HR Update 2018: Key pay and workplace trends

Transcription

1 HR Update 2018: Key pay and workplace trends

2 A four-part Ibec campaign to prepare Ireland for a new era of work. Investment in skills and employability Flexibility at all life stages A dynamic labour market Smoother career transitions ibec.ie/smarterwork

3 Contents 1. Foreword Respondent profile Key findings Basic pay rates Total Pay Resourcing Smarter World, Smarter Work... 9 Investment in skills and employability... 9 Flexibility at all life stages A dynamic labour market Smoother career transitions Challenges for organisations in Flexible work practices Skills training for HR priorities for Ibec Research Unit

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5 Foreword Ibec s latest HR Update Survey, now in its tenth year, highlights key employment trends and provides unique insights into how the Irish labour market is changing. This survey of 339 respondent companies reflects the views of senior HR leaders and business owners on a number of key HR topics affecting companies of all sizes across a wide range of sectors. The results identify a number of key trends. Pay and recruitment findings point to a continued tightening of the labour market. 80% of respondent companies expect to increase basic pay, with the median increase being 2.5% and 47% of companies plan to increase employee numbers next year, slightly up on last year s survey. Strong growth is reflected in the very positive hiring intentions over the coming year, however it is also a significant contributory factor in increasing pay expectations right across the economy. The survey also highlights how the very nature of work itself is changing. Globalisation, rapid digitalisation, changing lifestyles and new consumer preferences mean jobs and careers are being transformed. Companies priorities are shifting to meet these new challenges. Almost half (47%) of respondents have already identified new skills that will be needed in their future workplace, while half (51%) have identified the technology required for the workplace of the future. The new world of work that is emerging is more exciting, but also less predictable. How organisations, government and individuals respond to these trends will fundamentally affect the quality of our jobs and our lives into the future. In Ibec, responding effectively at an enterprise, national and international level to the challenges presented by the changing nature of work is a key priority. We recently launched Ibec s Smarter World, Smarter Work campaign. It looks at what s changing and sets out an ambitious vision for our economy and our society. Crucially, it identifies what action we need to take now if we are to reap the rewards and avoid the pitfalls. For more information visit Maeve McElwee Director of Employer Relations 3

6 Respondent Profile 16% 54 Over % 106 Less than 50 Just under a third of respondent companies (31%) employed fewer than 50 and a similar proportion (30%) employed over % Total 339 organisations 51% 175 Services Total 339 organisations 17% 56 High-tech manufacturing 22% 75 Other manufacturing 10% 33 Distribution (retail & wholesale) 19% % Around one in five respondents were engaged in the high-tech manufacturing sector which includes the manufacture of chemicals, electronics or medical devices. One in ten respondents were engaged in either retail or wholesale distribution while half of respondents (51%) were involved in some form of services sector activity. 4

7 Key Findings The key findings of the survey illustrate the focus on talent, skills and the future workplace on a practical level and a strategic level. Basic Pay 80% expect to increase basic pay rates in The median increase to basic pay rates is expected to be 2.5%. Recruitment 47% of companies will increase employee numbers in Attracting the right (23%) and retention of (15%) are the top priorities for HR departments in Workplace of the future 55% indicated they are ready to make changes to prepare for the workplace of the future. 47% agree they have identified new skills that will be needed in their future workplace. 51% have identified technology they will require for the workplace of the future. 65% have a formal plan or are actively considering plans for the future workplace Key future work challenges Securing employee buyin for change is a key challenge for respondents (54%). Identifying new skills required by the organisation (49%). Managing an intergenerational workforce and retirement (45%). Education/ Training Leadership/People management training was identified by 75% of respondents as the most critical area of training investment for Job-related IT training was the second most important training identified (55%). 5

8 Basic pay rates 2019 Four out of five (80%) of respondents expect their basic pay rates to increase next year. One in five expect basic pay to remain the same in The median pay increase is expected to be 2.5% in Basic pay 2019 by sector Increase Stay the same 20% Figure 1: Basic pay increases % Basic pay increases are most likely in the high-tech manufacturing sector and in manufacturing in general. Almost four out of five distribution companies (79%) expect basic pay rates to increase next year, while three quarters of services companies (75%) expect to increase basic pay. 91% 85% 79% 75% High-Tech Manufacturing Other Manufacturing Distribution Services Figure 2: Basic pay increases 2019 by sector. Basic pay 2019 by company size Basic pay increases are more likely in larger companies. Over nine out of ten respondents employing more than 500 expect to increase basic pay next year. 70% of small companies expect to increase basic pay next year. 70% 75% 89% 85% 93% Less than Figure 3: Basic pay increases 2019 by company size. 6

