Gartner HR insight | The trends set to shape the workplace in 2023

The trends set to shape the workplace in 2023

The 2023 working year is now well underway.

After a well-earned Christmas break, many will have spent the first week of January catching up on emails and getting back up to speed. And with the wheels now fully in motion, many HR leaders will be turning their attention to the challenges that lie ahead in 2023. The past few years have brought unprecedented and unforeseeable headaches for many in the People Function, and 2023 could well be just the same. As such, it’s important for CPOs and HRDs to consider what might be some of the most pressing issues they could face this year.

Below, Gartner HR provides HR Grapevine with an in-depth look at the trends they expect will shape the workplace in 2023:

“Quiet hiring" creates new avenues to snag in-demand talent

Despite worries about a forthcoming recession and a wave of companies announcing layoffs in late 2022, the labor market remains hot. Gartner benchmarking shows that while more HR leaders are becoming optimistic about the market cooling off in the next six months, a majority still expect it to get more competitive, not less. Organizations find themselves having to keep the in-demand talent they have — and find the critical talent they need — in a resource-constrained environment.

Anyone on LinkedIn will remember the viral wave of “quiet quitting” headlines from the second half of 2022. When employees “quiet quit,” organizations keep people, but lose skills and capabilities. In other words, organisations are finding it harder to obtain new talent as well as to get more out of their current employees.

To combat the tricky combination of economic slowdown and talent market squeeze, the best HR leaders will turn to “quiet hiring” — acquiring new skills and capabilities without acquiring new full-time employees. We will see this manifest in a few key ways:

  • New focus on internal talent mobility to ensure employees are deployed to the priorities that matter most and the opportunities that engage them best without fluctuations in headcount.

  • Renewed emphasis on stretch assignments and upskilling for existing workers to fulfil employees’ career aspirations while meeting evolving organizational needs as well as.

  • Redoubled efforts to retain talent and prevent continued attrition through more robust employee engagement, flexibility, well-being and development offerings.

  • Experimentation with alternate employment and sourcing models (including alumni networks, gig/contract work) to flexibly bring in new talent without relying exclusively on full-time employees.

  • Fighting for new full-time external talent will be a much less attractive option for many organisations in 2023, and we expect many organisations will turn to quiet hiring as a way to help keep payroll costs low, assist with retention, and cultivate home-grown skills. As many workers feel overworked or burn out, organizations will need to strike a balance between building employees’ skills and protecting their well-being.

Hybrid flexibility reaches the frontline

Entering a more permanent era of hybrid work for desk-based employees, organizations are struggling to find an equitable solution to worker flexibility for those on the frontline. Manufacturers, healthcare workers, and service workers have missed out on the benefits of remote and hybrid work that they’ve seen their desk-based counterparts enjoy. Eighty percent of organisations have frontline workers, and attrition for frontline roles has increased to 200% in the last 12 months. Only two in five hourly frontline workers say employees at their organization are fairly rewarded and recognized, and only three in five say their organisation has consistently treated them well.

To address this inequity, many organizations have sought to make the workforce-wide experience fair by simply making it equal: mandating on-site work for those who could work elsewhere. More than six in 10 organizations have some sort of on-site requirement for employees whose work can be done remotely.2 But this approach — limiting flexibility in the name of fairness — only serves to make everyone unhappy.

Give the support your employees deserve if you are planning on making redundancies

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In 2023, smart organizations will turn back from rigid return-to-office mandates and instead pursue formal strategies for more flexibility for the frontline workforce. A Gartner 2022 Candidate Survey of 680 frontline candidates found that the job characteristics most likely to attract them to roles are:

  • More control over their schedules

  • More paid leave

More stability in work schedules

Investing in frontline worker flexibility can also improve business performance goals – more managers at companies investing in frontline worker flexibility believe their employers have met or exceeded quality improvement goals than those not investing in frontline worker flexibility. The best will invest in maximizing flexibility where they can for all types of workers.

Managers are sandwiched by leader and employee expectations

For hybrid workforces, managers are now the primary – if not only – colleagues their direct reports interact with regularly. Sixty percent of hybrid employees say their direct manager is their primary mode of connecting to their company’s culture.

