Written by HRCap, Inc.
September 15, 2022
HRCap continuously conducts HR market research to stay on top of the leading trends and strategically advise our clients. In this blog, we project 2023 Top 10 HR Trends and provide data-backed recommendations for winning the War for Talent.
1. Resignations & Turnovers Will Continue, Unfortunately
COVID pandemic has left a mark on the job market as it sent many companies into a remote work environment. With the sudden change in work lifestyle, many people have come to realize the benefits of work from home (WFH) and continued to seek this flexibility even as the threat of the pandemic diminished. Consequently, during this time, many are quitting their jobs in hopes of WFH flexibility or changing their career path entirely.
Though people may think the Great Resignation is more of a recent phenomenon, it started as early as 2010. About 22 million employees quit just in 2010 alone, and the numbers continue to climb into 2022. In fact, in March 2022 alone there were 4.4 million employees that quit their jobs. The current job market is in favor of the job-seeker because there are twice as many job openings as there are unemployed people. As a result, 63.3% of companies have more difficulty retaining employees than hiring them.
This retention issue is not only apparent in the U.S. but all over the world.
This is affecting all levels of companies and many are facing labor shortages with many employees resigning all at once. This quitting trend will continue as 75% of full-time employees are planning to resign in 2022.
Though many are seeking remote work flexibility, there are other reasons why employees are quitting in 2022. According to Ceridian 2022 survey, the top reasons for employees quitting are low compensation (41%), no growth opportunities (30%), no job security (19%), poor relationships with managers (18%), and not being aligned with skills (18%).
2. Companies are More Focused on Preventing Bad Hires
With the current hiring shortages and recession, companies are realizing the importance of preventing bad hires and making the right ones. If a company makes a bad hire it can cost up to 30% of the employee’s first-year earnings. However, with other underlying costs such as recruiting, hiring, onboarding, and training, the total cost can be as much as $240,000.
Reasons for Bad Hire:
Lack of Qualified Candidates
Faulty Interview Process
Compromises Due to Urgency
Bad Timing and Slow Response
No Formal Background Check
No Professional Reference Check
Poor Onboarding Experience
Lack of Team Involvement in Team Build Out
The wrong hire can also leave a negative impact on the organization by reducing team morale and productivity, ultimately affecting quality work output.
[Related: Guide to Making the Right Hire]
>> Recommendation: Therefore, companies need to strengthen their interviewing and onboarding process to hire the right candidate and retain their top talent. Companies should also consider implementing an employee referral program to hire and retain employees better.
3. Economic Inequality will Worsen in 2023, Globally
With the Great Retention and War for Talent, companies need to retain their current workforce and hire new competent talents by providing competitive salaries.
This is why 50% of US organizations expect to increase their salary budget going into 2023, while 41% expect it to be the same as 2022 and 9% expect it to be lower than 2022.
This same trend is apparent in Korea, as companies within the semiconductor, IT, Battery, and Automotive industries are actively combating the war for talent with competitive salary packages. In Korea, salaries at the 100 largest companies rose by 9.1% in 2021. However, there is a discrepancy between small & mid-sized firms and big companies because the monthly average salary in a small & mid-sized firm is about 3.8 million won ($2,700) whereas the monthly average salary in a big company is 9.2 million won ($6,600). Furthermore, the average pay of all full-time workers increased by 4.6%, which is half of the average pay increase rate at big companies.
4. Competitive Salary Package is Not Enough for the Modern Workforce
According to the 2021 Edelman Report, many employees are looking for more than just a higher salary: 59% are looking for a more personally fulfilling job, greater learning opportunities and a more diverse, inclusive culture; 50% are looking for better work-life balance, flexible options for remote or hybrid work, and a healthier, safer workplace; and 31% are looking for higher total compensation, stronger benefits, and opportunities for growth and promotion.
Since employees are reevaluating their life priorities, about 40% of employees were thinking of quitting to find a job that aligns with their priorities.
Similarly, 35% of employers in South Korea say there is an epidemic of job turnover with many employees leaving due to the following reasons: compensation system, such as salary, is not good; the company couldn’t present a new vision; thinking there will be no problem even if they left the company; there is no systematic personnel management; anxiety at the workplace; and bad rumors spread among employees.
