March 7, 2023 – After several years of challenges like the COVID-19 pandemic, supply chain difficulties, and economic uncertainty, organizations are wondering what to expect in 2023. Unfortunately, there are still adverse remnants of the previous three years. Among others, the war in Ukraine continues, with no end yet in sight. Nor is there any shortage of changes underway in the world of work.
“While there have been whispers of a recession this year, the government has taken action to tamp down inflation and lessen the negative impacts on the greater economy,” said a report from Cowen Partners Executive Search. “DEI remains vital to companies seeking to maintain and improve their brand reputations and culture. There’s also a greater emphasis on company benefits like flexibility and remote work.”
In its new study, Cowen Partners examines the forthcoming trends for 2023 from a CHRO’s perspective.
2023: The Year of the Employee
In past decades, workers were largely disadvantaged in the employee-employer relationship. Managers looked down on excessive use of vacation and sick leave, and employees fought hard to maintain their organizational status, lest they fall out of favor with their boss and risk not advancing in the company.
“Today’s workforce is different,” the report said. “Due to various social movements, employees feel more comfortable voicing their need for self-care and attention to family. They’re no longer willing to work long hours in a bid for the next promotion. Instead, they’re looking for a relationship in the workplace that’s mutually beneficial.”
Cowen Partners expects employee needs to impact how human resources executives oversee workplace culture in 2023. In its report, the firm provided some trends to expect:
Flexible Work Arrangements on the Rise
At the height of the COVID-19 pandemic, remote work was widespread. In fact, it was the only option for many businesses forced to close during ongoing lockdowns. Cowen Partners says that while most companies now have business-as-usual policies, employees haven’t forgotten the benefits of remote work.
“Not all companies can embrace a fully remote work culture,” the search firm said. “Some organizations require employees to be onsite for various reasons, such as manufacturing or inspecting products. Companies that value in-person collaboration are looking for innovative ways to keep this part of their culture. Other businesses have lengthy leases for expensive office space, making it challenging to support remote work initiatives.”
How CHROs can Prevent Top Talent from Leaving
Russell Reynolds Associates recently interviewed 12 CHROs and talent leaders across sectors to better understand what strong HR and talent organizations are doing to differentiate themselves to attract and retain the best talent. The firm received diverse perspectives, but one thing was clear: The workforce has changed permanently. Consequently, the skills needed to manage it have also shifted. Let’s take a closer look!
Cowen Partners notes that companies that are incapable of making the full leap to a remote work culture are attempting to meet their employees’ desires halfway. “Many offer hybrid work schedules, where employees work partly from home and come to the office on specific days of the week,” the report said. “Other organizations have gone a bit further, shortening the workweek to four days and allowing all their employees to enjoy three-day weekends on a rotating basis.”
CHROs shouldn’t expect the desire for workplace flexibility to disappear, according to the Cowen Partners report. “Organizations that can’t support a complete work-from-home environment should incorporate a hybrid policy,” the study said. “Otherwise, they may risk losing their edge as top talent looks for better options elsewhere.”
Further Emphasis on DEI Initiatives
DEI initiatives seemed to be everywhere in 2022. Companies jumped to change their organization’s culture as concerns over gender and racial equality rose. “Today’s CHROs have made strategic movements to incorporate DEI into their hiring practices through various methods, including writing inclusive job descriptions, providing unconscious bias training to hiring managers, and leveraging AI tools that reduce potential bias,” the Cowen Partners’ report said. “Going forward, we’ll see more developments in DEI. CHROs who haven’t already overhauled their hiring practices will need to do so if they intend to attract top talent to their workforce.”
According to a recent Glassdoor survey, 76 percent of candidates consider a company’s diversity a critical factor when looking for a new job.
“DEI initiatives start in the human resources department, specifically when opening new positions to the general public,” the search firm said. “Therefore, it’s essential to ensure the hiring process is free from bias. Incorporating various software tools designed to reduce bias can help, such as pre-employment skills testing and resume screening. CHROs should stay abreast of developments in the DEI world to maintain their company’s reputation as an industry leader that anyone with a suitable skill-set can join.”
Need for Employee Cross-Training
Recruiters agree that most employees don’t join their organization to stay in the same position for the remainder of their careers. In fact, according to the Bureau of Labor Statistics, the average tenure with a single employer was 4.1 years in 2022.
