HR Trends for 2023

I do think what people and employees could be doing, and employers could be doing, is investing in themselves and developing their skillsets to help be prepared for something that might happen. One, we're hearing quiet quitting, and that was a piece where people are saying, "I'm only going to do what I need to do in my job." That's what we saw in '21 and a little bit of 2022. In 2023, we might actually see with this recession quiet hiring and not necessarily going out and hiring people, but actually taking your existing employees that might not be impacted by a reduction in force and believe it or not, giving them more responsibility and giving them more functions to do. And the key piece here is how do we balance out giving people more work, more responsibility, and keeping them engaged in morale without feeling that burnout that I mentioned.
GC:And you talk about retooling and re-engineering and retraining, there's the cost associated with that, and typically, I remember having conversations with my CFO where, "Hey, we want to invest and we want to put this training forth and we want to reskill employees." And he said, "Wow, but imagine the expense and imagine if they leave." And my response was always, "Well imagine if we don't train them and they stay." So again, there's that proper balance between financial impact of what the cost is, as well as the protection of your organization from a headcount and a performance of duties, if you will.
MK:Yeah. Organizations should always be looking at three major areas, and I do this when I do strategic planning sessions with leadership, business development. What are you doing to grow your business or getting out of segments that are not working well? Operation efficiency. We didn't even touch upon technology in the importance of doing things faster, but with quality. How do you do things where you can take it out of the hands of an employee because of short staffed or not having the skillset and utilizing technology to help out? And then we already talked about succession planning and developing your skillsets of your bench. That's the people side. So if organizations in 2023 really focus in on businesses that they're in or want to get out of, what can they do for operation efficiency to do things better, faster, with quality, but cost control, and continuously developing your people, even if there is a reduction in force. Even if there is a recession, you still have to be able to take a step back to have that competitive edge.
GC:And you talk about reduction in force and the impact that plays on human resources. You and I both have 20 plus years of corporate human resources experience, and I know from dialogue that you and I have both lived through going through reductions in forces, and they're not pleasant and they're not fun, but the execution and the planning that's really entailed, you'd start talking about the WARN Act and you start talking about discrimination, discrimination testing, pay equity, and how am I going to let this go, and developing a strategy for it? Some of those things that HR professionals may not have had to deal with if they're younger in their career. So as you go through that, what advice would you give a head of HR?
MK:Yeah, great. Everything that you mentioned. What I would say for advice and counsel is understand your workforce. And I'm actually more concerned about those who aren't impacted by a reduction in force, we call it the survivor syndrome, and how do we keep them motivated and keep their morale up so they don't think, "What is next? Am I next? Is this going to happen again?" If you look at some companies out there that happened in 2022 where in the tech section they did a quick riff, reduction in force, but then they piecemealed some more after that. So when you're dealing with survivor syndrome, I would say measure twice, cut once.
GC:Yeah, I agree completely. I mean, the last thing you want is a workforce looking over the shoulder wondering when is the other foot going to drop? So when you look at that, I think that's a great piece of advice, measure twice, cut once. This way, you can have the dialogue with the folks that are around that, "Hey, this is what we did and this is the only time we're planning on doing it."
MK:That's right. And I think the last piece here is frequently asked questions for middle management, because employees aren't naturally going to have a ear to the C-suite and express some of those concerns. So really training and educating middle management about why you're doing a riff and what is the frequently asked questions and making sure that everybody is answering the same way.
GC:Perfect.
Thanks for joining us today. My name is Gene Camm. I'm a Senior Director at Compensation Resources, an Eisner Advisory Group organization. I'm joined today by Matt Kerzner. Matt is the Managing Director for our CIOP group. Matt, welcome.
MK:Thank you, Gene. First of all, CIOP stands for the Center for Individual and Organizational Performance, and I lead the strategic HR for the firm for the center.
GC:That's great. That's great. All right, Matt. So before we start talking about what the projections are for 2023, I think it's always important to look back at 2022. What were some of the critical high points that you've seen over in 2022?
MK:Yeah, great question. So there were about four major themes that I noticed in 2022, and actually have been working with my clients on. First one is what I call CEO or C-suite burnout. We won't normally hear a lot of this, but through my executive coaching, I'm hearing a lot of stress coming from the executives because of what they were dealing with in the middle of '19, '20, 2021, and it really came out in 2022. There were problems with supply chain issues, there were problems with labor, and we'll get into those. So C-suite burnout was one of the major pieces that I saw in 2022.

