8 of the Biggest Challenges for HR in 2023

By Alex Larralde
January 3, 2023
7 minute read

Human resources professionals have squared off against challenge after challenge in the past few years, and this year is shaping up to be a continuation of many of those issues – with a few new ones thrown in. Here’s a look at the eight biggest ones at play.

Engaging the Workforce

Employee engagement has been an ongoing matter of concern for HR professionals for decades. Engagement metrics were trending upward in the early part of the pandemic, driven by an increase in transparency and communication, but those gains have been tough to hang on to as the conversation has shifted toward if or when people will return to work in offices.

Address those challenges by investing in intentional, deliberate communications to help team members see what role they play in driving the business forward and in achieving the company’s mission, vision, and values. Connecting daily work to the business strategy helps employees feel more invested, accomplished, and engaged in their work.

Attracting Talent to the Enterprise

Talent acquisition is among the highest priority human resource challenges this year. U.S. unemployment is hovering at historical lows, and many organizations are finding it tough to fill their open roles in a timely fashion during the labor reshuffling that’s commonly referred to as the Great Resignation.

Competitive compensation and employee benefits packages are essential in attracting talent to your organization. However, to really compete, you need to dig deeper and offer meaningful experiences and a greater sense of purpose to your employees.

Your employer brand can help convey that purpose and attract people who are motivated by it. You don’t need to create a company culture that pleases everyone. This would be impossible and would leave you with a watered-down brand that appeals to virtually no one. Instead, narrow your focus and develop an employer brand based on your most valued and unique elements.

A focused employer brand that doesn’t back down from its values may not attract candidates who disagree with or simply aren’t passionate about those values. But that’s OK: You only need it to be attractive to the people whose values align with yours.

If you haven’t already defined your employer brand, now’s the time. If you have documented it, make time to review it and think about new ways to bring it to life. Identify what you want company culture to be based on your mission, vision, and values. Assess your company culture as it is now to determine whether it’s where you want it to be. Set goals for filling in the gaps, such as building up your DEI efforts to foster a greater sense of belonging for all employees.

Managing Relationships

In 2023, workplace relationships are more important than ever. Supporting healthy relationships is one of many challenges facing HR this year. Companies are finally settling into their long-term hybrid or remote working models, and that has a significant impact on how employees interact with each other. Work models in the new economy are powered by the relationships fostered between managers and individual team members and their peers.

Healthy work relationships build trust in the workforce and empower employees to work together more effectively, even if they don’t see each other or work together often.

In remote and hybrid work environments, we have to be intentional about building relationships. Your HR team can help set communication cadences for departments and teams, which drives relationships and builds awareness of everyone’s different roles and how they intersect. Regular communication drives stronger relationships and helps employees learn more about how they work together and can help each other.

The more that employees know each other and understand each other’s work, the better they can perform their own jobs. Knowing the next stage of a project, for example, helps individual contributors refine their own work. Employees need to trust their colleagues to deliver what’s needed to keep projects on track.

Training and Development Strategies

Rapid upskilling and reskilling is becoming the norm in the new economy. However, the world of work is evolving more quickly than static learning management systems can keep up.

In 2023, HR professionals will need to identify new solutions for training programs and continuing professional development. An effective training and development strategy must account for rapidly changing technical skills and long-term transferable skills.

Technical skills have a short half-life in a swiftly changing workplace, so don’t invest all of your limited learning resources in technical training. Incorporate technical training in the flow of work as much as possible. Technical training in the flow of work also makes it easier to update training to match your actual needs. It’s a more agile approach to technical training that gives your workforce an edge.

Transferable skills have greater longevity and are cumulative because you can build on adjacent skills. These include “soft” skills such as critical thinking, emotional and social intelligence, and communication. Transferable skills are especially important as a foundation for leadership development in the new economy. Leaders today (and in the future) need to be able to keep projects on track by supporting employees and removing roadblocks to their success. That requires good communication, empathy, and awareness, among other qualities.

AI in HR can be extremely useful in predicting skills gaps and helping employees see a path forward for training and development.

Talent Retention

Workers have more options for employment than they have in decades, so every HR professional must take care to retain the current workforce — or risk losing them to an extremely competitive talent market.

The first step to improving retention is finding out why employees are leaving in the first place. Exit interviews can provide insight into what employees liked best about working at your organization – and what they found lacking. Armed with this knowledge, HR professionals can develop plans to address the factors that are driving employee turnover.

Consider when employees are leaving, too, which can offer insights into why they’re leaving. Are there common stages of tenure when people leave more often, and what factors might be at play?

If turnover occurs frequently in the first few months of the employee life cycle, for example, that could indicate new employees didn’t feel prepared to perform the full scope of their duties. HR managers could mitigate this through better communication during the hiring process and more effective, engaging onboarding processes.

Employees leaving at later stages can be more challenging to address. They may be leaving because they feel like they’ve reached the limit of their potential at your company, for instance. To address that challenge requires reworking internal mobility and career paths to give employees more options for growth.

Diversity in the Workplace

Diversity remains a hot-button issue in human resources, with many organizations still struggling to build DEI goals into the broader strategic plan. This is an important point for actually moving the needle at your company. That, in turn, is important for employer branding and for attracting talent to the organization, as more employees want to work for companies that value diversity and offer everyone a sense of belonging.

Start by evaluating the state of DEI in your business, and set clear goals for where you want to be. Assign key results and clear ownership for each objective you set. Finally, put resources against each objective so their owners can actually deliver the results you need to see.

Embrace Inevitable Change

The world of work is not returning to the way things were before the pandemic. One of the greatest human resource challenges in 2023 is coming to terms with the new reality so your HR team can begin developing long-term plans that account for change and agility.

For the past two years, companies have been in limbo trying to return to the office. But that’s not how organizations operate anymore. Employees have experienced flexible and remote work arrangements and have come to expect that from your work experience. And in a tight labor market, you can’t afford not to listen to what employees need.

Beyond larger, strategic HR issues, HR teams also need to implement changes to employment laws and regulations in 2023, especially at the state level. Many states are currently updating paid family and medical leave laws, for example, and HR teams must prepare for changing compliance requirements.

Develop business and people plans that can accommodate this pace of change. In a fast-paced work environment, you must be able to flex with change without breaking. In business planning meetings, consider a variety of scenarios that could affect your business model and work processes. Develop alternative or contingent plans for addressing these scenarios as they arise so that you aren’t caught off-guard.

Employee Health and Well-Being

Employee well-being remains among the top HR issues in 2023. After the major disruptions of 2020, employers began to recognize the need for customized benefit plans to address individual employees’ most pressing issues. Companies are offering better, more varied benefits, including child and elder care benefits, and expanding coverage to mental health services.

But benefits alone aren’t enough to improve employee health and well-being: You need to support employee health and wellness in daily work lives, too. This could mean offering more flexibility around hours, offering more paid time off, or better managing schedules and workloads to prevent employees from feeling overwhelmed.

Survey employees to find out how you can better support them on their journey to wellness, and take action based on their needs. Be sure to communicate that their health is a business priority, as your workforce powers your business. Encourage employees to use the benefits you do offer, and collect feedback about how to improve them going forward.

Overcoming HR Management Challenges in 2023

HR leaders have significant human resource challenges ahead of them in 2023, but they also have opportunities for redefining the HR function. Finding innovative solutions to HR challenges encourages collaboration with other business leaders. HR challenges are linked with greater changes to the business model and operations.

HR professionals are in the process of redefining work by redefining how we work. As you address HR challenges in your organization, consider how you’re laying the groundwork for the future of your company.

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