9 Total Pay 2019 A total of 74% of respondents indicated an increase in total pay next year. Total pay includes increasing / decreasing headcount as well as changes to basic pay. The average expected increase to total pay, is 3.82% and the median increase is 3%. Increase Stay the same Decrease 1% 25% 74% Figure 4: Total pay Increases in total pay by sector There was little variation in the likelihood of total pay increases by sector. The services sector* is slightly less likely to see increases in total pay next year. 78% 79% 78% 70% High-Tech Manufacturing Other Manufacturing Distribution Services Figure 5: Increases total pay 2019 by sector. *The services sector includes all businesses that provides services to either individuals or other businesses including: hotels, agencies, consultancies, etc. Increases in total pay by company size 71% of smaller companies, (i.e. those with fewer than 50 ), expect increases in their total pay next year, compared with 79% of companies with over % 72% 73% 79% 79% Less than Figure 6: Increases in total pay 2019 by company size. 7

10 Resourcing 2019 The majority of respondent companies expect to either maintain (48%) or increase (47%) employee numbers in This is an increase on the 43% who were expecting to increase employee numbers for 2018, showing continuing strong growth in job creation. Increase Stay the same Decrease 5% Figure 7: Employee Numbers % 48% Across the companies that expected employee numbers to increase next year, on average, the expected increase, where information was provided, was 8.8% with a median increase of 5%. Employee numbers by sector Over half of the respondents from the high-tech sector expect to increase employee numbers in Just under a third of distribution companies expect to increase headcount next year. 54% 48% 31% 48% High-Tech Manufacturing Other Manufacturing Distribution Services Figure 8: Headcount movement by sector. Headcount movement by company size 71% of smaller companies, (i.e. those with fewer than 50 ), expect increases in their total pay bill next year, compared with 79% of companies with over % 46% 47% 51% 39% Less than Figure 9: Headcount movement by company size. 8

11 The workplace is changing, and the pace of this change is accelerating. This brings great opportunities but also risks and challenges. Ibec launched a campaign entitled Smarter World, Smarter Work in Summer 2018, which seeks to address these challenges. This report seeks to identify the initiatives that HR practitioners and businesses are taking to anticipate and manage the new and evolving work environment. We also asked HR practitioners about the key challenges they have encountered or expect to encounter as a result of implementing measures in preparation for a new era of work. In line with our campaign, we look at the headline responses under the four key action pillars as set out in Smarter World, Smarter Work. Detailed research findings are available in the subsequent sections of this report. Investment in skills and employability New jobs require new skills. At all life stages we will need training and educations systems that equip our with the knowledge and skills to reach their full potential. We asked what are the priority areas for investment in training and education for Almost half (47%) of respondents stated that they have identified new skills that will be needed for the future workplace. The survey responses clearly demonstrate the business emphasis on broad employability skills with a focus on leadership and communications. The top 5 investment areas identified were: Leadership and people management (75%) Information technology Job related (55%) Communication skills (42%) Team Working (37%) Project Management (36%) and Conflict/Networking/Assertiveness (36%) Breaking the data out to look at investment in management skills the priorities were: Leadership/people management (69%) Strategic thinking/innovation (59%) The research indicates that there is generally a low incidence of re-training specifically for who are changing roles where job roles have become obsolete or where they have been specifically impacted by technological advances. This is an interesting finding given the current challenges in retention of and future considerations of skills needs and re-training. Where have been identified as high-potential on the other hand, our findings indicate that training in highly transferable skills such as project management, problem solving, and data analytics will be the focus of investment in

12 Flexibility at all life stages We will need to rethink traditional career paths and embrace new ways of working. Our research shows that companies are actively working to facilitate work-life balance demands as well as championing new and more flexible collaborative working. Flexible start and finish times are well established (62%) Flexibility on work location is present in 39% of companies Reduced hours of work is available in 44% of companies Investment in new tech platforms to enable staff communication is in place in 36% of companies Staff buy-in to change is an anticipated challenge for 54% of respondent companies. The forecasted investment by companies in technology, communications and flexibility will be an essential component to achieving the required workplace changes. The survey shows that ongoing cross functional working (74%) and project-based working (71%) are the most prevalent flexible work practices identified where transferable skills can be honed to increase future employability skills. Just under a third (32%) of respondents indicated that they have already changed the physical design of the workplace and another 25% indicated that they intend to do so in the next 12 months, suggesting increased awareness of flexible working through more collaborative workspace design. A dynamic labour market Creating and attracting new jobs means staying competitive. Role redesign is seen as a key HR challenge by 44% of companies whilst 13% of companies identified roles becoming obsolete as a concern. These findings may indicate that companies see more opportunity in adapting and redefining existing roles than removing them entirely. One in five (22%) companies say that they expect to recruit more independent contractors to meet their future needs. Just under half (45%) of companies indicated that managing an intergenerational workforce and associated issues such as retirement are a key focus for The changing demographic of the Irish workforce is a key consideration for businesses examining the challenges of a wider generational spread of in the workforce. Approximately a third (34%) of companies indicated they see a challenge ahead in where they source talent in the future, with 17% of companies indicating that they are prepared for this. 10

13 Smoother career transitions Our employment, social protection and pensions system need to support easier career and life-stage transitions. 32% of companies are focusing on providing support to individuals re-entering the workforce after extended breaks. With a full labour market and the top 3 HR priorities for 2019 being: Attracting the right Retention of Employee engagement It is clear that employers need appropriate state support to work alongside company initiatives to increase labour market engagement, particularly among women where the participation rate in Ireland is just 67.4%. Pension reform, quality childcare, social welfare reform and investment in training supports will be critical to smooth career transitions. 11

