First came #MeToo; then came the COVID-19 pandemic and the Great Resignation. What’s next? Here’s a look at the latest HR trends that should be on your radar in 2023.
Wage Increases and New Pay Transparency Laws
In 2023, many key HR trends will involve pay and pay transparency.
Many workers received a legally-mandated raise on January 1. According to the Economic Policy Institute, 23 states and the District of Columbia increased their minimum wage at the start of 2023, with approximately 8.4 million workers receiving raises as a result. The biggest hike occurred in Nebraska, where the minimum wage went from $9.00 to $10.50 per hour.
Even workers who aren’t impacted by the new minimum wage laws may see raises in 2023. According to a WTW survey of 1,550 U.S. employers, three in four employers are having trouble attracting and retaining workers. To address these issues, 57 percent have hired candidates higher in the relevant salary range and 76 percent have adjusted or may adjust salary ranges more aggressively. The average U.S. pay increase in 2023 is expected to be 4.6 percent.
This is significant, but, according to Bankrate, workers say raises are not keeping up with inflation. Consumer prices were up by 9.1 percent in the 12-month period ending June 2022 – the highest inflation rate seen since 1981.
Many workers want to make sure they’re receiving the pay they deserve – and new pay transparency laws may help them. According to AP News, Colorado was the first state to embrace pay transparency. Other states (including California and Washington) followed suit and some cities also passed laws. New York’s pay transparency law went into effect on November 1, requiring employers to include a salary range for every job, promotion, and transfer opportunity advertised. As more states require pay and employee benefits information in job advertisements, this may become something jobseekers come to expect, regardless of state law.
The Continued Evolution of Company Culture and DEIB
The new pay transparency laws are designed to reduce compensation disparities for women and people of color. They’re part of a bigger push for a company culture that promotes diversity, equity, inclusion, and belonging (DEIB) and social responsibility.
Some agencies have tried to require diversity. For example, California passed two separate laws requiring women and minorities on boards, although these mandates have since been challenged and struck down in court. Boards may still have to address diversity, however – and not just in California. Reuters says the SEC has approved a proposal from the Nasdaq to require listed companies to have diverse boards or explain why they do not, although this requirement is also being challenged.
Even without mandates, HR departments and business leaders may want to embrace diversity. According to Glassdoor, 76 percent of employees and jobseekers say a diverse workforce is an important factor when they’re evaluating companies and job offers. Additionally, 32 percent of jobseekers would not apply for a job at a company with a lack of diversity and 37 percent would not apply if there were disparities in employee satisfaction ratings among different ethnic or racial groups.
DEI can also impact purchasing decisions. According to a study from Top Design Firms, 34 percent of consumers consider diversity and inclusion when making purchasing decisions.
Jobseekers and consumers care about DEI, but HR leaders appear to be focusing on other issues. A 2023 report from McLean & Company found that DEI only ranks sixth in HR priorities, down from fourth in 2021. Additionally, only 37 percent of companies have a formal DEI strategy, whereas 35 percent have an informal strategy and 28 percent have no strategy at all.
Even more troubling, some companies that do have DEI policies may not be adhering to them. An article in Risk & Insurance warns that companies that fail to act on their DEI claims could face litigation.
HR Professionals Prioritize Skills-Based Hiring and Upskilling
Employers are struggling to find workers, which may impact current and future HR trends. In a 2022 CNBC/SurveyMonkey Small Business Survey, 52 percent of small business owners said it had become harder to find qualified people to hire.
Some employers may be screening out good candidates. Back in 2021, a study from Harvard Business School and Accenture found there were millions of “hidden workers” who could perform the work needed but were being overlooked. Some of these workers were being screened out by automated tools that remove candidates because they lack degrees or skills that aren’t really needed for the job or because they have gaps in their work history.
Now Harvard Business Review says skills-based hiring is on the rise, with more employers focusing on skills instead of degree requirements.
Upskilling and reskilling are also receiving attention. Due to rapid advancements in technology, the skills workers need are changing rapidly. Gartner says 58 percent of workers will need new skills to do their jobs.
Instead of trying to hire new workers with these skills, companies can train their workers. This could help companies secure the qualified workers they need while supporting retention efforts. In fact, the 2022 Career Optimism Index from the University of Phoenix found that 68 percent of workers would stay in their jobs if they had more opportunities to upskill.
HR Leaders Focus on Mental Health and Wellbeing
Workers are stressed – the pandemic may have pushed many workers to the breaking point. New HR trends need to address employee engagement and wellbeing.
The CDC says poor mental health and stress can negatively impact job performance, productivity, employee engagement, communication with coworkers, physical capability, and daily functioning.
Gallup says engagement and wellbeing rates were rising before the pandemic, but they’re not anymore. Only 33 percent of employees say they’re thriving in terms of their overall wellbeing and only 21 percent say they’re engaged at work.
In the Work and Well-being Survey from the American Psychology Association (APA), 81 percent of workers said they’ll consider how employers support mental health when they look for jobs in the future. Specifically, 41 percent want flexible work hours, 34 percent want a workplace culture that respects time off, 33 percent want to be able to work remotely, and 31 percent want a four-day workweek. Employers seem to be receiving the message: the survey also found that 71 percent of workers believe their employers are more concerned about their mental health than they were in the past.
Keep Up with Top HR Trends
Keeping up with human resources trends isn’t easy when HR professionals are being pulled in multiple directions. Let Higginbotham help. We provide HR services, including HR consulting, HR outsourcing, payroll services, and onboarding services. Our services can help you stay ahead of the latest HR trends to foster a strong workforce and meet your business goals. Learn more.
