HR Looking Forward
Tis the season when HRI’s periodical shelves and file folders are newly filled with end-of-the-year predictions. There are the obligatory technology trends, market forecasts and, of course, a good many prognostications about HR and workforce issues. Below are just a few of the highlights:
The Second War for Talent May Be Declared – Although some may argue that the “war for talent” of the late 1990s never ended, especially when it comes to people with truly top-notch skills, a lot of experts expect the combat to really heat up again in 2006 if the global economy stays healthy. “With the economy and job market expanding at a healthy pace and the labor force tightening, the competition for skilled employees is intensifying,” states Richard Castellini, senior career advisor at CareerBuilder.com (“Higher,” 2005).
If so, there’s going to be an even greater emphasis on talent management in the near future. Consulting firm Watson Wyatt Worldwide (2005) predicts, “As the population ages and the economy gains further momentum, progressive employers will start to think more holistically about talent management – not only to attract and retain employees, but also to ensure employees are productively engaged in their work and make a positive contribution to the organization’s bottom line.” Some experts predict that recruitment managers will endeavor to shorten hiring cycles in 2006 as talent grows scarcer.
Wages Will Inch Up – So how much is this talent war going to cost employers in terms of increased pay levels? For the U.S., at least, the consensus seems to be “not a lot, but more than last year.” A CareerBuilder.com and America Online survey found that 51% of hiring managers plan to bump up initial offers for new workers, and 78% will increase the paychecks for current workers. But the projected increases won’t be huge. Only about a fifth of those planning increases are going to boost pay levels by 5% or more (“Higher,” 2005). And U.S. News & World Report states that there’s going to be “slight uptick in pay, from 3.6 to 3.8 percent” (Ramachandran, 2006, p. 37).
U.S. Healthcare Costs Will Continue to Sting – One of the factors keeping wages down is that healthcare costs keep rising a lot faster than inflation. “As long as we are going to pay more and more on the benefits side, then wages are not going to go up,” notes economist Bill Kunkelberg (Ramachandran, 2006).
For 2006, the experts are predicting more double-digit increases that are three or four times higher than the U.S. inflation rate. According to The Segal Co.’s annual Health Plan Cost Trend Survey, “With average per-participant costs of $7,600 (composite single/family before cost-sharing), a projected 12% increase would mean plan sponsors could expect a cost increase of over $900 per participant in 2006, if they maintain current levels of benefits” (Marshall, 2005).
The nation’s inability to control healthcare costs may threaten the health of the U.S. economy. General Motors’ mid-2005 announcement about major job cuts is largely due to staggering health benefit costs ( Scherer, 2005). Cutbacks in the auto and related industries could have ripple effects throughout the U.S. economy. That’s why companies will continue to tweak their healthcare programs, relying less on co-pays and more on co-insurance and deductibles, looking harder at high-deductible/personal healthcare accounts, and implementing new cost arrangements for prescription drug benefits (Marshall, 2005).
Tech Integration Will Get More Attention – The war-for-talent trend puts a lot of pressure on companies to leverage their workforce management technologies more effectively. Employers already recognize that the right equipment and processes could help them cultivate and retain talent, according to Steve Larson, senior consultant for Watson Wyatt Worldwide, but a lot of firms still lack the infrastructure needed to truly integrate recruitment, performance management, compensation and other workforce-related programs (Klaff, 2006). In 2006, more companies will work to integrate their systems.
New Jobs Could Materialize – As technologies and markets change, so do job responsibilities and job titles. To keep up with new developments, for example, employees will increasingly need to be involved in continuing education. John Challenger (2005), CEO of outplacement firm Challenger, Gray & Christmas, notes that one job that could emerge in coming years is “Coordinator of Workforce Development and Continuing Education.” This person would do everything from run Web-based seminars to manage “virtual internships” that are designed to “tap talented youth across the world and expand the company’s technological knowledge base” (p. 50). Challenger also suggests up-and-coming job titles such as “Offshore Outsourcing Coordinator,” “Corporate Age Advisor,” and “Chief Health Officer.”
Watch for the Merger Surge – There’s likely to be greater industry consolidation in 2006 because corporate buyers have plenty of cash and business opportunities in an environment still marked by low interest rates, according to the Transaction Services group of PricewaterhouseCoopers. “What isn’t spent on stock buybacks and special dividends will likely go to M&As, as companies struggle to maintain competitiveness in an economy that’s still growing fast,” said Bob Filek of PricewaterhouseCoopers (2005).
So, HR professionals and other managers should prepare for a busy year. There’s likely to be more talent to woo, costs to cut, systems to integrate, jobs to create and due diligence to do. And that, of course, is just the tip of the prediction iceberg.
Documents used in the preparation of this TrendWatcher include:
Challenger, John A. “Working in the Future.” The Futurist, November-December 2005, pp. 47-50.
“Higher Starting Salaries, Better Compensation Packages and More Flex Time in 2006.” PR Newswire U.S., LexisNexis, December 29, 2005.
Klaff, Leslie Gross. “Covering All the Bases.” Workforce Management, 2006 Vendor Directory.
Marshall, Jeffrey. “Healthcare Outlook 2006: From a Gallop Down to a Canter.” Financial Executive, ProQuest. December 2005.
“PricewaterhouseCoopers Forecast: Record Cash Reserves and a Desire for Growth Will Accelerate M&A in 2006.” PR Newswire U.S., LexisNexis, December 13, 2005.
Ramachandran, Nisha. “Pity Your Paycheck.” U.S. News & World Report, December 26, 2005/January 2, 2006, pp. 37-38.
Scherer, Ron. “Rising Benefits Burden.” Christian Science Monitor [www.csmonitor.com]. June 9, 2005.
