HR trends for 2020 and beyond: Tips for small businesses

2020 has thrown businesses of all sizes off course, whether they’ve had to move to remote work or restructure their yearly budget and compensation plans. With a global pandemic affecting many aspects of daily life and mass movements causing the reprioritization of policies and processes, HR leaders for small businesses are facing especially unique challenges.

HR efforts should effectively engage employees and motivate them to work in valuable ways. As a leader of a small business, having a comprehensive HR strategy is the best way to lay the foundation for organizational growth and employee retention.

With all of the turbulent and unprecedented circumstances that this year has brought, many organizations have already taken the steps to revise their current HR and compensation strategies. In fact, according to a pulse survey on COVID-19’s effects on compensation planning, 39 percent of employers are considering making adjustments to their 2020 base pay compensation budgets, and 29 percent of employers are looking at modifying their short-term incentive compensation plans.

While so much is changing, it’s hard to predict what exactly business will be like in this “new normal.” That’s why we’ve put together this guide of the top HR trends that are likely to outlive the year. While 2020 has put a wrench in many of our plans, it has also given us the opportunity to think quickly and adapt to changing times with new tools and different ways to communicate. Let’s explore the following HR trends:

  1. Dependence on technology and tools
  2. Openness to more remote work
  3. Increased task automation
  4. Focus on workplace experience
  5. Concentration on diversity, equity, and inclusion

If there’s one thing this year has already taught us, it’s that staying on top of the current economic and business landscape is key to preparing yourself for whatever may come. This post will help you plan your HR strategy to encourage growth and keep employees motivated.

1. Dependence on technology and tools

If your small business hadn’t already jumped on the train and invested in HR-dedicated tools and solutions, COVID-19 probably changed your mind. Due to social distancing guidelines, most nonessential businesses had to make the transition to fully remote or semi-remote work — and do it in a hurry.

Smaller businesses and organizations have likely felt the brunt of this adjustment. When you have a smaller workforce, it’s easy to engage in person to quickly accomplish tasks and move projects forward. But with the move to working from home, small business leaders have had to come up with novel ways to keep team members connected, engaged, and on the same page. That’s where technology and tools come in.

There’s an abundance of work-from-home tools available, including talent management software that can help strengthen and streamline your HR strategy. These tools make it easy to shift your employee engagement efforts and other tasks online using technology to communicate instead of face-to-face conversations. 

For instance, the following tools will likely help you now and be great resources for organizations of all sizes far beyond 2020:

  • Performance tracking tools. These solutions help keep track of your employees’ progress and organize any performance evaluations to make sure everyone is meeting their goals and objectives. With your team working remotely, you need a tool to keep track of all this information in one place in order to ensure each employee gets compensated fairly. 
  • Recruiting software. Recruiting during a pandemic isn’t easy. While video interviews are a good solution, sometimes more comprehensive recruiting software is the best way to ensure you meet qualified leads and guide prospects down the pipeline. Use your recruiting tool to post job ads, sort and accept applications, and accept candidates.
  • Payroll service. A payroll service can help automatically calculate paychecks, deductions, and vacations, ensuring that you compensate your employees fairly and keep track of your budget. Remember to stay up to date on any new laws or legislation about employee compensation and leave time. 
  • Employee engagement tools. To replicate the communication that takes place in the office, it’s imperative you invest in dedicated engagement tools that go beyond email. Consider some sort of chat system and videoconferencing tools to ensure that important meetings go smoothly.

The tools above can greatly aid your HR team and fill the gaps in their responsibilities. However,  this talent management buyers guide contends that it’s much more beneficial to invest in a comprehensive talent management platform that supports a wide range of HR activities instead of picking and choosing tools whenever a need comes up. 

With a fully fleshed-out solution, talent management software can help your leadership optimize their compensation, recruitment, performance management, and employee development processes and programs as well as better define and manage the employee life cycle at your business.

2. Openness to more remote work

When social distancing guidelines and quarantine rules were most restrictive, remote work was a quick, temporary solution until it was safe to go back to the office. However, it’s still not clear when it will be safe to return, and employers have realized that remote work isn’t just possible but very doable. 

While the transition to remote work seemed daunting at first, many have realized that their businesses are, in fact, doing just as well (or even better) remotely. A little more than 60 percent of the U.S. workforce now prefers working from home over sharing a workplace, and 48.9 percent now wish they could permanently work remotely. It’s clear that this trend will continue. 

For one thing, by forgoing the office entirely, businesses can actually save on overhead like rent, which could help reduce some of the economic damage this pandemic has inflicted.

And with more acceptance of remote work comes the option to hire employees located anywhere, not just in your town or city. Even if your company isn’t currently looking to expand, it’s good to know that you don’t have to limit your prospects to those who live in the area. This is also a great way to promote diversity in your workforce, something we’ll touch on later.

What does this mean for your specific business? Consider asking your employees their opinions and weighing the pros and cons of a fully remote team as a long-term solution. If remote work is something your team seems to enjoy, it’s worth the effort to use it in the future, even if it’s not necessitated by a global pandemic. If you fear going fully remote isn’t the best plan, a semi-remote situation where employees stagger when they come in is also an option.

