2023 Key Issues

To thrive amid uncertainty, technology and digital transformation will be key. Executives expect 2023 to be another difficult year as they confront an unprecedented confluence of factors – a progression of the global economic downturn due to recession, high inflation, continued geopolitical turmoil and talent shortages driven by long-term demographic shifts. Their concern about these risks is evident in The Hackett Group’s 2023 Key Issues Study. Approximately twothirds of respondents across all business functions cited the potential for economic downturn and/or recession to be the top risk during the coming year, while over one-half expressed concern about the risks of talent shortages and inflation. Notably, more than one-quarter of study participants said the inability to successfully transform the business and related functions is of key concern.

To prepare for economic downturn or potential recession, organisations are changing their spending patterns to improve margins and find cash flow to fund potential responses to recessionary challenges. It is clear that executives are looking to technology as they consider how to address these pressing enterprise risks: 45% of executives said they are accelerating digital transformation (automation, advanced analytics and modelling) in preparation for a downturn –more than any other response measured, including capital spending and cost reduction programmes. The cloud has moved to the forefront as the platform organisations must leverage for agility, growth and transformation. In the study, 42% of enterprises reported having legacy solutions that must be replaced. For many of these applications, cloud solutions are now the only game in town. But organisational disconnects hold back many companies from achieving the transformation they are targeting.

2023 Human Resources Priorities

With this unprecedented environment as a backdrop, human resources (HR) executives shared their priorities and planned improvement initiatives for 2023 (Fig. 1).

Helping the enterprise to develop a new kind of leader who is better suited to meeting today’s complex business and organisational challenges has moved to the top priority for HR in 2023. Recruiting, retention and enabling growth remain high priorities, while acting as a strategic adviser and creating/maintaining a high-performing culture each dropped two places but remain in the top five of the priority list.

Six of the 10 top HR priorities represent business and enterprise goals related to human capital, indicating that HR remains focused on its role in enabling the success of the overall enterprise. Four of the priorities relate to improving the HR function’s own capabilities – however, a minority of organisations have 2023 improvement initiatives planned to address these areas, reflecting a potential mismatch between priorities and investments of resources.

Executives do not consider any of the top 10 priorities to be well supported. In fact, the top seven objectives are all critical development areas – priorities of high importance but for which confidence in the ability to deliver is low.

1. Develop Executives Who Can Lead Effectively In A Changing Business Environment

A pressing need to equip managers to guide the organisation through the challenges posed by continued business disruption and workplace transformation has elevated leadership to the top issue for HR this year – up from the seventh spot on last year’s list.

While HR executives clearly see the importance of this objective, there are concerning signs. Only 39% of those surveyed said their organisations have a major 2023 initiative planned to address this objective. That is a lower percentage than for many of the other top 10 objectives. Furthermore, executives expressed low confidence in their ability to deliver improvement in this area. Significant and meaningful progress won’t happen without action; thus, this is a critical development area where HR executives need to reconsider their alignment of resources and focus.

2. Recruit And Retain Staff In Key Business Positions And With Critical Skills

Acquiring and retaining talent remains near the top of the 2023 agenda of HR organisations. For recruiting and retention efforts to succeed, HR must lead in creating compelling candidate and employee experiences. As with other top objectives, confidence in the ability to deliver is a concern, but HR organisations are taking action. Nearly two-thirds of organisations have a major improvement initiative in 2023 to address this objective.

One area of focus that will have a strong bearing on experience and, thus, both recruiting and retention, is the hybrid workplace. Attention to this area is evident in the percentage of organisations that have plans underway to enable the transition that began to take hold in 2022 (Fig. 2). Maintaining employee well-being and engagement throughout 2023 are top of mind for most HR organisations.

3. Act As A Strategic Advisor To The Business

With so many people-related issues affecting business success, HR organisations must act as strategic advisers to top management. Businesses continue to face challenges related to culture, productivity, work style and engagement. HR must be able to guide business leaders, and shape new strategies and policies to reinvent work and the workplace. But many need to upgrade staff skills and support capabilities to successfully play this role. Only 23% of HR organisations have a major 2023 initiative planned to address this objective – the lowest among the top 10 priorities.