“Watson Wyatt Forecasts Top 10 Workplace Trends in 2006.” Canada Newswire, LexisNexis, December 27, 2005.
The Second War for Talent May Be Declared – Although some may argue that the “war for talent” of the late 1990s never ended, especially when it comes to people with truly top-notch skills, a lot of experts expect the combat to really heat up again in 2006 if the global economy stays healthy. “With the economy and job market expanding at a healthy pace and the labor force tightening, the competition for skilled employees is intensifying,” states Richard Castellini, senior career advisor at CareerBuilder.com (“Higher,” 2005).
If so, there’s going to be an even greater emphasis on talent management in the near future. Consulting firm Watson Wyatt Worldwide (2005) predicts, “As the population ages and the economy gains further momentum, progressive employers will start to think more holistically about talent management – not only to attract and retain employees, but also to ensure employees are productively engaged in their work and make a positive contribution to the organization’s bottom line.” Some experts predict that recruitment managers will endeavor to shorten hiring cycles in 2006 as talent grows scarcer.
Wages Will Inch Up – So how much is this talent war going to cost employers in terms of increased pay levels? For the U.S., at least, the consensus seems to be “not a lot, but more than last year.” A CareerBuilder.com and America Online survey found that 51% of hiring managers plan to bump up initial offers for new workers, and 78% will increase the paychecks for current workers. But the projected increases won’t be huge. Only about a fifth of those planning increases are going to boost pay levels by 5% or more (“Higher,” 2005). And U.S. News & World Report states that there’s going to be “slight uptick in pay, from 3.6 to 3.8 percent” (Ramachandran, 2006, p. 37).
U.S. Healthcare Costs Will Continue to Sting – One of the factors keeping wages down is that healthcare costs keep rising a lot faster than inflation. “As long as we are going to pay more and more on the benefits side, then wages are not going to go up,” notes economist Bill Kunkelberg (Ramachandran, 2006).
For 2006, the experts are predicting more double-digit increases that are three or four times higher than the U.S. inflation rate. According to The Segal Co.’s annual Health Plan Cost Trend Survey, “With average per-participant costs of $7,600 (composite single/family before cost-sharing), a projected 12% increase would mean plan sponsors could expect a cost increase of over $900 per participant in 2006, if they maintain current levels of benefits” (Marshall, 2005).
The nation’s inability to control healthcare costs may threaten the health of the U.S. economy. General Motors’ mid-2005 announcement about major job cuts is largely due to staggering health benefit costs ( Scherer, 2005). Cutbacks in the auto and related industries could have ripple effects throughout the U.S. economy. That’s why companies will continue to tweak their healthcare programs, relying less on co-pays and more on co-insurance and deductibles, looking harder at high-deductible/personal healthcare accounts, and implementing new cost arrangements for prescription drug benefits (Marshall, 2005).
Tech Integration Will Get More Attention – The war-for-talent trend puts a lot of pressure on companies to leverage their workforce management technologies more effectively. Employers already recognize that the right equipment and processes could help them cultivate and retain talent, according to Steve Larson, senior consultant for Watson Wyatt Worldwide, but a lot of firms still lack the infrastructure needed to truly integrate recruitment, performance management, compensation and other workforce-related programs (Klaff, 2006). In 2006, more companies will work to integrate their systems.
New Jobs Could Materialize – As technologies and markets change, so do job responsibilities and job titles. To keep up with new developments, for example, employees will increasingly need to be involved in continuing education. John Challenger (2005), CEO of outplacement firm Challenger, Gray & Christmas, notes that one job that could emerge in coming years is “Coordinator of Workforce Development and Continuing Education.” This person would do everything from run Web-based seminars to manage “virtual internships” that are designed to “tap talented youth across the world and expand the company’s technological knowledge base” (p. 50). Challenger also suggests up-and-coming job titles such as “Offshore Outsourcing Coordinator,” “Corporate Age Advisor,” and “Chief Health Officer.”
Watch for the Merger Surge – There’s likely to be greater industry consolidation in 2006 because corporate buyers have plenty of cash and business opportunities in an environment still marked by low interest rates, according to the Transaction Services group of PricewaterhouseCoopers. “What isn’t spent on stock buybacks and special dividends will likely go to M&As, as companies struggle to maintain competitiveness in an economy that’s still growing fast,” said Bob Filek of PricewaterhouseCoopers (2005).
So, HR professionals and other managers should prepare for a busy year. There’s likely to be more talent to woo, costs to cut, systems to integrate, jobs to create and due diligence to do. And that, of course, is just the tip of the prediction iceberg.
Documents used in the preparation of this TrendWatcher include:
Challenger, John A. “Working in the Future.” The Futurist, November-December 2005, pp. 47-50.
“Higher Starting Salaries, Better Compensation Packages and More Flex Time in 2006.” PR Newswire U.S., LexisNexis, December 29, 2005.
Klaff, Leslie Gross. “Covering All the Bases.” Workforce Management, 2006 Vendor Directory.
Marshall, Jeffrey. “Healthcare Outlook 2006: From a Gallop Down to a Canter.” Financial Executive, ProQuest. December 2005.
“PricewaterhouseCoopers Forecast: Record Cash Reserves and a Desire for Growth Will Accelerate M&A in 2006.” PR Newswire U.S., LexisNexis, December 13, 2005.
Ramachandran, Nisha. “Pity Your Paycheck.” U.S. News & World Report, December 26, 2005/January 2, 2006, pp. 37-38.
Scherer, Ron. “Rising Benefits Burden.” Christian Science Monitor [www.csmonitor.com]. June 9, 2005.
“Watson Wyatt Forecasts Top 10 Workplace Trends in 2006.” Canada Newswire, LexisNexis, December 27, 2005.