HR Trends & Challenges to Prepare For in 2023

We all know that the work landscape since 2020 has been unprecedented. But many of us expected to find relief in 2022 – only to discover that it brought its own unique challenges. Like the start of the New Normal – and all of the in-fighting and conflict that stemmed from that. Or the drop in engagement for many remote workers who might have been amped in the beginning but are feeling depressed and depleted almost three years later.

As we head into 2023, HR professionals are preparing for a number of challenges that will impact the workplace. The workforce is changing, with more people working in the gig economy and a multigenerational workforce. HR technology and automation are on the rise, and diversity and inclusion are finally moving into the spotlight.

At the same time, some of the major issues of 2021 and 2022 remain. Hybrid work remains a challenge for many businesses that are used to operating either 100% in-office or 100% remotely. On top of that, despite the re-opening of many businesses, new waves of COVID-19 remain a looming threat and risk.

In an effort to help you prepare for 2023, this guide will cover a handful of trends and considerations for how HR can tackle each trend.

Employee Engagement

One of the biggest challenges that HR departments will face in 2023 is employee engagement. With the rise of automation and artificial intelligence, many employees are feeling disengaged and unfulfilled at work. To combat this, HR departments will need to find ways to keep employees engaged and motivated. Some ideas include offering more opportunities for professional development, increasing communication between employees and management, and offering flexible work arrangements.

DEI Continues to Grow In Importance

Diversity, equity, and inclusion have increased in priority for business leaders across the country, and this is only accelerating in 2022. With key differences between how certain groups have fared in the pandemic – including everything from how particular racial and ethnic groups were more susceptible to illness to who is saddled with the bulk of domestic responsibilities at home – ensuring that the most vulnerable workers remain healthy, happy and engaged will make or break a lot of businesses. And if leaders aren’t careful, overlooking these challenges can lead to disparate advancement and promotional opportunities later down the line.

As the workforce becomes more diverse, it's important that companies create an inclusive environment where everyone feels welcome and respected. This can be done by implementing anti-discrimination policies, offering training on unconscious bias, and creating employee resource groups. Holding the organization accountable for its DEI goals will be critical.

Mental Health Will Become a Bigger Priority

Mental health is an often-ignored topic in the workplace, but that's starting to change. In recent years, there has been an increased focus on mental health in the workplace, and this trend is only going to continue in the coming years. As more businesses become aware of the importance of mental health, they'll start putting policies, resources, and programs in place to support employees' mental well-being. These can include offering mental health benefits, providing access to online counselors or therapists, and offering wellness programs.

AI & Automation Will Become More Prevalent in HR

One of the most significant changes we'll see in HR over the next few years is the increased use of artificial intelligence (AI) and automation. AI can be used for a variety of tasks, from screening job applicants to conducting performance reviews. And as AI becomes more sophisticated, we can expect to see even more applications for it in HR.

However, it's important to note that AI is not a replacement for human resources professionals. Rather, it's a tool that can be used to supplement their work. For example, if you're looking to fill a position, AI can help you narrow down the pool of candidates so that you only have to interview the most qualified people. But it's still up to you to make the final decision about who to hire.

HR Tech Will Facilitate Remote Workplaces

Investment into digital HR systems and infrastructures that can improve how businesses recruit, hire, onboard and retain talent will be vital to maintaining the talent lifecycle. With employees either being fully-remote or otherwise fragmented and disjointed from other team members, HR will need to invest more time into employee experience – HR technology offers the perfect opportunity to outsource the administrative side of things.

The Gig Economy Will Continue to Grow

The gig economy—defined as short-term or project-based work—is nothing new. But we can expect to see it continue to grow in popularity over the next few years. There are a number of reasons for this trend, including the increased flexibility and freedom that gig work offers workers.

For businesses, hiring gig workers can be a great way to get access to high-quality talent on an as-needed basis. However, it's important to remember that gig workers are not employees in the traditional sense. This means that you won't have the same level of control over them, and they're not entitled to the same benefits and protections as regular employees.

The War for Talent Will Intensify and Complicate Staffing Further

The war for talent is only going to intensify in the coming years as businesses increasingly compete for top talent. This is especially true in industries where there is a shortage of skilled workers, such as tech and healthcare. To win the war for talent, businesses need to focus on creating a positive employer brand and offering competitive compensation and benefits packages.

With such massive gaps in talent, it’s likely that employers will find themselves short in some areas with a potential surplus in others. A fulfillment company, for example, may find that their customer service and front-of-house operations are still in place, but there’s a massive gap in warehouse talent. Planning for this in advance – whether through upskilling or cross-skilling or through targeted recruitment efforts – will save you a lot of frustration next year.

