5 HR trends for 2024: what can you do to stay ahead? 

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We asked five experts from Mercer’s Workforce Solutions team to place their big bets for 2024. From hybrid work, to culture, salaries, skills and AI, what will be the key trends for the year ahead – and how can you stay ahead of continual change? 

The labour market in Australia and New Zealand remains tight, new skills are becoming increasingly needed as AI tools take hold and employees are demanding more personalisation. In a volatile economic landscape, HR teams are adapting with greater cost management scrutiny putting productivity and retention front and centre.

In a lively webinar discussion, five Mercer Workforce solution experts shared their number one HR trend for the year ahead. “There’s plenty to debate about where the HR agenda is heading,” said David Guazzarotto, Mercer Pacific’s Digital HR and Technology Advisory leader and the host of the panel discussion. 

  • 1. Hybrid work: It’s time for a more flexible mindset 

    Andrew Lafontaine, Mercer Strategy & Growth Leader, is placing his big bet on a flexibility re-set. But instead of calling on employers to be more flexible, he believes employees will also need to flex their default position on working from home.

    “Since the pandemic, employers have had to meet employees where they’re at,” he said. “Policies to get people back into the offices two or three days a week have had very little success. So let’s move away from that and think about what flexible work arrangements should look like for both employers and employees in a modern work environment.”

    He says this requires trade-offs and incentives. A live poll of webinar participants found 85% would sign up for a four-day week even if it required them to be in the office three days a week – and Lafontaine says that’s the sort of mindset shift that’s needed to encourage in-person collaboration and innovation.

    “Many people want to work from home, but the reality is Australia’s services productivity is significantly down according to the RBA’s most recent report,” he noted. A recent news.com.au survey of 50,000 Australian employees also found that only 30% think they are more productive at home.

  • 2. Culture will unleash workforce potential
    Mercer Employee Experience and Culture Leader May Lee said a flexibility re-set could also help improve equity across the workforce. However, in many organisations there is a need to provide equitable and fair access to flexibility across a range of diverse roles. For example, many frontline workers do not have the luxury of choosing where, when and how they work, and the employee value proposition will need to provide a consistent and fair approach to build a culture based on trust.

    “Culture was identified as a business critical priority in Mercer’s Global Talent Trends 2023 Report, and I would expect that to continue,” she said. “Ultimately, focusing on culture is a way of managing risk – because ultimately behavioural misconduct or breach comes back to it being a culture issue.”

    The Mercer People Risk Report 2023 found employee health and wellbeing and the changing nature of work had both increased in ranking from last year to this year, reflecting greater risks around talent – and culture can make a fundamental difference here. But a large part of culture is invisible, like the area below the surface in an iceberg.

    “A lot of our work this year has focused on redefining employee value propositions for organisations that are struggling with hybrid working and flexibility, as a cornerstone to culture and ways of working,” said Lee.
  • 3. The changing shape of work requires a new approach to rewards

    Chi Tran leads Mercer’s salary survey and data business, so she can see the natural shift in remuneration patterns. And she says a new approach to rewards is inevitable.

    “What worked for a pre-COVID workforce is not going to work anymore,” she said. “As well as greater cost scrutiny, talent turnover and retention issues and higher cost of living pressures, Australia will have gender pay disclosure changes in place next year. All these things will impact your total remuneration practices.”

    Mercer’s 2023 Total Remuneration Survey found the overall salary budget increase for Australia in 2024 is 4%, and 3.9% in New Zealand, higher than pre-pandemic levels – but hiring intentions are more cautious in the year ahead.

    “Retention will be a focus, which means prioritising employee benefits around career paths, reskilling and upskilling. We also see employers putting a larger proportion of remuneration budgets into variable compensation, which can be adjusted in line with business performance,” she observed.

    In general, benefits will be more personalised. “We’re seeing the rise of the work-life balance culture, with more flexitime and health and wellbeing programs that cater to all demographics,” she said. 

  • 4. An accelerated shift from jobs to skills

    Senior Principal Anne Le Blanc specialises in helping clients become skills-powered organisations. Her big bet for 2024 is on solving the talent shortage by building skills from within.

    “While hiring intentions are softening a little, that actually drives a need to keep developing existing employees – especially as Mercer data tells us 77% of employers still report difficulty finding the talent they need1,” she says.

    Mercer research also suggests skills development is a cost-effective lever for retention. “Commercially it makes sense to invest in growing the skills within your team,” she says.

    The World Economic Forum’s latest Future of Jobs report suggests 83 million jobs will be eliminated by 2027 – and 69 million new jobs will be created. This will also accelerate the need to pivot skills development.

    “The number one challenge for transformation is lack of workforce capability and skills, yet only two in five HR professionals know the skills in their organisation,” says Le Blanc. She says developing that skills maturity should be a priority for every HR leader in 2024, because it’s the first step on a journey to enabling your internal talent marketplace in the future.

  • 5. AI will be the best HR employee you hire in 2024

    In just 12 months, generative AI has become part of everyday work for many organisations. A recent Gartner survey found 76% of HR leaders believe their organisation will be behind if they don’t adopt AI solutions in the next 12 to 24 months.

    Jared Cameron leads Mercer’s Digital HR and Technology advice team in New Zealand. He says there are some very clear use cases for AI in HR, including easy efficiency gains like writing job descriptions and job ads.

    “As we dial up the complexity of what AI can do, we see potential for chatbots and virtual assistants to answer common enquiries, or guide personalised learning and career development,” he says.

    To do this well, you’ll need a strong foundation with data on talent skills, careers and job architecture.

    “AI can also help you analyse data on understanding employee experience, why people leave, or what your leadership pipeline looks like,” Cameron adds. “These are all areas where AI can add a lot of value.”

    He believes the ideal HR tech of the future will be a hub and spoke model, with a central data system and a range of applications plugging into it. 

Everything is connected

When webinar attendees were asked to vote on their number one priority from these five bets, the results were mixed. While one in four embraced the need for a more flexible mindset, a similar number are prioritising culture – and one in five agree AI will be their next best HR employee.
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“This suggests you can’t do these things in isolation,” said Guazzarotto.

As HR teams navigate an increasingly complex and challenging world, they will need to be more strategic in understanding underlying culture issues. But they will also need to focus on developing skills to encourage internal mobility and retention, ensure benefits are equitable and relevant, and embrace new technology to enhance productivity and employee experience.

What to stay ahead in 2024? Watch the webinar on demand for the full conversation, or contact us to learn more.

1.     Mercer 2022/2023 Workforce Movement 
As well as greater cost scrutiny, talent turnover and retention issues and higher cost of living pressures, Australia will have gender pay disclosure changes in place next year. All these things will impact your total remuneration practices.
Chi Tran

Head of Market Insights and Data

About the author(s)
David Guazzarotto

Digital HR & Technology Advisory practice

Anne Le Blanc

- Senior Principal, Workforce Solutions

Andrew Lafontaine

Partner, Strategy & Growth, Workforce Solutions

May Lee

Employee Experience and Culture Leader, Mercer Pacific

Jared Cameron

Principal, Digital HR Advisory

Chi Tran

Head of Market Insights and Data, Pacific

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