The second one is the hybrid workplace, people just trying to adjust. I mean, really, let me take a step back. Remote work was really the theme, the second theme where people were adjusting. They finally were learning this new habit of working from home. So we had the issue in '19, '20 was kind of learning this new habit of working from home. How do you get productive? 2022, people hit their strides. They really got how to work from home in the remote workplace and created this new habit, which leads into the third theme of what does the hybrid workplace look like.

So in 2022, we saw a soft kind of, I use the word opening, or soft movement towards the hybrid workplace where people were coming into the office when they needed to. We started seeing people traveling again to clients. We started seeing people come together in person. So 2022 was this hybrid what do we do? How do we interact with each other in person coming out of this? And then the fourth thing that I saw, and I think we all heard about it, was the great resignation. People making some decisions about what's important for me as an individual working and is the culture of the organization that I'm currently working for right? So people made some decisions and decided to move to other organizations, they wanted more of a remote work or a hybrid work, or they were changing industries altogether because of what they've experienced in 2021 and parts of 2022.
GC:Got it. So as we move forward into 2023, that was a great recap of 2022, what are the things that... you talked a little bit about CEO burnout and C level burnout. What are some of the things that are keeping your HR professionals up at night, your CEOs up at night, your CFOs up at night?
MK:Yeah, good question. So first of all, it's probably four o'clock in the morning is the witching hour for a lot of them where things are popping in their minds of what's going on. So on the executive side, think of what happened in 2022, which created some of this burnout, or 2021, 2022, supply chain issues, not getting what you needed to get to actually deliver the products and services to your clients. That's extremely frustrating because it hurt their bottom line. It hurt the morale of the organization because people were stuck doing what they were doing. Also, depending on the organization that CEOs and C-Suite was leading, where's their work? Where's their workforce? They were dealing with how do we motivate, manage, and keep our employees engaged when one, the great resignation, people are leaving and how do I replace them?

And number two, how do we keep people, I'm going to use the word engaged. So that was a big piece. The HR folks that felt the stress and burnout was they were getting pressure from the executives to fill positions, create new policies because of the COVID and the hybrid and the remote work, as well as HR folks might have also gave notice and left and new HR folks were coming in. So you had this culture of learning, growing, developing, and frustration of being able to execute in order to meet the needs of your investors, your board, I'm talking the executives here, very stressful. And they were trying to figure out when is the end?
GC:I think you're making some very great points, especially when you start talking about that people dynamic and that people aspect of everything. From our client's perspective, what we saw was a lot of compensation issues, that fight for retention, and how do I attract and retain employees on the long term basis, and how does compensation factor into that? So all of those things came into play absolutely, and are still at the forefront, I think, of what's keeping a lot of executives up at night.
MK:Yeah. I mean, think about this, 2022 was the year of the employee where the C-suite executives usually like to main control, manage the P&L, but when they were trying to do these things and you didn't have, like I said, the supplies or stuff for inventory or doing the goods for the services that you provide, you also didn't have the people. Or when you had the people you felt very uncomfortable. Are they going to stay? And then when you gave notice, or if somebody gave notice through the great resignation, leadership felt that their backs were against the wall, think about compensation. What is it going to cost me to keep people? And that also increased the cost of doing business.
GC:Yeah, and when we advised our clients, we told them not to press the panic button. You don't want to just automatically increase your FIS expense. Let's look at variable pay practices and that type of thing. So we did a lot of implementations on that side.
MK:Yeah. In my executive coaching, I use the term pop it in neutral. Let's pop it in neutral, take a breath, let's take a step back and do some strategy of how you want to handle these things. Let's not punt, which can cause bigger problems.
GC:And what ties that together too is kind of that workforce and that culture and that environment and being back to the office, as you had mentioned. You're seeing a lot of our clients really return to work, so to speak, on a full-time basis. Do you foresee that really going through a full tilt as we go into 2023?
MK:Are you talking about the hybrid work environment, people coming back in-
GC:Yes.
MK:Yeah. This is going to be a very interesting thing. People are asking me all the time, especially when I'm visiting locations or doing some coaching with executives, they're asking me what is happening out there and how other people are accepting the hybrid work environment. We're in January. It's very new. I tell people all the time, and there is a debate of how much it takes to learn a habit, and think about it in 2019 when the world came to a halt and they said it's only going to be two weeks, but it lasted. So during that timeframe, we deconstructed a little bit of what we normally do in the workplace, and we created a new habit of working from home, finding the space, finding how my spouse is going to work from home, how my kids are going to be doing stuff from home. So I was adjusting and going along.

