Updated: May 10
2022 was a weird year for employees and employers alike. Hiring managers learned to navigate unprecedented labor shortages, “quiet quitting”, and salaries that outpaced inflation by 2, even 3x. Employees, on the other hand, were being asked to return to the office (or told there was no longer an office to return to), made key decisions between loyalty or increasing earning potential, and, as we saw in Q3 and Q4, many experienced the highs of new salaries only to face layoffs just months later.
As we enter 2023, the economic picture seems even murkier than before. Inflation has yet to be wrangled, significant layoffs continue in the tech sector, yet unemployment is at record lows. What gives?
The Talent Landscape
Indeed, even amongst very public Q3 and Q4 layoffs, HR leaders are predicting a struggle to find qualified candidates. 2020 significantly altered employees’ expectations of their employer. The increase in remote and hybrid work meant that geographic barriers to employment were largely removed, leaving employees with more options for how they work and who they work for. “We're seeing an increase of discussions around quiet quitting while hearing more about the flexibility that roles offer and how that is offering employees more choice,” says Alice Chin, CEO of HR Consultancy, Your Other Half Solutions. “Many of our clients are struggling with finding amazing talent that will support their teams.” In a “post-COVID” world, pay remained the leading reason why employees jumped ship, but was followed closely by cultural factors such as burnout, lack of support from management, discontent with company culture, and lack of growth opportunities.
It’s not surprising that, by some estimates, voluntary turnover is up 15 to 20% since 2020. Although signs point to the #GreatResignation fading into the rearview, the market will remain highly competitive as employers battle on two fronts–retention and attraction–all with the backdrop of economic uncertainty.
Getting Creative with Talent Strategies: Internally & Externally
With a looming economic dip and a tighter talent market, company leadership will have to get creative when facing questions of labor and how work gets done. A recent survey from Gartner stated that a trend amongst CHROs this year will be utilizing a variety of methods to ensure their companies still have the capacity to accomplish 2023 goals. One of the two main strategies leadership will be using is outsourcing tasks, projects, and even whole functions. By partnering with outside organizations, companies give themselves the breathing room to flex as their needs (and budgets) change. The other advantage of outsourcing projects is the time-saving, cost-saving, and impact aspects. It takes time for internal resources to ramp up–especially when skill is lacking in particular specialties. In short, agencies and consulting firms rejoice! Once companies finalize budgets, undoubtedly, spend will be allocated to external resources to get important work done.
The other big strategy leadership will focus on is upskilling & reskilling. Unlike outsourcing, training employees in various areas can save money and deliver better long-term value (with the downside being the time it takes for employees to uplevel their expertise). By leveraging existing talent to learn new, in-demand skills, organizations can save themselves costly hires and equally costly layoffs by redirecting internal resources to top priority projects.
Reskilling and upskilling, however, require a certain type of employee. Engaged, top-level talent is far more likely to be able and willing to make the jump into new areas and learn new things. This means that, when companies do decide to hire new full-time employees, it’s increasingly important that they hire just as much on potential and adaptability as past experience. And while one might think that finding top candidates might be easy amongst layoffs, the majority of HR leaders believe that the competition for talent will continue to tighten in 2023.
Attraction & Retention Strategies
Clearly now is not the time to stop investing in employment brand. As many companies learned in the talent drought of late 2021/early 2022, an awesome culture is key to bringing in top candidates. Gone are the days of good benefits alone being enough to compel great people to join an organization. Today, flexible, remote, and hybrid work situations are table stakes. Increasingly, employees are asking for a more meaningful remote-based culture.
HubSpot is one of the companies leading the charge in not only adapting to but centering around a more flexible work environment. "2023 is going to be all about cultivating connection in a hybrid workplace,” says Liz Coralli, Program Manager, Hybrid Enablement at HubSpot (and former Re:Working Talent podcast guest). “Tools and technology alone aren't enough to cultivate a strong company culture. In fact, 60% of employees say they feel less connected to their co-workers than pre-pandemic. That's why we believe there will be a more intentional focus on creating opportunities for employees to connect in more meaningful ways. At HubSpot, we've seen a lot of success with the hybrid events we've created - from Bring Your Family to Work Day to The Great Ice Cream Social. People are simply looking to their employers to help bring people together, whether that's in person, virtual, or a mix of both."
Intentionality doesn’t stop with connecting employees with one another, however. More and more, alignment between a company’s values and employees’ own personal values leads to a plethora of benefits, according to studies. This values alignment can lead to increased job satisfaction, lower turnover, more diversity, better collaboration between teams, and even salary savings. It’s not surprising that values make such a difference. The millennial generation now makes up the majority of the workforce at 35%, with Gen Z prepped to make up as much as 27% of the workforce by 2025. More than any generation before them, both millennials and gen Z long for both purpose at work and investment in diversity and equity. (For more on the Gen Z perspective, check out our Gen Z podcast episode.)
In the same vein as clear (and truly embodied) corporate values, HR leaders are predicting that pay transparency will continue to be normalized. While pay transparency has long been a boon for companies looking to drive interest to job postings, more and more, states are passing laws requiring it. Recently, Washington and California joined Colorado in requiring employers to post salary ranges in job posts but laws requiring pay transparency when asked are already on the books for well over a dozen states. “Companies are naturally loosening the grip on pay and salary ranges,” says Samantha Adams, Compensation Manager at Deloitte. In referencing some of the recently passed laws, Adams stated, “I think we’re likely to see the trend continue, especially as remote work resumes removing the barrier of where people work.”
So there you have it: The trends of 2023. The war for top talent will carry far into 2023, requiring companies to get creative with the ways in which they tackle that challenge with a limited budget. Companies hoping to come out on top will keep investing deeply into cultivating culture, ensuring adherence to their values, and getting clear on equity–specifically around pay.
With the cloudy economic outlook, there’s no doubt that 2023 will be an interesting year, as well. What is clear is that companies willing to evolve and adapt will win.