HR in 2023: Trends to Watch For

In 2022, we saw a glimpse of what the new post-pandemic normal looked like in the workplace. With many countries relaxing restrictions on gatherings and travel, global employers went back and forth on having employees return to work.

Some adopted a hybrid working model, while others remained either fully virtual or required employees to return to the office.

Although many leaders find it challenging to trust their employees’ productivity in a hybrid environment, workers don’t feel the same.

According to a Society for Human Resources survey conducted last June, 48% of U.S. employees would seek a fully remote position for their next role.

With that said, what can we expect for HR in 2023? Although no one has a crystal ball, the past year has seen its share of interesting trends.

Even with layoffs dominating the headlines, there are bright spots in the market:

• Most workers report feeling happy and satisfied in their jobs.
• The Great Resignation may be waning as the flexible scheduling and compensation strategies are now helping HR professionals retain their employees.

All of this leads to a positive HR outlook in the new year. As more employers take a “people-first” approach to attracting and developing their team, HR professionals are being increasingly called upon to help make strategic business decisions.

Here’s what HR professionals should keep their eyes on for 2023.

What were major HR trends in 2022?

The aftermath of a global pandemic changed the working world as we know it. While 2021 saw over 47 million people quit in the Great Resignation, 2022 had mass layoffs, especially in tech.

Burnout, hustle, and ‘grind’ mentalities are being replaced with a focus on finding balance and a sense of purpose on the job.

All of this has led to a shift in how employers interact with their employees. As the pressure to retain talent in today’s market remains high, companies are increasingly willing to pivot organizational strategy to better suit their workers’ needs. In 2022, this included:

Out-of-the-box compensation

This past year saw companies like Shopify roll out novel methods for compensating their employees. Shopify’s new ‘Flex Comp’ was introduced in September of 2022, and is intended to tie its compensation model to the company’s mission as a whole.

‘Flex Comp’ allows Shopify workers to choose the proportion of their income allocated between base salary and restricted-stock-units (RSUs), with changes to the vesting period and bonuses given for taking on additional equity.

The model gives employees flexibility with how they choose to save and earn, as well as adding more transparency around the stock options they receive.

4-day workweeks

Workers in the UK are trying a new 4-day workweek on for size. In yet another 2022 milestone, 73 UK companies cut back hours to 32 per week while continuing to pay workers their full wage.

The result? The largest trial of a 4-day workweek ever conducted. As a result, 86% of the companies in the program say they’re likely to remain on the new schedule, with additional data from the pilot project set to come out soon.

Expanding benefit classes

Fertility benefits are the new frontier, at least according to major employers like Spotify, Facebook, Starbucks, Pinterest, and Chanel.

These benefits, which include in-vitro fertilization (IVF), donor eggs, and gestational surrogacy, allow couples who have challenges conceiving to access procedures they would otherwise be unable to afford.

It may seem expensive to provide this benefit. However, 97% of companies found that adding fertility benefits did not result in any additional costs, since not every couple will choose to conceive or have challenges doing so.

What are some 2023 HR trends to get excited for?

With so much in flux, it’s hard to predict what will happen in the years to come. However, having navigated the unprecedented shifts and economic upheavals of the last few years, all signs point to HR professionals — and small business owners —- taking these new changes in stride.

Here are some of the biggest shifts we anticipate for 2023.

Recruitment: Advances in AI make hiring technology more accessible to SMBs

Recruitment is one area that will see exciting innovations in 2023, including the expansion of Applicant Tracking Systems (ATS). These digital hiring tools can seek out and scan through thousands of resumes by using artificial intelligence to filter out the candidates you need.

Recruitment is one area that will see exciting innovations in 2023, including the expansion of Applicant Tracking Systems (ATS).

While these systems have long been vital to recruiters at large organizations (99% of Fortune 500 Companies used an ATS as of 2019) they’ve typically been out of reach for small businesses due to both scope and budgets.