And then, once I started getting that, 2022, I hit my stride, we hit our stride on how productive we are going to be. Now as people are coming back into the workplace and we're starting to hear three days a week, four days a week, what's happening is we're now going to have to deconstruct again the habit that we created. Perfect example, some people who might be night owls found it more productive to start working at 12:00 in the afternoon and work 10:00, 11:00 at night. But they were normally working at 9:00 to 5:00, or 8:30 to five. So there's now this adjustment, "You're telling me I now have to go back in the office at 8:30? I can't even get up until 9:00." So now what's going to happen is people are going to deconstruct that habit again, recreate the new norm, and start all over again. And the executives want the turnkey and have people immediately come back. But there's a lot of adjustment that has to go in that. So we're going through a learning curve here of how the hybrid work is going to work in 2023.
GC:I like to look and consider kind of a fluid state. It's not something that's said, it's something that you're trying to adjust to, and you're coming out of the great resignation. I think you made some terrific points earlier about the great resignation and the powers with the employee. And with the economy and where I believe we're going to be going, I think there's going to start to see a shift and head back towards the employer. Do you see that occurring and how do you think that's going to implicate retention of employees and attraction of employees?
MK:Yeah, great question. I think actually 2023 is going to be the year of the balance, in my opinion. It's going to be the balance of the employer and the employee. And the reason why I say that is, yes, the employer is going to put the gauntlet down and say, "You have to be back in the office. We need collaboration. We need face-to-face. We need that energy." And I'm seeing it. I'm sure you're seeing it when you're watching the environment being with your peers in place. That's wonderful. The piece that we have to remember is we hired a whole bunch of people during the great resignation to work in a remote work environment or a hybrid work environment, but we can't assume that the culture that we had in '19 and even at the beginning of '20 is still the culture in 2023 that these new employees, or if someone's been around for two years working in an environment that's remote.

Coming back into the workplace you have to look at your culture, your mission, your vision, your values to make sure that everybody feels included in this new hybrid or work environment and the culture. Because what we might see is yes, we might see the employer, the year of the employer, putting that gauntlet down, and because of the recession that people are talking about, yes, people are going to be cautious of saying, "I don't want to change right now," but the employer... employee, I'm sorry, is going to feel that rub of that new habit that they need to develop to be back in, and they're going to be looking for the new culture.
GC:And culture's such an important thing. I'm a big believer that culture devours strategy. When you look at culture, you try to find other things that are important to employees, and one of the big buzzwords that's been around is DEI, diversity, equity, and inclusion. And it's been around for a number of years, but it doesn't, in my opinion, feel like it's gotten really the traction that it really should. Really how do you engage and hold folks accountable for it? What's your feeling on DEI throughout 2023?
MK:Yeah, great question. First of all, I think, yes, I do think DE and I has been around for a very long time, and I think that we've done a lot of good awareness of DE and I in educating our employees and our vendors and our clients and everybody that we work with on our initiatives, and I'm not talking any specific company, I'm talking in general. And you hit the nail on the head about the word accountability here, and I think what we're going to see in 2023 in order to see D and I actually stick and actually make movement is that the executives and middle management need to be held accountable for the DE and I initiatives. So very much like the performance metrics that we would be looking at for revenue, for operation efficiency, for succession planning, just moving the needle on goals, we have to have very measurable goals on our De and I initiatives in how our executives are being held accountable, and that has to be baked into the SKIs, the goals, the performance process, and how they're being compensated needs to be related into those areas.
GC:It's so true, and what we see on our side is we're designing long-term incentive plans, we're designing annual bonus plans where DE and I has become really an initiative and a measuring stick. It's what are the quantitative results that you're getting? How are you driving it? What is the board looking at it from that perspective?
MK:And let's break it down just a little bit more deeper. So the word diversity in my mind is making sure that you have a diverse skillset and a diverse group of people that represent your community. So when I say measurable results, how are we measuring the talent management of bringing people in? Do we have a diverse slate of candidates before we even interview? And then when we're interviewing, are we looking at all things are equal, and what does our organization look like and what are our gaps in diversity of skillset and makeup of our workforce? So we should be held accountable for those metrics. In the word equity, we got the pay transparency. So how does leadership work with HR compensation or do compensation studies to make sure that we are not in a, I'm using the word pickle, that we are not being discriminatory in how men are being paid versus women, people of color.

