As challenges facing CEOs, boards, and HR executives increase exponentially, the rapid pace of change and the intense competition to attract and retain talent top the list for many companies.

The two trends driving this new frontier of leadership are closely related. The accelerated pace of change not only impacts overall business planning and strategy, but also requires timely action in areas affecting employees. Just as businesses can no longer take 18 months to design and implement new market strategies, neither can they spend months formulating new employment policies to replace outdated ones if they want to avoid excessive turnover and lagging recruitment.

A significant contributor to the pace of change is the rapid dissolution of boundaries between work, home, community, and world—a trend noticeable over the last decade but greatly accelerated during the pandemic. Employees are paying more attention to the non-work side of their lives and are more conscious of the interconnections between their communities and the world.

As a result, value systems for many employees are shifting. Many ask themselves whether making $200 thousand a year is as important as, say, having a half day off each week to volunteer.

At the same time generational differences are in play. A recent New York Times article notes that, when dealing with Gen Z employees, even millennial managers are struggling with changes in communication styles and terminology and with new norms of interaction between employees and their supervisors.

Prioritizing key action points

The pace of change along with the multiplicity of factors impacting employees have forced HR and business leaders to revisit a variety of issues, which will differ from company to company. Many have to rethink operating models and principles and reevaluate “what’s possible.”  This may include adopting new approaches to skill building, people development, hiring strategies, compensation, and what roles look like, particularly for managers.

Some of the powerful shifts we are seeing currently include:

– Moving from directive to true leadership: New workplace realities are driving many companies to prioritize a different set of leadership competencies. It was not so long ago that flexibility, humility, and vulnerability in leaders were signs of weakness but today, strong emotional intelligence is regarded as a critical leadership skill – and one that contributes to bottom-line value.

Closely related is the demand for greater transparency in both internal and external communications, intensified by the uncertainty and requisite need for communication during a pandemic that is expected to be an ongoing challenge.

These changes are part of a broader pattern. As Diane Gherson, CHRO at IBM has written, “We are seeing acceleration of the trend to democratize the workplace… During these last few months, digital technology has flattened hierarchies, with everyone connected and getting information at the same time, and so many channels for employee input and involvement in decision-making in real time.”

– Breaking the mold of traditional HR practices: Along with revisiting general business models, values, and principles, leaders need to invest in programs that address employees’ evolving needs. This includes reassessing traditional HR functions—for example, offering creative benefit options and moving away from one-size-fits-all compensation programs—while still working to find scale where possible. They need to seek knowledge from untapped resources by looking across networks, asking employees what they think, and incorporating new ideas from studies, competitors, and experts in other industries, especially technology companies.

– One size does not fit all: Covid has forced companies to develop flexible work options for employees and learn how to manage the hybrid working model. George Penn, VP at Gartner, notes that “Success in a hybrid work environment requires employers to move beyond viewing remote or hybrid environments as a temporary or short-term strategy and to treat it as an opportunity.”

In addressing these challenges, senior leadership including board of directors should seek critical input from HR more frequently. HR leaders are particularly well positioned to provide insight and shape direction because they have a close read on shifts in current and prospective employee preferences. Ideally, the board should be diverse enough to bring perspective back to the organization as well.

Building a strong foundation through meaningful connection

As we’ve noted, employee value systems are shifting. The younger generation may be at the forefront of this development, but it is shared by other employees who have been led by the pandemic to refocus on what they consider to be important in life, especially in the work environment where they spend so much of their time.

They want to see how their work connects to the company mission and to making the world a better place. They want to know the company’s policies on the environment, in detail, along with its position on important social issues and how the company intends to walk the fine line between taking a stand and angering constituents.

Amidst this time of massive change, one constant for leaders to bear in mind is the importance of shared values to employees. ArchPoint Consulting Partner Kris Breuer often asks business leaders, “What’s the key question your new employees want answered in their first weeks of employment?” Common answers to the question are related to benefits and compensation, etc. Kris suggests that the real answer is, “Have I made the right decision?” In other words, is this my kind of company? How do people treat each other here? Does the company really care about its employees, its customers, and its community? Simply, does the reality match the story?

Companies whose employees conclude that, yes, it’s their kind of company, have a decided edge in the competition for talent and a strong foundation for dealing with the other challenges they face.