Talent management efforts will be well-served by focusing on building skills rather than being overly focused on exact roles. Skills are more easily transferrable and skills gaps can often be filled much more efficiently. There are also a number of skills needed regardless of role – like the ability to work towards DEI outcomes, for example. And similar to what we’ve witnessed with the technology boom, there are certain to be future skills that aren’t even within the realm of our awareness yet. Build flexibility, adaptability, resilience, compassion, and empathy – and focus on the hard or technical skills as they come.

Employee Experience Will Continue to Evolve

And speaking of employee experience, expect a shift in how it looks. While past employee experience may have been able to rely on ideas like office gatherings and parties, even employees who are back in the office may not feel safe attending such events. Experience efforts that target remote employees only will isolate in-office workers, and the reverse will also be true. Hybrid work has forced us to get creative in how we can keep a pulse on the workplace sentiment. And while people replaced interaction with virtual Coffee Hours and similar ideas earlier in the pandemic, be mindful that many people may be experiencing Zoom fatigue at this point.

Retention Will Be a Priority Like Never Before

The Great Resignation has had a massive impact on both the economy and the broader culture, and it doesn't look like the trends it has ushered in are going to end soon. According to a recent study by Cigna, about 40% of workers are considering leaving their jobs within the next six months.

Employees across the board – but especially in select industries – are seeking better wages, more meaningful work, improved work-life balance, and greater flexibility. This isn’t a one-size-fits-all puzzle, though. Business leaders need to think strategically about how to ascertain what their target market is looking for and how they can accommodate those needs if they want to retain people. Otherwise, employees may be looking for the next opportunity sooner than you might think.

How Can HR Prepare for These Trends?

An anticipatory end-of-year reflection and strategic planning session will be critical. While we’ve covered a number of themes, below are a few questions adapted from Deloitte’s workforce strategy for post-COVID19 workbook. You can use these questions to lead reflections and strategic conversations.

• Were there any missteps during the past 12 months that need to be addressed?

• Do we need to adjust our approach and tone when engaging our workforce?

• Do we have the right processes in place to measure workforce sentiment?

• How do we make sure we are maintaining and elevating our employment brand across current and future prospects?

• Has our reputation changed through the crisis, through either our own actions or those of our industry? How do we want to continue or reverse this shift?

• When we first mandated our work-from-home policy, we may have introduced various software. Moving forward, should our people use a common collaboration platform or should we allow individual teams to choose?

• What tools and platforms continue to be most effective for supporting a blend of physical and virtual work? How are we understanding employee preferences?

• How do we remain on the cutting edge of remote working and other types of software offerings, to increase productivity and keep us prepared for future disruption?

• Were there HR processes that were difficult for our team to complete during the crisis that could be automated?

• What recovery and post-recovery challenges faced by our customers, employees and communities is our organization now uniquely equipped to solve (e.g., increasing employment opportunities)? Can we think of creative and unexpected ways to help?

• Should we conduct a comprehensive review of our mental health policies, programs, and practices?

• How are we supporting our workforce, in the event of additional school or caregiving disruptions?

• How are we ensuring employees continue to feel heard and safe as they re-enter the workplace (e.g., pulse surveys, open forums)?

• What is the appropriate cadence and channel for communications, to keep people engaged without being overwhelmed?

• Are there different types of behaviors we now want to recognize as part of our recovery efforts (e.g., finding new and effective ways to drive collaboration across virtual teams, and supporting colleagues struggling with mental health concerns)?

• Which of our employee processes are ripe for greater digitization (e.g., recruitment, onboarding)?

• How do we continue to shift our learning culture, so that our people see learning as integrated "into the flow" of their daily work?

How Are HR Leaders Preparing for 2023?

We asked HR leaders across several industries how they planned to handle these challenges heading into 2023. Here's what they had to say.

Develop Your Team With Skills to Adapt to New HR Technologies

We are refining our approach to improving "digital dexterity" in 2023. Developing our team's skill sets to adapt and transition seamlessly to emerging HR technologies is critical. It includes software applications in processes like onboarding, upskilling training, and employee experience. It boosts our efficiency as a department by automating manual HR work and promoting employee productivity and engagement. We have looked into HR tech we plan to adopt next year and started communicating these changes to employees as early as now. It helps us determine which new skills our team needs to learn and which ones stay relevant. This way, we can segment digital dexterity programs more effectively and personalize the training to each employee depending on their needs.

-Nunzio Ross, Owner and Head Director, Majesty Coffee

Pursue Upskilling in Tech and Protect Company Data

In 2023, one of the main trends that I am preparing for is the increasing reliance on technology in all areas of life. To get ready for this trend, I am actively incorporating technology into my workplace, staying up-to-date with the latest developments in the field, and continuously learning new skills related to technology. The best way to prepare for this trend is by taking steps to protect my employees' personal information is safe from hackers and other online threats.

