What does the HR landscape look like in 2023?
It’s likely if you work in an HR related role, you spent most of 2022 hearing relentlessly about how the world of work has changed. However, we hear often from our HR customers that they are still struggling to keep up with balancing internal and external challenges and knowing where to prioritise budgets and resources.
The reality is that economic pressures facing organisations, the impact of the cost of living crisis on employees, supply chain issues, and labour and talent shortages are still creating a difficult macro environment for HR leaders in 2023.
Whilst it initially seems there are limitations for People leaders on the impact they can have on this external environment, it’s the focus on internal factors that can help HR to prioritise their focus in 2023. Developing more ‘human’ strategies, managing investments in technology and changing employee expectations, and supporting attraction and retention are likely to become the juggling act when it comes to the top HR trends for 2023.
The 8 HR trends for 2023
We’ll explore these top 8 HR trends:
1. Financial wellbeing
2. Leadership and management training
3. Talent attraction and recruitment
4. Career development and internal progression
5. Change management
6. Plan for the future workforce
7. Flexible working
8. Digital transformation and employee experience
1. Financial Wellbeing – Pay, Benefit and Rewards
Recent research suggests that almost all employers now expect their employees to experience financial difficulties in 2023.
With the cost of living crisis continuing, reports show that pay is still the primary concern of most employees, with the majority of employees (80%) saying their pay isn’t keeping up with inflation.
Initially, salary reviews, pay equity and benchmarking is likely to be a major priority for HR leaders in 2023 to avoid the risk of losing talent.
However, for organisations struggling to meet pay rise demands, the priorities will be around pay equity, means of offering financial wellbeing support to employees and building a healthy company culture.
More than half (54%) of organisations aren’t currently offering a salary advance scheme, for example. This demonstrates an opportunity for employers to allow staff the ability to draw down pay already earned when it’s needed. In addition, more sophisticated approaches to rewards and recognition, free financial advice and competitive employee benefits are likely to be considered. Ensuring employees feel valued and have the flexibility they require in their working lives can all help with retention in what is likely to be another volatile year for the economy and the labour market.
Read more: The benefits of employee recognition.
2. Leadership and management training
As generational expectations of employers continue to change, so do the expectations of leaders, and what they should be responsible for. This is likely why we are seeing organisations looking to invest in more dedicated leadership training, and in particular, the need for more ‘human’ leadership. Empathetic managers are better able to adapt to individual employees’ challenges and have the confidence to take a proactive approach to supporting them.
The traditional focus on targets and business success within leadership and management training and responsibilities is likely holding managers back from dealing with other pressing issues facing their teams. This can have a detrimental impact on wellbeing, productivity and ultimately, retention. As a result, it’s unsurprising perhaps that 60% of HR leaders say this is a top HR priority in 2023.
Read more: Mental health and wellbeing resources for managers.
3. Talent attraction and recruitment
Sourcing relevant skills has been an ongoing trend for HR, but half of all organisations say they’re still expecting the competition for talent to increase in the next six months. With 36% of HR leaders saying their existing strategies to source talent aren’t sufficient, it’s unsurprising that nearly half (46%) say that recruitment is their biggest priority for 2023.
With a skills shortage in play across multiple sectors, existing staff and potential new recruits alike hold a new set of preferences and priorities, with which they’ll measure their professional satisfaction.
Aligning talent and skills with business outcomes will be the focus for many. It will help to ensure recruitment decisions are more data-led, sourcing strategies are candidate-first and onboarding is suitably able to set new starters up for success - in terms of both productivity for the business, and engagement and role-clarity for the new employee.
Discover our HR recruitment solution for talent acquisition.
4. Career development and internal progression
A focus on strategies that promote and communicate internal opportunities will also be a key trend that in turn supports talent and recruitment challenges.
Unfortunately, nearly half (44%) of employees say their organisations don’t have clearly defined or communicated career paths. This likely plays a large part in why three in four employees that are looking for a new role are interested specifically in external positions. This represents a significant challenge for HR teams when it comes to offering internal progression opportunities for existing talent to encourage retention and support succession planning.
This is becoming increasingly important with the changing skills required in the workplace, combined with the workforce rethinking their roles, the nature of work in their lives and the levels of burnout in the workforce. For example, today’s average employee is said to be time-poor, with just 1% of a typical workweek to focus on learning and development. On top of this, we can add a globally dwindling attention span. This is especially the case for Generation Z employees, who are said to have an eight second attention span.
