Business and Human resources (HR) leaders faced an unpredictable environment in 2022, beginning with the “Great Resignation” wave. Employees moved on from companies not for higher pay or better opportunities but for a healthier work-life balance, more professional freedom, and a lack of a sense of purpose in their work. It was followed by ever-evolving return-to-office policies and a “quiet quitting” trend in the year’s second half. The year was also marked by high employee turnover, burned-out employees, and business uncertainties due to geopolitical risks and policy intervention.
The year 2023 started on an ominous note for organisations, with the right sizing becoming the common theme across companies, specifically in the technology industry. February 2023 was the third most severe month since the beginning of 2022 in terms of job losses. Even as employee turnover and layoffs have dominated the HR discourse since 2022, other noticeable trends merit attention by business and HR leaders as they prepare their organisations to remain competitive in 2023 and beyond.
Niraj Seth, EVP, Naukri shares, “In 2022, organisations had to grapple with several challenges which include creating a framework for a distributed workforce, the war for talent, reforming candidate experience, addressing skills gaps and more. The pandemic accelerated the extensive use of technology in the recruitment process which also needed a lot of learning and unlearning for employers. Adapting to the changing work models also became a tricky proposition.”
Seth is, thus, confident that all these changes have transformed how 2023 workplaces will function. “It will be more tech-savvy, flexible, and inclusive than ever before. The pandemic has forced companies to adapt quickly, and these changes will have a lasting impact on the way we work. Artificial intelligence and automation will be integrated into more jobs, making work more efficient and allowing for greater innovation.”
Seth further points out that these transformations weren’t as easy to adapt to as they sound. Organisations had to go for a complete overhaul of their processes and policies to accommodate them. “Several of them had to revamp their entire talent strategy to factor in revised employee experience formats, rejig their work culture and look for newer ways to be an aspirational place to work for job seekers. What’s also important is to let the candidates and talent, in general, realise that the organisations have upgraded with the changing times and talent demands. One way to do that is by Employer Branding which when designed well can attract talent as per the company’s beliefs and principles.”
Also read: This is a Great Time to Correct Compensation Without Layoffs: Sreekanth Arimanithaya, EY GDS
We highlight major HR trends from 2022 and 2023 that will continue to redefine the new workplace environment.
Workplace Trends
Even as the uncertainty of the pandemic era has subsided, organisations are still working to define and create a new workplace normal.
- Remote work trends
According to WFH(Work from Home) research, by February 2023, 12% of full-time employees were fully remote, 60% were entirely on-site, and a little more than a quarter of employees were following hybrid work models. As the pandemic has ended, employers have planned a work-from-home policy allowing their employees an average of two days per week. However, the number of WFH days varies across industries, with information technology (IT) and financial services allowing more flexibility and a higher number of WFH days. The remote work trend varies across cities, with work-from-home more common in top cities than in smaller cities and towns, which can be attributed to the saving of long commuting hours in metro cities.
The organisations will extend similar flexibility to frontline workers by giving them more control and stability over their schedules, and other amenities.
- Increase in weekend working
Employees working on the weekend is becoming increasingly commonplace in some industries as workers seek time to focus away from multiple meetings and other distractions. ActivTrak analysed almost 175 million work hours of more than 1,30,000 anonymised users of its productivity-management software and found that the hours worked on weekends averaged 6.6, an increase of 5% from 2022. Even as 5% of the employee base worked on the weekend; however, the trend is not uniform across industries. The technology industry saw a growth of 31% more weekend work hours compared to 2022.
According to the report, the two drivers are mass layoffs, specifically in the technology industry, and the ability to focus on a weekend, away from the distractions of calls and meetings on a weekday.
Workplaces in 2023 will be more tech-savvy, flexible, and inclusive than ever before. The pandemic has forced companies to adapt quickly, and these changes will have a lasting impact on the way we work. Artificial intelligence and automation will be integrated into more jobs, making work more efficient and allowing for greater innovation.”
Talent Trends
Even as companies are laying off employees, there are in-demand skills for which competition is fierce, and HR leaders expect hiring quality talent will continue to be a challenge.
- Quiet hire in-demand talent
Automation and digitisation are impacting the skills required at the workplace, with the total number of skills needed for a single job increasing by 6.3% annually. The technology disruption may require 14% of the workforce to switch occupational categories. Even as business executives consider reskilling and upskilling the workforce as one of the top priorities, the critical challenge for them is to figure out how the job roles will change and skills or the type of talent they will need in the future.
The companies are providing upskilling opportunities to meet the future expected organisation skills requirements. PwC (PricewaterhouseCoopers) has committed $3 Billion to upskilling and launched a multi-year digital upskilling program for its workforce. The program imparts new digital skills through a customised program leveraging employees’ capabilities and experience. Amazon also announced a talent development program to upskill a third of its US employee base by 2025, enabling them to pursue new opportunities.