Strategic workforce planning capabilities, which are key to the ability to serve as a strategic adviser, are of particular concern (Fig. 3). Only 9% of respondents consider their organisations are highly effective in translating business strategy into talent implications, and a surprising 12% do not have the capability to do so. Similarly, most HR organisations lack highly effective capabilities for identifying risks associated with attraction and retention of critical talent.

4. Enable Enterprise Growth Strategies And Initiatives

Growth remains high on the enterprise agenda, and HR organisations are charging ahead with talent strategies and programmes to help ensure the organisation reaches its expansion targets.

The fact that this objective remains near the top, despite other pressing priorities and the potential workforce implications of an economic slowdown or recession, reflects at least a degree of optimism about the period ahead. More than one-half of HR organisations surveyed – 58% – have a major 2023 initiative in place to address this. Here again, though, executives have low confidence in their ability to address this objective. Bolstering HR’s own capabilities in areas such as strategic workforce planning and talent management will be key to success.

As challenging as the coming year may be, managing through a slowdown is a situation that most companies and leaders have experienced. The best companies look proactively for ways to thrive amid uncertainty and position strategically for capitalising on growth opportunities, regardless of the volatility they may encounter. HR can be a catalyst for growth by helping to model alternative workforce scenarios and proactively recommending improvements for meeting talent demands and mitigating risks.

5. Create And Maintain A Highperforming Organisational Culture

With so many organisations shifting to hybrid working, concerns about how to sustain productivity, engagement, innovation and performance are high among leaders, and they are seeking help from HR.

Implementation of digital workforce enablement tools continues to grow. For example, digital tools to enable hybrid meetings, learning and wellness are pervasive or soon will be (Fig. 4), and deliver strong results. Growth projections are strong, and HR will need to leverage these tools to the fullest to meet expectations in 2023.

Several other digital technology applications gained traction – for example, internal talent marketplaces, which improve employee mobility and skills development and, thus, build organisational agility, and aid productivity and retention – while some emerging technologies began scaling up in 2022.

6. Address Key Talent And Critical Skills Shortages

Increased turnover of experienced staff – combined with failure to build adequate bench strength – has left many organisations struggling in their attempts to fill critical roles.

Digging a bit deeper into the survey results, one area of opportunity is in strategic workforce planning capabilities for identifying risks associated with attracting and retaining critical talent. Nearly one-half of respondents (46%) feel their current capabilities are of low effectiveness, and 12% do not currently have such capabilities. HR needs to improve its ability to identify turnover risks, develop staff internally to fill critical roles and expand external talent pools.

7. Improve Talent Management Capabilities

Advanced talent management capabilities not only lead to better talent outcomes but can drive business performance as well. HR recognises the importance of increasing not just its own talent management capabilities, but those of people managers across the business. However, only one-third of HR organisations have a major initiative planned to address this.

This is particularly important as the hybrid workplace continues to come into focus (Fig. 5). There are significant people aspects of this transition, which are often the least well understood and managed. HR organisations must remain abreast of effective emerging talent management practices in the new world of virtual working and strengthen their partnership with information technology to employ them. They must also work closely with senior leaders to ensure hybrid working policies produce the desired outcomes.

8. Increase Agility Of The HR Service Delivery Model

Continued volatility in the business services environment and workplace, along with expectations of recession, are increasing pressure on HR to be nimble in how it deploys resources and delivers services.

In simple terms, agility is the ability to synchronise internal and external rates of change. Addressing other objectives highlighted in this paper – in particular, the ability to leverage technology and insight to improve HR service delivery – will help increase agility. Additionally, agility is a factor of the operating model. Traditionally, HR resources have been aligned to, or owned by the function. Greater agility will come from continuing to move towards a model with a more even distribution of resources between roles owned by the function, roles managed by the function and shared roles managed by the overall enterprise. This model – which is more capabilityfocused, digital and modular – establishes the flexibility needed to keep pace with change.

