HR Trends for 2023
Josh Bersin is a well-known HR Tech analyst and founder of Josh Bersin Academy. In the field of HR, he is the leading light and maven among other luminaries. A few days ago, he released a remarkably improving report filled with his perspicacious, distinctive, and magisterial insights on 'HR Trends for 2023.' Not to put too fine a point on it, but this compendious report is right out of the top drawer.
With reductionist analysis, this report comprehensively delineates 15 main trends and expatiate their effects on HR. Understanding these trends will stand HR professionals in good stead to devise their functional tactics and stay ahead of the curve. And suggested measures in this report will help them successfully address these trends and gain a competitive advantage. Let's try to epitomize the long and short of this report.
Skills are on the rise in HR.
Nowadays, employees require specific 'capabilities' & 'skills' to work in various roles on several projects. Josh defines capabilities as 'the business-word definitions of what drives success', and skills as 'the granular areas of expertise that people need to perform well.' Skills are becoming the focal point for matching workers with work as per the '2023 Deloitte Human Capital Trends Report.' It evinces gaining traction of a skills-based approach to managing work and workers.
Changes in technology and the workforce have led to the enhanced significance of myriad specific skills. Organizations are implementing a skills-based approach to hiring, training, developing, and paying employees. Such a 'skills-based organization' encourages employees to find in-demand skills and enhance their attainments to achieve organizational objectives.
In addition to simply implementing the skills taxonomy, Josh further suggests that skills projects must focus on a specific agenda. It may include enhancing performance, proceeding in a new way to reinvigorate the business, or expanding into different areas through business transformation. First, our efforts must be focused on capabilities and then on skills. First, employees need to figure out crucial business capabilities. And subsequently, specific skills based on requirements. He prescribes assigning functional 'owner' designated for each skills cluster, e.g., each for Finance, Marketing, HR, etc.
It has resulted in an appreciable increase in the importance of skills data, which is collected and applied in numerous systems, e.g., the HCM platform. ( other tools, e.g., recruitment, talent marketplace, L&D, and employee experience systems.) So far, we don't have a unified system since every vendor maintains a separate skills database.
References for better insights :
- Report by Deloitte
- Digital HR Leaders (article + podcast), and
- Bersin (Podcast)
Employee experience is gaining momentum.
Companies have successfully tackled the past three years, devising a new work strategy, e.g., remote, WFH, WFA, etc. Josh propounds three main concerns. First, define 'workplace' along with refining collaboration and workspace tools. Second, creating better team management processes that facilitate teamwork, alignment, and multifunctional collaboration. And third, successfully implementing HR & workplace technology and productivity tools that improve the employee experience. (e.g., ServiceNow, Microsoft, etc.)
Such flexible work arrangements necessitate a focus on developing a culture of inclusion and belonging that encourages line managers to support employees. He thinks inclusion is essential, especially for sedulous frontline workers, and we must offer them appropriate autonomy and flexibility. Josh urges leaders to design a range of tools and guidelines for flexible work arrangements. Instead of dragooning employees to attend the office in person. To successfully address various issues, he suggests, companies may consider applying design thinking and experience design approaches.
Josh introduces 'People Sustainability' as a modernistic concept, melding practices in areas such as DEI, benefits, health & safety, pay equity, career growth, and employee experience. He thinks it will pave the way for enhancing fairness, equity, belonging, and well-being. However, he recommends a long period of investment in sustainability initiatives.
References for better insights :
Realign the leadership model.
Josh asserts that successful companies opt for flatter structures that function in teams instead of hierarchies, including flexible work arrangements. That results in the enhanced importance of empathetic and flexible leadership. The erstwhile leadership's focus on managing and directing employees now shifts towards regularly evaluating, training, moving, supporting, and aligning them.
The leadership models primarily focus on productivity in general, and care, inspiration, empathy, and flexibility in particular. Mainly because of the realization that 'If you take care of your people, they will take care of you.'
For strategic reasons, culture becomes crucial for leaders. Hence, our leadership model must reinforce our culture. Leaders are supposed to set the tone for behaviours, norms, and values. He then highlights the increasing importance of 'Feedback' and listening for improving productivity.
References for better insights :
- Article by Bersin
Revise the Performance Management process.
