Group of people around a desk

The key HR challenges for 2023

HR professionals and senior leaders alike have faced some unique people challenges in recent years, particularly as a result of Covid-19. As 2022 draws to a close, organisations continue to grapple with a range of HR issues, new and old. From skills shortages and recruitment challenges to hybrid working models and the current cost of living crisis – how should you respond effectively to attract, retain, develop, and support your teams in 2023?

At Northumbria University, we’ve gathered expert input from business leaders, policy experts and leadership and management academics – including practical advice, tips, and tools to help tackle some of the challenges ahead…

  1. Competition for people and skills – talent attraction and retention

HR and people professionals consistently discuss the competitive labour market and the challenges they face in attracting candidates. This ranges from decisions about employer brand to what packages can be offered to entice talent. Added to that is the difficulty that many organisations, especially those in the public sector, face in maintaining competitive salaries and retaining staff. As a result, organisations are now required to leverage positive internal behaviours; organisations who are authentic, with HR professionals who understand the merits of a positive culture, will be more likely to win this war for talent and skills.

Nicola Inge, Employment & Skills Director at Business in the Community, said:Vacancies remain at a record high and the number of unemployed people remains low – 1.2 million people (ONS, 2022). This is a real challenge as businesses struggle to fill vacancies, but it is also an opportunity to reach a diverse, untapped talent pool. However, to reach those who face disadvantage in the labour market, businesses need to change the way they recruit.”

Tips for attracting and retaining staff include: focusing on organisational culture and the benefits of being a ‘good place to work’; highlighting the total rewards package; going beyond the salary to other perks like flexible working, volunteering opportunities or childcare vouchers; and finally, bringing attention to training opportunities. There needs to be a paradigm shift towards visible career development and progression routes. The benefits in staff retention far outweigh the cost of training, or indeed higher salaries.

People working collaboratively
  1. Cost of living – and how employers can support their workforce

People professionals have an important role in supporting their colleagues and the organisation through the cost of living crisis. Many employees will be experiencing finances which are tighter than ever – especially younger workers experiencing the first major recession or challenging economic time in their working lives. Marianne O’Sullivan, Policy Manager, North East England Chamber of Commerce, added: “With many businesses currently looking at how they can help staff to cope with rising inflation, some businesses are offering cost of living payments and others are looking at general pay rises which, as well as easing current pressures, can help to support retention.”

As well as financial concerns, HR practitioners and people professionals need to take account of the resultant mental health ramifications – not only from a pastoral sense but also as a business practicality. Of course, anxious and stressed employees are not as productive – recent figures suggest that 36% of millennials find their performance is impacted by money worries (CMI, 2022) – so there is certainly a business case for offering support. This can be achieved by creating a culture in which talking about challenges and finances is enabled and resources are provided to help employees to access practical financial advice. This is a life skill that employees will benefit from well beyond the current situation and could support both financial and psychological wellbeing longer term.

  1. Wellbeing – and its impact on performance, productivity and staff retention

Wellbeing is one of the most important issues that HR practitioners and people professionals must tackle. Many challenges have stemmed from the pandemic and been further exacerbated by the cost of living crisis. Evidence suggests that financial wellbeing support can also increase productivity (CIPD, 2022); but wellbeing is not just about financial support. Josh Jackman, Operations Director, ART Health Solutions, commented: “Quality of life and wellbeing have become the top priorities for office workers, even above salary, which is now in third place. To attract and retain top talent, businesses must be seen as somewhere that supports employee health and wellbeing.”

It’s important to have an integrated approach that can nurture higher levels of employee engagement while fostering a workforce where people are committed to achieving organisational success. It is also important to remember that your business may be very different to others, and that one size does not fit all. Don’t be tempted to look at competitors and try to mirror their wellbeing policy, instead tailor policies and practices to the unique needs and characteristics of your organisation and people.

HR and people teams can support employees by training managers and senior leaders to ensure they are equipped to provide the right support to staff. Having sensitive conversations and embedding actions that offer support and flexibility can be highly beneficial to an employee’s health and performance. Cultivating a robust organisational culture and developing a framework that ensures employees are heard will make them feel understood, valued, and recognised. Additionally, communications strategies between managers and employees that establish trust in challenging times will increase the likelihood of seeking help when needed.

  1. Hybrid working – and how to ensure it works effectively for both employers and employees

The pandemic saw a seismic shift in how organisations view and implement hybrid working, given that only around 5% of the workforce worked from home pre-Covid-19 (CIPD, 2022). This has led to significant shifts in working practices, which people professionals must help their organisation to adapt to as hybrid working often requires different skill sets. For hybrid working to be truly effective, there must be a significant cultural shift, with organisations establishing associated policies and practices.

To ensure that hybrid working is mutually beneficial, a clear policy must be developed alongside supporting guidance that reflects the organisation’s strategic position. Parameters should be clearly defined and placed within the specific organisational context. These parameters will often need to be tailored depending on role requirements.

Managers should be provided with ongoing training to enable them to support, communicate and share feedback on hybrid models and organisations must be dynamic enough to support and respond to any associated implications such as technology and people infrastructure. Attention must also be paid to social relationships and cohesion, so as not to negatively impact organisational culture or wellbeing.

Supporting your HR and People teams to tackle these challenges

Recruiting staff from a challenging labour market, motivating, engaging, and supporting existing staff and tackling the lingering impacts of Covid-19 all require people professionals to understand a broad range of topics to optimise their workforce. Northumbria University has developed its innovative Senior People Professional Higher Apprenticeship Course to support HR professionals with the knowledge and skills to tackle current workplace challenges such as these.

To find out more, sign up to attend a virtual information event on Tuesday 22 November or visit the course page for more information.

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