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4 HR Challenges for 2023 and How to Overcome Them

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9 min read
hr challenges for 2023 and how to overcome them

Since 2019, it feels as though we’ve been on a never-ending rollercoaster of uncertainty. The UK has been hit with an energy crisis, inflation and skyrocketing cost of living – and that’s without mentioning the global pandemic… 

This turbulence has had a direct impact on the world of HR. After all, HR is all about people, and these seismic events have knocked us all for six. 

Looking forward, what HR challenges can we expect to come in 2023 and how should organisations navigate them? 

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How Has HR Evolved? 

It’s important to reflect on how HR has evolved and what the ‘new normal’ of HR looks like now. 

HR is becoming increasingly known as the ‘people and culture’ team. Gone are the days of personnel and human resources. HR is finally an integrated and accepted team within an organisation’s ecosystem. 

The People team has a real focus on looking out rather than looking in. This is a big shift from what has historically been a ‘damage limitation’ department. Don’t get us wrong, HR still has its risk mitigation hat firmly on its head. However, there’s more scope for People teams to be proactive and focus on the ‘rewarding’ areas of HR, rather than just reacting to the latest grievance or disciplinary action. 

This shift has paved the way for the future of HR, which lies in strategy. A People strategy is essential. Organisations that don’t have one may be last to the finish line and will certainly lag when it comes to profits. This article looks at some of the key areas to bring into your 2023 People Plan. 

1) Recruitment in a candidate-led market

2022 was the year of the ‘Great Resignation’, or the ‘Great Reshuffle’, where over a quarter of the workforce jumped onto the job boards to find their next opportunity. Unfortunately, the number of roles available far exceeded the number of workers to fill them. Brexit undoubtedly had an impact on this disparity, with skilled workers from the EU dropping by 330,000 due to uncertainty. 

As well as Brexit, the pandemic had a direct impact on the expectations of employees who were looking to move. We saw that it was in fact possible to earn a good salary without even leaving your home. This made roles in sectors such as retail and hospitality even harder to recruit for as these customer-facing positions could not be afforded the same level of flexibility as other computer-based, remote roles. 

Combine this shortage of workers with an ever-growing list of requirements from employees and you get an imbalance of power. We’re in a candidate-led market, meaning employers need to work harder to attract and secure that top talent.

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How can HR teams go about doing this?  

1. Analyse your vacancies

When backfilling a role, organisations should ask themselves the questions – why did the previous post holder leave? Is the current job overloaded? Do we need to consider restructuring? How can we make the role more attractive and sustainable? 

Using exit interviews can be a great way to extract and record this information. If you answered yes to any of the above questions, you should look closely at the job description and think about how you might be able to make improvements. 

2. Conduct salary benchmarking

Organisations should think about the rate of pay attached to their vacancies. It’s important to understand if they are in line with the current market. To do this, you should conduct some salary benchmarking of similar roles in the same industry/sector and the same region. If adverts aren’t attracting many applicants and your salaries are lower than the market average, this might be the reason. 

3. Revamp your job adverts 

Make your job adverts clear – transparency is key. You should make them concise but also provide background. Who are you? Why should a candidate want to work for you? What can you give them? What will they need to succeed in this role? 

You should also consider reviewing your benefits offering as part of this process. Do you celebrate all of your benefits in your job adverts? It might be so ingrained in your ways of working that you ‘forget’ about it. However, someone on the outside might find it really valuable. For example, if your organisation works flexible hours to support a work-life balance, tell your candidates!

4. Provide an excellent candidate experience 

After all, this is how your organisation builds its reputation. If a candidate isn’t successful on this occasion, but they felt as though the process was really thorough, fair and efficient, they won’t necessarily leave with a bad taste in their mouth. They might even come back and reapply for another role! 

Organisations should be open and upfront about the recruitment process, what it involves and how long it will take. Organisations should keep all candidates informed and manage expectations. This will keep everyone happy. 

5. Think about employee experience

Make the screening process welcoming and sell yourself as an organisation. Be mindful of the reversal in power; this is your sales pitch. You should also expedite the process wherever possible. Make sure your recruitment process doesn’t take any longer than necessary. You don’t want to lose candidates along the way to other opportunities. 

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2) Navigating the cost of living crisis 

The cost of living crisis is continuing to impact people across the UK, with family households set to be an average of £2,100 worse off in 2023. 

This is a result of increasing products and services, but people’s incomes are not increasing at the same rate as their outgoings. We hear the term ‘real-time pay cut’ which refers to disposable income, i.e. what’s left after a household has covered their bills and other expenses. Because costs have gone up, the overall amount left over is less than it was this time last year. 

Employees are working just as hard as they did last year but have less to show for it, which can be extremely demoralising. Individuals are either limiting their luxuries or, in more extreme cases, having to sell their houses and downsize or skip meals.

So how can organisations help alleviate some of the pressures of the cost of living crisis? 

1. Benchmark existing employees’ salaries 

Do you have an employee that’s been with your organisation for years and their role has developed but their salary doesn’t reflect the responsibilities they’ve collected over time? It might be time to have a deeper dive into the specifics of individual role requirements and their pay. Following that, organisations may find it useful to conduct a salary benchmarking exercise to ensure their employees are being paid fairly.

2. Consider how you approach the annual pay increase

Some organisations action a flat X% year on year. Others base pay increases on RPI, CPI, or CPIH. Organisations might not have an annual process and they simply offer pay increases as and when they need to – usually when someone shouts loud enough or threatens to leave. Organisations should get ahead of the curve and think carefully about their pay increases. Show your employees you value them or risk losing them. 