>> Recommendation: Therefore, companies need to consider creating a benefits package and a workplace culture that is conducive to employees' well-being.
5. Forever Hybrid is Here to Stay; Flexibility is Critical
To maintain a work-life balance, many employees are looking for work flexibility as a workplace benefit. Many companies have adopted a combination of onsite and remote or fully remote working environments because of how it benefits both employees and employers.
94% of employers indicated that productivity was either the same or higher when working remotely, and 68% of remote employees reported having fewer interruptions.
Despite the benefits of WFH, only 58% of job holders have options to work remotely, while 41% of job holders don’t have the choice.
This transition to a hybrid workplace can be seen in Korea. Before COVID, only 8% of managers used flexible working arrangements, but, during COVID in 2021, 67% of employees worked from home for select industries. The shift to remote work grew to the point that 92% of leading South Korean companies had WFH arrangements, and, even into 2022, 73% of large South Korean companies have continued to allow employees to WFH.
>> Recommendation: Companies should consider providing work flexibility options to maximize the employee’s work-life balance and productivity, increase retention, and attract new talent cross-country.
6. There is Rising Urgency to Invest in Cybersecurity
With more companies adopting remote work environments, there is a rising need for companies to invest in cybersecurity. In 2022, data breach costs averaged $4.35 Million worldwide. The number of cyber-attacks has increased during the pandemic with a 150% rise in ransomware in 2021. Although employers may think hackers only target large companies, 43% of these data breaches involved small and mid-sized businesses and 60% of small companies go out of business within 6 months of falling victim to a data breach or cyber attack.
In South Korea alone, the number of ransomware attacks has increased from 2018 to 2020 by 477%. The damages from ransomware attacks can lead to data loss, loss of productivity, data leaks, financial loss, image damage, and lawsuits.
>> Recommendation: Therefore, it is crucial that companies properly prepare their cybersecurity by critically assessing their current level of security and investing in other measures, such as malware protection, password policies, firewall installation, file integrity monitoring, regular risk assessments, network vulnerability reduction, incident & failure response strategies, and employee cybersecurity training.
7. Data Literacy is the Universal Language of the Future
97% of companies said the COVID-19 pandemic accelerated their plan for digital transformation (DX). As a result, there is a higher need for digital skills and data literacy. According to US BLS, by the time we reach 2030 digital marketing is predicted to grow by 10%, while cloud computing, software & web development, and AI/Machine Learning are projected to grow by 15%. Another prediction is that there will be 180,000 data jobs by 2030, but currently, there are only 41% of HR practitioners that can leverage technology to read and apply data to improve efficiency and business value.
There is also a shortage of data literacy and digital skills in South Korea as well. About 37% of the workforce is estimated to require digital skills training. Although 96% of employers in South Korea said they planned to implement a digital skills training plan, only 25% have implemented such plans in 2022.
>> Recommendation: Companies need to hire and train employees for digital skills and data literacy by creating an organizational plan for digital transformation and following through with their training plan to close the skills gap proactively.
8. The Proven Best ROI is Upskilling and Reskilling Talent
With the technological transformation and the need for digital skills and data literacy, employees need to be reskilled and upskilled. In fact, the total number of skills that are required for a single job is increasing at 6.3%, and 29% of skills present in 2018 job postings are now obsolete in 2022. When sourcing for job positions in 2022, recruiters' top hiring needs and sourced skills are web development skills, AI/Machine learning skills, and UI/UX skills.
However, 87% of employers report having trouble finding qualified talent to fill their positions. Therefore, many companies and professionals are now realizing the need to reskill and upskill. 64% of global L&D professionals said reskilling the current workforce to fill skills gaps is a priority.
If the skills gap and talent shortage in the US is not addressed, it will lead to a total loss of $8.5 Trillion by 2030. By upskilling and reskilling employees, employers will be able to see improved company productivity, better employee retention, higher completion of company goals, and increased company reputation.
