Service: Human resources 

Key HR trends and challenges for 2023

By Deval Patel

05 Jan 2023

HR teams and businesses struggled to adapt to a changing landscape in 2022. For 2023, the situation remains much the same, though the trends and difficulties are different. According to some reports, 85% of UK staff are experiencing burnout. 

The key to overcoming future problems is understanding the trends and challenges coming downstream in 2023. Firms that can anticipate issues can respond better. 

Key trends for 2023

This section explores critical HR trends for 2023. 

The end of Burnout

Employers know that burnout harms productivity. NICE estimates that the UK economy loses 13.7 million work days per year because of it. Unfortunately, burnout rates increased dramatically pre- and post-pandemic, rising from 40% before the pandemic to 54% today. 

Therefore, leading businesses will need to take action this year. Company managers are implementing flexible holidays, more time off at weekends, and even shorter working weeks. 

The creation of skills-based organisations

The most innovative UK companies will also continue their transition towards “skills-based” organisations in 2023, which Deloitte estimates 20% of firms are doing already. 

Skills-based organisations will be more flexible and focus on people, not processes. A highly adaptable workforce should be able to respond to technological, regulatory and societal changes arriving this year, or so the reasoning goes.

Therefore, firms will hire based on what employees can do, not their education, experience or background. 

The emergence of people analytics

Cursory HR analytics has been around for some time. However, more advanced software capable of providing deeper insights is now available. 

Top UK firms will use these tools to deliver value to their employees. Such developments are critical as teams grow and become more complex over the coming months. 

The humanisation of work

Workers will no longer accept employers treating them as cogs in the system and employers shouldn’t pursue such policies if they want to avoid high turnover. 

Therefore, 2023 will bring a greater humanisation of work. Companies will provide individuals with dignity and respect, reflecting the norms of non-economic relationships. 

As consulting firm Deloitte puts it, when “the focus is not on “human”, but on “resources” companies are likely to see long-term consequences and lose valued people and talent..”

The arrival of improved HR tech

Lastly, thanks to the development of the gig economy, firms will invest in improved HR tech in 2023. AI will come to play a more significant role in HR functions, including: 

●    Automating repetitive tasks, such as arranging leave
●    Building smart digital applications forms
●    Screening pools of candidates for those most likely to meet company requirements
●    Improving onboarding by providing chatbots to answer colleagues’ questions
●    Reduce errors by streamlining processes
●    Standardising compensation and benefits across employees from all demographics
●    Reducing hiring bias

Challenges

Of course, the challenges of the coming year will be significant. Employers will need to adapt to an economic and cultural environment scarcely seen before.

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Ensuring junior staff members get face-to-face contact with senior staff

The rise of remote working arrangements has, undoubtedly, allowed employees to enjoy a better work-life balance.

But, one downside is the impact on junior staff and new team members, such as graduates. Remote work can make it more challenging for junior staff to enjoy face-to-face contact with experienced, senior team members. 

In-person interactions and training, both formal and off-the-cuff, can be critical for development. This is a major challenge facing businesses in 2023 – and HR teams will need to figure out the best solution.

Employees appear to understand the value of personal contact instinctively. According to UK government data, 85% of people working from home want to adopt a hybrid approach. Such arrangements are one possible means of increasing face-to-face contact – helping to boost personal development, increase productivity, and lower turnover however there must be a collaborative approach between staff and employers to ensure the correct balance is achieved so as not to compromise development. 

Developing a robust culture and fostering workplace relationships

Another challenge is building a robust culture that serves businesses and staff. Between 2020 and 2022, the proportion of workers working from home increased dramatically, but social systems didn’t adapt rapidly enough to keep pace with the change. 

Organisations tried many easy-to-implement ideas in the first few weeks of the pandemic, but they weren’t successful. Startups, for instance, attempted to recreate office rituals, such as “bagel Fridays” and “drinks Thursdays” over Zoom, but they couldn’t emulate in-person interactions. 

Social connections are the thing workers miss most about the pre-pandemic days, according to a Twingate survey of more than 700 employees. Workers lament the loss of office kitchen and corridor interactions essential to all innovative firms. 

Bringing culture and relationships back to the workplace will take some original thinking. But, again, hybrid work approaches seem like the obvious solution. With it, employees won’t see their work as merely a list of tasks. 

Another solution is to coax workers back to the office by offering better conditions. Firms could create workspaces that feel more like home, set up coworking spaces, or organise events that tap into the desire for social interaction and creativity – whether that’s training, team lunches, or brainstorming sessions with the executive team. Or, you could ask your employees what they want from the office, so you can tailor the experience to their needs and desires.

Helping staff cope with the cost of living crisis

In 2023, some businesses will have to make tough decisions in the face of extremely challenging economic conditions. Redundancies are likely, unfortunately.

But HR teams will also need to help staff cope with the cost of living crisis. Unlike previous recessions, the one expected in 2023 could have a material impact on workers’ ability to work. Remote employees may not have enough money to heat their homes, for example. Others may struggle to maintain their health or put food on the table.

A CIPD study found that financial insecurity is impacting productivity at work. 25% agreed that a lack of money was harming job performance, while 20% said they were struggling to sleep because of it. 

Employers can help by: 

  • Paying workers a fair wage, relative to where they live and the local cost of living
  • Implementing a financial well-being policy, educating employees on how they can take care of their money in hard times and where to go for support
  • Providing workers with benefits and discounts on essentials, such as life insurance, eye care, and flu vaccinations
  • Offering employee discounts on your products
  • Providing and promoting mental health resources, services and policies

Wrapping up

Summarising, HR will continue to go through profound changes in 2023. Technology, culture and finances are the primary drivers of the trends and challenges we are likely to see. 

Employers can solve the human resources issues they face, but it will require ongoing concerted action. Quick fixes are unsuitable in today’s economic environment.

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