The phrase “these are unprecedented times” has been said more times over the last two years than one can count. Companies and employees alike have experienced unprecedented life changes, health changes, business changes and social changes, to name a few. While the phrase has become a mainstay in today’s messaging, it remains to be true: we are still experiencing unprecedented times.

Today, organizations are faced with inflation, low unemployment, low immigration, supply chain issues, an ongoing pandemic and a business slowdown. It is safe to say a playbook on how to prepare and adapt to these variables does not exist. So, what can organizations do to forge a successful path forward? It starts with knowing your purpose as an organization and connecting with your employees.

As we move from the “Great Resignation” to the “Great Reshuffle,” employees are seeking purposeful jobs that best match their lives, values and needs, and may materialize differently by individual, role or generation. For the first time, there are four generations in the workplace, with Gen Zs joining baby boomers, Gen Xers and millennials. Successful organizations must work to understand the needs of all employees to ensure they feel supported, respected 
and heard. 

To attract and retain the best talent, employers must create an engaging work environment that includes multiple workforce structures. For example, before the COVID-19 pandemic, only 3.6% of the U.S. workforce worked remotely half-time or more. In the 2023 HR Trends survey, approximately 85% of survey participants stated that their organization offers at least some form of remote work. Now, organizations need to create engagement practices that connect with fully remote, hybrid and in-person employees, which was not common practice pre-pandemic. 

As organizations continue to pivot and adapt to workforce needs, these are the three key challenges they face for 2023:

PRIORITIZE PEOPLE: Uncover Ways to Attract the Right Talent

Position Yourself to Stand Out in the Crowd

After a brief hiatus in 2021, attracting the right talent repeats as the number one HR challenge employers are facing leading into 2023. Eighty-eight percent of HR Trends survey participants state this as their greatest challenge, while 74% ranked recruitment as one of their top two priorities for 2023.

Upgrade Your Employee Value Proposition

In a job market filled with seemingly endless opportunities, employers need to stand out from the crowd. One way to do so is by having a strong employee value proposition (EVP). An EVP plays a vital role in an employer’s brand strategy and is an opportunity to align an organization’s goals, values and benefit offerings with those of prospective employees. A traditional EVP outlines key benefits offered to employees, such as pay, benefits and career opportunities. Today, EVPs are expanding to include “in-demand” offerings such as technology, remote work, flexibility and more.

28% of HR Trends survey participants reported having an employee value proposition.

DOES YOUR ORGANIZATION HAVE A DEFINED EVP?

Understanding What Employees Want Most

To attract the right talent, it is important to know what employees desire in a job. According to QTI’s inaugural “Understanding the Worker Experience” survey, 82% of candidates stated that competitive pay is their top priority when selecting a job. Similarly, compensation was one of the top three reasons employees stated for leaving a job. However, flexibility is quickly growing to become a primary value proposition for employees. According to a 2022 LinkedIn Global Trends survey, since 2019, there has been an 83% increase in job posts that mentioned flexibility. Comparatively, in QTI’s Understanding the Worker Experience survey, flexibility is the second most sought-after benefit when searching for a job.

Herein lies the disconnect: When it comes to flexibility, employers and employees aren’t speaking the same language. A recent article by SHRM confirms as much, stressing the importance of distinguishing between “flexibility and autonomy” when describing a working environment. When referencing “workplace flexibility,” many employers are describing their policies around the number of days to be in the office. What job seekers ultimately desire is autonomy — in other words, not just the days to be in the office but also the hours they work. 

The SHRM article discusses the varying degrees of autonomy and flexibility that can be offered. On one end of the spectrum is low autonomy, low flexibility, which is when an employee is required to be in the office all the time. On the opposite end of the spectrum, there is high autonomy, high flexibility, which allows an employee to work from anywhere at any time while continuing to have access to their organization’s space. While offering employees both flexibility and autonomy is a differentiating and sought-after benefit, it may not always be a plausible option depending on the position. Therefore, employers need to determine what they can offer and clearly communicate it with potential employees to ensure both wants and needs match.

ASK YOURSELF: What are you doing to promote autonomy and flexibility in the workplace?