Josh affirms that companies are implementing OKRs (Objectives and Key Results), involving periodic check-ins and managing performance 'in the flow of work.' He exemplifies that for some companies, it is a core business process supporting their vision and mission. Wherein goal setting from the top becomes an effective channel for alignment.
He further asserts that every HR tech company is reinvesting in OKR, e.g., SuccessFactors, Microsoft Viva Goals (available in Microsoft Teams), 15Five, Lattice, CultureAmp, and BetterWorks. He states that Workday is also designing a similar goal management system.
Josh thinks a clear emerging trend in supporting tools considering productivity, individuality, and a new generation of philosophies. Our performance management process must reflect this. And our leaders can cultivate mutual understanding by helping and supporting employees through training and mentoring.
There is no one-size-fits-all approach to implementing performance management. Research indicates that successful companies hold people accountable. And initiate efforts towards 'performance enablement' while devising continuous process and systems. In 2023, he expects to reconsider the OKR process while focusing on growth, efficiency, and User-centered design.
References for better insights :
- Article by Microsoft, BetterWorks
- Course Microsoft Viva Goals
- Course OKR Leadership Program
Rethink employee pay and rewards.
Josh states that due to prevailing circumstances during the previous three years, companies are changing pay models, benchmarking, and raising pay. The research reveals companies opting for various pay equity solutions mainly to remove inconsistencies. It also shows that issues relating to 'pay equity' impact employees largely compared to the 'level of pay.'
He opines that for efficient budget allocation, first we need to fix the pay disparities before giving pay raises to employees. New purveyors in this space are Trusaic, Syndio, Salary.com, and Payscale. We need to adjust pay issues on a continuous basis depending on the employee joining, preferment, or moving within the company.
The research underscores the importance of clear and honest communication strategy for maximum effectiveness. It further highlights the significance of fair and equitable pay and rewards practices for attracting and retaining top talent. Bersin's latest report on pay delineates four levels of maturity. First, 'basic transactional pay' second, 'total rewards' third, 'performance-based pay' and fourth, 'systemic pay and rewards.'
He also explains the annual increase in 'total reward.' Mainly the 'noncash benefits', e.g., insurance, leave, educational benefits, and oodles of other rewards. Josh entreats companies to think of human capital as an investment instead of an expense. The only appreciating asset we have in our balance sheet is our people. We can increase our investment returns by helping them to stay focused and productive through an effective reward system.
References for better insights :
- Article by AIHR
Well-being is gaining traction.
Contrary to our earlier assumptions, Josh propounds that 'productivity creates well-being', and now is the time to 'make work easier.' "Make life easier for employees." says Laszlo Bock (Work Rules!). Due to prevailing circumstances, workers are in a different state. However, they do possess enhanced agency and bargaining strength. And companies are trying to entice them using flexible work, pay raises, and career growth. He says that companies also need to address the concern about financial well-being.
Latterly, well-being has gained significant importance and is a tactical concern now. It has garnered a new level of approbation from C-suite executives. According to their opinions, in the present time, 'skilled and engaged employees' are equivalent to 'supply chain' assets. Employee well-being is now a management concern, and issues like too many meetings, zoom fatigue, interruptions, and other projects have their impact.
Josh adduces his book 'Irresistible' which puts forward the need for 'slack time.' Unlike machines, conscientious employees require time to rest, reflect, learn, and grow. It has significant implications for productivity where 'service workers' materially contribute to economic activity by creating, developing, devising, or serving others. He further thinks essentially, 'well-being' is a design issue, not just benefits and other activities. Designing the company for productivity will incontrovertibly lead to the consequential flourishing of employee well-being.
"Business exists to enhance human well-being"
— Mihaly Csikszentmihalyi
References for better insights :
- Report by Bersin
Learning and growth in the flow of work.
Josh cites his recent learning research, which essentially reveals an important goal of L&D. Research underscores that 'creating extensive career growth options' is 'the learning practice' that actually creates value. This revelation has a remarkable impact, especially in improving the chances of developing skills required for the future. When companies think beyond development, indubitably, they enable growth in the flow of work. The research indicates that growth-focused companies allow employees to unlock their potential, develop innovation leaders, and become the best places to work.