“CHROs understand how expensive it can be to lose a high-performing employee,” the Cowen Partners’ report said. “When workers leave, companies need to locate new employees with the appropriate skills and temperaments to fit in with the work environment and train them to succeed. While most employees don’t stay at their organizations for decades, employers can increase the likelihood of long-term employee retention through cross-training and employment development programs.”
Cowen Partners also notes that cross-training employees across different roles lessens the potential for knowledge loss when a worker leaves. “Employees with knowledge of the position can assist if a colleague decides to resign, ensuring business continuity,” the firm said. “Cross-training also prevents worker boredom since employees can learn and master new skills.”
Upskilling and Reskilling
Another trend Cowen Partners says to watch for in 2023 is upskilling and reskilling employees. In the current economic environment, technology is constantly changing. “The skills that employees learned during their college days may no longer be relevant in the future,” the firm said. “Employers can ensure their workforce remains competitive by identifying critical skills necessary to be successful in their roles. Different positions will likely need other skills training. For instance, someone in marketing may need training in digital advertising methods, while a software engineer may benefit from AI training.”
The report also says that CHROs can stay ahead of the trend by regularly meeting with department managers to understand the skills their team is lacking. Once they know what training is necessary, they can implement programs that employees can participate in to grow their skill-sets.
Today’s CHROs Have Much Work to Do
“The workforce of today is unlike any other we’ve had in previous decades,” the Cowen Partners report said. “Where workers once could expect to graduate from college and maintain a solid career until they retire, that’s no longer the case without regular training and development. Technology is simply changing too quickly.”
Finding HR Leaders and Diversity Chiefs Remains Hot Spot for Executive Recruiters
More and more, chief executive officers have recognized the strategic role that the human resources function plays in the core strategic issues their companies face, including growth strategy, mergers and acquisitions, restructuring, increased board oversight, and evolving governance and reporting. HR can also ensure that clear changes are made to recruitment and capability-building processes by determining the characteristics of a “purpose driven” employee and embedding these attributes within recruitment, development, and succession planning.
“In my 30-plus years of working with HR executives, this has been one of the most critical times I have seen for a company to have a highly capable HR function with strong leadership,” said Alan Berger, vice president, human resources search at StevenDouglas. “Setting and implementing a strategy of how to make sure the workforce stays engaged and highly productive in an onsite, hybrid or remote setting, with the headwinds of a labor shortage and unprecedented resignations, is incredibly challenging. In the end, the work has to get done and deciding on how that can be accomplished and under ever changing COVID rules and mandates falls squarely on HR leadership’s plate.”
The report suggests that CHROs can ensure their workforce remains competitive through upskilling and reskilling and they’ll need to maintain workplace policies that attract top talent and provide a diverse working environment.
The Modern CHRO
Historically human resources has garnered a reputation as purely administrative. “Apart from the work they do in onboarding/offboarding talent and ensuring everyone toes the line, there’s often a temptation to see little else,” said the report. “In fact, some go so far as to tag HR as the complaints department and no more.” This view tends to detract from the premium placed on the work that HR does and the value of its personnel. For context, a survey by HR tech firm, Namely, found that, out of 1,000 midsize organizations surveyed, just seven percent had a C-level HR executive. Worse, when asked what departments they felt were most valuable to their organization, CEOs ranked HR in ninth place, according to research from McKinsey and Conference Board.
“Yet, the imperative for proactive, multi-dimensional recruitment and talent management is only increasing,” said the Cowen Partners report. “As we are seeing, human resources leaders are emerging front and center as a critical concern for organizations, and the majority of CEOs now see attracting and retaining talent as a top challenge. Considering this, it may be time to rethink these dated perceptions about the HR function and what it brings to organizations, as well as the role that a CHRO plays in unlocking this value.”
Cowen Partners serves both small and large, publicly traded, pre-IPO, private, and non-profit organizations. Its clients are typically $50 million to multi-billion-dollar revenue Fortune 1000 companies or have assets between $500 million to $15 billion. Placements span the entire C-suite and include VP and director-level leadership roles. Cowen Partners has placed hundreds of candidates in industries including technology, healthcare, manufacturing, retail, financial services, and private equity.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media