Get Ready for the Top 5 HR Trends in 2023
HR can make an impact in a business by identifying the forces creating instability and linking HR processes.
There is still tremendous opportunity for organizations to integrate their HR programs.
Employers should tap into existing data to better understand what their employees want and need from a total rewards perspective.
By effectively measuring and capturing wellbeing data, companies can then design wellbeing programs that address the real needs of their workforce.
HR plays a crucial role in enabling companies to achieve their strategic goals in a complex and challenging environment that’s transforming the workplace. Some of the factors impacting the workforce include:
- A more volatile business environment triggered by challenging macroeconomic trends and geopolitical instability
- Greater demand and opportunity to focus on employee wellbeing
- A more dispersed workforce and talent pool due to hybrid and remote work
- Ongoing difficulty with attracting and retaining talent
- Demand for talent with the right skills for the future
The HR function has a unique opportunity to partner with other areas of the business to address these challenges in a holistic way. Leaders can have a compounding impact on their initiatives by connecting the forces that are creating instability and linking HR processes. For example, attracting talent in this market is challenging, companies’ hiring budgets may be more constrained, and the need for future skills in the workforce is as great as ever. These forces create an opportunity for companies to double down on their retention, engagement and re/upskilling programs.
Here are five trends where HR professionals have an opportunity to lead and turn challenges into opportunities.
1. Economic Uncertainty Requires a Reimagining of Total Rewards.
While employees are concerned about the impact of inflation on their household bills, employers are facing the challenge of balancing rising costs with providing appropriate support — all while hiring and retaining the right talent to fuel growth.
“For most people, the cost of living, inflation and economic uncertainty will remain the worrying backdrop to everyday life in 2023. This is close on the heels of the pandemic, whose high toll on mental health and resilience is still very much playing out,” says Rachel Fellowes, chief wellbeing officer at Aon.
Employers should tap into existing data to better understand what their employees want and need from a total rewards perspective and then use existing platforms to efficiently deliver those compensation and benefits. Too often, companies tie total rewards to an industry benchmark that isn’t relevant or, worse yet, based on faulty assumptions and guesswork. Companies should also clearly communicate their total rewards programs in an environment where compensation might not be as robust as prior years. Consider what other benefits employees are receiving and how effectively these benefits connect with employees’ needs — and then measure this over time.
Where is the Opportunity for HR? Think of Alternative Cost-Cutting Initiatives.
Companies must always invest in their core talent, but this is particularly true in an uncertain business environment. Trying to achieve growth by cutting costs will leave organizations vulnerable, particularly when the business environment shifts favorably.
“If headcount reductions really are the only option, they need to be looked at holistically and with added consideration for future needs and potential, as well as the impact this will inevitably have on diversity and inclusion,” says Michael Burke, CEO of Human Capital Solutions, Aon.
Alternatives to reducing headcount or other dramatic measures could include:
- Rethinking operating models to include shared service models and outsourcing
- Modifying organizational design to foster efficiency through grade alignment
- Aligning employee benefits to employee needs
- Cutting the costs of service providers and travel and entertainment
- Employing technology and digitalization to promote efficiencies
- Utilizing alternative financing models to fund insured benefits, such as benefits captives
For more information about how employers can support their people during a time of high inflation, please read our article, Increasing Inflation: Key Considerations for Employers Looking to Provide Better Support.
2. Wellbeing Continues to Rise in Importance Across Every Region — But Initiatives Don’t Always Match Stressors Impacting Employees
Companies should focus on their wellbeing strategy and make it more comprehensive. Nearly two-thirds of organizations globally say employee wellbeing is more important to their company since 2020, and 47 percent say employee wellbeing has become a bigger priority since 2020, according to Aon’s 2022-2023 Global Wellbeing Survey.
Respondents who say employee wellbeing is more important to their company since 2020:
It’s clear why wellbeing has risen in importance: Driving wellbeing initiatives attracts talent in a tight job market and creates positive business results. Aon's 2022-2023 Global Wellbeing Survey found improving employee wellbeing factors can enhance company performance by at least 11 percent and up to 55 percent.
Where is the Opportunity for HR? Develop an Agile Wellbeing Strategy that Connects Initiatives to the Issues That Matter Most to Employees.
Companies should consider designing wellbeing initiatives that more closely match the stressors impacting employees right now. For example, many of the financial wellbeing benefits companies offer center on retirement savings plans or "saving for retirement" seminars. But the financial wellbeing issues reported to impact employees the most are focused on the immediate term (e.g., living paycheck to paycheck, paying off debt) — concerns that are only exacerbated by high inflation.
In practice this could mean committing to new ways of measuring wellbeing. Aon’s Human Sustainability IndexOpens in a new tab, for example, measures wellbeing, resilience and sustainability at the individual, team and organizational level. Once a baseline measurement is determined, employers are much better equipped to decide what changes they need to make to their wellbeing initiatives to drive improved return on investment and growth.
Access the full results of Aon’s 2022-2023 Global Wellbeing Survey.
