HR executives say they’re keeping their eyes on inflation, retention, and the skills gap in our latest report.
By Zee Johnson
2022 began as a year that many hoped would be the official return of normalcy. Yet, like 2021, it quickly became a year of adversity, uncertainty, and preparation. Leaders strategized and formulated how they’d sustain the workplace progressions they made when it came to pay equity, technology adoption, DEIB, and more. As the economic downturn, raging global war, retention challenges, and other obstacles continue to threaten the workforce’s well-being, leaders are keeping on their toes to exude resilient once again.
HRO Today’s 2022 Top Concerns of CHROs Report, sponsored by WilsonHCG, surveyed HR leaders across the country to determine the challenges that are most relevant to them, as well as the issues they are anticipating for the coming year. Here, a roundup of senior HR executives share how these challenges are impacting them and strategies for overcoming them.
CONCERN: Inflation and Potential Recession
Talks of a recession have been swarming and through the bulk of speculation, one thing is certain—it has everyone on edge. Of those surveyed, about two-thirds (65%) said they were concerned about an impending recession, making it a top area of concern.
In Achievers’ 2022 HR Preparedness Report, 77% of HR leaders said they were concerned about a possible recession, but just 26% thought that their organization was prepared to manage the challenges that’ll come from it. And in the CHRO report, half (50%) of respondents said they were extremely or very concerned about a potential recession within the next 12 months.
Leaders are unnerved by the thought of a recession, as economic downturns historically have impacted productivity, profits, investment, and headcount.
Cody Harker, head of data and insights at Bayard Advertising, says the first thing that the possible recession has affected is talent acquisition. “The potential for a recession has already impacted recruitment. According to the most recent Harris Poll, more than 70% of Americans seeking a new job reported more difficulty than anticipated and 72% of respondents said that employers ignored their applications or failed to schedule interviews.”
He also thinks that a recession would cause a power struggle of sorts, therefore threatening recent wage progressions. “A recession would shift the balance of power back toward employers, and in that case, employers won’t be as concerned with higher wages, bigger and better benefits, etc., and their recruitment marketing efforts will probably reflect that,” he says.
A recession isn’t the best-case scenario for organizations, but how exactly does it affect employees? The Bureau of Labor and Statistics reported that the average workers’ take-home pay is shrinking, making the average hourly earnings fall by 3.6%. So, during this time, employees will be expecting more support from their employers and businesses must be proactive about how they plan to help struggling employees.
“High inflation rates are affecting the well-being of our workforce across the globe,” says Katherine Loranger, chief people officer at Safeguard Global. “Employees are experiencing increased amounts of stress about job security, finances, and the long-term impact of economic uncertainty. We are monitoring inflation rates and have shared guidelines with our leaders on how to discuss the topic with our workforce in order to ease concerns.” In the past, her company identified areas most impacted by the changes caused by inflation and worked to implement measures that helped employees combat high energy and food costs through the winter months.
Melissa Jones, executive vice president and chief human resources officer at CSAA Insurance Group, thinks leaders should err on the side of empathy when an entire workforce is negatively affected by something like inflation. They must also be transparent by prompting employees on what the company plans to do during tough times. At her company, they’ve led several initiatives, including:
- moved pay positioning to no lower than 90% of market midpoint and made pay adjustments to get to at least that mark;
- increased merit budget and planned for a 4% merit budget in 2023;
- allowed extensive flexibility to work from home;
- offered competitive retirement benefits to focus on long-term financial well-being; and
- focused on overall employee wellness, including support for stress and burnout.
Some leaders have yet to experience inflation or a recession during their executive tenure. By banding with staff, actively listening to employees and implementing change, they’ll help ease anxieties.
65% of HR executive are concerned about an impending recession.
Retention has been a recurring challenge for businesses for quite some time now, and while many have found strategies to boost employee loyalty amid uncertain circumstances, it still remains a pressing issue.
The Top Concerns of CHRO Report found that retention was the greatest area of concern for nearly three-quarters (74%) of respondents, almost the same as in 2021. Loranger attributes recent attrition to a change in employee attitudes.
“No company is immune to attrition. In the last few years, people have been very vocal about what they need and that’s a good thing,” she says. “There is less of a stigma than there once was about changing jobs.” The pandemic reset, she says, played a key role in dismantling how work was once viewed, leaving employers navigating what retention and hiring will look like in the long run.
Jo Deal, chief people officer at GoTo, thinks that the most in-demand talent has more options, and with the ball in their court, their skills give them a market advantage. “In the U.S. and many other countries, the demand for talent is still outweighing the supply of people. While layoffs are becoming more common and hiring pauses are the new normal, there is still a choice available to skilled workers,” she says.
Harker says investing in the employee experience and showing the workforce that they are valuable to the organization can help combat attrition. “One way to improve retention is to focus on creating a superb customer experience and prioritizing DE&I practices, especially when seeking to attract diverse talent,” he says.
Likewise, Jones says a solid DE&I strategy helps her company’s retention efforts. “Our culture, which is focused on inclusion, belonging, well-being, development, and flexibility as some of the hallmarks, is a huge attraction and retention benefit for us.”
