Challenges Facing HR Over the
Next 10 Years
November 1, 2012

• What will be the three biggest challenges facing HR executives over the next 10 years?
Retaining and rewarding the best employees (59%), developing the next generation of
corporate leaders (52%), and creating a corporate culture that attracts the best
employees to organizations (36%).
• What will be the biggest investment challenge for organizations over the next 10 years?
About two-fifths (43%) of HR professionals indicated that obtaining human capital and
optimizing human capital investments will be the biggest investment challenge.
• Which tactics will be the most effective in attracting, retaining and rewarding the best
employees over the next 10 years? The top four responses were providing flexible work
arrangements (40%); creating an organizational culture where trust, open communication
and fairness are emphasized and demonstrated by leaders (37%); providing employees
with opportunities for career advancement (26%); and offering a higher total rewards
package than organizations that compete for the same talent (26%).
• How do HR Professionals expect the future workforce to evolve over the next 10 years? In
terms of workforce size, the majority (69%) of HR professionals expect their organization to
have a larger workforce in 10 years. Just over one-half (54%) indicate that their use of
contract/temporary employees will not change, and 29% expect a growing proportion of
contract/temporary employees. Nearly one-half (47%) indicate that over the next 10 years
there will be a greater proportion of full-time employees, whereas the other half believe
the workforce will stay the same (27%) or have more part-time employees (26%).
Challenges Facing HR Over the Next 10 Years ©SHRM 2012 2
Key Findings

• Which HR competencies will be most critical 10 years from now? Over one-third of HR
professionals think that the four most critical competencies in 10 years will be business
acumen (42%), organizational leadership and navigation (40%), relationship management
(37%), and communication (35%).
• What components (subcompetencies) of business acumen will be most critical in 10
years? HR professionals expect the top three components to be HR and organizational
metrics/analytics/business indicators (45%), knowledge of business operations and logistics
(41%), and strategic agility (41%).
• What bodies of knowledge do HR professionals rate as being the most important in 10
years? The four bodies of knowledge that were rated as most important were strategic
business management, talent management, change management, and workforce
planning and employment.
Challenges Facing HR Over the Next 10 Years ©SHRM 2012 3
Key Findings (continued)

Challenges Facing HR Over the Next 10 Years ©SHRM 2012 4
Challenges in HR

Over the next 10 years, what do you think will be the three
biggest challenges facing HR executives at your
organization?
Challenges Facing HR Over the Next 10 Years ©SHRM 2012 5
59%
52%
36%
34%
33%
20%
15%
13%
11%
6%
51%
29%
44%
21%
41%
17%
33%
12%
24%
1%
Retaining and rewarding the best employees
Developing the next generation of corporate
leaders
Creating a corporate culture that attracts the
best employees to our organization
Remaining competitive in the talent marketplace
Finding employees with the increasingly
specialized skills we need
Creating smooth and efficient HR processes that
ensure a good employee experience
Finding the right employees in the right markets
where we do business around the world
Creating an employee-centric, service-oriented
HR organization
Breaking down cultural barriers that make it
difficult to create a truly global company
Other
2012 (n = 483)
2010 (n = 465)
Note: Percentages do not total 100% due to multiple response options. Respondents who answered “don’t know” were excluded from this
analysis.

Over the next 10 years, what do you think will be the three
biggest challenges facing HR executives at your
organization?
6
Note: Only statistically significant differences are shown.
Comparisons by organization sector
• Publicly owned for-profit and privately owned for-profit organizations are more likely than nonprofit organizations to
indicate that finding the right employees in the right markets where we do business around the world is one of the
biggest challenges facing HR executives.
Comparisons by organization sector
Publicly owned for-profit (24%)
Privately owned for-profit (19%)
> Nonprofit (8%)
Challenges Facing HR Over the Next 10 Years ©SHRM 2012

Over the next 10 years, what do you think will be the
biggest investment challenge facing organizations?
Challenges Facing HR Over the Next 10 Years ©SHRM 2012 7
43%
22%
19%
14%
3%
47%
29%
11%
12%
2%
Obtaining human capital and optimizing
human capital investments
Obtaining financial capital and optimizing
financial capital investments
Obtaining technology and optimizing
technological capital investments
Obtaining intellectual capital and optimizing
intellectual capital investments
Obtaining physical capital and optimizing
physical capital investments
2012 (n = 484)
2010 (n = 449)
Note: Percentages do not total 100% due to rounding.

