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What’s on chief human resources executives’ 2023 agenda?

8 CHRO trends for 2023

By John M. Bremen , Amy DeVylder Levanat and Suzanne McAndrew | January 11, 2023

Following a year of political and economic volatility, chief human resources executives will strive for stability in 2023 through an innovative approach to people and risk.
Compensation Strategy & Design|ESG and Sustainability|Future of Work|Health and Benefits|Inclusion-and-Diversity|Employee Experience|Ukupne nagrade |Benessere integrato
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Toward the end of every year, members of the WTW CHRO Thinking Ahead Group (TAG HR) – a forum for forward-looking chief human resources officers – offer perspectives on trends they foresee for the year ahead. The overarching theme this year is that CHROs expect to continue working with their boards and senior management teams to create new levels of stability for their organizations and their people amid ongoing disruption.

Here are eight areas of focus that human resources executives expect for this year and their potential implications:

  1. Organization resilience is crucial as inflation and recession concerns drive decisions. TAG CHROs report that despite inflation trending down from 2022 highs in many countries where they operate, their boards and senior leaders remain concerned about both inflation and recession. They understand how supporting employee wellbeing and creating healthy, resilient employees helps to develop healthy, resilient organizations that are prepared for growth and/or recession.

    Implication: In 2023, CHROs are focused on balancing the need to grow and meet the needs of shareholders with managing rising pay and benefit costs, attracting, engaging and retaining talent, addressing skill shortages and avoiding layoffs. They seek to meet employees’ unique physical, emotional, financial and social wellbeing needs, enabling their employees and organizations to thrive under the most trying conditions.

  2. HR connects risk and people issues. TAG CHROs became far more involved in board and C-suite discussions on risk over the past three years, and their involvement will continue through 2023. Geopolitics, economic volatility, population health and wellbeing, climate change, supply chain disruption, talent shortages and cyber risks affect their people. Leadership and employee actions in turn impact the risk itself both positively and negatively, creating either a vicious or virtuous circle.

    Implication: CHROs expect to work closely with chief risk officers to develop short- and long-term mitigation strategies that connect human capital risks with the enterprise risk strategy.

  3. Talent shortages for key skills and roles are here long term. TAG CHROs suggest the “great resignation” is not a short-term phenomenon but rather an indication that talent turnover and shortages could last for years, especially considering generational demographic shifts that result in shortages for certain jobs, skill areas and geographies.

    Implication: CHROs emphasize that talent strategies must tap new sources of labor, provide career-long skills training and create compelling places to work to attract and retain the talent they need to succeed.

  4. Employee engagement and presenteeism frame the quiet quitting phenomenon. TAG CHROs emphasize that while the concept of quiet quitting is not new, the impact of low employee engagement and reduced discretionary effort that result in higher presenteeism will continue to be an issue for 2023.

    Implication: CHROs expect staffing shortages, economic and geopolitical uncertainty, reduced employee purchasing power and dependent-care challenges will continue. They believe more engaging employee experiences, greater manager effectiveness and enhanced focus on emotional wellbeing can mitigate some of these factors.

  5. New work models normalize as organizations seek greater balance. TAG CHROs are keen to make progress normalizing new work models, which remain in flux as employees want the flexibility of remote and hybrid work arrangements while recognizing the benefits and fulfillment of in-person interaction as they return to workplaces.

    Implication: CHROs expect to walk a fine line, reimagining work models based on what employees want from work and what work needs from employees while continuing to battle talent shortages.

  6. Work and total rewards models continue to evolve. TAG CHROs report they are driving multiyear transformations across work and total rewards to reframe programs for flexibility, wellbeing, new ways of working, reskilling, and diversity, equity and inclusion (DEI). They acknowledge that providing workers with flexible and choice-based work, pay, benefits and skill development programs has evolved from being a competitive advantage to table stakes in the current environment. Flexibility and choice enable their organizations to pivot operations when necessary and lead to broader access to talent as well as inclusion.

    Implication: CHROs will continue to treat pay and benefits as both competitive and wellbeing issues. Cited examples include ways of working (e.g., shift schedules, work arrangements, caregiving leave), pay and performance management programs (e.g., pay for skills, pay for value), benefits with greater choice across health and savings (e.g., access and affordability), and career programs (e.g., upskilling, tuition support).

  7. Culture and employee experience (EX) become institutionalized as differentiators. TAG CHROs suggest leaders in their organizations understand that in addition to transforming pay and benefits, they need to focus on culture, EX and programs that reflect what their employees need, want and value.

    Implication: CHROs will increase their focus on the disconnects between their aspirations for the culture they want to be known for and how employees perceive their EX. They know employees join and stay for an array of reasons, including purpose, interaction with coworkers and leaders, total rewards, flexible work arrangements, work environment, and career and skill growth. CHROs also will seek to understand underlying tangible differentiators such as culture and values, DEI, and connections to corporate social responsibility and environmental, social and governance (ESG).

  8. ESG matures and enters a new stage of development. TAG CHROs suggest pushback on ESG has yielded productive conversations on how to make actions and governance more effective. They foresee rethinking their ESG approaches this year to create more value and impact, with focused HR attention on climate, wellbeing, DEI, governance (including pay) and risk.

    Implications: CHROs believe leaders will be more articulate in their motivations for ESG actions, ranging from regulatory compliance-driven to social responsibility-driven to business strategy-driven, suggesting different approaches for different businesses.

TAG CHRO’s believe that regardless of whether they see recession in 2023 or the economic “soft landing” economists and policymakers hope for, focusing on people while managing risk will continue to be essential to competitive advantage.

Authors

Managing Director and Chief Innovation & Acceleration Officer
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Senior Director, Innovation & Acceleration
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Global Head, Employee Experience Business
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