HR leaders have been put to the test like never before in recent years. With the abrupt shift to remote work, mass resignations, economic volatility, and geopolitical upheaval, they were tested on all fronts. 2023 will be more than ever the year of human resources! 

As an HR Leader, do you know how to turn 2023 HR trends into opportunities?

Employee well-being, AI-powered data analytics, diversity and inclusion, remote and hybrid work strategies, and employee and skill development have been top HR priorities for organizations as they work to adapt to massive disruption and change. Many of these trends will continue and evolve in the coming year as companies focus on communication, skill development, and relationship management.

The importance of human resources will increase dramatically in 2023. We see the major HR trends emerging in 2023:

• The Increasing Importance of HR

Traditionally, most CEOs concentrated their efforts on investors, strategies, boards of directors, and other similar matters. The responsibility that was under the control of the HR department has frequently been overlooked. Previously incidental concerns like talent, culture, employee expectations, and company-employee relations are now at the forefront. In the past, people were hired to execute the strategy, but today they are a fundamental cornerstone of the strategy.

HR can lead the organization on how to define work, professional relationships, and organizational and team design through agile experimentation.

So, how can CHROs leverage this opportunity to inspire and facilitate change within their organizations?

-       Get involved:

HR managers should pay attention to the workforce's explicit and sometimes implicit needs. This necessitates the executive team to actively listen to a variety of voices within the organization and constantly recalibrate priorities as individuals implement the talent strategy. And then be prepared to modify (again) as circumstances and needs evolve and change. Above all, be willing to experiment and be vulnerable.

-       Make the connection:

HR must communicate their vision of company culture and invite diverse and opposing viewpoints into the conversation across race, gender, sexual orientation, and personal goals and ambitions. People want tangible proof that the organization they work for cares about their personal as well as professional needs from career development to mental health.

-       Shape the culture:

Engagement and connection will ultimately shape a good culture, which will drive the company's strategy and development. Nothing compares to culture. More than ever, corporate cultures must prioritize the future workforce and the future of work.

• AI-Powered Data Analytics and the Rise of Algorithmic HR

According to IDC, by 2024, 80% of the world's largest 2,000 companies will use algorithmic managers for hiring, firing, and training employees.

In many organizations, human resources already play a strategic role. In the future, data analytics and reports will assist HR in becoming more informed and objective. AI-enabled analytics platforms, for example, can assist in identifying employee leave trends, employees at risk of leaving the company, and much more. The timely availability of data will undoubtedly aid HR and management in making strategic decisions and mitigating potential risks.

According to IDC, 40% of international companies' HR functions have incorporated AI applications to help grow the candidate pool, enable faster hiring, and improve engagement and retention. HR professionals can make informed decisions about employees by collecting data on key metrics and using algorithmic managers powered by AI technology. Algorithmic managers can be an indispensable tool for processing large amounts of data, and they can be useful as a supplement to the complex decision-making that falls on HR professionals' shoulders.

It is critical to avoid incorporating any existing biases in pre-existing HR data when programming and operating algorithmic managers. As a result, the new or rewritten algorithm can promote the principles of diversity, equity, and inclusion.

• Diversity and Inclusion in Modern Organizations

According to a Harvard Business Review study, diverse companies achieved a 19% higher revenue from innovation.

In the future, the emphasis will be on creating a diverse and inclusive workplace culture. Many organizations around the world have already adopted the concept of diversity and inclusion (D&I), and others are working on creating a diverse and inclusive workplace where no one is left behind. An inclusive workplace culture is one in which employees of all backgrounds and characteristics are welcomed and valued. Companies are now using HR technologies to create a diverse and inclusive workplace by eliminating bias, improving connectivity, and training employees. Overall, the goal is to provide a safe, secure, and inclusive workplace for all employees from various backgrounds and geographical locations.

According to Forbes, ethnically diverse companies are 35% more likely to outperform, while companies that are gender diverse are 15% more likely to outperform.

To create an inclusive culture, it is critical to incorporate transparency and fairness into all employee-related processes, such as goal setting, performance appraisals, feedback, compensation management, and others. It is also critical to keep your workforce motivated, engaged, and empowered. 