14 Challenges for the organisation in 2019 Securing staff buy-in for change Identification of new skills required by the organisation Managing an older workforce and retirement related issues Redesign of job roles 54% 49% 45% 44% Redesign of workflows. New reporting lines Recruitment of from outside of typical background and professional qualifications Remote/flexible locations for working 35% 34% 31% Securing management buy-in for change Increased automation of tasks including AI and robotics 25% 30% Jobs becoming obsolete 13% Figure 10: Challenges for the organisation in

15 This table illustrates the level of preparedness of those expecting the challenges in figure 10. Table 2: Level of preparedness for change. Already prepared Have preliminary plans Not prepared Don t know/not applicable Securing staff buy-in for change 10% 69% 19% 2% Identification of new skills required by the organisation 12% 63% 24% 1% Managing an intergenerational workforce and retirement 15% 63% 21% 1% Redesign of job roles 13% 64% 21% 2% Redesign of workflows. New reporting lines 20% 63% 15% 2% Recruitment of from outside of typical background and professional 17% 59% 24% 0% qualifications Remote/Flexible locations for working 36% 46% 18% 1% Securing management buy-in for change 18% 62% 18% 2% Increased automation of tasks including AI and robotics 17% 61% 18% 4% Jobs becoming obsolete 8% 53% 37% 3% The following table outlines how respondent companies are prepared for the changes associated with the future workplace. Table 3: Immediate plans for the workplace of the future. My organisation is ready to make changes to prepare for the workplace of the future My organisation has identified the technology required for the workplace of the future I consider our organisation well-prepared for the demands of the future workplace My organisation has identified the new skills we will need in our future workplace My organisation has put in place a training plan to prepare for the workplace of the future My organisation will require external support and guidance in preparing for the workplace of the future My organisation expects to recruit more independent contractors to meet the needs of our future workplace Already prepared Have preliminary plans Not prepared Don t know/not applicable 55% 17% 12% 16% 51% 17% 15% 17% 36% 30% 18% 16% 47% 23% 15% 16% 29% 41% 15% 16% 55% 13% 16% 16% 22% 35% 27% 17% 13

16 Flexible work practices Table 4: Flexible Work Practices. Currently have Intend to introduce in next 12 months Do not have Not applicable/ Don t know Cross functional project groups 71% 5% 15% 9% Ongoing cross functional working 74% 5% 14% 7% Identification of roles which will become obsolete Identification of possible new/ redesigned roles Data collection for improved decision-making Changed the physical design of the workplace Increased flexibility on work location 17% 19% 37% 27% 34% 33% 19% 15% 47% 26% 15% 12% 32% 25% 20% 24% 39% 16% 27% 18% Flexible start/finish times 62% 9% 21% 8% Reduced hours of work 44% 4% 34% 19% New technological platforms for employee communications Supporting workers re-entering the workforce after extended breaks 36% 32% 19% 13% 32% 11% 37% 20% 14

17 Skills training for 2019 Leadership / People management 75% Information technology Job related 55% Communication skills 42% Team working 37% Project management People skills, conflict, assertiveness, networking, etc Change manegement 36% 36% 33% Strategic thinking / innovation Problem-solving skills critical thinking Data analytics 20% 28% 26% Intercultural awareness Other 8% 12% Figure 11: Skills training for

18 HR Priorities for 2019 Attracting the right 23% Retention of 15% Employee engagement 14% Managing performance 12% Preparing for the workplace of the future 7% Leadership development 6% Training and development 5% Employee relations Compensation and benefits Talent management Cultural change / Diversity management Building an employer brand 4% 3% 3% 3% 3% Staff wellbeing 1% Other 0% Figure 12: HR Priorities for Attracting the right, as we would expect in a virtually full employment situation, remains the key HR priority. Talent Management (including career and succession planning) is ranked higher on the list of HR priorities when relativity is factored in. 16

19 About the Ibec Research Unit The Ibec Research Unit collects information from member companies and publishes a wide variety of reports on areas such as pay and conditions of employment, HR practices within companies, areas of policy interest and some reports for Ibec sector organisations. The range of topics on which the unit regularly publishes material includes: absence rates, employee turnover, conditions of employment including sick pay, leave provision, training and study provision and flexible work practices among others. Feedback and queries can be directed to research@ibec.ie. Our reports can be accessed via our webpages at About Ibec Ibec is Ireland s largest lobby group representing Irish business both domestically and internationally. Its membership is home grown, multinational, big and small, spanning every sector of the economy. Together they employ over 70% of the private sector workforce in Ireland. Ibec and its trade associations lobby government, policy makers and other key stakeholders nationally and internationally to shape business conditions and drive economic growth. It has over 240 professional services staff in seven locations including Brussels and has 42 different trade associations in the group. For further information contact: Geraldine Anderson Head of Research Tel: Claire Hellen HR Strategy Specialist Tel: Mind the gap: An introduction to gender pay gap reporting 19

20 ibec.ie/smarterwork