And Loranger thinks investing in what employees enjoy most is a proven way to generate positive outcomes, especially when money is being allocated to flexibility. “We recognize that this shift in how people need to better integrate their work and personal lives results in greater desire for more flexible work experience and are investing in the resources that allow employees to work in any way that best suits their personal and professional needs,” she says. “We prioritize creating policies that recognize our teams’ outputs rather than time and have been intentional about creating a culture where team members feel valued.”
CONCERN: Skilled Worker Availability
Any company in the market to fill employment gaps is searching not just for any worker, but for a quality candidate. However, 72% of leaders are concerned about the availability of skilled employees, an 18-percentage point increase from last year.
While businesses are actively recruiting candidates who fit their desired criteria, a candidate who settles perfectly into the culture at one organization may not be the right fit at another. Skill set requirements vary greatly Jones says, and a candidate who possesses both enterprise and leader skills is most ideal for her company. She breaks down the difference between the two skill sets.
- Agile mindset
- Business acumen
- Cross-team collaboration
- Data insights
- Emotional intelligence
- Strategic thinking
- Hybrid team management
- Inclusive leadership digital transformation
- Talent development
And Deal believes an employee who can effectively visualize an agile plan for the future is essential. “Being able to efficiently execute scenario planning is extremely valuable. Building a plan for today and tomorrow is great but being able to see around corners and ensure that plan still works if the economy changes, if customer demands shift, and if supply chain issues slow down further are very valuable skills.”
For companies that have decided to permanently implement remote workforces, having skills that allow for growth in a virtual environment are crucial. “With hybrid and remote work now the norm, tech-savvy employees who thrive in virtual settings are a must,” says Loranger. “Because the modern workforce is spread across the globe, employees must have the skills to manage their own workload and problem solve without the physical presence of a supervisor.”
Since dispersed workforces have expedited the adoption of technology, the skills leaders sought several years ago look vastly different than the ones they seek currently. “The focus on task-oriented work has declined as a result of greater adoption of automation over the last decade. Now, companies need creative ideas and strategic thinking more than the ability to alphabetize paperwork,” she says.
Overall, being able to connect and work with colleagues who may or may not be in the same room tops the list at CSAA.
“Emotional intelligence is so important, especially in a more digital workplace. Without the benefit of physical cues that we get through in-person interactions, it’s even more critical to be able to work and connect with others emotionally in meaningful ways,” Jones says. “Obviously, for our employees – and of course for our customers – enhancing the digital experience is paramount to our success.”
72% of leaders are concerned about the availability of skilled employees, an 18-percentage point increase from last year.
CONCERN: Remote Work Reducing Engagement and Loyalty
Remote work became a mainstay during the pandemic, and now leaders are concerned about the long-term impact it could have on company culture. More than two-thirds (67%) of CHROs agreed that remote work has reduced employee attachment and loyalty to their company, a 19% increase from 2021.
Jones says while remote work has come with some concessions, giving employees choice has been a way that she’s been able to foster engagement. It’s important, however, to double-down on communication and make sure employees are still connecting via virtual methods. “It doesn’t come without tradeoffs, and we are working to define our long-term connection and collaboration strategy to ensure we still create meaningful engagement opportunities for all our employees,” she says. “We’ve gotten really good at digital events, for things like training, development, engagement, collaboration, and innovation, and we’ll continue to focus on evolving our future of work.”
And Deal doesn’t regret making the change to being a remote-first company. In fact, in GoTo’s recent employee engagement survey, the company produced the highest engagement levels they’ve seen since the surveying of employees began five years ago. This is because the company’s remote shift was calculated carefully and intentionally executed for success.
“Productivity was not impacted, and our employees enjoy the flexibility that working at GoTo offers them, whether that be where they live or how and when they work,” she says. “We were extremely thoughtful in our move to remote, it was not a quick decision and we put a lot of work into determining how best to support the experience, including investments in work-from-home stipends and equipment; budget set aside for community and team building activities; and appointing community leaders in every location where we had a hub of employees.”
She does think, however, that providing opportunities for in-person connection has helped sustain the strong bonds that exist within her company’s culture.
But more important than whether an employee works in-person or offsite is having the right technology in place to allow organizations to curate a standout employee experience. “We have our own great technology, like GoTo Connect, that also helps us stay connected and have been thoughtful about additional tools and best practices we could deploy to help remove friction points in a global hybrid workplace,” Deal says. “It is important to stay mindful of burnout when home and work and life blur together, especially with employees working across multiple time zones.”
Similar to Deal, Shira Wilensky, national practice leader, health and well-being at OneDigital, thinks that remote work isn’t necessarily the issue, instead, ensuring remote employees have just as much mental and emotional support as those onsite is. By addressing mental health and well-being, organizations can boost loyalty and make employees feel safe at work. “Companies are acknowledging that poor employee well-being is a problem for their business,” she says. “Employees that are struggling are less productive and more likely to leave and certainly don’t contribute to a positive work environment.”
She says well-being, which has mental health at the center, is not one-dimensional, but multifaceted, and has a number of drivers including:
- poor physical health;
- financial stress;
- social determinants of health; and
- feeling a sense of purpose and belonging.
2023 will be like previous years—full of problems that are fixable if leaders tackle them eagerly and deliberately. But 2023 also has the chance to be the most outstanding year for HR executives who again prove to their organizations and the world that they are more resilient than any other practice.