• Remote and Hybrid Work Strategies

Throughout the pandemic, work has changed. According to McKinsey, the pandemic has accelerated digital transformation in organizations by three to four years. Companies have adapted accordingly. For example, according to LinkedIn data, remote jobs which account for approximately 20% of all jobs on LinkedIn, received more than 50% of all job applications. This demonstrates how resistance to some degree of flexible working will put organizations at a competitive disadvantage. Not all companies have recognized this workforce change, and they continue to cling to outdated strategies that once made sense. For instance, according to PWC, 95% of executives believe that employees must be present in the office to preserve company culture.

Employees prefer clear communication and up-to-date policies. By 2023, HR professionals will need to establish clear principles for how, where, and when work is performed. HR managers will facilitate internal discussions about this topic and encourage their organizations to make decisions, even if they are temporary, as organizations experiment with different workplace strategies. Professionals will also educate themselves and managers on how to overcome proximity bias, which is an unconscious tendency to favor in-office employees over remote workers. They will work on developing objective performance metrics, as well as promotion and salary increase criteria.

Clear working policies will influence office planning and utilization. This will result in better-designed workspaces, more flexible spaces to combat potential loneliness at home, and workspace allowances to upgrade home facilities.

• Employee Wellbeing

According to a Gartner survey of HR leaders, 47% consider employee experience to be their top priority for 2023.

Since 2020, employee expectations have shifted, and HR is witnessing the impact on the quality and quantity of employee attraction and retention across all industries. Every major event, from a candidate's first impression to hiring and onboarding, their career path and development, and their decision to leave the company, is critical.

Employee wellness is now a top priority for companies. To promote a healthy work environment for their employees, an increasing number of organizations are implementing technology and wellness programs.

Employee happiness and health have a direct impact on team productivity and overall company performance. As a result, it is critical to improving workplace conditions to enhance employee well-being and performance.

As a current trend in HR technology, the emphasis on employee well-being is expected to grow stronger. Companies will implement strategies to assist employees in avoiding burnout and work stress, which will result in higher levels of satisfaction and employee retention. In some ways, in the coming years, we will see more personalized health and wellness systems powered by employee data.

• Employee and Skills Development

According to Gartner's research, 58% of the workforce will need new skill sets to do their jobs successfully.

Employees are understandably looking for new opportunities for advancement elsewhere.

Improving employee skills is emerging as a major human resource trend. Upskilling and reskilling are critical not only for employee development but also for business growth. Organizations increase productivity and maximize investment by improving employee skill sets. Companies are encouraged to promote true innovation, reduce employment costs, and meet the needs of their customers. Employers have discovered that to meet future company requirements, they must clearly define the future skill set required for their employees. This will be one of the next global human resource trends to emerge, and it will be long-lasting.

As global organizations seek a competitive advantage through employee development, HR professionals are under increasing pressure to provide evidence of the success of their training initiatives. This will help people develop by providing the skills and behaviors needed to support the company's strategy and growth goals, as well as increase revenue. It also assists in concentrating talent development investments in labor and operational support areas that have the greatest impact on profitability, as well as attracting and retaining top talent through enhanced personal and professional development opportunities.

• Compliance with ISO 26000

According to Holmes Report, 83% of professional investors say they are more likely to invest in companies known for their social responsibility.

For businesses and organizations committed to operating in a socially responsible way, there’s ISO 26000. It offers direction to those who understand that upholding social norms and the environment is essential to success. The implementation of ISO 26000 is increasingly seen to evaluate an organization's commitment to sustainability and its overall performance, in addition to being the "right thing" to do.

The foundations of socially responsible behavior are outlined in ISO 26000's core values. Companies will make sure to incorporate those values into their DNA and into each decision they make as part of their approach to responsibility.

Since there is much more public pressure on companies to act more socially responsibly and uphold social standards, social responsibility has grown to be a significant concern. Organizations all over the world must take the necessary steps to improve their social performance and change the world. They can start doing that by focusing on their people and providing them with equal opportunities, transparency at the workplace, and opportunities to grow together with the organization.

Human capital is an organization's most asset and biggest competitive advantage. As a result, the most successful organizations are those that put HR at the core of their strategies and operations. The goal of ISO 26000 in human resource management is to assist HR departments in raising their levels of performance and, ultimately, the performance of their organizations. In the area of human resources, ISO 26000 has included labor practices as one of its core subjects, establishing requirements and actions that companies must take to demonstrate their socially responsible behavior.

