Introduction

In the past years, employee expectations have changed like never before. Did you know that employees trust their CEOs more than government leaders or that digital transformation advanced by half a decade after the pandemic? The value that HR traditionally provided has been turned upside down. That’s why, in 2023, HR will have to reinvent itself. If HR steps up to the plate and seizes this window of opportunity, it will create incredible value for the organization and its employees and help cope with the labor market trends in 2023.

To explore how to go about this, we must identify some HR trends that will shape the future of HR and help you navigate yourself and your HR teams into the year 2023. If you stick around this blog post till the end, you’ll get to know the single most important skill that HR professionals need in 2023.

First of all, we have highlighted 11 HR trends that will impact us significantly in 2023. Now that’s not all, we have categorized these into 3 overarching themes that help us understand some of the forces that are shaping the world of work. 

Our first theme centers around the changing expectations between the employee and the employer. The psychological contract has changed and this is reshaping the employee value proposition. This means that in the year 2023 we will have to revamp the value that we offer to our employees. 

Our second theme looks at where work takes place. Work is going beyond the employees and the organization and includes a contingent workforce, supply chain partners, as well as a digital metaverse. This has far-reaching consequences for how we practice HR.

Our third theme is the changing role of leadership. This includes leadership in the organization as well as leadership in HR. We’ll address the changing role of the Chief Human Resources Officer(CHRO), as well as the challenges for the line managers, and how we should deal with robot managers, which is a trend that is most likely to impact large organizations in 2023 already.  

But before we start talking about robots and algorithmic managers let’s dive into our first theme which is:

HR trends of 2023 about changing expectations between the employee and the employer.

HR Trends for 2023 No.1: Focus On Total Well-being

The psychological contract is changing in more than one way. Let’s start with expectations around employee well-being. Well-being has been at the front and center of HR policies since the pandemic. This will only become more relevant with a looming recession, the war in Europe, and the rising cost of living across the globe creating uncertainty and stress. That’s why in 2023, HR’s focus will be on total well-being. Total well-being is a holistic approach focusing not just on the physical, but also on mental and financial well-being. 

This includes investments in a culture of acceptance around mental health, creating an inclusive workplace for physical disabilities, implementing stricter work-life balance policies, initiatives to build financial acumen to help employees manage a rising cost of living, and actions promoting physical well-being. 

Focusing on total well-being, starting in the often overlooked HR department itself, is not just the right thing to do. Not investing in it will impact the stability of the organization, and, in line with our theme employees are expecting the organization to care about them, now more than ever before.  

HR Trends for 2023 No.2: Creating Purpose-Driven Organizations

Another changing expectation is the role of purpose in work. Where purpose used to be a nice-to-have, we are now seeing that purpose is becoming a prime directive. The purpose is one of the things that is valued across generations. Whether it is GenZ that is just entering the workforce or Boomers who have just retired and are willing to work a couple more years because they connect with the organizations’ goals. Organizations without a greater purpose will fail to attract and retain top talent. It is that simple. And if they do attract talent, that talent is more likely to be disengaged and join the quiet quitting or lying flat movement.

Beyond purpose, there is inclusion. Employees expect employers to create an inclusive environment that fosters a sense of belonging. Despite this, organizational leadership is still too often white and male. This needs to change. Embedding DEIB, i.e, Diversity, Equity, Inclusion, and Belonging into all our HR practices is again the right thing to do and it helps to create a more enticing employee value proposition, attract scarce talent and build a naturally diverse workforce. 

HR Trends for 2023 No.3: Inclusion Across The Employee Life-Cycle

Diversity initiatives now focus mostly on recruiting, but getting people in is not enough, we need to ensure that every person can contribute their unique gift in a way that feels safe and inclusive. To do this, HR organizations adopt DEIB across the HR value chain in onboarding, leadership development, promotions, benefits, and so on. 