9. Adapt Talent Acquisition Strategies To Dynamic Labor Markets

With talent demand far exceeding supply in many labour categories and employee expectations shifting, organisations are struggling to pivot their talent acquisition strategies to the new realities of labour markets.

One reason so many HR organisations were caught off guard by the Great Resignation trend of 2021 and 2022, was their inability to anticipate shifts in demand, supply of skills and changes in labor markets. Most respondents lack a wide range of effective strategic workforce planning capabilities. Only 6% believe their organisations are highly effective at identifying risks associated with talent attraction and retention. Fully 41% said they do not have capabilities for modeling alternative scenarios for workforce supply, demand and economic variance.

Improving insight will be at the centre of delivering on this objective. Adoption of datarelated and emerging technologies is increasing at a steady pace (Fig. 6), but the learning curve remains steep for some HR organisations. Smallscale deployments of advanced analytics, data visualisation and master data management are the norm. More than two-thirds of respondents said they are realising their objectives using these technologies, suggesting HR is mastering the learning curve and should be looking beyond small-scale applications to larger-scale deployments.

10. Leverage Technology To Improve The Efficiency And Effectiveness Of HR Services

With a continuing mandate to do more with less, HR organisations are placing increasing focus on using technology to deliver HR services more efficiently and increase staff productivity.

HR adoption of digital technologies continues to grow, and for the most part, they are delivering on business objectives (Fig. 7). Cloud-based core human capital management (HCM) suites are pervasive, as are process management/workflow tools and HR point solutions. All are widely successful. Robotic process automation (RPA) tools – while still producing mixed results – are worth a second look, especially for resource-strapped HR groups with fragmented systems.

HR’s Increased Workload Will Continue To Create Productivity And Efficiency Gaps

Addressing these diverse priorities will require resources. The Key Issues Study confirms and quantifies what HR executives already know: They must find a way to do more with less. In 2023, the HR workload is predicted to increase by 10.5%, reflecting the broadening of priorities. With head count and operating budget remaining virtually flat (Fig. 8), HR organisations must be prepared to fill a productivity gap of 10.2% and an efficiency gap of 10.1%. These gaps have grown slightly from last year’s study (8.9% and 9.5%, respectively), indicating that HR executives still have a significant challenge in front of them. HR leaders will need to rely on technology to increase productivity, efficiency and effectiveness, yet they expect only a modest jump in technology spending – far less than last year’s 9.1% projected increase in technology spending. As a result, they will need to wring greater value from its existing technology and find ways to better use the functionality of its systems and tools.

HR workloads will be more evenly distributed across the organisation and technology in past years. Function leaders expect to rely more on self-service functionality and automation (including work executed by RPA, artificial intelligence and chatbots) in 2023 to absorb the increased workload.

Internal Challenges That Hinder Growth

Organisations encounter many internal challenges to transformation and growth. While these challenges vary across and within organisations, it is important for HR leaders to understand enterprise concerns and align their own strategies for success. For the most part, HR executives’ perceptions of top enterprise challenges are fairly consistent with concerns of executives across all business functions.

Given that these internal challenges are common across all business functions, it makes sense that they are best addressed through an enterprise-led approach that harnesses the collective input, expertise and action of multiple organisational disciplines –rather than managing them ad hoc or at the functional level, as is often the case.

Where To Focus In 2023

An unprecedented talent shortage, along with economic and geopolitical disruption, remain prominent features in the outlook for 2023. The typical reaction to a recession is to cut staff and cancel investments. However, in an economy that already has more open jobs than people looking for work and a shrinking future workforce, organisations that shed employees risk the possibility of never getting them back. And those that halt or cut funding for business process automation will only put them further behind digital leaders.

