The State of HR Trends in 2023: 15 Predictions to Look out For

The last few years have changed the business landscape and hence HR. For businesses. For leaders. For employees. For humanity.

Employees are now starting to ask radically human questions. They are looking for more than salary, appraisals, holidays, and benefits. Why am I doing this? What is it for? How can we do it better together? Many are choosing to leave their jobs for better ones that align with their personal values causing higher employee churn rates. Naturally, the competition to attract and retain new talent is growing fiercer than ever.

Phrases like ‘great resignation’, ‘war of talent’, ‘future of work’, and ‘work 2.0’ are overused. Yet, somehow they still take center stage at every event and every discussion.

So, the big question is—Do these words hold any water, or is 2023 going to be another ‘unprecedented’ year? Let’s find out!

3 top aspects in which HR has changed over the last 10 years

1. HR as a function has turned proactive over the last two decades. Access to data and analytics has made it possible to predict upcoming challenges or needs, and course-correct proactively.
   
   Take, for example, employee experience. Earlier, HR would look backward to track and measure employee performance and engagement. Today, HR can analyze data on ongoing employee performance and engagement to identify trends and make predictions about things like retention risk or potential for promotion.
   
   
2. The HR function is no longer seen as an administrative or operational function like it used to be several years ago. Instead, it plays a key role in company strategy and decision-making. HR owns strategic responsibilities and works in tandem with the leadership teams to drive business results.
   
   
3. With the arrival of remote work culture, businesses rely heavily on virtual HR practices and strategies to offer their employees a competitive employee experience. It's the foundation for employee retention, employer branding, hiring, productivity, and everything else that affects the business.

With that said, it's time to part ways with some old HR trends and embrace the new ones.

Goodbye, old and irrelevant HR trends 

Yes, it's time to let go.
Many of the old HR trends are no longer relevant in today's business environment.
Let's look at some examples.

1. Annual performance reviews:
   Many organizations have moved away from traditional annual performance reviews. Instead, they embrace more frequent, ongoing feedback to enable continuous growth.
   
   
2. Rigid dress code:
   In recent years, companies have been titling in favor of relaxed dress codes, as they recognize the importance of employee comfort and personal expression.
   
   
3. Fixed work schedules:
   The trend towards remote work and flexible schedules has made rigid 9-to-5 work schedules almost obsolete.
   
   
4. Hierarchical organizational structures:
   Flat, matrix-based organizational structures are gaining popularity as companies look to increase collaboration and empower employees.

These trends may still be relevant for some organizations, but are no longer universally applicable or widely adopted. If it's not relevant to you, bid adieu. 

On the other hand, you need to stay up-to-date on the latest HR trends and practices to ensure that you are using the most effective and competitive approaches.

15 HR trends that ambitious HR teams will embrace in 2023

1. The increasing use of technology in HR

Today's HR landscape has powerful technology to solve the different HR challenges companies face. The solutions are affordable, easy to use, and quite scalable as businesses grow. Picking the right technology at the right time ensures growth and is not hindered by everyday transactional difficulties. It also makes room for HR to focus on more strategic areas. 

Companies also have the freedom to choose what goes into their HR tech stack and when based on their challenges and stage of growth. 

Here are some examples of tools you can include in your HR tech stack:

1. ATS (applicant tracking software)
2. New hire onboarding software
3. Employee engagement software
4. Performance management software
5. Workflow management software 
6. HR automation tools
7. Employee self-service software

2. The growing importance of diversity, equity, and inclusion

Some observations from Amber (the smart and quirky HR chat assistant from Infeedo) over the last few years:

1. 71% of male employees see a growth path in the organization, while only 66% of females (5% less than males) feel the same way.
2. Tenured employees feel that their growth has been stalled and restricted despite their extensive contributions throughout their tenure (recognition, promotion, growth, etc.).
3. Employees feel that their organizations double down in hiring new employees more than putting efforts to solve issues with the employees who are currently serving.
4. The majority of employees still feel that promotions and appraisals lack transparency. Many find preferential treatment or favoritism to be common.

With the remote market opening up global opportunities for candidates, employee retention is getting more challenging.

Ensuring that employees feel seen, heard, and included will directly impact their loyalty. Companies understand this. So in 2023, we will see active DEI efforts to overcome bias and build a culture of true inclusion, where employees experience a sense of belonging.

3. The increasing focus on employee well-being

One of the HR trends that emerged through the pandemic season is companies invested in the mental well-being of their employees and experienced the positive impact it had on business. For example, the mental and physical health of an employee directly impacts productivity and engagement.

In 2023, more companies will implement employee wellness programs and initiatives. This could include offering resources such as gym memberships, free mental health support services, on-site yoga classes, or something fun like free football coaching!

