5 trends that will shape HR in 2023
Another year has passed for HR. If it felt like time flew by, perhaps that’s because HR professionals were busy, caught between the tail end of the Great Resignation and the belt tightening that marked 2022’s waning days — not to mention chatter about a potential recession.
That doesn’t even take into account the changing nature of the COVID-19 pandemic, which has more or less defined HR’s objectives for the past two years. HR leaders are still sorting out the pandemic’s long-term impact on how people work, not the least of which is how their organizations will approach flexibility and the role of remote work and hybrid work.
The same conversations dominating HR’s attention in 2022 largely overlapped with that of CEOs, CFOs and other C-suite executives. The pandemic may have demonstrated just how central people issues are to core business processes and goals. Now that HR has the attention of leadership, it will be up to the profession to highlight its role in responding to the challenges of 2023.
The following are five HR trends that may dominate this year.
#1: Positioning HR as a partner for leadership
At its core, HR has to partner with leaders to maintain influence on the direction of an organization, said Rebecca Kehoe, associate professor of HR studies at Cornell University’s School of Industrial and Labor Relations. “This is a two-way street,” Kehoe noted, but that doesn’t absolve HR from getting outside of its comfort zone to understand the needs of the business.
In her work teaching for Cornell ILR’s master’s program, Kehoe said such conversations have taken center stage: “Increasingly, we’re doing a good job of training them to understand the needs of the business and that those needs need to be at the center of our policies and decisions.”
It’s much the same for executives who are veterans of the field. Reggie Willis, chief diversity officer at Ally Financial, told HR Dive in an interview that interacting with management and leadership has been a core component of his work during the past few years.
“For many HR leaders it’s, ‘How do you provide that guidance?,’” Willis said. “That’s the million dollar question.”
Part of that work is communicating organizational priorities to workers, too. That work has always been important, but it’s especially top of mind after a year in which workers across multiple industries made their voices heard. Public discourse around wage increases, leave benefits, flexibility and other issues soared in 2022, and Kehoe said she expects many of these trends to continue.
“At a certain point, each organization is going to have to land on how they’re going to address each of those trends,” she added. “From an HR perspective, there’s a really clear need to be more proactive in establishing the stance and the role of HR within the organization around different issues.”
#2: Flexibility: An opportunity for HR to prove itself
Transparency became a central theme of 2022’s final months, with employees and regulators alike demanding it from organizations. Internal pressure is also building. An October 2022 Conference Board report found that investors are looking to company boards to form clear human capital management strategies and connect those strategies to business and financial outcomes.
Flexible work is just one opportunity for HR to engage with leadership and show transparency in 2023. In the early stages of office reopening conversations, Kehoe said she was surprised to hear that many organizations pushed return-to-office decisions onto managers, letting them decide which arrangements worked best for their teams.
Some may still take this approach, but “what HR found in many cases was that managers themselves were uncomfortable having to navigate that flexibility within their teams, and they didn’t want to have the burden of that decision landing on them,” Kehoe said.
Instead, HR can step into a more supportive role, providing policy information, guidance and support for managers who may not know how to navigate flexibility. Willis said that Ally’s HR department has done this work in part by educating leaders on authentic, purpose-driven leadership strategies.
“It’s really about having that adaptiveness,” Willis said. “For some people, coming into the workplace is an outlet and a needed opportunity for collaboration and for heads-down working.” But an organization’s core values, he noted, must extend to wherever an employee is working.
Regardless of where an organization lands on whether it will permit employees to work from home permanently, some of the time, or none of the time, it must take a clear stand — and HR can be a key player in forming that stance, said Mike Lamm, VP of people, America at technology company Monday.com.
According to Lamm, collaboration has weighed heavily on the minds of HR staff at Monday.com throughout the past few years. The company shifted to fully remote work and only recently began to open new brick-and-mortar hubs to bolster its North American operations. Throughout that process, he said, Monday.com had to balance the in-person collaboration and community aspects it views as central to its culture while maintaining the flexibility that served employees.
“With in-office expectations, the overall play is that you have to take a stand on it,” Lamm said. “What has worked really well for us and for other companies is that transparency is what people want to hear.”
The work doesn’t end at setting a policy. HR needs to be there for leaders to help manage through the changes brought on by flexibility and other trends, Willis said. He noted that Ally seeks to help leaders think through what it means to be authentic, act with purpose and express themselves.