Following are the latest innovations of growth-oriented L&D. First, implementing 'Talent Marketplaces' with several options for effective skills development, e.g., projects, mentoring, relationships development, networking, company events, etc. Second, creating 'Capability Academies' for developing strategically important business capabilities. It involves effectually melding business leaders and L&D professionals to establish an 'academy' concentrating on capabilities, skills, and growth. Third, developing skills for strategic positions through career pathways with a tuition-free education.
They are by no means point solutions. In fact, our organization's business and talent strategy should meticulously integrate such innovations. As part of the systemic HR operating model, they try to address specific areas of knowledge or skills.
"When companies go beyond development and facilitate growth in the flow of work, they are likely to build skills for the future."— Josh Bersin
References for better insights :
- Report by Bersin
People analytics and Talent Intelligence.
Josh narrates the 'people analytics' evolution over the years. From the early 80s & 90s to the present day. Initially, it helped us understand pay, rewards, and the annual engagement survey. In the 2000s, culture assessment, and organizational network analysis (ONA) became part of it. Concurrently, we derived a direct line of sight to business performance, substantiating with DEI, tenure, and other important data. In the 2010s, we started considering data from location, skills, and organizational hierarchy. During this period, big companies instituted centralized 'people analytics teams.' The implementation went on swimmingly for an ongoing 'listening strategy' focused on advanced surveys and listening systems.
The next phase was the implementation of listening platforms supported by integrated analytics. Vendors like Perceptyx, Medallia, Qualtrics, Peakon, and Glint (Microsoft); created annual, pulse, 360, crowdsourcing, and passive listening feedback tools. During 2020, we witnessed the maturing of 'passive analytics' that involves accessing data from calendars, messages, and ONA. We can now track employee sentiment, activity, and productivity data with tools offered by purveyors like Cultivate (Perceptyx), Visier, Microsoft Viva Insights, and Motive (BetterUp). Josh suggests that people analytics initiatives should focus on the company's growth and saving resources. We can implement people analytics to improve health & well-being, remote work, collaboration, skills, engagement, recruitment, and retention.
Josh expresses his neoteric perspectives on the newfangled concept of 'Talent Intelligence.' By no means nondescript initiative, he thinks talent intelligence is the next big thing in HR. He elaborates on the 'Four Rs of Talent Intelligence' as an initiative to predict recruiting, reskilling, retaining, and redesigning. He thinks that to contribute significantly people analytics team will collaborate with employees from sourcing intelligence and workforce planning. In addition to focusing on health, well-being, and turnover for improving investment returns, people analytics teams should address issues like skills gaps, sourcing strategies, retention, reskilling, redeployment, and job redesign. He suggests enhancing the scope of these teams by including sourcing & skills intelligence, workforce planning, and labour economics.
Happily, innovative HCM vendors are providing better tools for people analytics with integrated platforms. Unifying data has become easy now with open APIs, integrating data from skills, recruiting, learning, and survey platforms. He enjoins on us investing in this area. He points out the importance of directly reaching out to managers and employees. He thinks data needs to be simple and visual, open and action-oriented. It must help HR business partners, line managers, and even employees to take action in real time. In addition to HR, he expects to explore the possibility of people analytics providing insights to other parts of the business. He imagines the prospect of involving talent intelligence, skills trends, and workplace insights in next-gen people analytics. Check out a pragmatic and modern approach for 'Talent Intelligence' implementation at Amazon in 'Digital HR Leaders' (link below).
References for better insights :
- Article by McKinsey
- Report by Bersin
- Webinar by Gartner
- Digital HR Leaders (article + podcast)
The arrival of a new HR Tech landscape.
When we think of HR Tech, there is a veritable smorgasbord of options available to HR professionals. Effectively corroborated with data & analytics, these options will enhance the effectiveness of our HR initiatives. Due to the existing implementation of numerous 'intelligence systems' for creating, inferring, and storing skills, Josh anticipates the emergence of a new integrated 'skills-talent platform.' Mainly, companies are implementing 'skills systems' platforms for recruitment, talent marketplace, learning, and employee experience. They subsequently intend to organize them into a unified 'employee skills profile.'
