Could Business Success in 2023 Rest on the Shoulders of HR?
Discover how HR can drive employee and business success, despite ongoing macro challenges in 2023.
In the last three years, businesses, societies, and people have borne witness to a global pandemic, Russia’s invasion of Ukraine, and soaring interest rates. As we head into 2023, 90% of CEOs predict a recession is coming. Across the world, inflation rates are higher than they have been in decades and economic activity is suffering. The IMF is predicting a sharper-than-expected slowdown with growth slowing from 6.0% in 2021 to 2.7% in 2023.
When it comes to talent, this unprecedented economic environment is leaving businesses, HR, and employees in a state of confusion. Josh Bersin recently commented that the current operating climate is leaving CEOs and CHROs ‘baffled’!
Are we hiring or firing?
Are we freezing pay or going for a big rise to retain employees?
There is no doubt that we are in uncertain times, which are impacting employees, HR, and businesses in different ways. In this article, we explore why HR must be front and center of business strategy in 2023 to ensure business success.
Talent management needs a human-centric approach
In 2022 there was a spotlight on ‘the human-centric approach i.e. the need for organizations and leaders to understand employees within their business on a more personal and individual level. Employees have and are experiencing prolonged stress, anxiety, and uncertainty. The last three years have taken their toll on employees. Many are fatigued and burnt out, and 8 in 10 employees are disengaged at work (Gallup). The individual, business, and economic toll of this is catastrophic and untenable long term. Much of the cost cannot be accounted for in monetary terms, but the estimated cost of lost productivity as a result of employee burnout to the global economy is $ 1 trillion a year (McKinsey).
To investigate the post-pandemic changes to employees in terms of their priorities and motivations at work, SHL dived into their people data to get an objective perspective on what employees want today. What we found was that people have been through so much over recent years, that we find it more difficult to adapt and bounce back from hardship.
Our levels of adaptability and resilience have declined since the start of the pandemic.
What is more, we have reprioritized our motivators towards a greater need for purposeful work, individual growth as well as connection, and belonging. The pandemic has led to employees longing for more work-life balance and all these factors mean that many employees have re-evaluated their willingness to take on levels of stretch that are necessitated higher up an organizational structure.
Despite financial constraints and headwinds towards a global recession, good employees always have the agency to leave an organization. And according to McKinsey the number one reason for employees leaving a job is a development and career advancement. With high employee burnout and individuals feeling that their needs and priorities are not being met at work, many will continue to march on their feet and look for new jobs in 2023.
What we found was that people have been through so much over recent years, that we find it more difficult to adapt and bounce back from hardship.
A growing need for talent intelligence
When we turn our attention to HR, we can see the criticality of this function to the success of any business. In fact, the economic environment in 2023 means that HR is front and center of business strategy. It is critical that organizations have the right talent in the business to deliver on strategic goals. But with budgets under tight control, HR will have to be data-driven and highly intelligent about how to deploy resources, retain talent, and remain agile this year.
For many years, recruiting costs have been high as organizations buy in talent to either replace employees or build out new skill sets. In a buoyant economy, this may have seemed an easy option, but in 2023 it is economically flawed. It is estimated that it costs 25% of an employee’s annual salary to replace a leaver and that is before we consider the indirect costs as well as the time and effort involved. And yet, the answer could be right in front of us: organizations are sitting on a whole body of untapped talent that wants to be discovered. LinkedIn research found that a staggering 93% of employees would stay at a company longer if it invested in their careers. The reality is that good talent is already in every business, but HR often does not have the data or analytics to unlock hidden potential.
As HR shifts to focus on the employees within the business, they need data to be able to understand not just ‘top talent’ or ‘high potential talent’ but employees at all levels. More than this, they need to be able to understand where and how people want to develop and recognize that not every employee is looking for upwards progression. Keeping in mind the SHL research indicating that employees are looking for purpose and meaning at work, as well as more work-life balance, HR must think about how we leverage talent across the business to retain good employees whilst also filling critical gaps.
- Your top sales performer might not want to become a sales manager, but they may have the potential to move into the marketing function.
- Your customer service super-star could well be your next sales rep.
Talent management is needed at every level of a business
Traditionally it has been difficult for HR to have this level of insight into the skills and abilities and motivations and preferences of employees across the organization. Instead, they have had to focus on the top levels of an organization as well as a hierarchical approach to employee progression. However, with advances in data and analytics, combined with objective assessment it is possible to have an at-scale, data-driven and joined-up understanding of talent at all levels within a business. This allows HR to become highly intelligent about the workforce within the business, enabling internal mobility, employee development, and critical retention, in what is setting up to be a tough economic landscape in 2023.
SHL’s talent management solution, Mobilize, delivers insights into your entire workforce, helping you make impactful mobility and development decisions with agility and accuracy—supporting HR to become front and center of business success this year.
Contact us and let us help you drive business success through your talent management strategy.