The Art and Science of Matching Open Positions with Talent

Adding to the challenge of talent attraction is the mismatch of available talent to open positions. For decades, an individual’s career path was linear, where a typical career trajectory included moving up to the next level and earning a new job title. Today, this path tends to be more winding, as employees seek to find jobs that match their interests and talents. When recruiting for talent, keep this winding path in mind and determine whether reskilling or upskilling is an option.

• Reskilling: teaching new skills which are not directly related to the current position, with the specific purpose of increasing organizational agility
• Upskilling: teaching new skills directly related to their current position

Having a strong EVP and making yourself appealing to applicants is a vital step in attracting the right talent.

SIX ACTIONS TO HELP WIDEN YOUR RECRUITMENT NET

1. Reexamine the requirements of your positions. Are the wish-fors too specific where finding the dream candidate is akin to capturing a unicorn? Rather than requiring specific industry experiences, determine which skills and/or backgrounds could easily transfer into a designated role.
2. Ensure the job description uses unbiased language related to age, race and gender.
3. Increase the geographical radius of where you are searching for talent if remote work is now an option.
4. Join new networks or partnerships that will help you tap into a new candidate base while diversifying your recruitment efforts.
5. Prioritize and create an authentic and compelling applicant experience.
6. Consider using a contingent workforce to assist with talent acquisition challenges.

PRO TIP: Use neutral wording instead of gendered, coded words: Masculine: competitive, assertive, dominant Feminine: concerned, pleasant, nurturing Neutral: exceptional, motivated, team-focused

75% of reporting organizations have at least a portion of their workforce composed of contingent workers (QTI HR Trends Survey).

MORE THAN MONEY: Managing Higher Total Rewards Demands

Let's Talk about Total Rewards

According to QTI’s HR Trends survey, 84% of organizations state that meeting higher compensation, benefits and total rewards demands of employees and candidates is a challenge for 2023. With global uncertainty, increased inflation and a looming recession, these demands are unlikely to go away anytime soon. 

A total rewards strategy embraces everything that employees value in the employment relationship. It is a holistic approach to reward design and delivery that ensures all programs are aligned within the business.

THERE ARE FOUR CRITICAL COMPONENTS TO TOTAL REWARDS

A well-defined and innovative total rewards strategy ensures that your rewards become a driving force to accomplish organizational goals.

Disruption and Challenges in Total Rewards

Inflation, which soared at its fastest pace in more than 40 years, is wiping out pay raises that many people have received. In February of 2022, after accounting for inflation, hourly wages fell by 2.7% from February 2021 (Bureau of Labor Statistics). Additionally, the cost of goods has increased, translating into a higher cost of living and the need for higher compensation.

The COVID-19 pandemic has also impacted the demand for higher total rewards. Employees have taken stock in what they value most and desire rewards. In other words, their “worth it equation” has changed (2022 Work Trend Index: Annual Report). As outlined in Microsoft’s 2022 Work Trend Index, the “worth it equation” is defined as “what people want from work and what they’re willing to give in return.” Employees want total rewards that prioritize their well-being and connect their passion to purpose. They desire flexibility and work-life balance. Organizations that can offer rewards in these areas will have a leg up on their recruitment competition.

With the increase in remote work, recruiting and retaining employees has become more competitive. Your total rewards programs are now being evaluated against local, national and sometimes global competitors as well. To be successful, employers need to innovate their total rewards strategy to embrace the evolving world of work.

ASK YOURSELF: Are the total rewards you're offering table stakes, or are you upping the ante to attract potential candidates?

Compensation and Benefits Trends

While the 2023 HR Trends survey results show that meeting employees’ higher total reward needs is a challenge for 2023, respondents were split 50/50 on altering their 2022 base pay increase budgets in response to inflation. Across all respondents, median 2022 actual and 2023 planned base pay increases are 4.0% and 3.5%, respectively.

Year	Overall Median	Overall Average
2022 Actual Base Pay Increase	4.0%	4.5%
2023 Planned Base Pay Increase	3.5%	3.9%

41% of respondents indicated that the 2023 base pay increase is “to be determined”

With the rise in inflation and increase in total rewards demands, pay compression between new hires and existing employees continues to be prevalent with responding organizations. To address these inequities, 51% of organizations are granting pay increases to current employees. Market-based compensation plans are one way to avoid pay compression. Evaluating these plans annually (at least) helps to ensure pay remains market competitive.