3. Increased task automation

With the latest technology and tools, you’ll soon find that your team can complete much of the work they previously did manually through task automation. This means they can also finish their work faster. 

In 2017, the McKinsey Global Institute estimated that organizations can automate at least 18 percent of business activities with today’s technology. Imagine how much that figure has increased since then.

Task automation is a key digital transformation strategy that enables HR professionals to better organize their workflow, easily access and manage data with contextual information, and spend more time engaging with employees. 

Because of its sheer convenience, task automation will continue to expand. Here are some common ways task automation can empower your small business’s HR strategy:

  • Payroll automation to ensure accurate calculations of taxes, deductions, etc.
  • Onboarding and recruitment, with emails and important documents automatically sent to prospects and new hires to guide them through the interview and/or onboarding process
  • Automation of the benefit eligibility process to determine more quickly which employee receives which benefits
  • Automation of performance evaluations to ensure employees understand their job roles and that managers can keep track of areas of growth and excellence

For your task automation tools to work at their peak, you need to have a dedicated data management strategy and a centralized customer relationship management (CRM) system. This way, your HR management tools can work together and pull data from the same resource. 

With the automation of HR’s more mundane tasks, there are more opportunities to track key data and drive insights that improve the HR and employee relationship going forward.

4. Focus on workplace experience

The events of the past year have turned your employees’ lives upside down. In times of turbulence and uncertainty, it’s important that you consider ways to retain your current team members and keep them motivated.

One of the biggest challenges this year has been the major disruption of workplace experience and culture. After all, if many of your employees are at home, not having face-to-face meetings, it’s difficult to create the same atmosphere and camaraderie that employees in the office would experience while eating lunch or chatting by the cooler.

Whether you’ve decided to host a weekly virtual happy hour or another type of team-building event for your remote staff, focusing on the workplace environment is something you’ll need to do for a while. After all, it seems like 2020 is the year of unpredictability. It’s important your HR team sets the foundation for consistent non-work related engagement, company culture events, and employee recognition. By creating an environment where individuals feel safe to grow and learn from others, your small business can truly thrive.

The best way to ensure the work experience is optimal on all levels — not just when team members are actually working — is to take a total rewards approach to your HR strategy and compensation plan. Include both direct and indirect compensation models. “Direct compensation” refers to payroll and other salary items, but what exactly does “indirect compensation” refer to?

Indirect compensation includes all the ways your company gives back to employees in nonfinancial ways. This is often the biggest driver motivating employees to stick around. Indirect forms of compensation like healthcare benefits and a 401(k) matching plan show your team members that your business is prepared to support them for the long run.

It’s also crucial to continue and emphasize indirect cultural components like corporate social responsibility programs, wellness programs, and employee events during this time. 

You might think a matching gift program isn’t that important right now, especially if you’re on a tight budget. However, according to this Double the Donation article, many businesses are actually increasing their matching gift programs to keep employees motivated and form partnerships with meaningful organizations. Continue to prioritize your indirect forms of compensation to improve your workplace experience.

5. Concentration on diversity, equity, and inclusion

This year has also seen a rise in mass social movements, particularly ones calling for racial equality and inclusion. As part of the HR leadership of your small business, you cannot ignore these social issues. They touch every part of your workforce’s lives. 

A concentration on diversity, equity, and inclusion in your small business isn’t a trend, but something that should be woven into every internal process going forward. HR plays a critical role in ensuring an equitable workplace, so this is something you can’t forget as the rest of the year plays out.

Even if you think your business is doing all it can, there’s always a risk of unconscious bias — whether it affects your behavior as a manager or other employees’ behavior. Especially in this polarizing election cycle, creating specific and dedicated guidelines for how team members should treat others is even more important. 

While the steps your business takes will depend on your unique situation, make sure to rethink the following policies in regards to diversity, equity, and inclusion:

  • Hiring practices. Actively make sure that there’s no bias whatsoever. For instance, get rid of unnecessary criteria that can promote bias, remove subconscious biases in word choice, use a diverse set of interviewers, and redefine what diversity means to your business. 
  • Pay equity. Ensuring pay equity for race, gender, and other factors seems easy in concept, but recent studies show that there are still racial and gender pay gaps across different industries. It’s crucial that you reflect on and analyze your compensation structure and how it affects each member of your workforce.

Prioritizing diversity, equity, and inclusion is essential for all businesses, not just small ones. If your organization is missing key areas or letting unconscious bias impact your processes, hiring an HR consultant is likely your best bet. This way, you can work with professionals who will conduct a thorough audit to pinpoint areas of strength and areas to improve.

This year has had its ups and downs, but many businesses have learned to adapt to changes quickly. Whether using new technology or being open to remote work, HR teams from all over had to follow the trends if they wanted to keep up.

Hopefully, this guide has given you insight into the top trends that are sure to last beyond 2020, which should help you prepare for what’s next. Good luck!

This article is originally published on Oct 08, 2020, and updated on Oct 09, 2020.
AUTHOR
Jennifer is a founding partner of and national director for Astron Solutions, a compensation consulting firm. She has 23 years of experience at organizations such as the Hay Group, Parsons Brinckerhoff, Eagle Electric Manufacturing Company, and Harcourt General.

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