EDLIGO Talent Analytics software assists improvement of an organization's HR sustainability strategy and helps to achieve their ESG goals. Talent Analytics can support HR with a constant flow of data to predict and measure the impact of key strategic decisions and evaluate the organization's future readiness.

For HR professionals to have a positive business impact in 2023 and beyond, we identified trends that every human resource department should be aware of. As the employee experience takes center stage in 2023, managers will focus on strengthening their bonds with their employees to support growth and development. The workplace has changed significantly in recent years and will continue to evolve. Companies will rely heavily on human resources, as well as the talent and experience of their teams, to meet the challenges ahead. To build a progressive workplace for the future, it is critical to implement the best HR practices and stay current on HR technology trends for 2023.

In an uncertain world, EDLIGO Talent Analytics assists organizations in establishing a clear, objective, and data-driven baseline for their employees. It offers an advanced analytics solution that helps corporations all over the world in driving targeted actions. Leaders can benefit from using the EDLIGO Talent Analytics solution to help shape business decisions, create internal mobility opportunities, personalize employees' career paths, and enhance teamwork and interpersonal relationships.

If you would like to know more about how AI and Talent Analytics can help your organization to succeed, please contact the EDLIGO team.

The Economist featured this week the illustration by Bernard Hage, a German Artist of Lebanese origin. The illustration sheds light on the impact of the economic downturn on the technology industry and the employees who have been affected by it, such as 2023 layoffs at some of the largest companies. 

Layoffs have become a common reality in today's global economy, especially with the rise of automation and globalization. The pressure of the stock market and concerns about a potential recession add to the uncertainty, as companies try to cut costs and remain profitable in a challenging business environment. This can lead to job loss for many employees and can have a significant impact on their lives and the broader economy. It's important for both individuals and organizations to be prepared for these changes and to have contingency plans in place.

Thousands of employees have been severely impacted by the widespread job losses, which have caused them to feel insecure financially and experience stress and anxiety. While layoffs may seem like a necessary step in the short term, they come with significant long-term consequences.

By taking a closer look at the costs and benefits of layoffs, this article provides a comprehensive understanding of why companies should consider alternative solutions to layoffs in the future.

Massive Layoffs Aren’t Over

Since the end of last year until today, major technology organizations have announced layoffs.

With Twitter laying off 7500 employees and Google following suit with 12000 employees, the trend is set to continue through 2023. Table 1 highlights the companies that have announced job cuts and the number of employees impacted. This information was gathered from publicly available data sources.

Employee Layoffs May Create More Problems Than They Solve

Layoffs may result in immediate savings, but they can have catastrophic long-term effects on an organization.

The article by Harvard Business Review collected various studies published by scholars all around the world and concluded that the majority of organizations that decided to conduct layoffs do not see improved profitability, return on assets, return on equity, or return on sales. Layoffs are also negatively influencing performance of companies, which highly rely on R&D.

Good Reasons for Not Laying Off Employees:

• Hiring an Excellent Team Takes a Lot of Effort

Recruiting and retaining talented employees is one of an organization's most challenging responsibilities.

One of the worst mistakes is letting go of the right people once companies find them. Although downsizing may initially result in some financial savings for large corporations, what if those same enterprises end up losing the skills necessary for long-term success?

The extreme option is to fire employees. But there are always better options to consider. Instead of letting go of a fantastic team, companies could consider cutting back on part-time workers and consultant hours, as well as other expenses such as unused tools, technology, or benefits.

• The Severance Pays and The Costs of New Hires Are High

Severance paying for laid-off employees can also add to the costs for companies. Notice of termination compensation is common in many countries to provide financial support to employees who have lost their job. It is meant to help them transition to a new job and provide some financial stability during the transition period. The length of the notice period and the amount of pay can vary depending on the country, the type of job, and the length of service of the employee. Indeed, some employees may not be as productive during the notice period, especially if they are actively seeking new employment.

When laying off employees, one error that many organizations make is eliminating positions that they cannot afford to lose.

