HR Update 2018: Key pay and workplace trends - fsi.ie · future workplace, while half (51%) have identified the technology required for the workplace of the future. The new world

HR Update 2018: Key pay and workplace trends


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

1. Foreword ......................................................... 3

2. Respondent profile ........................................... 4

3. Key findings ..................................................... 5

4. Basic pay rates 2019 ....................................... 6

5. Total Pay 2019 ................................................ 7

6. Resourcing 2019 ............................................. 8

7. Smarter World, Smarter Work ........................... 9

Investment in skills and employability ................ 9

Flexibility at all life stages ............................... 10

A dynamic labour market ................................ 10

Smoother career transitions ............................ 11

8. Challenges for organisations in 2019 ............... 12

10. Flexible work practices ................................... 14

11. Skills training for 2019 ................................... 15

12. HR priorities for 2019 ..................................... 16

13. Ibec Research Unit ......................................... 17

1HR Update 2018: Key pay and workplace trends

Contents

HR Update 2018: Key pay and workplace trends 2

ForewordIbec’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 www.ibec.ie/smarterwork.

Maeve McElwee Director of Employer Relations



Respondent Profile

Just under a third of respondent companies (31%) employed fewer than 50 employees and a similar proportion (30%) employed over 250 employees.

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.

Total 339organisations

Total 339organisations

31%106

Less than 50 employees

17%56

High-tech manufacturing

22%75

Other manufacturing

10%33

Distribution (retail & wholesale)

51%175

Services

20%68

50-99 employees

19%64

100-249 employees

14%47

250-499 employees

16%54

Over 500 employees

4

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 2019. • The median increase to basic pay rates is expected to be 2.5%.

Recruitment • 47% of companies will increase employee numbers in 2019. • Attracting the right employees (23%) and retention of employees (15%) are the top priorities

for HR departments in 2019.

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 buy-

in 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 2019.

• Job-related IT training was the second most important training identified (55%).



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 2019. The median pay increase is expected to be 2.5% in 2019.

Basic pay 2019 by sector

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.

Figure 1: Basic pay increases 2019.

Figure 2: Basic pay increases 2019 by sector.

High-Tech Manufacturing

Increase

Stay the same

DistributionOther Manufacturing

Services

91% 85% 79% 75%

6

80%

20%

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 employees expect to increase basic pay next year. 70% of small companies expect to increase basic pay next year.

Figure 3: Basic pay increases 2019 by company size.


100-249 employees

50-99 employees

250-499 employees

500+

70% 75%89% 85%

93%


Figure 4: Total pay 2019.

Increase

Stay the same

Decrease

7

74%

25%

1%

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%.

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.

*The services sector includes all businesses that provides services to either individuals or other businesses including: hotels, agencies, consultancies, etc.

Figure 5: Increases total pay 2019 by sector.



Services

78% 79% 78%70%

Increases in total pay by company size

71% of smaller companies, (i.e. those with fewer than 50 employees), expect increases in their total pay next year, compared with 79% of companies with over 500 employees.

Figure 6: Increases in total pay 2019 by company size.


100-249 employees

50-99 employees

250-499 employees

500+

71% 72% 73%79% 79%


Resourcing 2019

The majority of respondent companies expect to either maintain (48%) or increase (47%) employee numbers in 2019. This is an increase on the 43% who were expecting to increase employee numbers for 2018, showing continuing strong growth in job creation.

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 2019. Just under a third of distribution companies expect to increase headcount next year.

Figure 8: Headcount movement by sector.



Services

54% 48%

31%

48%

8

Figure 7: Employee Numbers 2019.

Increase

Stay the same

Decrease

47%

48%

5%

Headcount movement by company size

71% of smaller companies, (i.e. those with fewer than 50 employees), expect increases in their total pay bill next year, compared with 79% of companies with over 500 employees.

Figure 9: Headcount movement by company size.


