HR trends to watch in 2023. An overview from the most important report

The Calamari team has cherry-picked the available reports and come up with the compendium below to guide you through uncertain and challenging times to come.

The upcoming year is predicted to be even tougher than 2022. As KPMG states, before the COVID-19 crisis, the world of Human Resources was predictable and relatively stable, with all changes occurring in an evolutionary rather than revolutionary way.

Since 2020, the world has faced constant change. The pandemic, the recession, and the Russia-Ukraine war have resulted in fundamental shifts in the market environment, approach, and expectations of both employers and employees.

Reducing uncertainty surrounding the future requires gathering knowledge about the trends and phenomena that are predicted to influence business operations in the near future. Because of that, multiple organizations have published reports on the future of HR and how companies can get ready for it.

That’s why, here at Calamari, we have cherry-picked the available HR reports and come up with the guide below to help you through the interesting times that lay ahead.

Top priorities for HR in 2023

After reading the reports and predictions from leading companies (and countless other sources that provide facts and opinions alike), our team has curated seven trends that are claimed to dominate the HR landscape of 2023.

HR trend 1: Remote work

The office-dominated world of professionals has suddenly been shifted to the realm of working from home – basically with no transfer period or training before. Yet there was enough time to gather the experiences and let the market and employees mature in the new reality.

One of the downsides of remote work is the reduced facetime. According to the Lattice report, 72% of surveyed companies worry about employees feeling disconnected, and 62% say that it is hard to track morale in their team. Also, for 50%, it is challenging to keep clarity about the expectations, and for 45% to track productivity.

To-do:

• Check the codification of procedures in your company. Are there remote work tools and procedures in place?
• Check the general team attitude toward remote work – you may have some room for improvement.
• Deliver a reliable remote work policy as soon as possible. Don’t be afraid to validate and revalidate it frequently.

HR trend 2: Company culture

Without office walls building unity in a company team, the only way to shape the spirit is to establish a coherent and attractive company culture. According to the Kleiner Perkins People Report, one of the key elements of company culture is the answer to “how to measure and track employee performance if office-spent hours are no longer relevant?”

This makes the clear pay-performance connection a vital element of modern company culture. Also, the rules on managing remote work – the obligations, rights, and responsibilities of out-of-office and office-based employees alike – would be a must-have.

The Gartner report highlights this as one of the top five priorities for HR leaders in 2023 – the need for organizational design and change management. The constant change of recent years is wearing on teams, with 43% of employees declaring above average levels of change fatigue. Retaining them and shaping a culture that tackles this challenge comes as one of the dominant trends of 2023.

Employee resource groups

Employee resource groups (ERG) emerge as one of the most interesting ways to engage and support employees in these harsh times. Summing up – a resource group connects employees sharing some qualities like ethnic background or certain experiences (depression, veteran status, etc.) to provide mutual support.

To-do: Do you have some coherent and consistent vision of organization culture? If yes, how is it codified? Is there a culture book that the company can share outside of the organization? If there is no vision to follow, think about the current situation, the natural, organic culture, and how it benefits the organization. If it doesn’t, then now is the time to react.

HR trend 3: Talent shortage

The extremely challenging environment of recent years has resulted in a skyrocketing need for talent. Despite layoffs and the upcoming recession, the reports generally agree that hiring and investing in human potential will be one of the most valuable ways to either survive or build a competitive advantage.

The Kleiner Perkins report highlights that, in the wake of the looming recession, employees prioritize stability over risk, and by that, the eagerness to change jobs will be reduced. And the fear of job stability is not entirely pointless. The Kleiner Perkins report highlights that 64% of surveyed companies have reduced their headcount and yet are selectively hiring, while 12% have reduced their number of employees and completely frozen their recruitment processes.

Recruiting is also the fourth most important priority for HR departments, according to Gartner predictions. It was pointed out by 46% of surveyed companies. The same report shows that 36% of HR leaders claim that their sourcing strategies are insufficient for finding the skills they need.

Employer branding

Recruiting is one side of the coin, and talent retention is another. HR departments are aware that hiring a new employee comes at a tremendous cost. Employer branding is a way to both reduce hiring costs and improve the retention rate.

To-do:

• Do you have an employer branding strategy? Or even an employer brand?
• Do you have a strategy and plan to deal with offshore team members? Time zones? Local customs?
• If you don’t have employer branding-related issues addressed, do so as soon as possible. The issue requires cooperation between the HR team, marketing team, and some members of all other departments. Forging an interdisciplinary task group and coming up with a plan is the best thing to do right here, right now.