The demands of today's working environment, however, have many managers feeling out of their depth. Senior leaders direct them to implement corporate strategy, such as hybrid and onsite work policies, while employees expect their managers to provide a sense of purpose, flexibility, and career opportunities. These two pressures often do not align. Managers feel “squeezed” from above and below, pushed to the breaking point navigating conflicting mandates, expanding responsibilities, wider spans of control, and accelerated turnover. In fact, 59% of managers think they need to be better at balancing multiple stakeholder interests compared to three years ago.

In 2023, the best leaders will relieve pressure on managers by providing support and training to mitigate the widening managerial skills gap while clarifying manager priorities, making it clear how managers should allocate their time amid increased responsibilities, and redesigning their roles where necessary.

Pursuit of non-traditional candidates expands talent pipelines

For years, organizations have talked about the strategic value of expanding and diversifying their talent pipelines. Now, two confluent trends are forcing business leaders to take action:

On the supply side, employees are increasingly charting non-linear career paths: 56% of candidates report applying for jobs outside their current career.

On the demand side, businesses can no longer meet their talent needs through traditional sourcing methods and candidate pools. Furthermore, hiring managers are less concerned with industry experience and technical skills than they were in the past.

To fill critical roles in 2023, organisations will need to become more comfortable assessing candidates solely on their ability to perform in the role, rather than their credentials and prior experience. We will see firms taking several approaches to do this, including relaxing formal education and experience requirements in job postings and redesigning roles around tasks.

For instance, HR may encourage hiring managers to create more generalist positions and split specialised tasks among them, or conversely, to define highly specialized roles that focus heavily on a small number of specific tasks. Lastly, progressive organisations are reaching out directly to internal or external candidates from untraditional backgrounds who might not have access to certain professional opportunities or even be aware of them.

In 2023, many companies will change the way they think and talk about hiring untraditional talent, and those that succeed at recruiting and retaining outside-the-box candidates will have a significant leg up in the competitive talent market.

Healing pandemic trauma opens a path to more sustainable performance

The challenges of a global pandemic, including unemployment, supply chain shortages, isolation from family and friends, illness, grief and intense political fractures created intense stress. While the immediate threats have subsided for many, the exhaustion associated with collective global trauma persists, and in some cases has been replaced with stress around inflation, layoffs and a potential recession. In 2022, employees’ stress and worry grew above even 2020 peaks — nearly 60% of employees are stressed at their jobs every day.

Even if employees don’t personally identify as traumatized, the collective impact will continue to echo in organizations in 2023 – for instance, more complex mental health challenges and considerations around fair policies for time off. Grappling with the pandemic’s personal toll becomes not just an issue of employee wellbeing, but of overall organisational performance.

Eighty-two percent of employees say it’s important that their organizations see them as a whole person, rather than simply an employee. In the coming year, the best firms will:

Institute a wide variety of strategies to support proactive rest for employees – helping employees maintain their emotional resilience and performance rather than offering rest as a recovery solution after both have plummeted. When organisations offer proactive rest, they see a 26% increase in employee performance.10 Increase in discussion venues for employees to air challenges and difficult topics without judgment or consequences.

Provide trauma counsellors or other mental health support, especially when the workforce includes large populations of frontline or essential workers, to help individual employees address challenges and coach managers on navigating the needs of their teams.

Organisations drive DEI forward amid growing pushback

Diversity, equity and inclusion (DEI) efforts remain important to creating an equitable environment for employees as well as building stronger, better performing organisations. Yet many are confronting greater resistance from some of their employees. Forty-two percent of employees say their organisation’s DEI efforts are divisive, and another 42% even resent their organization's DEI efforts.

Gartner experts define employee resistance to DEI efforts as pushback. This pushback — often from dominant groups — invalidates, disrupts or disconnects the workforce from programs meant to enable marginalised groups.

Unchecked pushback can result in decreased workforce engagement and inclusion, along with lower levels of trust. Forty percent of employees say they would leave their organization if they could not trust leadership to fulfil its DEI commitments.

In 2023, organisations and leaders need to engage resistant employees whose pushback, whether subtle or unintentional, is an obstacle to DEI efforts. They must provide managers with tools and strategies to address pushback early before it evolves into more disruptive forms of DEI resistance. This is crucial for maintaining the momentum of DEI efforts and achieving greater maturity and strategic impact.