Challenges Facing HR Over the Next 10 Years ©SHRM 2012 8
Talent Management Tactics

Over the next 10 years, which of the following tactics do
you believe will be most effective in attracting, retaining
and rewarding the best employees in your organization?
Challenges Facing HR Over the Next 10 Years ©SHRM 2012 9
40%
37%
26%
26%
24%
24%
17%
17%
15%
14%
13%
11%
11%
7%
58%
47%
23%
29%
40%
21%
11%
15%
13%
14%
11%
4%
Providing flexible work arrangements
Promoting a culture of trust, open communication and fairness
Providing employees with opportunities for career advancement*
Offering a higher total rewards package than competitors
Demonstrating a commitment to employee development
Providing meaningful work with clear purpose in meeting organization's
objectives
Creating a stimulating and attractive organizational culture
Having latest tools/technology to maximize work efficiency and effectiveness
Encouraging employees to make decisions and to take risks
Providing employees with recognition based on job performance*
Developing human capital managers at all levels of the organization
Providing employees with better opportunities to use skills and abilities
Creating a highly inclusive culture that uses diverse perspectives
Being committed to corporate social responsibility and sustainability
2012 (n = 486)
2010 (n = 449)
Note: Percentages do not total 100% due to multiple response options. An asterisk (*) indicates option was not included on 2010 survey.

Over the next 10 years, which of the following tactics do
you believe will be most effective in attracting, retaining
and rewarding the best employees in your organization?
10
Note: Only statistically significant differences are shown.
Comparisons by organization sector
• Nonprofit organizations are more likely than privately owned for-profit organizations to indicate that creating an
organizational culture where trust, open communication and fairness are emphasized and demonstrated by leaders is
one of the most effective tactics in attracting, retaining and rewarding the best employees.
Comparisons by organization sector
Nonprofit (51%) > Privately owned for-profit (33%)
Challenges Facing HR Over the Next 10 Years ©SHRM 2012

Challenges Facing HR Over the Next 10 Years ©SHRM 2012 11
Future Workforce

Over the next 10 years, how do you expect the size
of your organization’s workforce to evolve?
Challenges Facing HR Over the Next 10 Years ©SHRM 2012 12
69%
16%
15%
48%
37%
15%
Larger workforce
Smaller workforce
No change
2012 (n = 442)
2010 (n = 470)
Note: Respondents who answered “don’t know” were excluded from this analysis.

Over the next 10 years, how do you expect the size
of your organization’s workforce to evolve?
13Note: Only statistically significant differences are shown.
Comparisons by organization sector
• Privately owned for-profit organizations are more likely than nonprofit and government organizations to expect the size
of their organization’s workforce to grow larger over the next 10 years.
Comparisons by organization sector
Privately owned for-profit (80%) >
Nonprofit (62%)
Government (36%)
Challenges Facing HR Over the Next 10 Years ©SHRM 2012
• Government organizations are more likely than privately owned for-profit organizations to expect the size of their
organization’s workforce to get smaller over the next 10 years.
Comparisons by organization sector
Government (39%) > Privately owned for-profit (11%)
• Nonprofit organizations are more likely than privately owned for-profit organizations to expect the size of their
organization’s workforce to have no change over the next 10 years.
Comparisons by organization sector
Nonprofit (23%) > Privately owned for-profit (10%)

Over the next 10 years, how do you expect your
organization’s use of contract or temporary
employees to evolve?
Challenges Facing HR Over the Next 10 Years ©SHRM 2012 14
54%
29%
17%
22%
65%
13%
No change
Growing proportion of
contract/temporary employees
Growing proportion of full-time
employees
2012 (n = 424)
2010 (n = 448)
Note: Respondents who answered “don’t know” were excluded from this analysis.

Over the next 10 years, how do you expect your
organization’s use of contract or temporary
employees to evolve?
15
Comparisons by organization staff size
25,000 or more employees (57%) >
1 to 99 employees (25%)
100 to 499 employees (21%)
500 to 2,499 employees (29%)
Note: Only statistically significant differences are shown.
Comparisons by organization staff size
• Organizations with 25,000 or more employees are more likely than organizations with 1 to 2,499 employees to expect a
growing proportion of contract or temporary employees over the next 10 years.
Challenges Facing HR Over the Next 10 Years ©SHRM 2012

Over the next 10 years, how do you expect your
organization’s employment status to evolve?
Challenges Facing HR Over the Next 10 Years ©SHRM 2012 16
47%
27%
26%
19%
30%
50%
Growing proportion of full-time
employees
No change
Growing proportion of part-time
employees
2012 (n = 434)
2010 (n = 447)
Note: Respondents who answered “don’t know” were excluded from this analysis. Percentages may not total 100% due to rounding.