Technology and people analytics may even play an important role in monitoring and supporting the well-being of employees. Would you believe us if we told you that you can predict employee burnout before it happens with simple tools?

4. The rise of remote work

The COVID-19 pandemic gave our world a taste of remote work. It accelerated employee preferences toward remote work. This trend will likely continue in the coming year as businesses and employees have both enjoyed the upsides of remote work.

Employees love flexibility and work-life balance. They also enjoy the opportunity to work for any great organization around the globe. Organizations discovered that remote work leads to cost savings. They can also attract top talent from across the globe.

So, companies will continue to adapt to the changing business landscape. They will look for ways to support the needs and preferences of their employees.

5. The increasing use of artificial intelligence in HR: 

AI has empowered HR to streamline everyday routines that wreck HR productivity. For example, consider the HR of a 1000-10000 people company. Imagine them taking queries on benefits, compensation, or policies every day, manually. It would dent their efficiency and bury them in conversations that add no value to the business.

But, with a tool like Infeedo, you can automate responses to employees' queries. Not only that, Infeedo also enables you to store these conversations and run sentiment analysis to uncover alerts, triggers, and other important indicators.

AI can help automate plenty of such HR routines. Examples: resume screening, employee self-service, absence management, and so on.

6. The growing importance of soft skills

With remote work opening up, the nature of work has changed. Thereby, soft skills such as the ability to collaborate, communicate, and problem-solve effectively will have a growing importance in hiring and performance tracking.

HR may even invest in training and developing such skills through workshops or development programs.

7. The rise of employee advocacy

With the borders shrinking, people are exploring opportunities around the globe. Employee advocacy will impact how people perceive you as an employer brand.

This is also why employers will continue to focus on employee advocacy programs. You will see companies empower employees with the time, resources, tools, and rewards required to advocate for them on social media and other platforms.

8. Increased use of employee feedback 

During the pandemic, companies got into the habit of frequently seeking feedback from their employees. Since many companies switched to remote/hybrid workplaces, they use engagement surveys to hear out and understand employees.

Additionally, they also do one-on-one meetings, focus groups, and performance evaluations to lean in and listen to their employees.

9. The growing importance of employer branding

In the current talent market, companies need an employer brand to stand out from the crowd. Without it, attracting and retaining star performers will be a distant dream.

In 2023, companies will compete for talent through strong employer branding initiatives such as creative career pages, CSR activities, social media engagement, and employee advocacy programs.

10. Increasing use of gig workers

Companies are also turning to contract employees to fill short-term or project-based needs. Using gig workers gives you access to specialized skills for specific projects while also cutting down on costs.

With the economy taking a dip and many companies actively laying off full-time employees, this trend is likely to grow stronger in 2023.

11. Increasing focus on work-life balance

According to Amber, ~1/4th of employees (25%) faced issues in managing their personal and social lives along with their roles and responsibilities. 

Offices entered homes during the pandemic and refused to leave after. Employees had a hard time taking a break or tuning out of work hours. As a result, many companies focused on promoting a healthy balance between work and personal life, through offerings such as flexible work arrangements and paid time off.

12. The increasing importance of change management

The one thing that the last few years have taught us is that the only thing certain is uncertainty. The entire world of work may change overnight.

Businesses will hence move forward shielding themselves with robust change management strategies. 

Some things to consider when devising your change management strategy should be - the right digital tools, insights from your data, feedback from your early adopters, and thoughtfulness to humanize change.

13. Increasing emphasis on leadership training

The changing work environment has increased the demand for new leadership abilities. For example, after remote work was embraced as the new norm, the ability to lead and coordinate with remote teams became one of the most important skills needed for a leader.

So companies will focus on upskilling and training leaders to be more effective and human-centric as they chase business goals.

14. The impact of Metaverse 

Even though Metaverse is gaining popularity, it may not make much of a difference to the HR world in 2023. It is still new and untested. There may be minimal experimentation in this space given that a few companies are embracing Metaverse for immersive learning programs, virtual job fairs, or onboarding. 

But, given the current scenario, it may be difficult to integrate with existing HR systems and processes, and even steer clear of security and privacy concerns. Metaverse also requires a high level of technical expertise to set up and use effectively, which may not be readily available for a majority of companies at this point.

15. Increased use of data and analytics in HR

HR will continue to rely on data and analytics to make informed, business-impacting decisions and continue to establish itself as a strategic function.

Meeting rooms will be unified. Arguments will be rested. Leadership will continue to see an increase in value in the HR function. Metrics will make this possible. Metrics will also make it easier to track ROI for HR programs and justify business decisions. In other words, data and people analytics will empower HR to be effective.