News + Insights

• Dramatically shifting labor market indicates that employers need to reconnect with employees

• Companies where HR has a strong voice were able to use the pandemic to evolve

• Flexibility is key to pandemic rebound and employee retention

The relationship between employers and employees has changed. With the pandemic appearing to wind down, many companies are eyeing a return to the office. But there is clear-cut evidence that the pre-pandemic dynamic between employers and employees may have inexorably shifted. On the heels of the Great Resignation, employers everywhere have challenges ahead of them when it comes to recruiting and retaining employees.

Elements illustrating this shift have come to light in the first cut of data from a recent study conducted by Mineral and Toronto-based research firm ONR. Together we created a study called “The State of HR,” which sought to understand how organizations are navigating their HR work function post-pandemic. This study looked to measure organization-level HR outcomes evaluate different areas of the HR function, examine the strategies and actions that companies have deployed before and after the pandemic, understand how they have built their HR function and workforce and, lastly, gauge the post-pandemic outlook for HR. We will release the full report on the research later this summer. For now, we’re releasing an early cut of the data.

ONR surveyed 2,644 HR and compliance decision-makers in the US (see description of survey methodology at the end of this article). This study assessed organizations of different sizes across industries and took a close look at if and how the pandemic has changed the employee/employer relationship.

The labor market has changed dramatically over the past two years. The data shows us that employers are struggling to regain their balance. The skills they need employees to possess to ensure the success of their business have changed—and are scarcer than ever before. Coming out of the pandemic, 59% of organizations report that one of their biggest obstacles to overall success will be having access to employees that possess the skillsets they require. Add to this the fact that 50% of organizations find employee morale lower than before the pandemic—and it’s clear that it’s an incredibly difficult landscape to navigate. Some organizations have been able to boost morale and have had an easier time hiring—but given only 26% of organizations surveyed were capable of this boost, it’s hardly dramatic.

Who does the heavy lifting in such a struggling environment?

HR departments have had their hands full both during and post-pandemic. The degree to which they play a strategic role in their organization is critical to their organization’s ability to succeed in the current market. While employers are learning to reconnect with employees and establish meaningful relationships, 60% of them recognize that they face significant challenges in their bid to evolve to meet the current expectations of the business world. And almost 50% of them realize that there will be inherent struggles as they mitigate the challenges of the Great Resignation.

One thing we found really shone through in the research data was how successful organizations were where HR had a lead role in decision-making—a component of what we’ll call “healthy HR.” They were the ones that were agile, gaining strength through quick evolution. These companies were twice as likely to take advantage of the pandemic to evolve their workforce and processes. More pointedly, these organizations used crisis to strengthen alliances with their employees.

Specifically, 72% of organizations where “HR leadership has always been a primary voice leading the business” used the pandemic to evolve their workforces by reinventing job roles, responsibilities, operations and processes. In organizations where HR had a smaller voice, only 35% of those took advantage of the pandemic to evolve.

And the organizations that showed flexibility in changing and tweaking job roles and processes put a strong emphasis on mental health as they did it—and that helped them increase retention. To put a finer point on it, organizations in which HR leadership has a primary voice in their business were more than twice as likely to have a culture that identified employee mental health as its highest priority. In other words, the organizations that walked the talk on mental health did better through the pandemic than those that didn’t.

And the key driver for pandemic rebound success? Healthy HR.

In short, flexibility. Environments with remote options, flexible benefits and compensation packages, and an increased respect for work-life balance are at the forefront for employees everywhere. And this includes the increased attention to employee mental well-being.

What does flexible mean? Essentially, it comprises five main elements:

• Offering flexible scheduling and working hours;
• Offering flexible remote and hybrid work options;
• Proactively reviewing market wages to update compensation targets;
• Tailoring benefits to specific employee situations to enable the highest quality of life; and
• Considering employee quality of life when making compensation decisions.

The organizations that responded to current employee preferences by delivering the above elements saw tangible results. Over the last year, these organizations were five times more likely to report elevated employee morale, six times more likely to report an improved ability to hire, and three times more likely to report increased workforce productivity.

At the end of the day, the organizations that tackled the pandemic and the various bumps in the road related to labor with a definitive HR focus were the ones that came out ready to rebound quickly and healthily. What we call “healthy HR” saved the day. And we are convinced it will continue to do so.

Survey Methodology

Mineral partnered with ONR to conduct a survey of 2,644 senior HR professionals in the US through an online survey from February 4 – 24, 2022. Respondents were gathered through a mix of professional panels, Mineral clients and social media channels. Respondents were predominantly executive leadership and had significant knowledge and involvement in their organization’s HR function. Companies of all sizes were included, ranging from smaller organizations of under 50 headcounts through to enterprise-sized organizations. The sample composition was balanced between five sectors: Consumer Goods & Services, Energy & Resources, Financial Services & Insurance, Life Sciences & Healthcare and Technology, and Media & Telecom.

Source: Monica Schwing, at Mineral.