Impact in 2023

In 2023, talent shortages and new technologies can converge to make ATS more affordable (and accessible) to businesses of every size.

In any case, the forecasted 5% increase in enterprise technology spending over the next year means digital recruitment tools are here to stay. AI-powered technologies make the hiring process easier, so it won’t be long before small businesses have their pick when it comes to ATS.

How to begin

Small businesses looking to get a leg up on their hiring tech should keep an eye on ATS tools mentioned in industry magazines, at conferences, or within your network.

Whether your business requires a robust set of screening features or you’re just looking to weed out candidates who aren’t a fit, 2023 could potentially bring more options onto the market to meet your budget and your needs.

Keep in mind that these kinds of tools need to be carefully configured to avoid filtering out candidates you might want to see.

Researchers suggest shifting these programs to ‘affirmative’ categories (i.e., showing all candidates that have a certain degree) vs. negative ones (filtering out all candidates without that degree) are more likely to overcome this kind of bias.

Employee experience: Burnout means DEI initiatives are here to stay

While we’re no longer in the height of the ‘Great Resignation,’ global talent shortages are expected to stretch as far as 2030.

The post-pandemic workforce is increasingly unwilling to settle for being unhappy at work, so efforts to improve employee well-being are more important than ever.

Burnout among employees is at an all-time high.

Burnout among employees is at an all-time high. In 2022, 44% of workers said they had experienced ‘a lot’ of stress during the previous workday.

Experts suggest countering this burnout starts with employee well-being and a culture of respect. Expect to see investment in diversity, equity, and inclusion (DEI) strategies to continue in the coming year.

Impact in 2023

A recent Gallup study suggests 3 in 10 US workers feel burned out, and employees who also felt discriminated against were more than twice as likely to fall into this category.

According to a study by Pew Research, 57% of workers who left a job in 2021 said feeling disrespected in their workplace was part of their reason not to stay.

Employees who feel that they have the same opportunities for advancement as their coworkers are less likely to feel burned out at the end of the day.

For example, a female project manager who knows she has the same chance at a promotion as her male counterpart might be more satisfied at work, even with a heavier workload, than someone in the same position struggling to feel heard.

Respect in the workplace helps employees feel more valued, heard, and satisfied in their roles. Discrimination, harassment, and other ‘toxic’ workplace behavior not only leads to burnout, it can also lower team morale, encourage absenteeism, and make talented employees harder to retain.

How to begin

DEI initiatives can be as simple as deliberately making sure every team member’s voice is heard. Tools such as ‘silent meetings’ level the playing field and contribute to this goal.

In a silent meeting, the facilitator submits notes ahead of time (or poses a question). They do this before giving all attendees a few moments to digest the information and write down their thoughts. At the end of a short review period, written ideas are shared with the group.

Having transparency, consistency, and clarity around how you recognize or promote employees is another way to create an inclusive environment.

Learning & development: Remote work means remote learning

Companies were forced to adopt virtual options for corporate training during the pandemic, and in 2023, these remote learning models are here to stay!

Like with recruitment, the proliferation of virtual learning technology in high-profile companies is paving the way for small businesses to do the same. And when it comes to this kind of learning, employees are enthusiastic.

Impact in 2023

Learning management software, microlearning tools, mobile apps, and digital course offerings are popular and affordable options for training employees.

Most of these employee training tools are also affordable for small businesses, and some, like microlearning, can be done even in short periods of time.

How to begin

Share videos or interesting podcasts, leverage open source learning, host quiz competitions, or turn onboarding facts and product knowledge into a game.

There are plenty of ways to make the most of this trend, but doing things the ‘new’ old fashioned way works too: one-on-one virtual coaching or mentoring sessions can be offered even with a workforce that is fully remote.

Compensation: Salaries will be trending upwards in 2023

Rising inflation and changing employee expectations could make 2023 a “banner year” for salaries. Even with tech layoffs, soaring costs and talent wars suggest wage increases are on the menu if companies want to retain their talent.

