Just when you were wishing for a quiet year, 2023 comes along.

As another year comes to an end and we get ready to create our targets for an upcoming one, it’s worth taking a look back at some of the challenges that we’ve had to face in our HR practices in the past few months.

2023 has seen no shortage of drama when it comes to events affecting HR and L&D. From the ongoing fallout of political and economic crises through to wider, structural employment issues, 2023 has been anything but boring. 

Here’s a round up of some of the most significant HR events and themes that have punctuated 2023.

1.   The cost of living crisis is affecting employees

With the start of recession in the final quarter, UK interest rates at their highest levels in recent times and eye-wateringly-high energy pricesmaking putting on the heat this winter impossible for a lot of families, it’s clear that the cost of living crisis has been one of the main themes running through 2023.

From pay-rise requests, home working requests and increased rates of employee turnover, the rise in the cost of living and the reduction in disposable income has meant that employees are being squeezed financially, like never before. And this is having a wider effect on employee satisfaction, retention and motivation.

2023 has been a year where HR departments have been called upon to find answers to several strategic issues at a company to do with the cost of living: and it’s something that they’ll probably need to do going forward for the foreseeable future.

2. Mental health is plummeting

As the recession and cost of living crisis bites, HR departments have started to see a steady increase in cases of poor mental health in their workplaces and all of the social and business impacts that come with that.

Apart from the obvious mental distress that the ongoing cost of living crisis is causing employees, long-term, issues to do with the way that organisations treat their employees are also having significant negative impacts on mental health at work.

The 2023 ‘Health and wellbeing at work survey’ report created by the CIPD in partnership with Simplyhealth, found that one of the main causes for work-related stress was management style. This is actually an issue that can fairly easily be remedied with better management training, so it should serve as some encouragement for HR teams that there can be some quick wins when it comes to improving mental health in the workplace – not every problem is necessarily something beyond your control.

The CIPD has a range of support materials that were created with mental health charity Mind, like practical templates to facilitate difficult conversations about stress and mental health, that can be signposted to management at an organisation for them to encourage good mental health in their teams.

3. Increased employee turnover

The UK is currently in the ongoing grip of a labour shortage, meaning that it’s a job-seekers market and that employers are struggling to attract people into roles.

There are a range of reasons for the increase in employee turnover in 2023, but the biggest one is the cost of living crisis. With successive rises in energy prices, the cost of fuel and food – the basic necessities that people need to survive – employees are requesting that their wages be adjusted to take this rise in the cost of living to be taken into account.

This has translated into more requests for pay rises and hardship payments. If employees cannot get a pay rise that matches the reduction in their income from the increased price of the necessities of life, they are often handing in their notice and finding a new job that will do so.

It’s no surprise that a lot of employees are voting with their feet and choosing to find a new position with a higher salary.  And with an array of roles on the jobs market at the moment, traditional ‘stick’ of being out of a job doesn’t have the same weight as it used to. In 2023, employees are quite comfortable about leaving a job that isn’t meeting their needs anymore.

2023 has been the year that many HR professionals have had to face the unwelcome truth of whether or not their retention strategies and succession planning strategies are fit for purpose.

4.  Building skills is a strategic focus

The increase in employee turnover is having a cascading impact on many other areas of HR and L&D: namely, a renewed focus on improving the skills of existing employees in an organisation.

Throughout 2023, we’ve seen public and private sectors try to improve the investment that they make in their staff both to improve their own bottom-line and productivity and also prove to employees that they’re a valued part of the team. This has been motivated by the twin problems of flatlining UK productivity and widespread labour shortages which has been causing headaches for HR professionals this year.

As a result, there’s been a widespread focus on investing in the skills development of employee throughout 2023.

The ‘2023 Workplace Learning Report: The Transformation of L&D’ by LinkedIn found that the two most popular areas that employers have focused on developing during 2022 are employee retention and supporting internal mobility and career pathing.

2023: A year of HR challenges

2023 has been a year of challenges when it comes to HR. It has often seemed exhausting, with one crisis followed by another. As we look towards a new year, most HR professionals will be happy to see the back of 2023 and enter 2024 with a fresh perspective.

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