3. Wellbeing Is Starting to Be Integrated Into Company Culture and Key Business Initiatives
No longer a standalone issue, wellbeing is increasingly being integrated into company culture and key business initiatives, as well as other areas of human capital management. In 2020, 67 percent of respondents to Aon’s Global Wellbeing Survey said they were partially or fully integrating wellbeing into their business and talent strategies. That number jumped to 80 percent in 2022-2023.
Across different regions, we see roughly half of our survey participants report some level of integration of DE&I and wellbeing, with Asia-Pacific reporting the strongest connection.
DE&I Strategy Moderately or Comprehensively Incorporates Wellbeing
Where is the Opportunity for HR? Stay Ahead of the Curve by Integrating All HR Programs.
Despite progress, there is still an enormous opportunity for organizations to integrate all of their HR programs. Linking programs together will identify gaps in coverage across employee populations. For example, are your organization’s health and benefits programs better in one location or among certain demographics? In one instance, Aon’s 2022 Global Diversity, Equity and Inclusion Survey found that 29 percent of employers report inconsistent benefit structures across their employee populations. This can lead to bias in plan design and have a negative impact on DE&I and wellbeing programs.
Access the full results of Aon’s 2022 Global Diversity, Equity and Inclusion Survey.
4. Future Skills Planning Has Become More Urgent as the Skills Gap Persists.
There are many questions to sort out in assessing and strengthening the future skills needed in the workforce. How do you know which current employees have the potential to learn, change and adapt? How do you reward for hot skills? Where do you source new talent with these skills and help existing employees through the transition?
Regardless of industry or location, businesses need their talent to possess the core competencies of their job in addition to technological acumen and adaptability. Employees with technological knowledge can understand and use new technologies, such as cloud-based tools, artificial intelligence, machine learning and big data. Technological acumen also means workers on the factory floor can work with new digital tools. In addition, your workforce must be adaptable to new situations by learning emerging technologies and processes and adapting to customer demands.
Indeed, failure to innovate and meet customer needs is identified as the number 10 risk facing businesses around the world, according to Aon’s 2021 Global Risk Management Survey. This risk is closely tied to having talent with the right skills. As companies build these future skills among their workforce, they are more likely to drive innovation and execute on their strategy.
Where is the Opportunity for HR? Invest in a Future Skills Framework That Will Help Answer These Questions.
There are three steps in creating a skills framework.
- Identify the workforce skills that your organization needs to fulfill its strategy — and connect those skills to the firm’s job architecture so these initiatives are in sync.
- Conduct a future skills assessment to identify where there are gaps in the workforce for those necessary skills. For example, do you lack people that understand how artificial intelligence can be used to enhance current processes?
- Develop workforce strategies to close this skills gap. This includes both reskilling and upskilling talent where possible and acquiring future skills through hiring the right talent.
Future skills planning is a common challenge to career development. One in five participants of Aon’s 2022-2023 Global Wellbeing Survey named a “lack of clear career path” as a top five issue for their organization.
Employers that identify current talent with the potential to develop future skills will not only close their skills gap; they will also create a more compelling employee experience.
Read about Aon’s approach to helping companies manage their workforce skills.
5. Boosting Your EVP Is Critical to Attracting and Retaining, But it Will Only Come from Improving Other HR Initiatives.
Foster a culture around a sustainable working life by developing a human-centered employee value proposition (EVP). Companies should keep in mind that most employees bring their whole selves to work. Compartmentalizing their “professional self” from their “personal self” no longer works because you can’t genuinely separate the two. The answer is to support both to create a sustainable working life.
The overall experience that employees have is more than any one HR initiative. Employee benefits may be more important to some individuals while others care more about their career development. The EVP is the collection of an employer’s values, culture, policies and benefits.
Where is the Opportunity for HR? Track Your Firm’s EVP Over Time and Ensure the Relevance and Impact Remains Strong.
People are becoming more aware and selective about the type of organization they want to work for. In a post-pandemic environment, more workers are telling us through surveys and client engagements that they are looking for an organization with a sense of purpose and belonging, values that align to theirs, and employee wellbeing programs and flexibility that are core to overall total rewards.
To create a compelling EVP consider the following:
- Use internal and external benchmarking data around skills and benefits to help reevaluate current programs.
- Strengthen the communication of what your organization offers so current and prospective employees know what value they are receiving or can expect.
- Survey employees frequently to determine what is important to them — we have seen how much this can change in the past few years.
Explore more of our insights around workforce resilience.
Embrace These Trends for a Competitive Talent Strategy
The nature of managing people is that trends change over time. What people want from the workplace evolves — as the pandemic and rise of remote work has shown. However, many of these HR trends have been set in motion for years. For example, wellbeing was already rising to the top of the HR priority list well before the pandemic. What has changed is how companies have improved their strategy around wellbeing; they are thinking about the topic more holistically and syncing those activities to other HR programs.
Employers that embrace change and measure and adapt their programs will ultimately improve their ability to attract, retain and sustain their workforce.
The information contained herein and the statements expressed are of a general nature and are not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information and use sources we consider reliable, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
The contents herein may not be reproduced, reused, reprinted or redistributed without the expressed written consent of Aon, unless otherwise authorized by Aon. To use information contained herein, please write to our team.
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