Article: People Matters HR Trends for 2023

Strategic HR

People Matters HR Trends for 2023

In today's disrupted and dynamic environment, the HR function must continually adapt and adjust existing approaches to meet new needs. We highlight eight trends in the world of work that will shape and direct HR focus and strategy in the coming year.
People Matters HR Trends for 2023

HR's work is ever-evolving. With the advent of technology and digitalisation in HR, we witnessed how rapid changes developed into cutting-edge trends. When the pandemic drove an overhaul of the workplace, we saw once-niche practices blossom into a sweeping new normal.

Even now, many of these shifts are not fully integrated into the world of work. We will continue to see changes, challenges, friction, and opportunities in the upcoming year and beyond, as organisations come to grips with these trends and incorporate them into the workplace and working culture.

Here, we highlight eight significant trends that we predict will shape HR's work throughout 2023.

1. The balance will tip further towards hybrid work

Most bosses hated it at first, and wanted everyone back in the office. But many organisations have already found a successful balance between working from home and returning to the office. Leaders and managers have grown to understand the value of a flexible working model, whether in terms of time and location; employees are accepting the benefits of being in the office every so often. Meanwhile, HR leaders are becoming ever more well-versed in the creation and implementation of hybrid strategies that could meet the needs of all employees, including potential hires.

We predict that in 2023, additional cost pressures from inflation will further push organisations to pursue this model, particularly in locations with a high cost of living that will impact office-related expenses. Certain of the other trends we list below, including DEI and VR, will contribute to the viability and desirability of hybrid. This will at least partially reverse the swing back to the office that we saw across 2022.

2. DEI continues to be a top priority

Diversity, Equity, and Inclusion (DEI) is increasingly becoming a key component of workplace strategy. Global sociopolitical movements brought it into the mainstream over the last few years, and as organisations realised its impact on the bottom line, they have responded with an increasingly sophisticated approach - growing from token gestures to involve every aspect of work including education of the workforce on diversity, implementation of equitable hiring, restructuring of compensation and benefits, changes to organisational policies to incentivise inclusiveness, active adjustments of workplace culture, and more.

Now that the DEI ball has started rolling, it will not easily stop. It will further gain impetus as macroeconomic cost pressures make it less viable to keep hiring and retention policies, not to mention overall market strategies, narrowed to particular demographics. We predict that in 2023, DEI will continue to push other elements of work and work culture to the forefront, as organisations seek to broaden their horizons in the search for talent.

3. Emphasis on employee and candidate experience

The Great Resignation phenomenon pushed many employers to look more closely at how they are engaging current and potential talent. This played into the popularisation of the hybrid working model, and also put the spotlight on identifying and implementing approaches to employee engagement that could go beyond the superficial. Often, this moved into the area of analytics and hyperpersonalisation.

However, significant gaps have already emerged between what candidates want and what employers think they want. These gaps are also manifesting in current employees' intentions - despite the looming economic downturn and hiring freezes in many organisations, not to mention the massive tech layoffs worldwide, large numbers of employees are planning to change jobs in 2023. We predict that the Great Resignation will be followed by a Great Churn, where employers will have to put greater emphasis on recruitment and candidate experience to attract the specific talent they need to weather out a recession.

4. Greater clarity around moonlighting

Moonlighting made the headlines in the second half of 2022, with some companies outright firing employees who were caught moonlighting and others openly encouraging employees to do it as long as their work for their primary employer was not affected. But with economic recession looming, the original justification for moonlighting – that the pandemic had threatened sources of income and pushed workers to find backups and alternatives – is regaining traction. Organisations are slowly realising that moonlighting benefits them as well, by enabling easier scalability of their own workforce.

This may be a game-changer as they buckle down for the downturn. Although the trend is nascent, we predict that in 2023, companies will start considering it as a source of competitive advantage: allowing it within subsidiaries of the same parent company, for example, or employing moonlighters from other organisations as a way to overcome constraints on their hiring budget.

5. More data-skilled HR practitioners

HR has been slow to automate, but once it gets going, the digitalisation of documentation and processes allows practitioners to manage data more effectively than ever. And the great remote working experiment of 2020 and 2021 did not just accelerate that digitalisation, it generated reams of workforce data on performance, productivity, team culture, team and individual behaviour, and more. Some of this data is so detailed and granular that organisations are able to even measure the optimal time employees spend at various desk-bound tasks, something once confined to the manufacturing industry.

Already, HR teams in many companies are upskilling themselves to become more proficient in data science and data analytics. We predict that this trend will dominate learning for HR practitioners in 2023 out of the sheer necessity to catch up. Not all HR teams will become data scientists immediately, but over the course of the year, it will become increasingly normalised as a HR skill.

6. Demand for scalability in cloud-based HR software

The last few years saw a boom in the digital industries, and cloud-based HR software is no exception. It's hardly a new thing, but it has certain major advantages over on-premise systems, most notably speed and scalability at a low cost – something which proved extremely valuable during the pandemic, when some organisations shed huge numbers of jobs in very short times and others, particularly in the tech industry, expanded just as quickly.

Now that multiple tech companies have been rushing to reverse their expansion, scalable systems continue to be the best way of handling the significant changes in staffing. At the same time, HR teams are increasingly wanting to customise the systems they already have - they may have installed full suites in the scramble to shift to WFH, but after three years, they have a much clearer idea of what they aren't using, what they want to add, and what they no longer want to pay for. We predict that the demand for scalability and customisation will continue to rise in 2023, and that practitioners will be increasingly specific about their requirements as their familiarity with tools and systems improves.

7. Virtual reality in recruiting and training

Virtual reality has been growing in popularity in a variety of industries over the past few years, and lately it has entered the HR arena, where it has already been tested in applications such as hosting virtual job fairs. However, experiments to implement the metaverse in daily workflow - conducting interviews or meetings in a virtual office environment - have failed to make much headway.

That said, one of the most effective applications of VR has been to host virtual training sessions for employees in fields that require highly specific on-site training such as aerospace and other technical, engineering-related work where workers have to be completely familiarised with their physical surroundings. We predict that in 2023, VR and its lesser cousin, augmented reality (AR) will see more use in training and onboarding as HR teams find new ways to realistically apply it. That said, it is still highly unlikely to reach the full-immersion implementation idealised in movies.

8. AI-powered HR analytics

We have seen a boom in the applications of artificial intelligence for HR use, particularly in recruitment and retention. The early stages of adoption that many companies entered during the pandemic have matured into more comprehensive and integrated usage.

This particular trend has fuelled, or at least contributed to, many of the others. AI has supported diversity in hiring, for example, by reducing bias. It has enabled better use of people analytics. It is increasingly embedded in HR platforms and software, and is used to automate some of the most time-consuming parts of HR processes – such as the shortlisting and assessment segments of recruitment. Pair this with the growing appetite of HR practitioners for data and people analytics, and we predict that in 2023, more and more HR teams will be using AI in some way - if not actively, then indirectly, through tools and platforms that they have outsourced some functions to.

 

2022 brought us chaos, but also the opportunity to review, renew, and advance. Read the end-2022 issue of People Matters Digital Magazine for a look back, and some key takeaways to bring forward.

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Topics: Strategic HR, #Outlook2023

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