Getting personal with employee support creates new data risks

Organisations in 2023 will operate at the intersection of two important trends. First, a growing sense of organizational accountability for employees’ well-being: After years of collective upheaval and a workforce-wide reassessment of the importance of work, organizations are grappling with a new mandate to better support the human needs and unique contexts of their employees. Second, the post-COVID explosion of remote and hybrid work has led to a commensurate HR tech boom. Organisations have invested more in adopting and advancing technologies to help employees collaborate, navigate a hybrid environment and track their work.

Those two trends can, in theory, support one another. Organisations are increasingly using emerging technologies (including AI assistants, wearables, and more) to collect more data on employees’ health, family situations, living conditions, mental health and even sleep patterns in order to respond more effectively to their needs. But this also creates a looming privacy crisis.

Organisations’ technological capabilities are expanding more quickly than leaders can fully understand and control the impacts on their employees. Supporting employees more fully means knowing more about employees as people, a shift that has the potential to violate boundaries around what was once considered deeply personal and private information.

Employers must prioritise transparency around how they collect, use, and store employee data, as well as to allow employees to opt out of practices they find objectionable. Progressive organizations will use 2023 to create an employee data bill of rights to support employees’ needs for healthy boundaries in addition to overall well-being.

Gen Z skills gap reveals workforce-wide erosion of social skills

Since Gen Z entered the workforce about five years ago, business leaders have voiced concern that this extremely online generation lacks the social skills necessary to thrive in the workplace. At the same time, with the rise in remote and hybrid work, many new-to-the-workforce employees have had few in-person opportunities to observe norms, pick up on professional nuances, or determine what is appropriate or effective within their organizations. The expectations of managers when it comes to new hires’ “soft skills” may simply not align with the experiences they’ve had available to them, at a time when most employees think these very skills are becoming more critical to success in the workplace.

Organisations must redefine professionalism for their entire workforce.

A good place to start is more intentionally crafting interactions among employees. In a hybrid environment, the individual interactions that foster connectedness and collegiality no longer happen organically: Currently, only 31% of employees have human-to-human connections with their colleagues.14 Leaders may be tempted to try and solve this problem by forcing employees back to in-person work, but our research on culture connectedness shows physical proximity is neither necessary nor sufficient to create these connections.

Connections should be built across generational and geographic boundaries, with a foundation of employee choice and autonomy, a clear structure and purpose, and perhaps most importantly, a sense of levity and fun. When organizations approach building connections with these priorities in mind, employees are 12 times more likely to feel connected with colleagues and 5 times more likely to be on a high-performing team.

Emily Rose McRae, Senior Director, Gartner HR, says: “UK businesses have been forced to invest heavily in their workforce and operations to adapt to post-pandemic trends in recent years. Now, faced economic uncertainty, leaders are facing crunch decisions on what to continue to prioritise and how to evolve in 2023.

“One of the most significant shifts anticipated is the slowing pace of adding new headcount, though many organizations will still be facing talent shortages. We expect organisations to find new ways to acquire the skills they need, including driving talent mobility, pursuing alternative employment models or rethinking talent pools to include non-traditional candidates.

“This will make businesses more reliant on the development of their existing employees. Upon the shift to hybrid work, many reduced training due to high turnover and limited programmes to technology-based skills. A skills shortage will subsequently be exposed as the economic struggle intensifies – particularly with Gen Z employees who are new to the workforce and have had fewer in-person interactions – so leaders will need to find ways to address this.

“Another trend will be managers becoming increasingly squeezed by competing priorities from both executives and employees. Following the pandemic, many managers became the single point of contact with employees and responsible for wellbeing and morale. Managers feel “squeezed” from above and below, pushed to the breaking point navigating conflicting mandates, expanding responsibilities, wider spans of control, and accelerated turnover. But in a potential economic downturn they must do all of this with even fewer resources. Top companies will look at how they can provide more support and training to managers during this period.

“Finally, businesses are bracing themselves for a wellbeing crisis in case an economic crisis bites. 2022 was the worst year on record for employee stress and worry, but many leaders begun to understand the correlation between wellbeing and performance. They will look to prioritise proactive rest for employees in the New Year – our research shows that organisations who do so can see a 26% increase in employee performance and increase resilience and job satisfaction”.

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