HR trend 4: Well-being and burnout prevention

The pandemic has brought multiple shifts in global behavior and reshaped the attitudes of people. This has made mental health and well-being one of the key themes of modern HR policies.

The Kleiner Perkins report highlighted that 94% of employers cite work-life balance and burnout prevention as their top concerns for the year 2022. And it is unlikely to change in 2023, with a greater recession and crisis looming.

To-do:

• Inspect the possibilities. How many of your actual benefits can be considered helpful regarding mental well-being? Do you have a coherent benefit strategy in place? If not, it’s high time to forge one.

When it comes to building an organization with a focus on mental well-being, the KPMG report highlights the gap between a company’s ability to improve the mental health of its employees and the importance of this goal in the future. The gap is estimated to be 25 percentage points and is shown as one of the most important capability gaps overall.

To-do:

• Do you have an open culture toward mental health in your company? Is there a way for employees to get support when experiencing a breakdown?
• Find tools to spot the signs of burnout. Regular talks, one-on-ones, and surveys may come in handy when dealing with this challenge.

HR trend 5: Employee experience

The employee experience is the next thread that connects the major reports on either the current state of HR or future predictions regarding the key trends and issues shaping the priorities of Human Resources departments.

The KPMG report states that this applies both to the digital employee experience and the on-site one. Yet there lacks a common understanding of how to implement and build a modern one. According to the KPMG report, 60% of organizations claim to be changing their HR operating model in the next two to three years.

Also, the Gartner report shows that 70% of companies have introduced new benefits to their offer, with an emphasis on increasing the number of available well-being benefits. Well-being and mental health also apply to Gen Zers entering the work market.

To-do:

• Do you have a consistent benefit strategy, or was there some kind of randomness in benefit picking?

HR trend 6: HR going tech

HR departments are not commonly associated with high-tech tools or quantifiable results used in analytics. Yet this is one of the greatest challenges tackled by the KPMG report, where robust data integrity is shown to be one of the key elements of modern HR operations.

Deloitte named the level of automation as one of two defining factors that will influence HR departments in the near future, with the other being employee-employer relationships. The report states that, depending on the approach toward employees, the future workplace will be either a Welcome to 1984, with the mere exchange of work for money, or the real HR 4.0, with technology supporting the development and well-being of employees.

The HR tech time

The common perception of HR as a soft skill-only and low-digitized profession is not only misleading, but also untrue. The Kleiner Perkins report has delivered a detailed comparison and study regarding modern HR tools.

The tools are, in fact, the facilitators of the new HR reality, bringing the possibilities of new operations to companies. For example, tools like Calamari that combine time tracking, attendance management, and HR documentation management provide companies with the capability to build an extremely flexible working environment.

To-do:

• Think process-first and company-wise. Don’t scrap already-used tools for the sake of implementing a new tech stack, with a refreshment of the toolset being the only benefit. Rather, think about how to include new elements into the existing system.

HR trend 7: HR metrics and workplace measuring

The looming crisis already mentioned multiple times also provides motivation for HR depts to make their work and results more measurable. Yet making work measurable comes with the significant challenge of picking the right metrics to track.

Employee Net Promoter Score (eNPS)

The Kleiner Perkins report claims that the key indicator to measure and track is the Employee Net Promoter Score – the eagerness of an employee to recommend their employer as a good one to a colleague.

According to the report, the key elements constituting a high eNPS are compensation, flexibility, and access to tools that enable the employee to perform their job properly.

Span of control

Another interesting metric to follow is the span of control – basically, the number of reports the manager has to track during their work. Basically, the more reports per manager, the more likely it is for them to quit their job. The Kleiner Perkins report declares that the perfect number for a manager in an early-stage startup is 5-6 reports and 8-12 in a mature company with a larger employee base.

Recruiting metrics

Last but not least, the HR department needs to provide the company with clear metrics on the recruitment process. The report identifies Cost Per Hire (CPH) as the key metric to follow in shaping HR strategy.

To-do:

• Do you have a system of HR metrics? If not, why? It’s high time to come up with a coherent strategy.

Summary

The year 2023 is going to be tough and challenging for everyone, including the HR depts in companies of all sizes. The only way to prepare for the change is to gather all available knowledge and use it to forge a response plan.

Summing up and delivering this knowledge in a condensed way, as a real pill of knowledge, was the key goal of this text. If you feel hooked on the discussion, don’t hesitate to contact us now! We would be more than happy to share thoughts and exchange opinions on the challenges that HR will face in the near future.

Further Reading: Kleiner Perkins People Report 2022 (KPMG) The future of HR: From flux to flow (Gartner) The Top HR Trends and Priorities For 2023 (Lattice) 2023 State of People Strategy Report