Although we may not have any impeccable HR systems, companies need to think of inventing such an integrated structure. He enjoin companies to conceive this from the perspective of 'skills academies' or 'skills communities.' Wherein the taxonomies are maintained by business leaders. And to bring new skills into the structure, HR effectively collaborates with them. He then elaborates extensive use cases of skills utilization for - sourcing, selection, assessment, development, career pathways, pay, bonuses, job fit, redeployment, M&A integration, leadership development, mobility, mentoring, job-sharing, performance management, and development planning.
Given the importance of skills, each seller prefers to own this structure. He gives an example of the following companies positioning themselves as systems of skills inventory, e.g., SuccessFactors, Workday, Gloat, Cornerstone, Eightfold AI, and Beamery. Josh advises us to avoid such an approach. He recommends considering purveyors that think of themselves as a 'data company' and not just a software company. Essentially, offering an open API strategy with remarkable expertise in integrating numerous third-party data.
'Employee Experience tools' are gaining traction with options such as Microsoft Viva, ServiceNow, Firstup, Perceptyx, Medallia, Qualtrics, and many others. Learning systems continue to expand with the preponderance of the latest collaboration, cohort, and virtual learning systems. Soon we hope to get his perspectives on VR. Similarly for recruitment, we have options such as Eightfold AI, Beamery, and many others. And we have multifarious options for Pay equity, Well-being, DEI, etc.
Primarily, he enjoins developing a structure considering a long period of time while focusing on ease of use and improving employee productivity. While also accompanying that with appropriate HR functionality and data capabilities. Our implementations must centre on simplifying processes while creating the employee experience of the first water. In conclusion, he adduces their research that suggests 'even large HCM systems need to be employee systems first, then HR and data systems.'
References for better insights :
- Article by Bersin
Systemic HR - a new way forward.
Josh asserts that the 'most interesting' trend this year is the 'new operating system for HR.' There is an urgent need to rethink how we manage our HR function. Aim beyond improving service delivery, access to data, and HR business partners skills. He suggests taking a pragmatic approach by integrating HR into the 'total operating system' to facilitate a smooth flow of information and insights throughout the organization. Given the interlinked and interconnective nature of HR activities and their interdependence, he suggests subsuming them under an 'integrated operating system.'
Recently we have witnessed similar efforts from consultancies like Deloitte, Gartner, and McKinsey (links below). Apparently, it is an improvement over the groundbreaking work of Dave Ulrich, which, in my opinion, is one of his magnum opus (e.g., Human Resource Champions - 1997 & HR Transformation - 2009). Obviously, one has to change according to the circumstances. However, invariably we can improve upon the existing work in a decorous manner without criticizing efforts by others and giving appropriate attribution.
Josh explains that the design process of this new operating model is in progress, and he will communicate it during 2023. The following are a few of the principles:
- HR Teams need collaboration and a better understanding of each other's activities.
- There should be clarity on 'top priority' talent strategies.
- HR professionals should enhance their attainments (T- shape).
- Regular sharing of future projections among HR.
- Job rotation for HR professionals within and outside the business.
- Periodic sharing and alignment of HR Tech strategies with talent strategies.
- Sharing important decisions by integrated analytics and talent intelligence function.
He then elaborates on how we designed Centers of expertise (CoE) and service centers to achieve our objectives. For effectively designing employee self-service systems (ESS) and successfully implementing employee experience platforms, we require design teams. Especially for regularly interacting and sharing insights with HR teams. He thinks of a clarion call for various team to work cohesively within the HR function. He underpins his perspective for recommending this new HR model, with the legerity of the HR function for inventing and implementing several new processes during the preceding three years. He assures us of releasing this report in 2023, providing a concrete way towards the future.
References for better insights :
- Article by McKinsey
- Webinar by Gartner
- Report by Gartner
Conclusion.
Josh thinks 2023 will be an exciting and providential year for HR professionals. While developing integrated HR function, we have to optimize remote work, improve productivity, and enhance employee experience. We can expect stunning HR Tech vendors to innovate solutions championed by intelligent AI systems. However, HR professionals need to develop their skills, experiences, and relationships within HR to stay conversant with the latest trends. Our HR teams will require insights, education, support, and functional expertise. 2023 will be the year of prodigious innovations in the field of HR, leading towards flourishing tools developed by creative and innovative leaders. Since they managed to rise to the occasion during this important period, Josh concludes that
'HR function has now become one of the most important disciplines in business.'
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