9 trends that will impact HR and business in 2023

Arjen Swank

2022 has seen much of the world fully transform into the post-lockdowns “new normal.” While, for many, daily life is now similar to how it was before the pandemic, what were previously thought of as major transformations are now thought of as commonplace.

9 trends that will impact HR and business in 2023  

In the world of work, this has included mass adoption of hybrid working models, a changing dynamic between organizations and employees in employees’ favor, and a growth of interest in wellbeing and training and development. Here, we outline the 9 trends that HR and businesses will be dealing with in 2023. 

Trend 1: HR is now part of strategic decisions  

HR’s transition from the team that looks after things the board aren’t bothered about, to a strategically minded one has been taking place for some time now. We’ve noticed both in HR literature but also in our interactions with customers over the past years that HR is now much more data-driven and much more likely to have a CHRO on the board than before. 

Just because this has been a long-term process doesn’t mean it’s not still important to keep it in mind as a major trend for 2023. There is still some way to go before all organizations utilize their HR team in this way, and before HR has all the tools and skills necessary to really drive organizational success.  

When we asked HR professionals in Germany about the major external factor informing their approach, 40% of them responded saying that the most important one was that HR has been made part of strategic decision-making processes. Closely behind, 32% of respondents said that pan-organizational eagerness to improve the employee experience is heavily influencing them. 

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Trend 2:  Career growth and development is a HR priority 

As digitalization, hybrid working models and mergers take place across the business sector, many employees are needing new skills and opportunities to develop their careers. 72% of the HR professionals in Germany we surveyed said that career growth and development was very important to helping their organizations be successful in 2023. 

Training and development are necessary to ensure that an organization’s people can remain productive and stay engaged at work. A lack of training opportunities is one of the primary reasons people leave an organization. Research from our Employee Experience Review shows that 21% of employees in Africa, 15% of employees in South America and 13% of employees in Europe leave their job because of a lack of training opportunities. 

Trend 3: There are many people-oriented operational changes in the pipeline 

2022 has been full of news about The Great Resignation, The War on Talent, Quiet Quitting, each of them pointing to the ways in which employers must start to think about their employees differently. In short, we need more people-oriented organizations. 

To successfully manage these challenges, HR will need to be fully plugged in to what their people are thinking and feeling.  

This comes at a time of general instability and transformation in the (business) world. People-oriented organizational change, such as onboarding new hires, delivering training and development programs, and changing roles and responsibilities, will be taking up a lot of HR’s time in 2023. To successfully manage these challenges, HR will need to be fully plugged in to what their people are thinking and feeling.  

Trend 4: HR wants to know employee engagement outcomes  

Engagement has been a major part of the conversation for decades now. But that doesn’t make it any less relevant in 2023. At Effectory, we recently refined our definition of engagement. Based on our research, employee engagement can most accurately be described as “the degree to which employees are inspired and energized by their work and experience a positive connection with their work environment.” 

We know that high engagement rates amongst employees has all sorts of benefits for businesses. Organizations that have high engagement rates also find their employees have: 

  • 35% increase in job satisfaction 
  • 29% increase in customer focus 
  • 35% increase in employee retention 

This ties in with the continued focus on gathering people analytics. 60% of HR professionals in Germany say that their biggest challenge for 2023 is knowing what employees are thinking and feeling.  

As Kramp’s Wanda Stoteler says, “The best way to find out what employees are thinking is by asking them directly. But you HR needs surveys which are easy to perform, are scalable, and provides comparable data points over time. Effectory’s all-in-one employee feedback platform provides HR and organizations with exactly that.” 

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Trend 5: ESG continues to grow in importance 

ESG stands for Environmental, Social, and Governance, and is an acronym that is helping organizations think about their impact upon the world. According to Gartner, 2022 “is the first time the category [of environmental issues] has ever cracked the top 10 [CEO priorities] and reflects a very significant increase in interest.” 

On this topic, IBM’s Own your impact report says that: “Transformational sustainability occurs when sustainability becomes an integral part of an organization’s business strategy. More than an initiative, sustainability becomes core to the values of the company.

It will be essential to act on feedback and involve employees in day-to-day operations and long-term projects. 

Leaders who embrace transformational sustainability recognize the opportunity to reshape major aspects of the enterprise. They view sustainability as a catalyst to define new business models, as well as deliver on community needs.”  

The Social part of this acronym can’t be ignored. It will be important for people to be looked after while we also think about our environmental impact. To make organizations greener, it will be essential to act on feedback and involve employees in day-to-day operations and long-term projects. 

Trend 6: Attraction and retention of talent  

With there being more roles than candidates, it’s remaining important for organizations to ensure they retain their current staff. High turnover and recruitment are also expensive. The average US employer spends $4,000 and 24 days to hire a new worker, and that doesn’t take into account the productivity and expertise a long-serving employee takes with them. 

There are two major questions around attraction and retention: How to keep people on board? And how to shorten time to proficiency? These are the five most common causes for employees to leave a role, according to our own Employee Experience Review

  • Atmosphere of an organization 
  • Training opportunities 
  • Working independently 
  • Leadership 
  • Acceptable workload 

The same research also demonstrated the positive impact a good onboarding process has on engaging employees.  

Trend 7: Economic downturn 

It’s become a grim presumption that we’ll experience a global recession in 2023. Disruptions to the distribution of foods, goods, and energy, alongside depressed consumer spending power, inflation and interest rate hikes are creating a perfect storm for an economic downturn. 

For most businesses, how to deal with high inflation and less consumer spending will be the most obvious challenges. This will affect companies’ bottom lines and of course therefore effect staff and HR.  

In a 2009 paper on the impact of the economic recession on HR, research by IPSOS Mori revealed that 82% of respondents thought that the economic situation would lead to changes in their HR strategies. “Of these, three in five (58%) expect such changes to be long term rather than short term.” 2023-24 may look very similar to 2008-2009, and in that case, we can expect many more – some so far unidentified – changes to come. 

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Trend 8: Future of Work and hybrid working 

One of the major changes that COVID introduced, and one that will likely stick around, is the transition to hybrid working models. This also intersects with what is vaguely termed the “Future of Work”, the various operational changes, such as digitalization, which will present new challenges as well as opportunities for improved productivity and greater innovation. 

Some of the questions organizations are asking themselves regarding hybrid working are:  

  • How to design our office and ensure we have a positive work culture? 
  • What will be our future models of cooperation and communication?  
  • How do we take into account the needs to the different generations and individuals who are part of our organizations? 

Even as we enter a recession, or at least a period of economic uncertainty, looking after people will remain paramount. Without them, organizations won’t be able to survive at all, and the retention and attraction of talent will depend a lot on organizational culture. 

Trend 9: Leaders and managers need to be more effective 

In their Top 5 Priorities for HR Leaders in 2023 report, Gartner says that better preparing leadership for the Future of Work is a top priority.  

Gartner describes the necessary change about management adopting more “human-centric” approaches. This includes enabling “safe self-expression at work”, addressing the “life needs” of their employees instead of merely work needs, and managing “tailored, flexible workflows.” 

Of course, Effectory couldn’t agree more that leaders shout be more people centric. With our employee feedback platform, we’ve been promoting employees’ voices and enabling HR to access and analyze people analytics that drives organizational success. 

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