations with 2,500 to 24,999 employees are more likely than organizations with 100 to 499 employees to see
global and cultural effectiveness as being most critical for the HR professional 10 years from now.
Comparisons by organization staff size
2,500 to 24,999 employees (27%)
>
100 to 499 employees (10%)
Note: Only statistically significant differences are shown.
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Ten years from now, which of the following competencies
do you see being most critical for the HR professional?
Comparisons by organization sector
• Publicly owned for-profit organizations are more likely than nonprofit organizations to see business acumen as being
most critical for the HR professional 10 years from now.
Comparisons by organization sector
Publicly owned for-profit (57%)
Note: Only statistically significant differences are shown.
>
Nonprofit (34%)
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Ten years from now, when considering Business Acumen
for HR professionals, which of the following components
(i.e., subcompetencies) will be most critical?
HR and Organizational Metrics/Analytics/Business Indicators
45%
Knowledge of Business Operations/Logistics
41%
Strategic Agility
41%
Business Knowledge
28%
Knowledge of Government and Regulatory Guidelines
25%
Knowledge of Finance and Accounting
18%
Economic Awareness
17%
Knowledge of Labor Markets
17%
Knowledge of Technology
16%
Systems Thinking
14%
Effective Administration
11%
Knowledge of Sales and Marketing
Other
6%
1%
Note: n = 469. Percentages do not total 100% due to multiple response options.
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Ten years from now, when considering Business Acumen
for HR professionals, which of the following components
(i.e., subcompetencies) will be most critical?
Comparisons by organization staff size
• Organizations with 2,500 to 24,999 employees are more likely than organizations with 1 to 99 employees to consider HR
and organizational metrics/analytics/business indicators as being most critical for the HR professional 10 years from now.
Comparisons by organization staff size
2,500 to 24,999 employees (57%)
>
1 to 99 employees (34%)
Note: Only statistically significant differences are shown.
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Rate the importance of these bodies of knowledge
for HR professionals 10 years from now.
Body of Knowledge
Average Rating (0 to 10)
Strategic Business Management
8.8
Talent Management
8.6
Change Management
8.5
Workforce Planning and Employment
8.5
Compensation and Benefits
8.3
Human Resource Development
8.2
Employee and Labor Relations
8.1
HR Technology
8.0
Risk Management
7.7
Global and International Human Resources
6.9
Note: n = 446. Respondents rated each body of knowledge on a scale from 0 (not important) to 10 (very important).
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Organization Demographics
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Demographics: Organization Industry
Percentage
Professional, scientific and technical Services
20%
Health care and social assistance
17%
Manufacturing
16%
Educational services
13%
Finance and insurance
12%
Accommodation and food services
7%
Transportation and warehousing
6%
Arts, entertainment and recreation
5%
Government agencies
5%
Administrative and support and waste management and remediation
services
4%
Religious, grant-making, civic, professional and similar organizations
4%
Note: n = 461. Percentages do not total 100% due to multiple response options.
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Demographics: Organization Industry
(continued)
Percentage
Retail trade
4%
Construction
3%
Information
3%
Real estate and rental and leasing
3%
Repair and maintenance
3%
Wholesale trade
3%
Agriculture, forestry, fishing and hunting
2%
Mining
1%
Personal and laundry services
1%
Utilities
1%
Other
9%
Note: n = 461. Percentages do not total 100% due to multiple response options.
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Demographics: Organization Sector
Privately owned for-profit
47%
Nonprofit
25%
Publicly owned for-profit
18%
Government
Other
7%
3%
n = 462
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Demographics: Organization Staff Size
1 to 99 employees
21%
100 to 499 employees
30%
500 to 2,499 employees
19%
2,500 to 24,999 employees
25,000 or more employees
20%
10%
n = 454
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Other Demographics
Does your organization have U.S.based operations (business units) only,
or does it operate multinationally?
Is your organization a single-unit organization or
a multi-unit organization?
U.S.-based operations only
71%
Single-unit organization: An organization
in which the location and the
organization are one and the same.
Multinational operations
29%
Multi-unit organization: An organization
that has more than one location.
72%
n = 473
n = 470
What is the HR department/function for
which you responded for throughout this
survey?
Corporate (companywide)
71%
Business unit/division
17%
Facility/location
12%
n = 348
28%
For multi-unit organizations, are HR policies and
practices determined by the multi-unit headquarters,
by each work location or by both?
Multi-unit headquarters determines HR
policies and practices
51%
Each work location determines HR policies
and practices
3%
A combination of both the work location
and the multi-unit headquarters determines
HR policies and practices
46%
n = 347
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Challenges Facing HR Over the Next 10 Years
Survey Methodology
• 2012 response rate = 17%
• 2010 response rate = 17%
• Sample composed of 487 (2012) and 449 (2010) randomly selected HR professionals from
SHRM’s membership
• Margin of error +/-5%
• 2012 survey fielded September 14 to September 28, 2012
• 2010 survey fielded August 10 to August 23, 2010
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Challenges Facing HR Over the Next 10 Years
About SHRM Research
•
For more survey/poll findings, visit www.shrm.org/surveys
•
For more information about SHRM’s Customized Research Services, visit
www.shrm.org/customizedresearch
•
Follow us on Twitter @SHRM_Research
Project leader:
Tanya Mulvey, survey research analyst, SHRM Research
Project contributors:
Mark Schmit, Ph.D., SPHR, vice president, SHRM Research
Evren Esen, manager, Survey Research Center, SHRM Research
Alexander Alonso, Ph.D., SPHR, director, HR Thought Leadership
Copy editor:
Katya Scanlan, SHRM Knowledge Center
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