Given today’s unprecedented combination of threats, we believe HR executives must take progressive countermeasures rather than following the typical recession playbook. Here are several actions that are relevant to most organisations:

• Improve leadership acumen. Provide ample training and development experiences for organisational leaders and people managers. Use analysis of workforce and talent management data to guide policies and management practices

• Leverage digital technology. Digital technology is the means by which HR organisations can perform more tasks – better and cheaper – while creating a foundation for improved performance and greater business value. Start by fully utilising the capabilities of existing platforms, and accelerate the adoption of new tools and applications

• Rethink talent models and strategies. Assess and adjust talent models to make them sustainable. Evaluate talent management strategies to ensure the right mix of internal development and external recruiting. Gauge and improve your employee value proposition by workforce segment. Digitise and enhance talent management processes

• Elevate/solidify relationships. Elevate the role and upgrade the skills of HR business partners. Document expectations and measures of success. Arm HR business partners with the data-driven insights they need to inform and guide strategic decisions, and the training needed to understand and effectively communicate these insights

• Build data management and analytics capabilities. The ability to harness data and insights from analytics is pivotal to the future success of HR organisations. It is well past time to implement comprehensive data management strategies, fully leverage existing analytics and reporting capabilities, and start mastering advanced techniques

• Close HR skill gaps. Prioritise filling gaps in business acumen, change leadership, strategic thinking, data savviness and customer-centric design

• Transform the HR operating model. Change HR operating models to align high-level HR business partners with business leaders, focus centres of excellence on creating programme innovations and effective implementation, and deliver a great employee experience through digital channels and shared service centres.

THE HACKETT GROUP

Anthony DiRomualdo

- Senior Research Director

Franco Girimonte

- Associate Principal

Dorothée El-Khoury

- Associate Principal

To learn more, please contact us at 1 888 842 2538 (US) or +44 20 7398 9100 (UK), or visit us online at www.thehackettgroup.com.

International Hr Consultants

Deloitte Llp

Stonecutter Court, 1 Stonecutter Street, London, EC4A 4TR

Contact: Danny Taggart

Telephone: +44 (0) 20 7007 1832

Fax: +44 (0) 20 7007 1060

E-mail: dtaggart@deloitte.co.uk

Website: www.deloitte.co.uk

Whether you are creating your first international mobility programme for employees or addressing fundamental changes to an existing programme, our International Human Resources team can help. Deloitte provides consulting support that has an appreciation for each company’s size, background and unique cultural environment, aligning your international programme goals with corporate business strategies. Our consultants have developed deep expertise in many fields based on first hand experience with many of the world’s leading organisations: international assignment policy and process design, benchmarking, service delivery modelling, improving vendor management and helping our clients become more compliant and their administration more cost-effective.

RELOCATION ASSOCIATIONS ASSOCIATION OF RELOCATION PROFESSIONALS (ARP)

9&10 Diss Business Centre, Dark Lane, Diss, Norfolk, IP21 4ND

Contact: Tad Zurlinden

Telephone: +44 (0)1379 651 671

Fax: +44 (0)1379 641 940

Email: enquiries@arp-relocation.com

Website: www.arp-relocation.com

The ARP is the professional association for the relocation industry in the UK. The ARP’s activities include seminars throughout the year, an annual conference, the publication of an annual Directory of Members and a website, which is updated regularly.

THE EUROPEAN RELOCATION ASSOCIATION (EuRA)

9&10 Diss Business Centre, Dark Lane, Diss, Norfolk, IP21 4ND

Telephone +44 (0)1379 651 671

Fax: +44(0)1379 641 940

E-mail: enquiries@eura-relocation.com

Website: www.eura-relocation.com

EuRA is an industry body for Relocation Professionals in both Europe and Worldwide. EuRa have launched The EuRA Quality Seal, the world’s first accreditation programme for relocation providers. This pioneering initiative provides a straight forward, cost effective audit to reflect your company’s excellence in providing relocation services.