All those things, I think that's another metric on the equity side. The inclusion side is really understanding our workforce and what skill sets we have. It goes back to the diversity side, but the inclusion side is, "Okay, we have a lot of new people that just joined our organization." Is the organization actually understanding their skillsets? What is their education level? What is their knowledge? What abilities do they have? Because as we are starting to see the next chapter of the great resignation, we actually might see that we need to actually take our existing employee base, even though we might be short with staff, but they might have to rise up and add more value to the organization based on their skills.
GC:Yeah, and skills training, skills assessment, that's all part of really succession planning when you start looking at it from a bigger picture. So making sure that executives and HR professionals are building into their succession plan, that DEI initiative, and doing that skills analysis and that skillset.
MK:That's right.
GC:Perfect.
MK:That's right.
GC:In 2023, obviously we don't have a crystal ball, but what do you see as the key points that are going to be keeping executives up at night?
MK:So in 2023, it's going to be, "Do I have my executives in place? Do I have my right-hand person and my left-hand person in place? Do I have the right people, the right talent to make sure that we can execute on what we need to do?" So bench strength and succession planning, you said it, is going to be number one in 2023. Also in 2023, we're going to have to look at our landscape of our employees, and I'm talking demographics of age. And one thing that we're starting to see for some statistics is people from the ages of 65 and older, and actually we're starting to see 65 to 74, and we're starting to see from 75 and above, sticking around in the workplace and actually coming back to work.

The highest growing number of population of workers is actually 65 and older. So when you start working about succession planning, you should always think about what the next five years is going to look like with your workforce, but don't assume that somebody who is 60 years old is going to leave. They still have a lot of value, and we're starting to see people come back. As well as, because of the work shortage, the labor shortage, we should be also looking at a population that we could bring back to work, those who retired if we need it. So we're going to start seeing our executives really take a look at those who retired in our workforce as well as those that we have in to see if we can retain them longer.
GC:And again, when you start talking about retention, you talk about culture, you talk about environment, you talk about DE and I and different initiatives that organizations really hold their cap on. What do you see as the biggest impact in 2023 from an overall just culture perspective?
MK:Yeah, great question. I think because of the whole great resignation, and again, every organization's different so we don't know how many people in general, I don't have that stats of how many people actually quit, took new jobs, then left those jobs and then took another job because the culture wasn't intact, I do think that organizations should look at their mission, their vision, their values, and their culture from the past, and the past is three or four years ago because the world has changed, work has changed, and what has changed? So I think I'm asking people, the ask here is that leadership should really be looking at their strategic planning, and it doesn't have to be a five-year strategic plan. We also learn lessons that you should maybe look at a year, year and a half, but they really should take a look at what the culture was and what it is today.