In addition to increased wages, benefits costs are also increasing. Fifty-three percent of surveyed organizations experienced an increase in benefits cost. A little more than 1/3 are sharing those increased costs with employees. According to the August 31, 2022, SHRM article “Cancer Now Top Driver of Employer Health Costs,” the delay in nonemergency care during the pandemic has resulted in a spike in health care costs for many employers. The article states that to avoid shifting the increased cost onto employees, larger organizations are looking at “fundamental reforms to care delivery systems” to help address the costs increases.

TOP 3 ALTERNATIVE BENEFITS OFFERINGS FOR EMPLOYEES
(QTI’s Survey)

Providing a Holistic View with Total Rewards Statements

Total rewards statements are individualized documents that communicate the overall value of an employee’s financial rewards such as base pay, incentives and benefits, alongside the less tangible benefits such as work/life programs, learning and professional development opportunities, and flexible work arrangements. Utilizing total rewards statements provides an opportunity to communicate the full rewards being offered to employees, shifting the conversation beyond compensation. Fifty-one percent of HR Trends survey participants reported using total rewards statements to communicate their rewards program to employees.

By providing employees with a better understanding and value of their total rewards, 78% of employees who receive a total rewards statement “are more likely to stay with their employer.” (HR Performance/Aon Hewitt) 

Total Rewards Best Practices

With employers experiencing an increased demand for higher total rewards, now is an excellent time to review your current strategy to ensure it will help you attract and retain the best talent. Keep these best practices in mind:

• Start with organization strategy, mission, vision, purpose and values
• Assess employee motivators/values
• Inventory all your total rewards elements — both tangible and intangible
•  Be intentional — you can’t be everything to everyone
• Define role of each element
• Set competitive positioning
• Evaluate market to assess position
• Regularly evaluate and adapt as needed

EMPLOYEE RETENTION: Optimizing the Workplace to Minimize Turnover

While attracting the right talent to your organization may be a top priority, don’t leave your current employees behind. 
With only 10% of HR Trends survey respondents stating their workforce is highly engaged and 41% of organizations experiencing higher turnover than the prior year, working with your employees to create a great employee experience is essential to retaining key talent. 

To better understand what goes into great employee experiences, let’s look at Jacob Morgan’s Employee Experience equation:

CULTURE X TECHNOLOGY X PHYSICAL SPACE = EMPLOYEE EXPERIENCE

Morgan emphasizes those three elements as the key contributors in “creating an organization where people want, not need, to show up to work each day.” Only by making these “core changes to the workplace environment” will the employee experience improve.

Knowing that attracting new talent is harder than ever, understanding the why behind employee resignations will be a key in retaining your current talent. QTI’s Worker Experience Survey shows the top three reasons why an employee leaves their job are compensation (49%), work-life balance (49%) and work organization/culture (41%). Comparatively, our HR Trends responses show only 24% of responding organizations stated work-life balance as a top reason for resignation. This signals a disconnect between organizations and their employees. To overcome this divide, running regular surveys, including pulse surveys, can give you a better understanding of what your employees value and want most. Having conversations with employees about those desires will allow your organization to create actions around those results.

Embracing Employee Wellness

Differentiate your employer brand by demonstrating care to your employees through your total rewards offerings. QTI’s Worker Experience Survey shows us that employees value a workplace that supports a healthy work-life balance. Companies can support this desire by offering benefits that enhance one’s work and home lives. For 2023, trending benefits include telemedicine and financial education, which responding organizations plan to offer (or already offer) at 52% and 48%, respectively. Twenty-seven percent plan to offer (or currently offer) paid parental leave, which could be a key differentiator in both recruiting and retaining key talent. Research even suggests offering paid parental leave can increase worker retention, which decreases the costs of hiring and training new employees.

Employee wellness is an essential factor to consider when building a total rewards strategy. It creates additional opportunities to prove to employees that your organization cares about employee well-being. Employees expect their employers to understand and support that shift. Offering wellness programs to employees that consider the mind and body is essential. According to the 2023 HR Trends Survey, the most prevalent health and wealth offerings include employee assistance programs (91%), health risk assessments (37%) and immunization clinics (36%).

Mental health education and tools, and resources for stress management, are another trending health and wellness benefit. Thirty-one percent of HR Trends respondents are either planning to provide this offering or currently have it available. About one in four companies have or plan to increase their mental health program investment, with the most common rationales being increased employee satisfaction, improving retention and increasing employee engagement.