2023 is the year in which we will start addressing racial disparities in company-provided healthcare, boost managerial diversity, tie executive compensation to diversity metrics, and so on. 

HR Trends for 2023 No.4: Increased Investments In Deskless Workers

A kind of diversity we don’t speak enough about is diversity in work activities. There has always been a clear divide between deskless workers on the one hand, and white-collar workers on the other. The pandemic only emphasized this. Where deskless workers were fighting the pandemic on the frontline, as nurses, in supermarkets, or processing food on an assembly line, white-collar workers were doing so from the comfort of their homes. Deskless workers were also hardest hit by the cost of living crisis.

This is driving discontent, we’re seeing strikes and record levels of resignations among deskless workers. One in twelve already switched jobs, either to study or to a cushier job. Another 37% are considering leaving their job in the next 6 months unless things change. Deskless workers should have similar opportunities as their white-collar counterparts, including career opportunities ad access to technology. The great news here is that HR technology for deskless workers is booming. So creating a great or at least a greater place to work for deskless employees will be another one of HR’s focus areas in 2023

HR Trends for 2023 No.5: Reshaping Workplace Learning

Before we move on to our next theme, we would like to throw light on one last changing expectation which is the role of learning. In 2023, organizations will invest heavily in strategic learning. This is the development of those skills that are aligned with the capabilities the organization needs to be competitive. This can include technical skills like automation, AI, and business intelligence, as well as soft skills like communication, time management, and critical thinking. 2023 will be the year in which organizations invest in the implementation of these skills in the flow of work.

Again, not just because it is good for the organization, but also because it provides perspective and opportunities for employees. This is yet another great way in which HR can do good for employees while advancing the organization’s goals. 

That brings us to our second theme which revolves around where work happens. In other words, what is our place of conduct as HR? Is that just our organization, or does it go beyond the organization? Spoiler alert: the next three HR trends show that in 2023 HR will go beyond the organization and its employees.

HR Trends for 2023 No.6: Redefining Remote and Hybrid Work Strategies

First of all, there is the physical location where work happens. Too many organizations are still caught in two minds with unclear working policies we need to get clear on whether we want to work in the office, hybrid, or remotely and if that is not yet the case for your organization, 2023 will be the year in which you’ll get clear on that. 

We think that it’s not an option to fully work from the office if it is not needed for your job. Take a look at this statistic. Remote jobs posted on LinkedIn made up less than 20% of all paid job postings, yet received 50% of all applications. Not allowing a hybrid or remote work policy will hold your organization back. 

Next, we expect that HR will go beyond employees in the traditional sense of the word. We believe that 2023 is the year in which HR will start to actively and holistically manage its contingent workforce, including contractors, gig workers, and external contributors. If we believe that our HR practices add value and increase employee productivity(and we do), they should all be included in our HR value chain. 

HR Trends for 2023 No.7: Managing Workforce Ecosystems

We call this trend managing workforce ecosystems. But there’s more. We also expect HR to start sharing best practices across the end-to-end value chain. If the pandemic has shown us anything, it is that value chains and value chain partners are crucial for supplying materials and for reputational purposes

Take Rihanna’s fashion label, Fenty Beauty, which was accused of using child labor in its supply chain. This shows that the HR practices of your supply chain partners impact your reputation. So HR will manage its workforce ecosystem, not only by including its contingent workforce but also by sharing best practices outside the organization. This is a way in which HR can deliver value to the organization by going beyond its traditional role. 

HR Trends for 2023 No.8: HR Enters The Metaverse

And third, HR will also move into the metaverse in 2023. According to Gartner, 25% of people will spend at least one hour per day in the metaverse by 2026. Applications include virtual events, employee onboarding, career fairs, as well as meetings. The metaverse allows us to reinvent the way we conduct these meetings. HR can reimagine a productive, collaborative and creative work environment that is unrestrained from physical norms. This also allows for a  more equitable playing field for people with disabilities. 