Over the next 10 years, how do you expect your
organization’s employment status to evolve?
17
Comparisons by organization staff size
25,000 or more employees (44%) > 1 to 99 employees (16%)
Note: Only statistically significant differences are shown.
Comparisons by organization staff size
• Organizations with 25,000 or more employees are more likely than organizations with 1 to 99 employees to expect a
growing proportion of regular part-time employees over the next 10 years.
Comparisons by organization sector
• Privately owned for-profit organizations are more likely than nonprofit and government organizations to expect a
growing proportion of regular full-time employees over the next 10 years.
Comparisons by organization sector
Privately owned for-profit (58%) >
Nonprofit (38%)
Government(21%)
Challenges Facing HR Over the Next 10 Years ©SHRM 2012
• Government organizations are more likely than privately owned for-profit organizations to expect a growing proportion
of regular part-time employees over the next 10 years.
Comparisons by organization sector
Government (50%) > Privately owned for-profit (21%)

Challenges Facing HR Over the Next 10 Years ©SHRM 2012 18
HR Competencies

Ten years from now, which of the following competencies
do you see being most critical for the HR professional?
Challenges Facing HR Over the Next 10 Years ©SHRM 2012 19
42%
40%
37%
35%
30%
26%
25%
21%
17%
Business Acumen
Organizational Leadership and Navigation
Relationship Management
Communication
Critical Evaluation
HR Technical Expertise and Practice
Consultation
Ethical Practice
Global and Cultural Effectiveness
Note: n = 472. Percentages do not total 100% due to multiple response options.

Ten years from now, which of the following competencies
do you see being most critical for the HR professional?
20
Comparisons by organization staff size
2,500 to 24,999 employees (56%)
25,000 or more employees (59%)
> 1 to 99 employees (24%)
Note: Only statistically significant differences are shown.
Comparisons by organization staff size
• Organizations with 2,500 or more employees are more likely than organizations with 1 to 99 employees to see business
acumen as being most critical for the HR professional 10 years from now.
Challenges Facing HR Over the Next 10 Years ©SHRM 2012
Comparisons by organization staff size
100 to 499 employees (35%) > 2,500 to 24,999 employees (14%)
• Organizations with 100 to 499 employees are more likely than organizations with 2,500 to 24,999 employees to see HR
technical expertise and practice as being most critical for the HR professional 10 years from now.
Comparisons by organization staff size
2,500 to 24,999 employees (27%) > 100 to 499 employees (10%)
• Organizations with 2,500 to 24,999 employees are more likely than organizations with 100 to 499 employees to see
global and cultural effectiveness as being most critical for the HR professional 10 years from now.

Ten years from now, which of the following competencies
do you see being most critical for the HR professional?
21Note: Only statistically significant differences are shown.
Comparisons by organization sector
• Publicly owned for-profit organizations are more likely than nonprofit organizations to see business acumen as being
most critical for the HR professional 10 years from now.
Comparisons by organization sector
Publicly owned for-profit (57%) > Nonprofit (34%)
Challenges Facing HR Over the Next 10 Years ©SHRM 2012

Ten years from now, when considering Business Acumen
for HR professionals, which of the following components
(i.e., subcompetencies) will be most critical?
Challenges Facing HR Over the Next 10 Years ©SHRM 2012 22
45%
41%
41%
28%
25%
18%
17%
17%
16%
14%
11%
6%
1%
HR and Organizational Metrics/Analytics/Business Indicators
Knowledge of Business Operations/Logistics
Strategic Agility
Business Knowledge
Knowledge of Government and Regulatory Guidelines
Knowledge of Finance and Accounting
Economic Awareness
Knowledge of Labor Markets
Knowledge of Technology
Systems Thinking
Effective Administration
Knowledge of Sales and Marketing
Other
Note: n = 469. Percentages do not total 100% due to multiple response options.