53% of surveyed employees are more likely to prioritize health and wellness over work than before the pandemic.*

*Microsoft's 2022 Work Trends Index Annual Report

PRO TIP: PRO TIP: Investing in your employees’ mental well-being is a way to prove your commitment to their work-life balance needs, and in turn strengthens your ability to retain that talent.

Extinguishing Employee Burnout

Benefit and health and wellness programs can temporarily alleviate the symptoms of employee burnout, but they don’t address the root cause of it. A recent Gallup survey has found that 23% of employees report feeling burnt out at work often or always.

Although burnout may seem like the norm, it is found that burned-out employees are 2.6 times more likely to be actively seeking a different job. Addressing burnout from the root will aid your organization’s employee retention efforts. (Gallup Employee Burnout, Part 1: The 5 Main Causes)

COMMON REASONS FOR EMPLOYEE BURNOUT
(Gallup, Vantage Circle)

• Overwhelming workloads
• Unfair treatment
• Lack of a clear job description/role
• No support or backup
• Time constraints to get their job done

Committing to Continuous Diversity, Equity and Inclusion (DEI) Initiatives

DEI is an area where organizations can make a great impact in their long-term ability to attract and retain talent. Momentive’s research finds that 62% of workers consider DEI to be an important factor in their company’s success. An organization’s value of and commitment to DEI also affects an employee’s job satisfaction and desire to work for an organization. A large majority of the workforce says it is important to work for an organization that prioritizes diversity and inclusion.

WHAT HAS YOUR ORGANIZATION DONE OR IS IT DOING TO ADVANCE IN DIVERSITY, EQUITY AND INCLUSION?

More than three out of five organizations have made DEI a strategic priority, according to the 2023 HR Trends Survey. However, less than 20% have a DEI strategic plan in place.

Committing to a DEI strategic plan is not only a commitment to your organization’s EVP but also a commitment to your employee retention efforts. Momentive’s April 2021 Workforce Happiness Index found employee happiness increased significantly when reporting their company was either “about the right amount” or “going too far” on DEI issues. For companies looking to start or strengthen their DEI strategic plan, these are the top actions respondents are taking to advance their organization’s commitment to diversity and inclusion:

• 57%: Trainings, workshops and development opportunities
• 47%: Providing a safe place/way for employees to share feedback
• 46%: Reevaluating job requirements to ensure that degrees, years of experience, etc., are true requirements

PRO TIP: PRO TIP: Making thoughtful changes to your organization’s culture and recruitment process will strengthen your organization’s ability to recruit qualified, diverse candidates, which almost three out of four organizations report as their biggest obstacle to a more diverse workforce.

REMOTE WORK: Putting a Premium on Flexible Work Schedules

Making the (Continued) Case for Hybrid Work Environments

Like it or not, remote work is here to stay. To attract and retain talent, organizations need to maximize their remote work offerings/plan. QTI’s Worker Experience survey found that 83% of workers noted that a company offering a hybrid work environment was at least somewhat important when selecting a job, and 54% noted it as very or extremely important when selecting a job.
 
Employers have kept up with employee preferences regarding continuing a more flexible approach to the workplace. Seventy-three percent of HR Trends survey respondents report employees will be required to be onsite for less than a full week, with three days per week being the most prevalent option.

83% of workers noted that a company offering a hybrid work environment was at least somewhat important when selecting a job.

FLEXIBLE WORK ARRANGEMENTS

Eighty-five percent of responding organizations have and will continue to offer remote work arrangements (either ad hoc/occasional or full-time) post COVID-19. This is a slight increase from last year, which had 82% of responding organizations offering remote work arrangements.

Maximizing the Value of Being in the Office

While the spotlight is on remote work, the traditional office space is not dead. Eighty percent of organizations have not changed the physical worksite size since the start of the pandemic. Less than half intend to increase space or downsize in the next three years, which is a decrease of 15% when compared to last year’s survey. The most prevalent reasons for maintaining a physical work location are employee collaboration (67%) and business operations requiring a physical work location, such as a manufacturing facility (64%).

As we’ve seen over the last year, the return to work and shift toward hybrid work models has not been a simple decision for employees and organizations to make. Employees enjoy the flexibility but also find value in strong organizational networking and collaborative spaces. Employers need to find a way to accommodate hybrid workplaces to have the best of both worlds.

