Human resources professionals have contended with challenge after challenge over the past few years, and 2023 is shaping up to be a continuation of many of those issues – along with a few new ones rearing their heads.
Our team members have weighed in on the workforce trends impacting organizations as we head into 2023 and offer their insights, best practices, and recommended actions for HR & organizational leaders as the next year unfolds.
WORKFORCE TRENDS IN 2023
Unemployment will remain low – Unemployment is historically low, and inflation is the highest it’s been in 40 years. The lower workforce participation rates and recent strong earnings from Fortune 500 companies mean that unemployment will continue to remain historically low in 2023, even if there is a recession. If unemployment were to rise slightly from 3.5%, it would still be far below normal levels.
WHAT HR CAN DO:
Be flexible with job requirements – To broaden their talent pool, companies must consider evaluating candidates based on behavioral competencies and technical skills rather than educational credentials. The U.S. government, for instance, requires agencies “to limit the use of educational requirements” in federal contracts, and calls on them “to increase the use of skills and competency-based hiring for employment.”
“Using assessments and competency-based interviewing will ensure that companies are identifying and investing in the talent they seek,” says Jeffrey Harvey, Vice President, Executive Search.
Rising wages are here to stay – Companies are setting aside an average 3.9% of total payroll for wage increases in 2022. Pay will continue to rise through 2023 and beyond, especially for blue-collar jobs and manual services due to the shrinking working-age population and low unemployment rates (Conference Board).
WHAT HR CAN DO:
Double-down on non-monetary aspects of the employee experience – Companies must be willing to be flexible with salary, benefits, and vacation/PTO to remain competitive. However, beyond compensation and benefits, companies need to create opportunities for meaning and development in the careers of their employees. “Several companies are developing internal talent and offering a path for each team member to seek their own career goals rather than climb the typical corporate ladder,” says Harvey. Many employees are attracted to developing their skills and competencies and seek opportunities where they have the freedom and choice to do so. This scenario benefits the employee and the company by maintaining engagement and upskilling employees.
Workers’ desire for a remote or hybrid arrangement will remain unchanged – Research by Ladders found that remote opportunities increased from under 4% of all high-paying jobs before the pandemic to about 9% at the end of 2020, and to more than 15% by 2021. According to their projections, 25% of professional workers will work remotely by the end of 2023.
WHAT HR CAN DO:
Offer remote and hybrid work arrangements – The trend of remote and hybrid work arrangements during the pandemic allowed workers to envision a work/life balance they had not seen before. “I recently conducted a senior-level HR search for a client that wanted the candidate to be onsite five days a week,” says Harvey. “Of the hundreds of prospects I reached out to, close to 75% of the potential candidates were only willing to consider opportunities that allowed for a hybrid work arrangement or a fully remote option. Companies must consider hybrid options to attract and retain talent if their business can accommodate them.”
The “quiet quitting” trend will continue – Quiet quitting represents a significant risk for every organization now and into 2023. While motivated and engaged employees drive results, dejected employees who simply go through the motions while they wait for a better opportunity kill productivity, morale, and organizational success.
WHAT HR CAN DO:
Commit to the three Cs: communication, celebration, and connection – Gallup research shows the rise in quiet quitters is tied to a lack of clarity about expectations, fewer opportunities to learn and grow, not feeling cared about, and feeling a disconnect with the organization’s mission and purpose.
“To alleviate quiet quitting, redouble your efforts to communicate in ways that paint a compelling vision of the future and provide clarity of expectations,” says Brian Clapp, President. “Although leaders cannot offer certainty amid uncertainty, they can provide focus by letting people know what’s expected, that their work matters, and how they are doing,” says Clapp.
This is also a time to review the way you celebrate employees. Do you only celebrate the big wins? Do recognize employees the way they prefer? Employees like it when their efforts are acknowledged and appreciated. It can be as simple as mailing a card that says “Thank you! You were instrumental in the success and completion of this project.” Take time to create a recognition program to show employees that you recognize their hard work and efforts, no matter how big or small.
Lastly, HR leaders need to identify ways to foster connection within the culture. Employees should not only feel connected to their supervisor and team members, but also to the organization. These connections need to be intentional and meaningful. While regular one-on-ones and team meetings are typical avenues of connection, consider alternatives such as involving employees in decision-making, forming committees to foster cross-department collaboration, and creating shared interest groups such as a book club or baseball league.
Constant change is the norm – Change is not going away; it is just going to accelerate. While we can do our best to plan for what might be ahead, the success of an organization will depend on its ability to swiftly adapt, monitor, and adjust. The more organizations and their leaders embrace change, the better equipped they’ll be to ensure their businesses and people are poised for growth.
WHAT HR CAN DO:
Invest in your leaders – It’s never been more difficult to lead. In fact, 55 percent of HR leaders reported “leading change” as a critical skill most lacking in their organization in our 2022 HR Insights Survey. Being skilled at change management is something all organizations need to take seriously and prioritize. Through coaching, leaders can gain the skills they need not only to develop their own resiliency, capacity, and composure when change occurs but also to manage the people side of change, including clearly communicating the vision for the future, setting expectations, and engaging employees in the transformation process.
Talent turnover and scarcity will remain a risk for companies – Voluntary turnover is expected to reach 35% in 2023, according to research from Work Institute. Employees are in control of how, when, and where they work, and they will continue to flex this control to leave organizations that don’t align with their preferences. A significant driver of this trend is hybrid work, with 52% of employees saying flexible work policies will affect their decision to stay at their organization.
WHAT HR CAN DO:
Understand and Act On What Employees Need – Stay interviews and employee engagement surveys are a couple tools organizations can leverage to help combat turnover. “These can help you gain more insight into what keeps your employees working for the organization and what aspects may need to be improved before they become huge issues,” says Mark Saddic, Vice President of Talent Development.
A focus on development and job enrichment is also key, as studies continue to show workers are willing to switch jobs if offered career advancement and training opportunities.
“Providing opportunities for development is a win-win situation for everyone. It provides employees the opportunity to expand their skillset and grow their career, which often leads to higher engagement and improved retention for the company,” says Saddic.
Every organization is facing a conflux of challenging dynamics that includes bracing for market uncertainty, cost increases, a competitive labor market, and the challenge of navigating the new and probably still evolving balance of in-person, remote, or hybrid work. At the same time, both leaders and employees are understandably exhausted. In this environment of volatility, uncertainty, complexity, and ambiguity (VUCA), resist the temptation to hunker down. By implementing the action steps above, HR leaders can enable their people and organizations to compete, thrive, and grow in 2023.
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