As we welcome the new year of 2023, we naturally have a habit of trying to anticipate what lies ahead. Our team is already seeing some familiar and new HR trends emerging, and it has us excited for the year of possibilities. Why? Because these trends allow for HR to work hand-in-hand with departments across the organization to bring about much-needed boosts in workforce culture and engagement for improved retention.
Before looking ahead, let’s first look back. What residual factors will further shape what we see in 2023? Many are still navigating the impact of inflation, economic growth and turns, labor shortages, changing workforce demographics, and health and emotional stressors coming from every direction, all of which contributed to The Great Resignation of 2021 (that rolled right through 2022). The Bureau of Labor Statistics Job Openings and Labor Turnover shows quitting remained steady month over month, with 42.6 million resignations from January through October 2022.
With that in mind, it may not surprise you that most of our HR predictions for this upcoming year can be traced back to retention. Here are the Top 4 HR Trends for 2023, along with our recommendations:
1. Increased Emphasis on Retention Strategies
Organizations have realized just how important keeping those hard-to-find team members is – now more than ever. According to iHire’s 2022 Talent Retention Report, employers have lost the most employees in the last 12 months due to a few of these top reasons: employees feeling unhappy with their manager/supervisor (43.7%), unsatisfactory pay (43.4%), poor work/life balance (35.4%), and few growth/advancement opportunities (28.3%).
How can employers battle these top resignation reasons? Here are a few retention strategies that may help to tackle this HR Trend:
Revamp your onboarding.
An O.C. Tanner engagement report showed 69% of employees who receive a good onboarding process will likely stay at a company for 3+ years. Use onboarding to introduce your new hires to the company culture, build community and belonging for them, and make them feel good about their choice to join your company. A well-planned onboarding process also decreases the time it takes them to get up to speed and become productive.
Engage early and often.
Gather feedback from new hires within 90 days. This is enough time for your new hire to be familiar with the company and their new role, but there is still time to fix anything that might be wrong. Consider conducting one-on-one interviews with someone other than the new hire’s manager, or use an online tool to roll out short, easy-to-complete pulse surveys to give you the needed data to act on immediately before waiting for an annual review or engagement survey.
Ensure your pay is competitive.
This should not be limited to new hires but applied across your organization. It’s less expensive to keep a good employee than hire a new one. The Economic Research Institute (ERI) predicts salary budget increases of 3.78% for 2023. If you increased starting pay last year, this may be an excellent time to ensure pay scales are equitable and competitive for current employees too. This can be addressed through benchmarking key roles and evaluating pay bands. If no changes are needed, consider sharing a total compensation statement allowing employees to see and appreciate a complete picture of the total pay and benefits they receive.
Evaluate your benefits offerings.
Benefits and Pay combined are the top drivers of Intent to Stay, according to the 2023 Qualtrics Employee Experience Trends Report. Consider a benefit benchmarking study to see how you stack up against the competition. Or, ask employees which benefits are most important to them. You might learn that you could save money and retain employees by opting for a more attractive benefit to Gen Y and Z and dropping an outdated, expensive benefit not appreciated by your new workforce.
Give managers training and resources to be successful.
Being a great manager isn’t inherent – rather, it’s a critical skill to learn. Great managers bring the best out of their employees and are individuals for whom employees want to work. Provide training for managers on topics that help in relating to and guiding their team. A few key topics include giving feedback, coaching for development and goal planning, ways to engage in hybrid or remote environments, and business communication or soft skills.
Promote overall balance.
We’re not inclined to use the term “work-life balance” as much. Instead, we realize it’s more about overall life balance. Data from the most recent O.C. Tanner Global Culture Report indicates when organizations enable life balance and support growth and development holistically (flexibility, wellness, growth, engagement, etc.), it creates a thriving employee community where business outcomes are abundant. Sounds great! What does this look like in your organization?
Figuring out which retention strategies will benefit your organization the most can help position your organization as the top choice for both current and prospective employees.