For some remote workers, understanding the “why” behind returning to the office has been one of the largest hurdles in convincing them to return. Per Microsoft’s 2022 Work Trends Index Annual Report, 38% of hybrid employees say their biggest challenge is knowing when and why to come into the office. Many hybrid workers have returned to the office to find it empty or, worse, find themselves taking Zoom calls from their desks all day long. Erik Kostelnik, CEO of the marketing-technology company Postal.io, was cited in a recent article in The Wall Street Journal as saying, “If you don’t have a standardized time of when you’re in the office and when you have core working hours, it becomes too loose.” Leaders should create clear expectations for what in-person collaboration looks like for their teams to help facilitate positive, productive in-office days. To go even further, Michael Ford, CVP of Global Workplace Services, suggests “designing workplaces with enough flexibility to support every employee.”

Leaders should create clear expectations for what in-person collaboration looks like for their teams to help facilitate positive, productive in-office days.

Regaining Camaraderie and Connectivity in a Hybrid World

Loneliness and isolation in the workplace have been on the rise since remote/hybrid work began. Microsoft’s 2022 Work Trends Index Annual Report found 43% of leaders say relationship-building is the greatest challenge in remote and hybrid work. The same report found 55% of hybrid and 50% of remote employees feel lonelier at work than prior to going hybrid or remote. Feeling lonely at work is linked to lower employee engagement and must be addressed to retain talent.

SHRM suggests creating a “buddy system” to support new employees in a hybrid or remote environment. A “buddy” would be assigned to each new employee for the first 12 months to help them learn and acclimate to the company. There are concerns that first-time and younger generations of employees will struggle to acclimate to the ins and outs of the company and won’t effectively learn from experienced coworkers.

To create a better sense of community among your team, consider creating what SHRM calls a “virtual water cooler” through communication platforms such as Microsoft Teams or Slack. This is where employees can go for a dedicated non-work channel to connect with colleagues. To help get conversations started, they suggest all team members, regardless of work location, send a message to this channel answering the following questions:

• How are you doing overall?
• What’s been interesting in your life recently outside of work?
• What’s going on in your work: what’s going well, and what are some challenges?
• What is one thing about you or the world that most other team members do not know about?

ASK YOURSELF: How are you fostering employee connectivity beyond the demands of the work day?

YOUR 2023 HR PLAN: Putting a Plan Into Action

Results from this year’s survey offered insights into the biggest challenges companies are facing when it comes to their workforce, as well as some actionable steps to achieve success in increasing employee satisfaction. 

With the focus for 2023 clearly identified around the myriad facets of attracting and retaining talent, build a strategic plan that leads with employees’ best interests in mind. Putting them at the forefront will help produce a highly engaged workforce with employees who are emotionally committed and ready to go above and beyond for your organization. Doing this will create a strong foundation for your company to be successful today and well into the future.

To help you create the most powerful and actionable plan for addressing employee engagement in 2023, we put together some helpful questions to ask yourself along the way:

• What are the greatest HR challenges that your company is facing as we head into 2023?
• Are you using your company’s purpose and values to connect with prospective employees?
• What are you doing to ensure your company stands out from the crowd of companies recruiting talent?
• Do you have an employee value proposition, and if so, are you using it as part of your recruitment process?
• Are there opportunities to reskill or upskill talent?
• Are you making appropriate adjustments to your total rewards strategy based on inflation and the evolving needs of your employees?
• Are you communicating with employees the value of their total rewards through total rewards statements?
• Are you creating an organization where employees want to show up for work as it relates to culture, technology, and physical space?
• How are you differentiating your employee brand through your total rewards offerings?
• How are you demonstrating care to your employees?
• How do you show your commitment to furthering DEI?
• Are you setting clear expectations with your employees about when and why to return to the office?

Looking for More Detailed Information

Survey participants receive an exclusive copy of complete survey results. If you didn’t have a chance to participate this year, please consider doing so next year to receive these additional insights. Contact us to learn how.

Methodology

QTI’s 2023 HR Trends report is based on data submitted by 225 primarily Wisconsin-based employers across a variety of industries and organization sizes. The majority of respondents are privately held organizations. The survey submission period was June 15 – August 1, 2022.