Costs of hiring, recruiting, and training can be significant for companies. Recruiting and hiring new employees require resources such as advertising and job search sites, as well as time spent by HR staff reviewing resumes, interviewing candidates, and conducting background checks. According to the U.S. Department of Labor, the price of a bad hire is at least 30 % of the employee's first-year earnings. Bringing in new employees requires costs that include both direct costs and costs associated with the time and effort spent during the process.

Check more about recruiting costs here: Why Losing the Best Talent is so Costly.

• It's Challenging to Find Employees

Today's companies, especially small and medium-sized ones, have a difficult time finding and retaining talent.

The commitment and productivity of the company's employees might be disrupted by downsizing, which can have an impact on revenues and bottom-line earnings. Downsizing results in the loss of experienced talent and disrupts the social networks necessary to foster creativity and adaptability within the organizational culture. If management doesn't respond right away by rethinking tasks and introducing new technologies to make up for the loss of talent, this could have a significant negative impact on the company's success.

The HR department assumes a key leadership and management role when it comes to avoiding layoffs. The extent of their investments in physical and human capital is being reevaluated by several technological organizations. Companies intend to restructure their workforce, but they are having trouble doing so because of a lack of data and advanced tools.

Avoiding Layoffs During Challenging Times

Layoffs are frequently one of the first fears that come to the thoughts of professionals during challenging economic times. Many companies resorted to employee layoffs during severe economic downturns or impending recessions. Layoffs do not, however, must be the sole option. The strategies organizations can use to prevent firing people during lean times are discussed here, along with reasons why they would be a better long-term option.

• Reduced Hours and Temporary Pay Cuts

Employees could be asked to work fewer hours or accept a temporary wage cut to help the company get through these trying times rather than being let go. The organization must be fair and equal in any reductions that are implemented, as well as clearly and honestly communicate the situation to employees. To aid team members in the transition, it is also beneficial to provide support services like counseling or financial planning tools. This could assist in keeping jobs and boosting morale.

In general, when facing difficult circumstances, it's critical for companies to be proactive and weigh all their options. According to Gartner, 77% of employees say Senior Executives should be willing to take a significant pay cut before they reduce headcount or make changes to employee compensation.

As an example, Intel made several changes to its 2023 employee compensation and rewards programs as it continues to manage macroeconomic challenges and try to cut expenses throughout the organization. CEO of Intel Pat Gelsinger will receive a 25% cut of a baseline salary, with the rest of the executive team receiving a 15% cut and mid-level managers - a 5% cut. These changes are intended to support workforce expansion and the investments required to speed up the transition while achieving the long-term vision.

• Remote Work

When times are tough, avoiding layoffs is possible by embracing remote working. By eliminating the need for office space and all its associated expenses, including rent, utilities, and equipment, a remote workforce enables organizations to reduce costs. The resulting cost savings could help managing layoffs and keeping employees on board during challenging times. Ultimately, embracing remote working is a great way to increase productivity while reducing costs. A poll by Business Insider shows that 39% of employees would consider quitting their job if not provided the opportunity to work from home. 

• Training Programs

Investing in a strong training program is one of the best strategies to keep employees from being let go. Companies can move team members around if they are adaptable and capable of performing different responsibilities when one department or position becomes stagnant. Executives in all industries who want to guarantee optimal productivity and job security must have a team with a variety of skill sets and competencies.

The HR department plays a crucial role in managing and executing layoffs, as they are often responsible for communicating the changes to employees, handling benefits and severance packages, and ensuring compliance with labor laws and regulations. As companies reassess their investments in both physical and human capital, the HR department must navigate these changes with sensitivity and fairness.

The lack of data and advanced tools can make it challenging for companies to restructure their workforce effectively and efficiently. Without access to reliable data, companies may struggle to make informed decisions about which employees to retain, which positions to eliminate, and how to manage the transition process. This can lead to delays and difficulties in implementing the changes, as well as a negative impact on employee morale and company reputation.

Companies need to invest in the tools and resources needed to make informed decisions about their workforce. By leveraging data and technology, HR departments can develop effective workforce management strategies that minimize the negative effects of layoffs and support the long-term success of the company.

EDLIGO Talent Analytics assists organizations in establishing a clear, objective, and data-driven baseline for their employees. The EDLIGO platform helps organizations identify top performers and future leaders, discover great skills within their organization, develop employees for the future, increase retention rates, and maximize employee engagement.