Also read: Quiet Hiring, Gen-Z Skill Gaps – 9 Trends That Will Alter Future-of-Work in 2023
Additionally, companies are using alternative methods, such as gig workers, to bring in talents with specific skills for just-in-time hiring for high-priority tasks. According to a Korn Ferry survey, 52% of respondents believe the demand for interim employment will increase in 2023, even as 80% of large organisations plan to increase their use of contract workers.
- Employee first policies
The post-pandemic work environment has brought back the focus on the human aspect of employees, who are now at the centre of human resource policy initiatives. In 2022, more than 30 human resource leaders and employee experience practitioners published a new manifesto prioritising employee experience (EX). The framework has been adopted by companies like Patagonia, Airbnb, and Shopify, and others are following in their footsteps to create a high-performing work culture.
EX aims to deliver exceptional experiences at moments that matter across the entire employee lifecycle. Companies with positive employee experience enhance employee engagement levels that improve retention and perform better than their competitors across key performance indicators. The scope of employee experience has expanded to include employee well-being which provides for supporting employees in all aspects of their lives, including professional and personal. HP Spirit Program provides employees with emotional and social support to help them cope with challenges in their professional and personal life.
- Pay Transparency
According to a Linkedin survey, 91% of respondents say that seeing the salary range on the job post influences their decision to apply for the job, which is indicative of pay transparency being on top of the mind of the candidates. Pay transparency was the second most crucial factor after the job description, impacting the candidate’s decision to apply.
Pay transparency refers to the organisation sharing compensation details, including salary, bonus, and other benefits at some stage in the hiring process. Microsoft was the first major corporation to declare that it would disclose salary ranges in all internal and external job postings beginning January 2023.
In February 2023, the Australian government announced a new pay transparency bill legislation to promote transparency and gender pay equality. Most US states have implemented pay transparency legislation, with New York being the most recent state in which the law first came into force on November 01, 2022. The European Union reached an agreement in December 2022 for more pay transparency and equal pay without gender discrimination.
HR Technology Trends
Another emerging HR trend is the adoption of technologies across the human resources value chain. According to the Global HR Tech Investments & Startup Funding report, the year 2022 has proved to be the second-best year for HR technology investments, with a total investment of US$ 12.4 billion, while February 2023 alone has witnessed 11 deals focussing on talent acquisition and talent engagement segment.
- Artificial Intelligence (AI) in HR
Organisations are leveraging artificial intelligence (AI) and machine learning (ML) across the value chain, such as resume screening, candidate selection, employee engagement, payroll automation, and other activities. Besides automating processes, AI can also address some of the challenges, such as biased manual selection processes. Even as the ethical implications of AI implementation in recruiting are still being debated, New York City has passed an AI Bias law that is expected to take effect from April 15, 2023. The law requires employers to get their AI tool audited for bias before using it for recruitment, hiring, or promotion. Once the law is implemented, the organisations will have to undergo annual bias audits and publicly disclose their hiring metrics.
Besides hiring, organisations are also using AI and ML to improve payroll calculation, tax deduction, and regulatory compliance. Additionally, organisations are leveraging conversational AI or chatbots to enhance employee experiences by expediting query resolutions.
- Blockchain in HR
Besides AI, another technology that has been increasingly implemented in HR is blockchain. It is being used to create an immutable record of employee professional history and achievements, which can be used by employers to verify the candidate’s credentials, improving hiring efficiency quickly. It is being used by employers to pay employees in regions with limited pay infrastructure. The technology facilitates the creation of immutable, transparent digital contracts that enable employers to enforce contract terms and conditions without ambiguity.
- HR Analytics
HR analytics are increasingly being adopted by business executives and HR leaders for strategic decisions about their workforce. It enables organisations to turn candidate and employee data into insights that take the guesswork out of decision-making. One of the critical HR challenges is hiring the right talent, for which organisations are leveraging predictive analytics to identify if the candidate will be a good fit for the company by comparing the candidate’s characteristics and attributes with successful candidates. Besides, organisations are using HR analytics to improve employee experience, which has become critical to attracting and retaining talent.
The Covid-19 pandemic brought HR to the forefront, and they continue to play a vital role in the evolution of the new workplace model. Even as the focus remains on hiring and retaining quality talent, they must also manage an equally important task of maintaining organisational culture without diluting the core value system. Even as technology enables business executives and HR leaders to overcome the challenges of the hybrid work model, the human touch will remain relevant in creating a robust employee-employer bond. It will be a defining aspect of human resource policies in the year ahead and later.
