CoAdvantage – The business world has been tested over the past few years, and 2022 has been no exception. The year has seen significant upheaval for businesses facing the first major interest rate hikes in years, ongoing labor challenges, and considerable geopolitical instability.
As always, HR is at the frontlines finding ways for businesses to navigate these challenges. It begs the question: what can employers and HR teams expect out of 2023? Though specific predictions are infamously hard to get right, it’s easy to see a few general trends taking shape.
The post-pandemic “Great Resignation,” in which people suddenly quit their jobs and employers were desperate for labor, is easing. Though labor demand has remained high through the end of 2022, the Federal Reserve’s relentless efforts to combat inflation will likely slow demand in 2023. Forbes terms this emerging shift the “Great Rebalance” as employers extend fewer job offers and employees engage in less job hopping.
It’s more difficult to predict whether 2023 will see widespread layoffs; signals here are mixed. 2022 is ending with the tech industry shedding tens of thousands of jobs, and Amazon at least has indicated layoffs will likely continue into next year. However, although unemployment is expected to rise in 2023, Bank of America predicts only a modest increase in the unemployment rate to about 5.5% in 2023 (versus greater than 10% in the Great Recession), so it may yet be possible for many (non-tech) employers to avoid mass layoffs.
Other surveys seem to support the inclination of employers to keep their workers. Workforce management firm Lattice, in its 2023 State of People Strategy report, finds that HR teams are shifting gears into 2023. “Last year, hiring was everything,” they write. “Today, HR teams are investing in the talent they already have.” Specifically, nearly half of survey respondents indicated that talent acquisition was formerly a top priority; today, only 17% do.
Advisory and analysis firm Gartner surveyed HR leaders to understand their priorities going into 2023, and leadership concerns topped the list. Specifically, 60% of respondents named leadership effectiveness as a top priority, with nearly a quarter (24%) acknowledging that their current leadership development protocols aren’t adequate to meet future needs. As Gartner notes, “As organizations and society evolve, so do the expectations for what leaders are responsible for, making their roles increasingly complex. HR’s typical approaches do not address the barriers that are holding leaders back.”
Even if a cooling economy makes labor sourcing and procurement easier, employers will likely still struggle to close skill gaps where there just aren’t enough people with the needed background or education. “As organizations continue to operate in an increasingly volatile, uncertain, complex, and ambiguous environment, they must stop reacting to short-term skills shortages and labor market changes and instead adopt a long-term mindset regarding skills,” says McLean & Company in their HR Trends Report 2023. This will require the development of a comprehensive talent management strategy that offers multiple opportunities for employees and leaders to address skill deficits – likely the focus for many employers in 2023.
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