What will 2023 look like for people and payroll?

By Colette Philp, UK HR Country Lead at SD Worx UK

If there’s one sector that understands the value of agility when it comes to business, it’s HR. The pandemic may have opened the door to new ways of working and new employee expectations but as the last 12 months have shown us, the changes haven’t just stopped there.

Across industries, we’ve seen businesses pivot their HR approach at lightning speed all in a bid to stay on the front foot as working habits and business priorities adapt. In 2022, we’ve continued to see businesses lean into the value of solid payroll and people processes in a determined drive to stay ahead in the war for talent. The last 12 months have also brought focus to the importance of digital transformation, with companies ramping up efforts to deliver on demand for greater speed, convenience and a better employee experience.

And if there’s one key message to take away from a year of transformation it’s the importance of a people-first personalised approach at the heart of everything we do in HR. Across all sectors employees have set a high bar for everything from pay, to flexibility, to demand for digital HR solutions, meaning employers have had to rethink and reset or risk losing all competitive edge.

As we get ready to leave 2022 behind make no mistake the trends and challenges of the year will remain defining features of the year ahead. As the HR world gears up for what will no doubt be another bumper year here are my predictions for how 2023 will play out for people and payroll.

1. Demand for Transformation

The pandemic set the wheels of digitalisation in motion but it’s only now that we’re really seeing it take massive strides. In 2023 businesses will put tension on the issue of digital maturity and look to overcome the burden of legacy and fragmented HR applications by moving to integrated end-to-end solutions within one digital platform. Deeper and smarter integration is paramount, with the prospect of real cost savings and the added bonus of better employee engagement high on the business agenda.

While innovation is critical, businesses must ensure that the digital approach never comes at the expense of the personalised approach.

While employees crave better and more efficient HR processes it’s important to strike the right balance between offering digital improvements while retaining core personalised approaches that make employees feel valued. These approaches must not be mutually exclusive and should complement each other when deployed effectively, helping reduce admin tasks and freeing up time for essential ‘human’ engagement. The key to success lies in understanding where employees most want the personal touch and delivering on it. It’s mission critical to get this right from day one to make the most out of transformation efforts. If your team don’t share your vision and you haven’t got their buy-in, your investment efforts will be in vain. To be effective and truly worthwhile the dual approach is what ‘good’ looks like in this recruitment market.

1. The rise of internal talent marketplaces

Flexibility will be paramount in 2023. Thanks to fluid HR, the boundaries between different workplace departments are slowly disappearing. Organisations are looking at how talent across teams can complement each other in the best possible way. For example, internal marketplaces, or so-called talent platforms, connect hiring managers with suitable internal candidates, ensuring an optimal match between availability (permanent or temporary staff) and the nature of the job description.

Overall, the rise of this technology will see businesses tap further into the skill sets of their employees throwing open new opportunities to leverage talents and realise potential. Employees will have opportunities to contribute by adding their skills and interests into a system that may help many to envisage new career paths within a company.

And the usage of technology to underpin employment engagement won’t stop there as we’ll see an uptick in highly personalised approaches through increasingly targeted notifications such as: ‘Don’t forget you’ve still got annual leave to take’, and ‘You might be interested in this training session.”

1. Smarter spending and payments

Amid the skyrocketing cost of doing business, financial well-being will unsurprisingly remain mission critical for businesses in 2023. Companies will continue to take a more discerning look at investments made during the pandemic with an eagle-eyed focus on value. More than ever businesses will decide which tools will best underpin efforts to attract and retain employees and the war for talent spills into yet another year. Outsourcing payroll processes will also stay high on the business agenda for many, with cost and time saving efficiencies the main underlying motivations.

With the soaring cost of living also top of mind for employees too, more organisations will look to integrate smart rewards into their strategic pay policies, with customised options, flexible pay periods (pay on demand) and flexible rewards where employees can in part determine the composition of their pay package. Furthermore, new solutions like providing quicker access to funds owed will give employees the flexibility they need in particular difficult times.

1. HR and people analytics will thrive

Challenges like hitting all the right notes when it comes to salary, flexibility and appetite for technology, to name just a few core expectations will continue to set the HR agenda in 2023. Job hunters are holding the cards in this market, meaning employers have to demonstrate unprecedented levels of agility to not only attract employees but to retain them. With people-focussed solutions a core priority, an increasing proportion of businesses will work to deliver analytics solutions to gain better insights into critical areas such as staff shortages, absenteeism and employee turnover. Many will be hoping to reap the benefits of actionable insights, especially amid a time of huge transition as businesses grapple to improve productivity and support employees in a hybrid world.

It’s well established that analytics bring hard facts and robust advisory to business strategy, but analytics will also have a key role to play in engaging and supporting employees. By proactively mapping employees’ core skills, data analytics can support career development opportunities and career planning; critical factors as companies vie to attract the best talent in a challenging jobs market.