HR departments, Willis said, can talk through how to establish trust with employees and ensure that work is getting done while also ensuring safeguards are in place to check in with workers. “You have to be aware of how your teams are engaging in this environment, how you’re providing outlets for conversations and ensuring that work is being done at the same level.”
#3: Purpose drives response to downturn
The U.S. has faced months of declining economic outlooks, and corporate layoffs have featured heavily in 2023’s early headlines. Adding to the uncertainty, many organizations are cutting back hiring budgets despite a persistent need for skilled talent, according to a recent survey of CEOs and CFOs by Mercer.
In this kind of climate, HR may need to refocus on purpose and its place in modern organizations. Willis said this has been an important focus for Ally as the company winds down its external hiring. “What can we do for our employees and our leaders of people to continue to instill a thoughtfulness in them?,” he said. “What does it mean to be a human leader? What does it mean to be empathetic?”
These may not be easy questions to answer, but they are nonetheless important to keep in mind as social and economic issues bleed into the workplace, Willis said. To that end, he added that employers should consider how to unify employees around a sense of purpose and community.
Purpose will be an important draw for talent, Kehoe said, both in terms of how an organization approaches purpose with respect to external issues as well as enterprise-wide goals. Specifically, if employers communicate clearly how employees create value through their work, this can help employees feel that they are making a difference in their roles, she said.
“That gives something to employees to hold onto and to value as they do their work day to day,” Kehoe added.
There are other aspects of the employee experience that can contribute to a sense of purpose. Willis said Ally’s annual stock grant program is an example of the kind of program that can help to align employee success with that of the organization. “It creates a mentality that’s pervasive, that says we have some skin in this game,” he said. “We all have the ability to affect that stock price by the actions that we take and the care we give to each other as employees.”
#4: Talent operations turn inward
Without the ability to expand recruiting in the new year, many organizations will need to reassess what they can do with their internal talent pools to meet future needs, Kehoe said. That work may see employers recommitting to employees’ individual career trajectories, a trend that could prove troublesome for the industry.
“If HR has gone there, it’s been in the context of succession planning for higher-level roles,” Kehoe said.
HR professionals don’t have to build internal mobility plans by themselves. Instead, they can work with front-line leaders to determine short-term and long-term needs, and whether those needs align with employees’ own career goals and skill sets.
It may also help HR to consider whether employees in one segment of the organization could be developed nonlinearly to work in completely different roles or domains. Kehoe suggested the idea of a “lateral” approach to talent mobility, whereby employees who may not be ready to take the next step forward in their careers could develop skills and qualifications that allow them to contribute in new ways. Other approaches, like job shadowing, may also be applicable.
Still, managers may not have the bandwidth to facilitate this kind of growth, Kehoe said, meaning that HR teams could step in to provide training, resource guides and real-time support.
Aside from internal pipelines, employers also may want to explore how they can leverage alumni networks and client organizations, like suppliers, to find potential talent. “You know what you’re getting when you hire from a trusted partner,” Kehoe said, “and it can be a basis for strengthening trust with external partners.”
#5: Staying the course despite change
For all the progress that HR departments have made in drawing attention to their work in the past three years, fears of slowing progress persist. Diversity, equity and inclusion programs have been a particular focus along these lines; a 2022 Glassdoor survey found that access to DEI initiatives stood at 41% in the third quarter of last year, compared to 43% in 2021.
Willis said he has seen those concerns first-hand. Commitment from top leaders can help, however, and it may help for HR people themselves to reassess their approach.
“Be very intentional about why you’re doing this work,” Willis said. “Challenge your organization to see if the current state of things is going to take us down the path to success in this regard, and if not, what can we do to change that direction?”
At the end of the day, founders, CEOs and other leaders make business decisions and own them, Lamm said, and HR’s role has the power to shape those decisions.
“We finally have a seat at the table,” he said. “But that seat is evolving in a way. The value that we placed in HR leaders at the beginning of the pandemic, I think it made people realize how important this role was.”
HR departments will need to hold themselves and their organizations accountable to previously stated goals, particularly in areas like DEI, Willis said. Qualitative outcomes, such as the amount of funds the employer has given to charitable causes or the number of connections made with external community partners, are one method of doing so.
“Stay the course,” Willis said. “Keep score, and make sure you’re measuring what you said you’re going to do.”