Ten years from now, when considering Business Acumen
for HR professionals, which of the following components
(i.e., subcompetencies) will be most critical?
23
Comparisons by organization staff size
2,500 to 24,999 employees (57%) > 1 to 99 employees (34%)
Note: Only statistically significant differences are shown.
Comparisons by organization staff size
• Organizations with 2,500 to 24,999 employees are more likely than organizations with 1 to 99 employees to consider HR
and organizational metrics/analytics/business indicators as being most critical for the HR professional 10 years from now.
Challenges Facing HR Over the Next 10 Years ©SHRM 2012

Rate the importance of these bodies of knowledge
for HR professionals 10 years from now.
Challenges Facing HR Over the Next 10 Years ©SHRM 2012 24
Note: n = 446. Respondents rated each body of knowledge on a scale from 0 (not important) to 10 (very important).
Body of Knowledge Average Rating (0 to 10)
Strategic Business Management 8.8
Talent Management 8.6
Change Management 8.5
Workforce Planning and Employment 8.5
Compensation and Benefits 8.3
Human Resource Development 8.2
Employee and Labor Relations 8.1
HR Technology 8.0
Risk Management 7.7
Global and International Human Resources 6.9

Challenges Facing HR Over the Next 10 Years ©SHRM 2012 25
Organization Demographics

Demographics: Organization Industry
Challenges Facing HR Over the Next 10 Years ©SHRM 2012 26
Note: n = 461. Percentages do not total 100% due to multiple response options.
Percentage
Professional, scientific and technical Services 20%
Health care and social assistance 17%
Manufacturing 16%
Educational services 13%
Finance and insurance 12%
Accommodation and food services 7%
Transportation and warehousing 6%
Arts, entertainment and recreation 5%
Government agencies 5%
Administrative and support and waste management and remediation
services
4%
Religious, grant-making, civic, professional and similar organizations 4%

Demographics: Organization Industry
(continued)
Challenges Facing HR Over the Next 10 Years ©SHRM 2012 27
Note: n = 461. Percentages do not total 100% due to multiple response options.
Percentage
Retail trade 4%
Construction 3%
Information 3%
Real estate and rental and leasing 3%
Repair and maintenance 3%
Wholesale trade 3%
Agriculture, forestry, fishing and hunting 2%
Mining 1%
Personal and laundry services 1%
Utilities 1%
Other 9%

Demographics: Organization Sector
Challenges Facing HR Over the Next 10 Years ©SHRM 2012 28
47%
25%
18%
7%
3%
Privately owned for-profit
Nonprofit
Publicly owned for-profit
Government
Other
n = 462

Demographics: Organization Staff Size
Challenges Facing HR Over the Next 10 Years ©SHRM 2012 29
21%
30%
19%
20%
10%
1 to 99 employees
100 to 499 employees
500 to 2,499 employees
2,500 to 24,999 employees
25,000 or more employees
n = 454

Other Demographics
Challenges Facing HR Over the Next 10 Years ©SHRM 2012 30
U.S.-based operations only 71%
Multinational operations 29%
Single-unit organization: An organization
in which the location and the
organization are one and the same.
28%
Multi-unit organization: An organization
that has more than one location.
72%
Multi-unit headquarters determines HR
policies and practices
51%
Each work location determines HR policies
and practices
3%
A combination of both the work location
and the multi-unit headquarters determines
HR policies and practices
46%
Is your organization a single-unit organization or
a multi-unit organization?
For multi-unit organizations, are HR policies and
practices determined by the multi-unit headquarters,
by each work location or by both?
Does your organization have U.S.-
based operations (business units) only,
or does it operate multinationally?
n = 470 n = 473
n = 347
Corporate (companywide) 71%
Business unit/division 17%
Facility/location 12%
n = 348
What is the HR department/function for
which you responded for throughout this
survey?

• 2012 response rate = 17%
• 2010 response rate = 17%
• Sample composed of 487 (2012) and 449 (2010) randomly selected HR professionals from
SHRM’s membership
• Margin of error +/-5%
• 2012 survey fielded September 14 to September 28, 2012
• 2010 survey fielded August 10 to August 23, 2010
Challenges Facing HR Over the Next 10 Years ©SHRM 2012 31
Challenges Facing HR Over the Next 10 Years
Survey Methodology

• For more survey/poll findings, visit www.shrm.org/surveys
• For more information about SHRM’s Customized Research Services, visit
www.shrm.org/customizedresearch
• Follow us on Twitter @SHRM_Research
Challenges Facing HR Over the Next 10 Years ©SHRM 2012 32
Challenges Facing HR Over the Next 10 Years
About SHRM Research
Project leader:
Tanya Mulvey, survey research analyst, SHRM Research
Project contributors:
Mark Schmit, Ph.D., SPHR, vice president, SHRM Research
Evren Esen, manager, Survey Research Center, SHRM Research
Alexander Alonso, Ph.D., SPHR, director, HR Thought Leadership
Copy editor:
Katya Scanlan, SHRM Knowledge Center