Impact in 2023

The 3% salary increases of the past are gone, and employers in 2023 may be looking at 4-7% salary increases in their payroll.

Although small business owners with already slim margins might balk at the cost, trends from 2022 suggest that for many employees, picking a job is no longer all about the money.

With workers willing to take a 20% pay cut to work remotely, smaller organizations may be able to get creative with the budget they already have.

How to begin

Do you offer a robust learning environment? A respectful, inclusive team? Flexible hours? Equity options or other benefits?

As Shopify demonstrated with its plan, employees might be willing to take a different mix of compensation in exchange for a mission they believe in, a job that helps them learn, or growth potential alongside an experienced team.

Fair wages will always be important, but employees have a new “worth it” equation as we move into 2023. Developing your employer brand is one way to showcase your company’s unique benefits and attract (and retain) employees.

Talent management: HR systems include additional tools and options for SMBs

In the years before the pandemic, 70% of businesses with fewer than 50 employees were employing ‘ad hoc’ HR management, with business owners or office managers taking on onboarding and payroll tasks themselves.

However, cloud based human resources information systems (HRIS) are becoming increasingly accessible to businesses of every size.

Impact in 2023

With fewer chances to meet with employees in person, tasks like onboarding, recruitment, or payroll can no longer be done with a spreadsheet or by hand.

Cloud-based HR tools for managing these tasks are rapidly replacing paper filing systems, and the trend doesn’t seem to be slowing down any time soon.

HR tech spending is projected to increase at a rate of 6% per year, and more market interest will mean more options (and more features) for small businesses to choose from.

Cloud-based HR tools for managing tasks are rapidly replacing paper filing systems, and the trend doesn’t seem to be slowing down any time soon.

Cloud-based HRIS tools will bring more proactivity into 2023. Preemptive solutions can ‘nudge’ employees to complete tasks by sending reminders through emails, texts, or other communication channels.

Whether it’s forgetting to fill out a time card or incorrectly completing an onboarding form, these high-tech solutions help reduce your HR team’s workload overall.

How to begin

Small businesses can take advantage by replacing paper files with cloud-based HR software, eliminating the ‘ad-hoc HR’ model used pre-pandemic.

Small business owners can also add calendar or text alerts for timesheets or other tasks, or use new technology to make their office easier to access when remote.

Employee relations: Banishing ‘productivity paranoia’ and prioritizing one-on-one time

Microsoft researchers suggest that although 85% of employers find it challenging to feel confident in remote employees productivity, their actual productivity continues to climb.

Last year taught us that remote work is here to stay. So in 2023, correcting this mismatch between employer and employee views is likely to dominate HR’s agenda.

Impact in 2023

Proximity bias happens when employers give unfair treatment to workers who come into the office rather than the ones who work remotely.

HR experts suggest combating this bias is crucial to the future of work, and the Microsoft data proves it.

How to begin

Instead of relying on instinct to gauge someone’s work, small business leaders should focus on gathering metrics to assess employees’:

• Key performance indicators
• Accuracy of reports
• Quality of deliverables

While employers might miss walking through the office halls, employees are more concerned with managing the tasks they have on their plate:

• 81% of employees say it’s important that managers help them prioritize their workload
• 31% of them say they’ve received clear one-on-one guidance.

For small business leaders, making time for these kinds of one-on-one meetings will be an important factor in making sure employees have proper guidance.

HR in 2023: Challenges ahead but plenty to look forward to

The COVID-19 pandemic caused a paradigm shift in how people see the working world. The shift has had an impact on virtually every aspect of how we do business.

Workers are reporting increased happiness and satisfaction. Flexible scheduling and compensation have cooled the impact of the Great Resignation, as trends in technology, inclusion, and remote learning create new pathways for growth.

As the global economy continues to ebb and flow, the results of 2022 suggest that the workforce is learning to roll with the tides. While HR professionals will still face some challenges in the coming years, the future of work looks promising — and there’s plenty to look forward to along the way!