2024 HR and talent trends: a year of rebalancing

After years of flux for HR leaders, 2024 is set to be a period of rebalancing as the talent market, pay inflation and employee expectations all begin to settle

2024 Trends Hr 2

The HR function has had to prove its adaptability over the past few years as it has aided businesses through the remote-work revolution, the advent of AI and a competitive jobs market. 

While many of these trends will continue to impact HR in the year ahead, 2024 is likely to be a period of consolidation for most people leaders. 

Retention is ‘number one’ priority for HR

In recent years, companies have faced stiff competition in the talent market and many resorted to persuading the economically inactive back to the workplace in order to fill open positions. 

The priority for HR leaders in the year ahead will be talent management and retention

However, with the number of vacancies tailing off over the past year, and hiring budgets shrinking, most businesses will now be turning their attention from recruitment to retention.

“The priority for HR leaders in the year ahead will be talent management and retention,” says Dietmar Knoess, Puma’s global director of people and organisation. “I would be surprised if anyone says that’s not the number one issue.”

According to the Recruitment & Employment Confederation JobsOutlook report, the majority (60.2%) of employers expect their total number of permanent staff to remain the same over the next four to 12 months. 

The year ahead should be easier for companies that are looking to hire too. The total number of jobs posted on the recruitment site Reed was down 18% year-on-year, according to its CEO James Reed, while the number of people applying is on an upward trajectory. “It’s now a buyer’s market, not a seller’s market, which it had been for a couple of years after the pandemic,” he explains. 

Beware job-hopping trend

Although all signs point towards a cooler labour market in the year ahead, there is still cause for concern for HR. A PwC survey of the UK workforce estimates that nearly a quarter (23%) expect to change jobs in the first half of next year, a 5 percentage point increase from last year.

“People are not afraid to leave within a few months or even weeks of starting a new job if they realise it isn’t the right place for them, people will job hop” says Kelly Tucker, managing director of consultancy HR Star. “It’s definitely increased over the past year. That’s why it’s important to get your culture and onboarding right.”

HR leaders are well aware of the costs required to replace an employee – Centric HR estimates this to be between 6 to 9 months’ worth of the outgoing person’s salary, on average. Reducing attrition and deterring job hoppers from jumping ship will be a key priority.

HR needs to improve engagement

In order to do this, HR leaders will need a renewed focus on improving the employee experience over the next 12 months. And there is much room for improvement. According to Gallup’s State of the Global Workforce report, the UK has one of the least engaged workforces in Europe

There has been a fundamental shift in employee expectations, and many companies are seeing wellbeing flatline

Gallup CEO Jon Clifton believes that this level of disengagement will only increase in 2024, unless HR leaders actively seek to address it. “The pace of change in the workplace is accelerating and that’s leading to people feeling more burned out,” he says. “If this isn’t handled correctly, it will result in higher turnover.”

In his opinion the best way for HR to confront this is by upskilling managers so they are better able to listen and respond to employee grievances. “Make sure you’re diagnosing the right problems because, a lot of the time, HR only listens to the loudest people in the organisation and that’s not representative of everyone’s needs,” he adds.

Amanda Rajkumar, the outgoing executive board member for HR at Adidas, also sees middle managers as a key ally for HR professionals in addressing this engagement issue. “There has been a fundamental shift in employee expectations, and many companies are seeing wellbeing flatline,” she says. “HR must work with middle managers to start understanding what’s happening to their workforce and attuning themselves to how to resolve some of these wellbeing problems.”

Improving engagement also relies on creating a great culture that offers progression, and this will be among the top priorities for HR in 2024, according to Tucker. “Employee engagement will continue to be a really important factor when you’re looking to retain people,” she says. “If you want to hold on to talent, you are going to have to offer ways for them to progress, develop and learn new things.” 

Flatlining pay

Salaries have soared over the past 12 months as private sector pay sought to keep pace with rising inflation. However, the most recent data from the Office for National Statistics shows that the average basic salary rose by 7.8% during the three months to August – down slightly from the 7.9% rise seen the month prior.

We won’t see salary growth continue at the same pace next year

Doug Rode, managing director for the UK and Ireland at recruitment firm PageGroup, foresees this trend continuing in the year ahead. “We’re not going to see employers continue to come to the talent market with a blank chequebook on salary because the wage growth we’ve seen has been unsustainable,” he says. “We won’t see salary growth continue at the same pace next year.”

Ultimately, he sees 2024 being a year of “rebalancing” as labour market trends and changes in the economy become more predictable, compared with previous years.

Flexi benefits and the in-office premium

With companies no longer competing in terms of pay, employers will have to focus on their overall proposition when looking to attract and retain workers. 

Both Tucker and Rode agree that this could see a number of businesses reevaluate their benefits proposition in 2024. Rode adds: “Those organisations that want to access the broadest range of talent are looking at how they can flex some of their benefits propositions so that people can have more choice.”

Benefits platforms that allow employees to personalise their perks, are going to “really come into their own”, according to Tucker. She is also seeing discount vouchers and food delivery subscriptions like Gusto become increasingly popular employee benefits and she expects this to continue as the pressures of inflation persist.

Interestingly, Reed notes that the sectors that are continuing to see the highest wage growth are the ones that require people to be present in the workplace. This could mean that companies that want their staff to be in the office more frequently may have to pay a premium for talent in 2024.

AI’s impact on HR takes hold

AI is going to continue to disrupt businesses in the year ahead and the HR function will certainly not avoid its impacts. “Generative AI has staying power, it’s going to be very disruptive,” says Clifton.

Much of this disruption will have consequences for employees, meaning that it will be increasingly important for HR to bring a people perspective to its integration. Tucker adds: “HR is going to have to take an active role in incorporating these tools within the workplace, ensuring employees know how to use it and preparing for AI to potentially replace certain jobs in the organisation.” 

The integration of AI in the workplace will also bring a renewed focus to the importance of upskilling. The skills needed for jobs are estimated to change by 65% by 2030, due to rapid developments in AI, according to LinkedIn research. 

It will be down to HR leaders to gain an in-depth understanding of the skills their workforce has, and the areas where upskilling is required, according to Luke Mckend, LinkedIn’s senior director of talent solutions. He adds: “Business leaders will be relying on their HR teams and partners more than ever to help their organisations keep pace with the changes.”