100-249 employees

50-99 employees

250-499 employees

500+

51%46% 47%

51%

39%


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 employabilityNew jobs require new skills. At all life stages we will need training and educations systems that equip our employees with the knowledge and skills to reach their full potential.

We asked what are the priority areas for investment in training and education for 2019. 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 employees 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 employees and future considerations of skills needs and re-training.

Where employees 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 2019.

9


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 2019. The changing demographic of the Irish workforce is a key consideration for businesses examining the challenges of a wider generational spread of employees 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


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 employees

• Retention of employees

• 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


Challenges for the organisation in 2019

Figure 10: 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

Redesign of workflows. New reporting lines

Recruitment of employees from outside of typical background and professional qualifications

Remote/flexible locations for working

Securing management buy-in for change

Increased automation of tasks including AI and robotics

Jobs becoming obsolete

54%

49%

45%

44%

35%

34%

31%

30%

25%

13%

12


This table illustrates the level of preparedness of those expecting the challenges in figure 10.

The following table outlines how respondent companies are prepared for the changes associated with the future workplace.

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 employees from outside of typical background and professional qualifications

17% 59% 24% 0%

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%

Already prepared

Have preliminary

plans

Not prepared

Don’t know/Not applicable

My organisation is ready to make changes to prepare for the workplace of the future

55% 17% 12% 16%

My organisation has identified the technology required for the workplace of the future

51% 17% 15% 17%

I consider our organisation well-prepared for the demands of the future workplace

36% 30% 18% 16%

My organisation has identified the new skills we will need in our future workplace

47% 23% 15% 16%

My organisation has put in place a training plan to prepare for the workplace of the future

29% 41% 15% 16%

My organisation will require external support and guidance in preparing for the workplace of the future

55% 13% 16% 16%

My organisation expects to recruit more independent contractors to meet the needs of our future workplace

22% 35% 27% 17%

Table 3: Immediate plans for the workplace of the future.

Table 2: Level of preparedness for change.

13


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

17% 19% 37% 27%

Identification of possible new/redesigned roles

34% 33% 19% 15%

Data collection for improved decision-making

47% 26% 15% 12%

Changed the physical design of the workplace

32% 25% 20% 24%

Increased flexibility on work location

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

36% 32% 19% 13%

Supporting workers re-entering the workforce after extended breaks

32% 11% 37% 20%

Table 4: Flexible Work Practices.

14

Flexible work practices


Skills training for 2019

Leadership / People management

Information technology – Job related

Communication skills

Team working

Project management

People skills, conflict, assertiveness, networking, etc

Change manegement

Strategic thinking / innovation

Problem-solving skills – critical thinking

Data analytics

Intercultural awareness

Other

75%

55%

42%

37%

36%

36%

33%

28%

26%

20%

8%

12%

Figure 11: Skills training for 2019.

15


Figure 12: HR Priorities for 2019.

HR Priorities for 2019

Attracting the right employees

Retention of employees

Employee engagement

Managing performance

Preparing for the workplace of the future

Leadership development

Training and development

Employee relations

Compensation and benefits

Talent management

Cultural change / Diversity management

Building an employer brand

Staff wellbeing

Other

23%

15%

14%

12%

7%

6%

5%

4%

3%

3%

3%

3%

1%

0%

Attracting the right employees, 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.

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Mind the gap: An introduction to gender pay gap reporting 19HR Update 2018: Key pay and workplace trends

For further information contact:

Geraldine Anderson Head of Research Tel: 01 6051512

Claire Hellen HR Strategy Specialist Tel: 01 6051592

17

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.

www.ibec.ie

About Ibec

About the Ibec Research UnitThe 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 [email protected]. Our reports can be accessed via our webpages at www.ibec.ie/research.

ibec.ie/smarterwork

Documents

HR Update 2018: Key pay and workplace trends - fsi.ie · future workplace, while half (51%) have identified the technology required for the workplace of the future. The new world