2024 HR Outlook and Trends Part 1: Labor Market & Workforce
As we step into the new year, it's a good time for companies to pause and look at the evolving HR landscape. The new year brings both challenges and opportunities for human resources, prompting HR professionals to reflect on upcoming trends and issues. In this three-part series, our goal is to provide HR teams with comprehensive insights to navigate the dynamic changes that lie ahead.
In this blog, we cover what to expect in the labor market and workforce, providing a detailed look at the current landscape and anticipated shifts. In part 2, we'll cover remote work options, flexibility, and plans for returning to the office. Finally, we explore the impact of AI and HR technology in the new year, detailing their roles in shaping HR practices, talent management, and employee engagement.
Our goal is to empower HR leaders with the knowledge to navigate these challenges successfully. Join us on this exploration through hiring trends, addressing skill gaps, flexible work options, return to office plans, the impact of AI and delving into the role of HR technology in enhancing the employee experience.
Not Just One Labor Market: The Idiosyncrasies of Staffing and Hiring in 2024
As 2023 closed out, some sectors faced talent shortages even as others (especially tech) continued to shed jobs. In 2023, companies laid off over a quarter of a million tech workers, around 260,000. This is after a substantial increase from the 165,000 tech layoffs recorded in 2022.
Meanwhile, in various sectors, including hospitality and healthcare, the struggle to fill open roles became apparent. These industries are reliant on in-person services, encountered difficulties in recruiting suitable candidates. Some experts think these discrepancies between sectors may even out in the new year.
“As we look to 2024, staffing firms are reporting that labor market demand is normalizing following the volatile swings down and up that have impacted the staffing industry over the past few years,” Richard Wahlquist, chief executive officer at the American Staffing Association, tells HR Daily Advisor. Wahlquist predicts that hiring overall will increase during the year, especially if GDP continues to grow.
But after the volatility of the past few years, it remains frustratingly difficult to predict what will happen in 2024. Some experts suggest that layoffs may continue. Other indicators suggest layoffs will slow or even reverse. For example, Meta, after significant layoffs this year, expects to add jobs in 2024.
One thing is for sure: employers—especially those in the service-oriented industries still struggling to staff up—are increasingly turning to alternative labor sources like the gig economy and contingent workers. “In terms of recruitment strategies, companies are increasingly casting a wider net to tap into a more diverse pool of candidates,” says Abhishek Shah, founder of HR SaaS solutions firm Testlify.
Closing Skills Gaps and Building a Stronger Workforce
Talent acquisition is a key focus for companies looking to navigate this gap. Upskilling and reskilling have been buzzwords in HR for the past couple of years, and 2024 is likely no different. Regardless of whether organizations are laying off workers or about to embark on a hiring spree, they need to make sure the staff they have can get work done. Indeed, often the core struggle with hiring is not finding people per se; rather, it’s finding people with the right skillsets and knowledge.
Skills Gap in the Era of Digital Transformation
The widening skills gap is becoming more noticeable as companies embrace a digital transformation. An increasing number of companies are using generative AI and automation in the workplace. According to Nicola Hancock, Regional Managing Director, Americas & Investment Banking at talent solutions firm AMS, 2024 will be an attention-seeking year.
She told HR Daily Advisor, “2024 will be a disruptive year as the talent market grapples with persistent talent shortages in key skills. This will especially be prominent in the tech space, as companies are looking for talent that has experience and skills needed in tech and AI.”
The demand is precise, a need for individuals who understand new tech, contribute to innovation, and advance tech and AI are paramount. As businesses increase their use of digital technology, addressing the skills gap becomes a necessity. As digitalization increase, you must have strategies to attract and retain talent. This involves helping them gain the necessary skills for the changing technology and ensuring a supportive work environment for the long term.
Reskilling and Upskilling as a Solution
Reskilling and upskilling programs can ensure employers can get work done with the employees they have rather than the workforce they wish they had. One key suggestion for 2024: make sure to expand skills development programs to a wide variety of workers.
Gallup's research emphasizes a significant gap - suggesting that upskilling opportunities mostly benefit highly skilled workers. In the research they expand on this statement: “The challenge to employers is to expand upskilling opportunities to those in the lowest income earning groups and with the lowest current skill levels. Such an expansion would allow for more upskilling opportunities for those workers who may benefit most from upgrading their skills.” Ensuring a balanced approach to upskilling, considering the varying needs and circumstances is crucial for the overall success of the HR department.
Want to build your own successful upskilling program for your workplace? According to Harvard Business Review, three key considerations can significantly enhance the effectiveness of such programs.
First, encourage employees to take control of their career path by fostering a culture where careers are employee-owned, manager supported, and company enabled. Utilize one-on-one meetings to explore professional interests and goals, offering chances for both formal upskilling programs and self-directed learning.
Secondly, gather employee input through feedback and surveys to understand their needs. Identify repetitive themes to provide relevant options and communicate any gaps for improved decision-making.
Finally, provide a clear plan with paths and goals at different job levels to guide employees in their training. Use performance metrics and lay out a plan for career progression to connect individual goals with the company's learning and development strategy, making upskilling a well-rounded effort.
Next Up in Part 2: Flexibility, Remote Work, and Return to Office Mandates
As we conclude our exploration of the job market and workforce dynamics in 2024, join us in part 2 in our series. In the next part, we'll delve into the flexible work options, remote work, and strategies around returning to office in 2024.
Learn why work-life balance are crucial for attracting top talent, with insights from industry expert Richard Wahlquist. Uncover the concept of "radical flexibility" and its impact on productivity, morale, and engagement. We delve into how companies are adapting, moving beyond remote work to incorporate hybrid plans, flexible hours, and responsive time-off policies. Additionally, gain insights into expected return to office plans for 2024.
CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us today.