>> Recommendation: Employers should create reskilling and upskilling programs that will help employees to be successful at their job and improve their job satisfaction. This will in turn reduce the skills gap and allow for greater employee productivity and retention.
9. Companies with a Diverse, Multigenerational Workforce are already Winning the Talent War
It is important, now more than ever, that companies create a generationally diverse and inclusive workforce. Many Traditionalist and Baby Boomer employees are gradually transitioning out of the workforce and into retirement, which will lead to a rapid drain of knowledge and expertise. On top of that, there will be an increasing number of Millennials and Gen Z that are graduating and joining the workforce.
Companies that do have an effective, multigenerational workforce often see stronger collaboration, greater retention, increased innovation, better business decisions, improved market shares, and new market expansions.
>> Recommendation: Companies should retain and engage their Traditionalist and Baby Boomer as long as possible through part-time employment and mentorship programs to pass on their accumulated wealth of knowledge, expertise, and seasoned leadership. Companies should also learn how to attract, engage, motivate, and train incoming new professionals and the next generation of leaders.
10. Burnout Calls for Greater Empathetic Leadership
During the pandemic, there was an increase in mental and physical health problems across all generations. 46% of Gen Z adults have said their mental health has worsened compared with pre-pandemic. According to a scientific brief released by the World Health Organization, there has been a 25% worldwide increase in anxiety and depression.
As a result, many are facing burnout from work and not performing to the best of their abilities. During the pandemic, 63% of employees were more likely to take a sick day, 23% were more likely to visit the emergency room, 13% felt less confident in their performance, and those burnt out were 2.6 times more likely to actively seek a different job.
Burnout has led to a recent phenomenon called “Quiet Quitting” which is when employees just do the bare minimum to either prevent burnout or recover from it.
Another source of burnout comes from the lack of empathetic leadership. 25% of employees say unsupportive and unempathetic leaders are the main reason they experience burnout. In fact, 43% of workers quit because of their manager, and 53% of employees are looking to change jobs because of their manager.
Benefits of a good manager:
85% said that a good manager was important for their workplace happiness
62% said they currently have a good manager
38% said they stayed in a job longer than intended because of a good manager
48% felt comfortable talking about their personal life with their manager
>> Recommendation: Companies should encourage leadership training for managers to be more receptive and empathetic. Another way to build empathetic leadership is screening executives with strong emotional intelligence (EI) from the start of the hiring process by including it in the job description, asking interview questions that probe EI, and using leadership assessment tools.
Conclusion
These Top 10 HR trends will shape and shift the job market and work environment and leaders need to take the following actions to better position their companies for future success:
Invest in Critical Skills
Personalize Employee Experiences
Make Well-Informed, Unbiased Decisions Based on Data
Manage Costs through Automated, Digital, and Agile Processes
Lead with Empathy, Trust & Transparency Grounded in Communication
The HR industry will be critical in shaping the future of work, with newly created job functions that vary in tech-centricity & human-centricity such as Director Well-Being, Chief Purpose Planner, Human Network Analyst, Chatbot and Human Facilitator, Workplace Environment Architect, and Human-Machine Teaming Manager.
Without Emotional Intelligence, Artificial Intelligence is meaningless. To win the War for Talent and combat the Great Resignation, HR functions must continuously hire, develop, and advance leaders who have both tech-centric and human-centric skills.
As such, HRCap strongly recommends that all leaders continuously reflect, learn, adapt, and lead to achieve a perfect intersection of both.
Source: HRCap, Zenefits, US BLS, Bloomberg, RSM US, Bankrate, LinkedIn, Deloitte, McKinsey & Co, Joblist, Willis Towers Watson, Ceridian, Glassdoor, US Department of Labor, Harris Poll, Brandon Hall Group, CareerBuilder, Zippia, Korea Economic Research Institute, Korea Joongang Daily, Saramin, Edelman, Pew Research, Forbes, Microsoft, Monster, Mercer, Statista, PubMedCentral, HRMAsia, IBM, Korea Internet & Security Agency, European Union Agency for Cybersecurity, Gartner, Degreed, PwC, Salesforce, Citrix, Gallup, AARP, People Management, Cognizant, World Economic Forum
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