Schools

Acs International Schools

ACS International School Cobham Heywood, Portsmouth Road, Cobham, Surrey, KT11 1BL, England

ACS International School Egham London Road (A30)

Egham, Surrey, TW20 0HS, England

ACS International School Hillingdon Hillingdon Court, 108 Vine Lane Hillingdon, Middlesex UB10 0BE, England

ACS International School Doha

Al Oyoun Street, Al Gharrafa

PO Box 200568, Doha, Qatar

Telephone: 01932 869 744

Email: cobhamadmissions@acs-schools.com

Website: www.acs-schools.com

Contact: Dean of Admissions

ACS International Schools were founded in 1967 to serve international and local communities. The schools are non-sectarian and co-educational (day and boarding), enrolling students aged 2 to 18 years. The UK based schools have over 30 years’ experience of teaching the International Baccalaureate, and ACS Doha offers an international and American curriculum.

Tasis The American School In England

Coldharbour Lane, Thorpe, Surrey TW20 8TE

Contact: Sarah Travis

Telephone: 01932 582316

Email: ukadmissions@tasisengland.org

Website www.tasisengland.org

TASIS England's diverse student body includes over 50 nationalities and many in the school community have experienced the challenges of relocation. Along with well-established welcoming programs, families receive ongoing support as they cope with the practical and emotional aspects of their transition to life in the UK. Taught in small classes, students (ages 3–18) benefit from a balance of academics, arts, athletics, activities, and service leadership. Excellent exam results and oneto-one college counselling enable 97% of TASIS graduates to gain acceptance to their first- or second-choice university in the UK, the US, and worldwide.

Serviced Apartments

THE ASSOCIATION OF SERVICED APARTMENT PROVIDERS (ASAP)

Suite 3, The Business Centre, Innsworth Tech Park, Innsworth Lane, Gloucestershire GL3 1DL

Contact: ASAP Office

Telephone: +44 (0)1452 730452

Email: admin@theasap.org.uk

Website: www.theasap.org.uk

Twitter: @ASAPThe

LinkedIn: The Association of Serviced Apartment Providers

ASAP is in the industry association representing, promoting and improving the serviced apartment sector. Our 124 members including serviced apartment operators and agents represent in excess of 25,000 serviced apartments in the UK, Europe, USA and Canada. When booking your serviced apartment, look for our Quality Accreditation kitemark which confirms the operator is fully compliant with all the core legal, health and safety practices and means you can book with confidence.

Taxation

BDO LLP

55 Baker Street, London, W1U 7EU

Contact: Andrew Bailey

Telephone: 020 7893 2946

Fax: 020 7893 2418

E-mail: andrew.bailey@bdo.co.uk

Website: www.bdo.co.uk

BDO LLP is the award-winning, UK Member Firm of BDO International, the world’s fifth largest accountancy network with more than 1500 offices in 162 countries.

We have a partner-led approach, which delivers the highest quality of service by using short, functional chains of communication to aid decision-making. Clients benefit from our fresh thinking, constructive challenge and practical understanding of the issues they face. Developing strong, personal relationships with our clients is at the forefront of our service approach.

Tax advice is just one of our award-winning services and our expatriate team give practical and direct advice, delivering solutions which suit your needs.

Global Tax Network Ltd

1st Floor, Andrews House, College Road, Guildford, GU1 4QB

Contact: Richard Watts-Joyce CTA, ATT

Telephone: +44(0) 207 100 2126

Email: rwattsjoyce@gtn.uk

Website: www.gtn.uk

Twitter: @GTN_Tax

LinkedIn: www.linkedin.com/company/globaltax-network

Global Tax Network Ltd is the UK member of Global Tax Network (GTN), an international affiliation of professional firms in over 100 countries specialising in global mobility tax consulting. We provide assistance to employers with the tax administration of international assignment programs and private client services to high net worth individuals, non-domiciles, professional sportspersons and entertainers. Our consultants include members of the Association of Taxation Technicians, Chartered Institute of Taxation, and US Enrolled Agents.

To advertise your services to our Global HR readers in this Directory please email helen@internationalhradviser.com for further information.