3. Consider a one-off cost of living payment

Some organisations have been offering a no-strings-attached sum of money to help soften the blow of the ever-increasing cost of living. This would simply be paid alongside their salary and taxed accordingly. Organisations should think about how they frame this to their teams if they choose to go down this route. Communications should be clear about what the payment is for, when it will be made and highlight that the payment is not an annual contractual entitlement. 

4. Offer additional benefits

Consider reviewing your existing benefits and talk to your team about what they actually utilise. You could survey your team and suggest new options such as discounted gym memberships or subscriptions to wellness apps.  This could help to reduce the monthly expenses for your employees. 

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3) Negating the after-effects of the pandemic

A study by the British Medical Association revealed there’s been a 21% increase in the number of UK workers accessing mental health services since 2016. This downward trajectory has only worsened since the pandemic, with reports of loneliness at an all-time high. 

Remote working means teams don’t have morning chit-chat whilst they’re waiting for their tea to brew. There’s no opportunity to pass the time with a colleague whilst printing and scanning that report. Individuals have to actively Zoom a co-worker to speak with them. Is the need to tell someone what you had for dinner last night a good enough reason to arrange a virtual meeting? Probably not. UK workers are missing that human contact. 

This is compounded by the fact that over 30% of workers find it hard to switch off when working from home. People can just pop onto their emails and send that message without the need of going all the way into the office. It’s incredibly easy to work from home and the temptation has evolved into an obligation (and even an expectation for some). Many employees are reaching burnout. With remote working, this is now even harder to spot. Employee wellbeing isn’t just about mental health. Mercer identifies 8 key elements making up wellbeing: physical, emotional, spiritual, financial, social, intellectual, environmental and occupational. As an organisation, how are you supporting your team in all these areas? Here are some ideas of how you can help. 

1. Offer an EAP 

The World Health Organisation has highlighted the gaps in mental health services with many people across the world being simply unable to access services to support their mental health. Offering an EAP (employee assistance programme) is a fantastic way to bridge this gap for your team. An EAP is an employee benefit that provides holistic support to your employees in many different areas of life. One of the inclusions can be access to mental health support through short-term counselling. 

2. Train mental health first aiders 

Just like first aiders are trained to attend to emergencies affecting someone’s physical health, mental health first aiders (MHFAs) attend when someone is having a mental health emergency. An example of this might be when someone is having a panic attack due to high levels of anxiety. These designated individuals are specifically trained to identify signs of poor mental health and also know how to address them appropriately. In the not so distant future, it may become law to have mental health first aiders in your workplace. So, why not get a headstart and train yours now? 

3. Develop a wellbeing policy 

As more of a long-term, strategic piece, it’s also important that organisations think about their approach to wellbeing in general and put this in writing in the form of a policy. This is essentially a pledge and a framework to outline your organisation’s stance on wellbeing matters and how you plan to support your team. St John’s Ambulance has put together a guide to help organisations develop their own. 

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4. Communicate regularly 

Ensure your managers and supervisors are communicating with your team regularly and checking on their wellbeing. Not all employees are comfortable highlighting mental health issues. Some may feel more comfortable sharing how they are feeling in a private 1:1 setting

Managers who have a positive relationship with members of their team will be able to build that trust so individuals feel safe to share concerns with them. Communicating regularly will ensure nothing is missed or overlooked. These conversations can look at how the employee is holistically, not just from a performance or productivity perspective. 

4) Digitisation of HR 

Since the 1990s, the world has been moving into a digital era. This movement has sped up and gained momentum in recent years, with the launching of new technology and the emergence of mainstream artificial intelligence. 

Digitalisation has now also entered the world of HR. Gone are the days when organisations would file paper-based personnel records. Everything is electronic

The introduction of GDPR in 2018 has also meant that having paper-based systems simply no longer makes sense. Previously, it was an administrative headache to ensure your data retention policy was being adhered to. Organisations would have to manually trawl through thousands of pieces of paper checking what a record was and when it was created. 

How can you make sure your HR practices transition into the 21st century, along with the rest of the HR industry? 

1. Move your data onto an HRIS 

An HRIS (human resources information system) is a way to hold all your employees’ data and documentation securely. This data can be easily accessed, streamlining your day-to-day processes. It’s important you’re using an HRIS which is right for your organisation. Factorial is an intuitive system which can integrate into your existing systems. It has all the key modules to support your people management, including time, talent and performance management tools. 

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2. Utilise an ATS (applicant tracking system) 

Vacancies can attract hundreds of applicants if the job advert is strong. Keeping tabs on these applications can be extremely time-consuming, especially when they are coming in through different platforms. 

The best way to keep on top of your recruitment process is by using an ATS. Factorial’s Talent Management module allows you to do just that. You can communicate with candidates easily with preloaded templates, which improves the candidate experience by ensuring they’re always up-to-date and aware of where they are in the process. 

3. Digitise your performance management cycle 

Any business owner or leader will know that performance management (when not executed well) can be an onerous task. There is little to no point in paying lip service to the performance management process. If your managers don’t invest the time in it, you may as well scrap it off your agenda altogether. 

With the support of an electronic system to send you automatic reminders, schedule meetings and remove the need for unnecessary paperwork, you will undoubtedly take back hours of valuable time. Take a look at how Factorial can automate and centralise your performance management, too. 

✅ Try Factorial HR’s 14 day free trial today and get ahead of these HR challenges in 2023. 

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Amy is a knowledgeable People professional with over a decade of experience across a variety of private and public sector organisations. With a particular interest in employee engagement, Amy is an advocate for employee-centric approaches in all areas of HR which is reflected in her writing. Before a career in HR, Amy read English and Creative Writing at university and later studied for her CIPD, HR Management.

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