A discussion of finding from our newly-released 2023 HR Key Issues Research looking at challenges and opportunities for human resources in the coming year. Senior Director, HR Advisory Amanda Newfield talks with North American HR Executive Advisory Practice Leader Franco Girimonte.
Welcome to The Hackett Group’s “Business Excelleration Podcast,” where week after week we hear from experts on how to avoid obstacles, manage detours and celebrate milestones on the journey to world-class performance. This episode is hosted by Amanda Newfield, senior director in the HR Executive Advisory practice at The Hackett Group. Today’s episode will discuss the findings of The Hackett Group’s 2023 HR Key Issues Study. Amanda is joined by Franco Girimonte, North American practice leader for Executive HR Advisory at The Hackett Group.
The Hackett Group’s HR Key Issues Study is an annual study diving into the top-of-mind issues and strategies for today’s HR leaders. As the conversation begins, Franco shares the disruptions HR will face in the coming year. Of the three top issues on the list this year, first was the question of a potential recession and its aftermath. The second issue on the list was around talent shortages. Although we are seeing a softening in the marketplace, it isn’t exactly transpiring to the talent space. The last item is in regard to inflation itself. If inflation rates are high, interest rates increase too and slow down the economic cycle of revenue and growth opportunities. There are currently mixed messages in terms of which direction inflation will go next.
Given these complexities, Franco believes HR will need to enter 2023 prepared for disruption by having the most robust talent management and acquisition capabilities. They should also become better at planning, staying ahead and understanding where workforce trends are headed. In the study itself, we see that organizations are actively looking for executives who can lead effectively in this changing business environment. For the first time, this issue made it to the top of the list.
Shifting gears, another key element of the study is the continuing issues around HR workload. Over the years, we see HR’s workload steadily increasing. Factors contributing to this include changing regulations, changing focus in the HR area, new pressures coming from other leaders within the organization, and the hardship around retaining and recruiting employees. Their hypothesis concludes that HR struggles to keep up with this growing workload. This year, the workload was reported to have increased by 10%, with a 0.3% increase in HR staff and a 0.4% increase in the HR operating budget. Similarly, the technology spend was only 1.8% compared to last year’s 9.1%. HR failed to keep up with their technology investments and it showed. If this gap continues, we will see HR fall behind and struggle to keep up. This is driving the importance for HR to take full advantage of the capabilities they currently have while also looking at potential investments to extend capabilities.
Looking at all of this volume of work and improvement opportunity, Franco offers some considerations for leaders looking to take their next step. First, he recommends they take a look at the key issues research to see outlines of the issues and capability gaps you have uncovered as part of your strategic planning process. They should then compare their identified capability gaps to what’s in the Key Issues Study to determine if your organization has a plan to address the same things represented in the study. Similarly, he urges leaders to execute a prioritization system for initiatives. Then, Amanda recommends becoming comfortable with ever-moving and evolving change. We should feel comfortable incrementally moving forward with priority issues rather than waiting until everything is perfect to take the first plunge. Maintaining an agile mindset is key.
- 0:54 – Welcome to this episode hosted by Amanda Newfield.
- 1:22 – What disruptions will HR be faced with in 2023?
- 5:40 – HR’s top issues for 2023.
- 10:29 – How HR is managing their increasing workload volume.
- 16:27 – The downstream effects of HR underinvesting in their own capabilities.
- 19:01 – The best next steps for leaders to take.
- 25:10 – Thanks to Franco for joining and sharing his insights today!