This wraps up our second theme which shows that the area in which we operate in HR has expanded. In 2023, work is not just done in the office by employees, HR’s reach will extend beyond the traditional employee into the contingent employees, but also include supply chain partners. With employees working increasingly remotely, the reinvention of the digital workplace, in the form of the metaverse, is another key trend for 2023.

HR Trends for 2023 No.9: The Rise Of Algorithmic HR

This brings us to our third theme, which is leadership. When we examine leadership – both in the organization and also in the HR – we discover our last three HR trends. First, the rise of algorithmic HR. 2023 is the year in which the majority of large organizations will start to manage employees with robots. 80% of global 2000 companies will use algorithmic managers to attract, hire, train and fire by 2024. These HR robots will be able to complement the manager and act like a sounding board.

They will have access to much more information than the manager does at the moment, providing input for complex decisions. But at the same time, this also creates a responsibility for HR as well. Algorithmic decision-making runs the risk of having existing biases in its decision-making models. Additionally, it also provides us with an opportunity to create systemic equity in the literal sense of the word- creating a system that is equitable and that makes work more inclusive. 

HR Trends for 2023 No.10: The Evolving Role Of CHRO

Now it’s not only robot managers that are evolving the role of CHRO is also evolving. This has a couple of reasons. During times of crisis, like the pandemic, the war in Ukraine, and the rising cost of living, the board looks at the CHRO to lead and respond to the crisis. This has propelled CHROs into becoming the key leaders of the organization. In addition to this, the fact in today’s world, employees have more faith in their own CEOs than in government leaders, journalists, and other business leaders.

60% of the employees expect their CEOs to speak out on the social and political issues they care about. This means that the CEO’s role is also changing, creating room for CHRO to understand employee sentiment better and counsel the CEO on when to speak up and what to say. 

At last, we look at the leaders in the organization. During the great resignation, many high performers have been promoted to managerial positions in an attempt to retain them. This means that today’s leadership pipeline is filled with new candidates with little to no managerial experience. Developing the next generation of leaders is a top challenge for 55% of CEOs, and for good reason! Organizations providing high-quality development experiences are 1.5 times more likely to have high leader engagement and retention rates. 

HR Trends for 2023 No.11: Upskilling Leaders and Managers

This is why the last one of our HR trends for 2023 is that HR will significantly increase investments in upskilling leaders and managers. HR will clearly identify and communicate leadership expectations, and build the skills needed for leaders to succeed. To do this, HR will invest in leadership development programs, training, mentorship, on-the-job immersive experiences, and talent rotation strategies for exposure, experience, and skill development.

At the same time, HR will remain connected to the employee voice and advise organizational leaders on how to lead and where to speak up. Upskilling leaders and managers are one of the crucial ways in which HR will add value to the organization. By ensuring the business and excellent leadership, HR is helping to safeguard continuity, boost employee retention and improve organizational performance in the long run. This will have a major impact on the business, not just in 2023, but far into the future. 

Bonus Tips

That brings us to the end of the 11 HR trends. It’s time we discuss the most important skill for HR professionals in 2023. There are two skills that are crucial in 2023, i.e, awareness and agility. Talking about awareness, it’s about continuous listening, which is crucial not just inside the organization but also outside of the organization.

We’ve talked a lot about reinventing the employee value proposition in our eleven trends. This can only happen by listening to employees and finding out what they care about. At the same time, we expect 2023 to be a volatile year as inflation is high, unpredictable job market and a recession is looming. All of this will impact our people policies and HR budgets. So we need to be aware of these developments.

Our second skill is agility. It’s one thing to be aware of employee and market sentiment, it’s another thing to take action on it. This requires agility, and that same agility will allow HR to step up to the plate and seize 2023’s window of opportunity. When times and expectations are changing, HR has the opportunity to be agile, to be leading, and to help drive how the organization attracts, retains, and manages talent.