Priorities in HR Function Budgets Are Likely to Keep Shifting in 2021

July 9, 2021
Contributor: Jackie Wiles

CHROs expect HR function budgets to be under constant pressure in the year ahead. Make sure to protect what’s important.

Future-fit organizations actively sense and respond to disruptions and anticipate change, but that requires a rigorous and deliberate approach to scouting for trends. Gartner segments key trends and disruptions into seven major categories, so you can begin to build planning assumptions most relevant for your strategic plans.

A recent Gartner survey found that only 38% of organizations have a formal process for this type of trendspotting. “Most use an ad hoc approach,” saysMarty Resnick, VP Analyst, Gartner. “This leads to a disjointed effort that risks not taking full advantage of the positive impact a formal trendspotting approach will have on overall strategic assumptions and planning.”

A deliberate approach ensures that executive leaders consider trends and disruptions that exist outside of their core responsibilities, where emerging trends might be more familiar. For example, it prompts IT leaders to look beyond just impactfultechnology trends. Ignoring or devaluing non-technology trends will only result in gaps in the strategic planning process because your inputs are incomplete.

Some disruptions are more obvious than others, which is why trendspotting must be an ongoing, continuous discipline. “Oftentimes, there are inflection points and wild cards that shake up an industry,” says Resnick. “The sooner you spot these the better — and the more fit your organization will become in the way it senses and responds.”

A “tapestry” of interconnected strategic assumptions

Frameworks exist to scope for environmental and macro trends (PEST, PESTLE, STEEPLE, to name a few), but Gartner weaves the seven key areas of disruptive change into a “tapestry” of trends — to reinforce the interconnected nature of the acronymized trend areas (TPESTRE).

The seven key areas are:

Technological. The evolution, impact and disruption of technology change.
Political. Attitudes, institutions and legislation shifting the political environment.
Economic. Factors in the local and global economic environment that influence businesses and governments.
Social/Cultural. Attitudes, behaviors and lifestyles of individuals and societal groups.
Trust/Ethics. Ethical expectations, behaviors, duties and biases of people and companies toward one another and society.
Regulatory/Legal. Changes in laws and governmental policies and regulations to reward or punish particular behaviors.
Environmental. Technical, political, economic, cultural, ethical and legal changes supporting environmental protection and sustainability

Executives across functions and teams can use this TPESTRE construct to identify key trends, analyze their impact and build planning assumptions as they begin to map what actions might be needed in terms of business models, people/capabilities and IT systems.

7 drivers of change in strategic assumptions

Gartner analysts regularly scope for key developments in each of the seven trends and their analysis in April 2021 highlighted three potential disruptions in each area. Analysts then plotted signals, planning assumptions, opportunities and risks that executives can build into both scenario planning and strategic planning.

More detail on three of the disruptions includes the following:

No. 1.Technological trend: Augmented human experience

Gartner strategic assumption

Through 2023, 30% of IT organizations will extend bring-your-own-device (BYOD) policies with “bring your own enhancement” (BYOE).

What’s happening?

The augmented human experience refers to enhancing human capabilities and capacity with technology and science. It impacts how people move, perceive and interact in physical and digital spaces, as well as how they process, analyze and store information. The augmented human experience of the future exists at the intersection of medical technologies, information technologies, gaming technologies and other digital automation systems.

What do we see already?

Cognitive augmentation is already being deployed and will continue to evolve rapidly.
Wearables and mobile devices with AI-powered services provide fitness and healthcare monitoring and analytics today.
There is clear, current evidence that a distinction between medical device tech and information technology is dissolving.

Opportunities

Advances in prosthetics, sensory augmentation, brain implants, and more are so far focused primarily on helping people with disabilities in a clinical setting. Augmented intelligence using AI can compensate for human limitations and enable a symbiotic blend of people and machines to deliver a superior human experience.

Risks

Personalization and customization of physical augmentations could be costly and highly regulated. Societal acceptance of human augmentation is uncertain. Augmented human experience opens a new path for cybersecurity attacks and exposes more personal information to commercial and government entities. Ethical challenges arise when human augmentation is either mandated or unavailable to select groups.

No. 2. Social/cultural trend: Redefining work

Gartner strategic assumption

Post-COVID-19, 48% of employees of large enterprises will work remotely at least once a week, compared with 30% pre-COVID.

What’s happening?

Just as the internet launched a new digital era, COVID-19 has triggered a new work age. It’s a chance to intentionally rethink where, when and how we work — and employees expect the results to benefit them as well as their employers. As AI adoption continues, more and more tasks will be performed by robots (physical or software-based), creating a workforce where work is done by both bots and humans.

What do we see already?

The pandemic normalized the use of new employment models, such as 80% work for 80% pay and talent sharing between employers, offering new norms beyond the standard 40-hour work week.

Opportunities

Flexible location strategies could generate cost savings on critical talent and the talent pool is potentially wider and more diverse. Greater automation of routine tasks can reduce the risk of injury and infection for employees.

Risks

Many organizations lack comprehensive workforce strategies and centralized systems through which to see, manage and forecast mixed-employment models. Organizational culture could suffer if not properly managed when teams include physically dispersed employees and a range of employee types (full-time, part-time, gig). Pay equity is also more challenging to manage when pay is being managed across a range of markets.

No. 3. Environmental trend: Digitally enabled sustainability

Gartner strategic assumption

By 2030, digital information and technology can help reduce global greenhouse gas (GHG) by 15%.

What’s happening?

Digitally enabled sustainability applies data, IT and operational technology (OT) to reduce greenhouse gases. The complexity of the environmental sustainability data sets and insights needed means that organizations are moving on from a baseline of spreadsheet data collection to using more sophisticated tools, such as AI, Internet of Things (IoT) and machine learning (ML). Digital helps advance sustainability beyond compliance to new products and industry/cross-industry ecosystem performance.

What do we see already?

The Royal Society estimates that digital can account for one-third of GHG reduction in the UK by 2030.
Digital twins can increase wind farm yield by 20%.

Opportunities

Executives can leverage existing digital business technology platforms: AI, IoT, mobile, blockchain and other digital technologies can help drive significant improvements in enterprise sustainability performance and create new growth opportunities.

Risks

Digital business can hurt sustainability. For example, the carbon footprint of training even when AI is substantial. Also, digital business and sustainability are often treated as separate transformations, potentially reducing the impact of both.