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Top 8 Trends Shaping HR Strategies in 2023

Shannon Schaul December 28, 2022

These are tumultuous times for employers, particularly since the pandemic sparked the rapid acceleration of digital transformation and widespread adoption of remote work. In many ways, we’ve regained a sense of normalcy, but the aftereffects have continued to reverberate. Record-breaking worker resignations and the current economic downturn are just two of the factors that are helping to shape HR strategies and priorities across every industry. 

These are tumultuous times for employers, particularly since the pandemic sparked the rapid acceleration of digital transformation and widespread adoption of remote work. In many ways, we’ve regained a sense of normalcy, but the aftereffects have continued to reverberate. Record-breaking worker resignations and the current economic downturn are just two of the factors that are helping to shape HR strategies and priorities across every industry.

Here are some HR trends our experts expect to see in 2023 and beyond.

1. A growing focus on diversity, equity, and inclusion (DEI)

Diversity, equity, and inclusion has gained much-needed attention in recent years, and DEI has broadly evolved from business buzzword to critical conversation. Employers recognize the importance of these initiatives in the context of greater social responsibility, but also understand the power of diversity to attract and retain top talent and drive better business results. Indeed, a recent Boston Consulting Group survey found that organizations with more diverse leadership teams reported revenue 19% higher than their less diverse counterparts.

HR professionals will continue to prioritize DEI, driving them to build a more diverse workforce, inclusive culture, and equitable workplace. More and more organizations will focus on diversity, rooting out unconscious bias in their recruitment, hiring, and promotion practices. Employers will continue to explore ways to make a more inclusive workplace by giving every employee a voice, and making sure they’re heard. And identifying and rectifying inequities in pay or benefits will also be a focus for many organizations as they expand their DEI efforts.

2. Demonstrable social responsibility

Investors, customers, and employees increasingly look for businesses who are socially responsible. DEI is one critical aspect of corporate social responsibility, but CSR also means acting ethically, being environmentally conscious, and embracing philanthropy.

Today’s employees, especially younger generations, expect more from their employers than ever before. They want to work for an organization whose values and ethics align with their own. In fact, the Cone Communication Millennial Engagement Study found that 64% of Millennials won’t take a job if the prospective employer doesn’t have strong CSR values. That’s why we expect employers, and HR leaders, to look for ways to demonstrate social responsibility, such as improving diversity, reducing their carbon footprint, donating to charity, or providing paid time off for employees to volunteer.

3. Employee well-being and wellness-centered benefits

Employers recognize that improving workers’ physical, emotional, and financial health increases productivity, reduces turnover, and helps their bottom line–and employees want to work for organizations that care about their well-being. That’s why prioritizing employee wellness is a win-win for organizations.

The pandemic highlighted the importance of employee well-being, including mental health and greater work-life balance. We expect employers to permanently adopt flexible schedules and remote or hybrid work arrangements, largely because they see the value in improving employee well-being, but also because employees continue to have the upper hand in a tight labor market. According to Mercer’s 2022 Inside Employees’ Minds study, among employees whose jobs could be performed remotely, 47% preferred a hybrid working arrangement, 42% preferred to be fully remote, and just 11% would choose to be full-time on-site.

Beyond workplace well-being, wellness-centered benefits are an essential part of employer benefit packages. However, wellness programs that incentivize healthy behaviors will grow in prevalence, with employers encouraging well-being through fitness challenges and nutrition coaching. Over time, employers will commonly offer mental health support and care through benefits like traditional employee assistance programs, point solutions focused on emotional well-being, such as stress management or insomnia as well as therapy, counseling and treatment.

4. AI-driven analytics and automation

When today’s HR professionals are asked to do more with less, they often turn to technology to shape how they work. In 2023, HR teams will look to automate additional HR tasks and processes like applicant tracking, onboarding, payroll, and employee communications. Eliminating manual work will free up vital HR resources to focus on the strategic, rather than the tactical.

Artificial intelligence adoption will continue to grow, particularly AI-powered analytics. A McKinsey & Company survey found that 58% of organizations used at least one AI capability in a process or product. In the coming months, we expect AI to automate HR functions, including recruitment, onboarding, and guiding employees to the benefits they need. Next-generation data analytics also deliver critical workforce insights to help shape benefit strategies, like identifying employees most at risk of leaving, and population health insights like potential gaps in care.

5. Upskilling and reskilling

With U.S. inflation at a 40-year high and the country teetering on the brink of recession, many employers are making tough decisions about reducing staff and eliminating positions. Yet the competition for talent remains fierce, which means that upskilling and reskilling employees will become more crucial than ever. A recent Gallup study found that 65% of employees consider upskilling essential when considering a potential job. Upskilling is simply helping individuals learn new skills, and it’s become a key factor in recruitment and retention.

Providing employees with skills training and professional development opportunities will become table stakes for attracting top talent, and employers will need to leverage digital technology and learning management systems to broaden and enhance the skills of their workers.

Reskilling, or training existing employees to take on new roles or responsibilities, will become a main focus for employees in 2023 and beyond. In the near term, reskilling enables HR to quickly backfill positions, or retain valuable employees within an organization if their current job is eliminated. In the long-term, reskilling will allow employees to take on different internal functions as more tasks and processes are automated.

6. The rising need for soft skills

Employers can teach their workers the technical skills required to perform their jobs. But soft skills, aka people skills or interpersonal skills, may be harder to come by. And as technology and automation steadily replace jobs that primarily require hard skills, occupations that heavily rely on soft skills will steadily grow.

Soft skills like communication, teamwork, collaboration, time management, and problem-solving are critical to the success of any business, but they must be learned and practiced over time. According to the 2022 LinkedIn Global Trends report, 92% of HR professionals say that soft skills are as important, or more important, than hard skills.

We expect to see HR teams prioritize soft skills in recruitment in 2023, understanding that they can always train employees on the hard skills necessary to perform their jobs or advance their careers. Soft skill development will also become a central focus of employer training efforts, which may expand to include coaching and mentorship programs to further cultivate these critical skills.

7. Personalizing the employee experience

More and more organizations recognize the power of personalization to drive higher employee engagement, and we’re confident that trend will continue through 2023 and beyond. Employee engagement measures how connected employees feel to their employer–whether they feel included, respected, and valued.

Higher employee engagement means a better employee experience, leading to better business results. A Gallup meta-analysis found that highly engaged employees delivered 21% greater productivity along with 22% greater profitability. And personalization is a proven way to create a more engaged workforce.

In the coming year, organizations will continue personalizing the employee experience, using targeted communications to achieve critical objectives like boosting benefits utilization and enhancing employee well-being.

8. Optimized communications

Effective communication has always been critical for organizations, but the abrupt transition to remote work exacerbated long-standing challenges for many employers. Workplace well-being is a priority for many employers, and poor communication can quickly sour the employee experience. An Accountemps survey of HR managers found that a third of respondents reported that lack of open, honest communication was the biggest cause of low morale within their organization.

With greater numbers of employers dealing with geographically dispersed employees, good communication becomes even more crucial. Companies will use technology to optimize their communications, using personalization and automation to ensure consistent, relevant messaging. Timely, targeted messaging can also support other initiatives such as employee well-being, educating employees about relevant benefits, and guiding them to the programs and resources they need.

While the past several years have been a bumpy ride for businesses and HR pros, there are plenty of opportunities among the challenges. Our experts were encouraged to note that among these predicted trends, a common theme is improving the whole health of employees as organizations leverage technology to improve employees’ lives by aiding professional development, personalizing the employee experience, and addressing their physical, social, emotional, and financial needs. And that represents more than a trend. That represents progress.