Employees should always be consuming information that is directly relevant to their job. Gone are the days of company-wide e-learning rollouts that disengage those who cannot apply the learning to their work. Presenting curated information to specific subsets of employees ensures that they remain focused, and their time is used effectively.
It may be relevant to offer different learning and development opportunities to different generations. Younger employees may want to focus on developing their role-specific skills, whereas those more established in their career, may want to focus on soft skills such as conflict resolution and leadership.
With nearly half (47%) of HR leaders saying internal skills are a top priority for 2023, it’s likely that the trend will include a focus on setting clearer internal career paths for employees, developing more personalised approaches to learning and development and more effectively communicating opportunities for new roles both externally and internally.
Discover our career development eLearning courses and solutions.
5. Change management
Whilst HR teams will be familiar with change management, increased external uncertainties and levels of continuous change are beginning to take their toll on employees. In fact, one survey showed that only 38% of employees were willing to adapt their working behaviours to support organisational changes.
It’s likely that the trend for 2023 will involve HR overseeing support for employees dealing with ongoing change to manage the impact on their day-to-day work.
6. Plan for the future workforce
Generational expectations of work are changing. With 43% of 18-24 year olds surveyed in a recent City & Guilds study saying their education hadn’t properly equipped them with the skills they need to get the job they want, the challenge of attracting young talent is a multi-faceted issue not easily solved by organisations alone.
In fact, the research found that some young people (around 9% equating to a huge 227,000) are being put off the idea of working at all. With nearly half of HR leaders (43%) saying they don’t have a ‘future of work’ strategy, it’s likely that a trend for 2023 will be for organisations to rethink the following:
- How to attract new talent
- What reskilling and upskilling programmes they can offer
- How they can be more adaptable to shifting skills
- How they can drive the kind of culture that supports future talent and skills
This is a top priority for 42% of HR leaders in 2023.
7. Flexible working
Our recent study with University of Nottingham on the long-term impact of hybrid working on the workforce, found a mixed picture when it came to remote work in particular.
The study’s researcher Fiona Frost said “It confirmed that many employees like the best of both worlds – the natural conversations in the office over coffee, with the option to work from home where you can concentrate without distractions. But this depends on several factors, such as whether someone has a dedicated working space and can switch off at the end of the day, and whether their employer is focused on wellbeing and preventing burnout.”
The research found that early-career employees in a hybrid setting experienced poorer wellbeing compared to their seasoned colleagues – around 10% lower than those in older age categories. Whilst human connection and interaction is important to an extent to all of us, it’s likely that younger employees, and those that may require more support with their role or workload at an earlier stage in their careers, are struggling with the extension of a hybrid or remote working environment.
The trend for 2023 will continue to be looking at the wider options for and impact of more flexible working, whether that be trialing the four-day week, or offering greater flexibility when it comes to hours, geographical location, and importantly offering employees more freedom generally to manage their working time.
With recent changes to legislation meaning that employees will now have the right to ask for flexible working from day one on the job, it's likely that the trend for 2023 will see HR continuing to review their flexible and hybrid working arrangements.
Read more: How to make hybrid working work for your business.
8. Digital transformation and employee experience
An organisation’s approach to flexibility is also closely linked to employee experience. Empowering people with the right digital tools to make their working lives easier helps increase productivity bringing both employee and organisational benefits.
In fact, the combination of flexibility combined with the technology to improve the employee experience will likely be the main priorities for HR leaders in 2023.
Customers tell us the main reason they choose Access HR software, PeopleXD is the ability to have the tools their employees and leaders need to make their day-to-day working lives easier, which ultimately contributes to the overall employee experience.
A HR system should include self-service functionality and mobile-first capabilities. These features will help to save employees time and improve productivity, allowing them to find what they need when they need it - from digital learning, to employee benefits and requesting leave wherever they’re working. Whilst managers and HR leaders should have the tools they need to free up time and connect processes, with the seamless flow of data to help make faster and more efficient business decisions.
Looking for HR tools to help make your organisation more agile?
We hope we’ve provided a useful account of the various future trends and challenges that are already posing urgent questions for HR professionals.
Our HR software PeopleXD is a fully integrated, mobile-first software solution that can ensure your tech is future-proof so you’re more prepared to deal with external changes.
Watch a 4-min demo to find out more about the software and how it can support your business, or get in touch with our specialists to discuss your needs.