2. Succession Planning
Your CEO is new and likely going nowhere, so why would you need a succession plan? Succession plans are for more than just the C-suite. What could happen if your only IT person who reigns over your network systems and security suddenly left? Or what about your top salesperson bringing in most of your revenue?
We encourage clients to look at key people and roles at all levels, thinking about their impact on the health of their business and operations. Succession planning will help ensure valuable knowledge and experiences don’t leave your organization when employees do.
To address this HR trend, savvy organizations will seize the opportunity to get “rising stars” ready for critical roles that retirees may vacate soon (or to prepare for unexpected turnover). Planned succession can be a win for the exiting employees prepared to share their knowledge and those valued employees seeking opportunities for growth and advancement, a critical key to retention.
When you need to get employees ready for the next level, consider implementing mentorships for relationship building and knowledge sharing, using assessments for growth coaching, informal lunch and learns for training, and leadership training that includes business and soft skills.
3. Recruiting Amidst Workforce Shortages
Despite rumblings and some tech cutbacks, many sectors continue to scale up. It may not be the frantic rush of 2022 to get hires in the door, but there’s no doubt that the trends of workforce shortages will prevail. As employers are adding jobs at a rate still well above average trend growth, staffing shortages and the fight for talent will likely continue through much of 2023.
Make sure your recruiting efforts don’t go to waste. A 2022 survey by The Muse noted 72% of respondents said they’d experienced “shift shock,” the term now used to describe the pattern of Gen Z and millennial candidates being more likely to leave a company within the first six months if it was different from what they expected from the interview process.
Avoid recruiting mishaps by crafting the most accurate job descriptions and ads (i.e. utilizing not just skills needed, but identified and proven job success factors), thus reducing the possibility of mismatched hires. Remember to evaluate those key traits and values core to your organization. Training interviewers and hiring managers to appropriately use the job description throughout the hiring process can also lead to better hires.
4. Holistic Approaches to DEI&B
We expect to see an increased emphasis on diversity, equity, inclusion, and belonging (DEI&B) strategies among this year’s HR trends. When done right, improving your organization’s DEI&B efforts has a considerable impact on culture, retention, and so much more. How do you take it further so that DEI&B is a core component and driving factor in your culture and people operations?
We’re seeing organizations take steps such as these:
- Linking DEI&B goals to leader performance measures to ensure accountability and importance. Do your executive compensation incentive plans have a component tying back to DEI&B successes?
- Proactively implementing transparent pay practices while hiring and after. Some organizations are being proactive, but laws in many states already mandate pay transparency in hiring practices, with more expected in 2023. Does this make sense for your organization? Pay transparency seems scary for some at first, but it can promote fair pay for genders, establish clarity about promotional goals or merit increases, and some believe it leads to more trust.
- Promoting inclusivity in benefit offerings shows a commitment to DEI&B. A policy update or added benefit can encourage and support your desired culture. We’re crafting many new benefit options involving non-traditional families, enhanced parental leaves, and flexible holiday and PTO policies.
Use employee feedback to address the HR Trends
Your organization’s retention needs may look different than others. Not all organizations will need to tackle retention, but we know many will. Don’t be overwhelmed; we know from measuring employee feedback that sometimes a little effort and communication can go a long way. If you haven’t already, consider implementing employee pulse surveys to help you identify the best ways to navigate through the HR trends.
We have no doubt this new year will be another exciting one for us all. Whether you’re slowly stepping in one toe at a time or charging full speed ahead excited to tackle the HR trends for 2023, we wish you a prosperous new year!
Thank you to Andrea Whalen, Senior HR Business Strategist, for contributing to this issue of Emerging Issues in HR.
Need help tackling your HR Strategy for 2023? Let our team of HR experts assist in building your plans for the new year. Please visit our HR Strategy page to learn more, or simply contact us – we’d love to hear from you.