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.