And let's not assume that somebody who's been around for five, 10, 15 years A, knows what it was or needs to understand that it has changed because of the work environment. So I do think that leadership should take a look at those, revisit, re-change if need be, and as people come back, it's a new year, I always use the term get back to basics, I think there should be a general orientation, for not only new employees or employees that are new since the era of COVID, but take everybody in level set. So not only existing employees, but new employees could learn together what the mission, vision and values are so we're level setting all at the same time.
GC:Yeah, I think that's a great point, it's a great idea, especially when dealing with clients over the last two and a half years, culture went out the window. People were working from home, there was less importance on culture, on work environment, and I think where organizations may have gone by the wayside is that they lost that vision or they lost that mission of what we're trying to accomplish. So I definitely think it's important to capture that.
MK:There is one more, I think theme that's going to happen in 2023, and I think it's important to mention because I know it impacted me, and I know it impacted a lot of people, and that is... and I think organizations can do a better job at educating people on some of the benefits that could help. For example, we've all experienced, I think we all, I mentioned executive burnout, but burnout is I think, prevalent all over the place. So I think if we can educate people on mental health, your physical health, your financial health as a person working not only here, but how do we secure ourselves to take care of our family, our community? So I think in 2023, there needs to be a focus, this is more HR and what HR leadership can do, is making sure that there's not only awareness, but there's initiatives.

So I think first of all, awareness is a big piece. So I think HR professionals should work with leadership to figure out what they currently have to offer. So through employee assistance programs or the medical benefits or whatever 401K you're offering, what education can you provide and resources you can provide your organization? And I'm not just talking reading material. If you're now back in the workplace and you're trying to get some collaboration, bring some vendors in, maximize your use of your vendors to really educate, and then run some initiatives. Gym memberships or having a contest for just overall health, those type of initiatives is really where I'm going with. Obviously people are nervous about savings and saving for retirement, or even student loans. All these things are on people's minds right now, and I think organizations could help bring forward. And believe it or not, most organizations might be offering these things, they're just not communicating them and really educating and really getting your employees engaged to move the needle on people feeling safe.
GC:I think communication's the key because when we deal with our clients, we talk about, "Hey, what's total cash compensation? What's my base salary? What's my bonus?" But when you start looking at the total compensation package, you start including the benefits and the health and the wellness and the 401k. So I think it's communicating it, re-communicating it, and making sure that the folks understand, "Hey, there's assistance in these different areas. Make that we're taking advantage of it. And hey, by the way, it's company sponsored and it's something the company and the organization is really putting forth for you."
MK:Yeah. And then once you do the awareness part, think of different demographics, different age groups, people who are in their twenties, maybe early thirties, are thinking something different than those in forties or those in the fifties or those in the sixties, or remember I said 65 now. So what does the organization... not what, but what can the organization do to even take the material we just talked about, about those three or four initiatives, how do you make it very specific to age groups?
GC:Yeah, absolutely. So as we conclude today, Matt and I first want to thank you, but would love to get your final thoughts on, hey, this is what we're going to really see as the hot topic in 2023. Final thoughts?
MK:It's almost like going back to the beginning. So number one is really taking care of the health of your executives. It's almost like being on a plane. You have to put the mask on yourself first before you can put it on others. So the CEOs and executives need to take a step back, maybe take a look on how they can support each other, break down those silos and departments and communicate and work together as an informal group, or formal group, to tackle some of these issues. So I think CEOs, C-suite burnout, there needs to be an initiative to get the group to support each other, to reduce some of that pressure. And it's also okay for CEOs and executives, I say CEOs because I always say the leader has to lead by example, to have a balanced life.

It shouldn't all be about work. It should be family, friends, exercise, spirituality, all these things to be balanced. And I think if the executives can focus in on themselves and learn on how to do that, they're going to come across where other people are going to feel that, and that's going to kind of low down the temperature a little bit in the workplace. So I think that's a big initiative for 2023, as I mentioned. Another final thought on De and I is finding a way for that accountability, getting these initiatives built into your performance culture. Another big takeaway is culture, reviewing your culture and making it an environment where people feel very comfortable and aligned on where the organization wants to go. So culture's going to be very important, and that's going to slow down the resignations and build retention and get us back on course on being the most strategic competitive organization that you possibly can be.
GC:Fantastic. Thank you so much today, Matt. I appreciate it. For Matt Kerzner, I'm Gene Camm. Thanks and have a great day.
MK:Thank you.

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