- Linda Shaffer, Chief People Operations Officer, Checkr

Take Steps to Decrease Your Carbon Footprint

The past few years have shown us that our customers care even more about what we do to help save the planet. They want to know exactly what sustainability initiatives we are pursuing. This has become a challenge not just for large conglomerates but also for small and medium businesses. Customers want to buy products from companies whose ethics match their own. For example, we understand that climate change is important to our customers and will seek ways to ensure our carbon footprint decreases and work towards being a carbon-neutral company.

-Anthony Martin, Founder and CEO, Choice Mutual

Maintain a Responsive Communication With Recruits

A small business like ours with only one person functioning for HR faces the challenge of being responsive and engaging with all recruits or employees. Communication is essential, especially now that there is a hiring crisis and we have a limited pool of applicants, so it is crucial to seek the talent you want in your company actively. You need to be able to master the organizing features of your email application. Through this, you can flag some messages and recipients, screen out spam messages and put important people on alert to avoid missing any vital messages from them. Organizing your email will save you time reviewing every email that goes into your inbox, allowing you more time to focus on responding to the more vital people.

-Debbie Meeuws, Owner and CEO, Nature's Arc Organic

Empower and Train Top Leadership

Even in companies that develop a horizontal leadership system, with managers and employees on the same hierarchical level and being able to bring ideas to the departament, the "bosses" are still seen as responsible figures, a leader for the development of new ideas, for problem reporting or problem-solving, and others. Therefore, these leaders must be prepared to take on this role and guide employees along the best path to achieving the organization's goals. As we see empowering and training top leadership as Human Resources for 2023, our department is planning and promoting development and training actions for these professionals. After all, we believe it will be the first step to enhancing the transformations and building a quality and healthy workspace for our employees.

-Ricardo von Groll, Manager, Talentify

Focus on Employee Well-Being and Retention

I'm expecting to see a continued focus on employee retention and well-being. With the talent shortage showing no signs of abating, companies will need to invest more in keeping their best employees happy and engaged. So I will be preparing my team to provide more targeted support and development opportunities. We're also exploring other ways to improve our benefits and perks offerings to stay competitive. 

Flexible work arrangements will help with this also. As more and more employees seek greater work-life balance, HR teams must be prepared to accommodate alternative schedules and remote working arrangements. Finally, I think we'll see a renewed focus on diversity and inclusion initiatives. Companies are starting to realize that a diverse workforce is the right thing to do and makes good business sense. To get ahead of this trend, my team is working on revamping our recruiting practices and increasing our outreach to underrepresented groups.

-Wendy Makinson, HR Manager, Joloda Hydraroll

Integrate Artificial Intelligence into Daily Processes

One of the biggest trends we're seeing in the world of HR is the integration of AI in our everyday working lives. And, while I don't think the technology is quite there yet as a means of fully automating your processes of choice (nor do I think there ever will be a tool that can do that completely), it would be a shame not to at least see what AI is capable of based on immediate and long-term task assistance. We're currently in the testing phase with AI processes to help us automate aspects of internal employee training programs and assist with skill and experience-based matching in line with training requirements. We want to be ready for what will no doubt be an explosion of HR integrations via AI tools in 2023, so we're aiming to get ahead of the curve to understand capabilities and how we can use AI in the future.

-Dawn Wood, HR Manager, Woodyatt Curtains

Invest in Employee Development

We've heard many buzzwords over the past few years, including great resignation, quiet quitting, and an abundance of layoffs. One thing that has not been as pronounced is investing in employee development. I'm of the strong opinion that 2023 will be the year of development. Many employees are looking to gain skills in different areas and grow in order to not become stagnant. Personally, I'm creating a Learning and Development strategy and a plan to tackle this in 2023.

-Tawanda Johnson, HR Leader, Sporting Smiles

Ready or Not, Here Comes 2023!

The next few years are going to be an exciting time for the field of human resources. it's important for HR department leaders to stay ahead of the curve so that they can anticipate these changes and prepare their organizations accordingly. While this seems like a lot – you don’t have to tackle it alone! We recommend working with the broader leadership team to focus on deep-diving these critical functions.

In the meantime, GoCo can help by supporting you with administration through Modern HR. With the new normal here to stay, we expect companies to need more sophisticated HR tools to keep up with the ever-changing needs of a digital-first workforce. Having a flexible HR to take all of the manual admin work off your plate (onboarding, compliance, benefits, and other HR admin functions) will allow you to focus on the other themes that need your attention.