The Herman Trend Alert

January 25, 2023

2023 Workforce-Workplace Forecast

Every year at about this time, The Herman Group issues its annual workforce-workplace forecast. This Herman Trend Alert is intended to provide employers with insights about what to expect in the coming years, so that they may position themselves for success. This forecast serves for both last week and this one. 

While no one would dispute that 2022 was a challenging year, 2023 may be even more problematic. . .as we adjust to what I call Normal 3.0. By now, most of us expected to be Post-COVID; however, we will have evolved to accept serial infections of COVID variants. And though we know that masking works, most people are not willing to endure the inconvenience.

1. History is about to Repeat Itself

In 2008, the Great Recession gave employers an excuse to lay off thousands of workers. At that time, we at the Herman Group urged companies to find a way to keep their people on; we believed that when the recession was over, those organizations would be sorry, because they would find it difficult to recruit the people they would need. Not surprisingly to us, that is exactly what happened. Now, tech companies are loudly laying off thousands of employees each. The term "Loud Layoffs" is said to be a response to "Quiet Quitting." Though this move will have a positive short-term effect on the bottom line, the long-term effect will not be constructive. Laid off employees will not be so anxious to trust these tech companies which will speed up the transition to the Gig Economy, detailed in Daniel Pink's landmark book Free Agent Nation. At a current level of 3.7 percent, the unemployment rate in the United States has a long way to go to be out of workforce shortage territory

2. Job Leaving will be at an All-Time High---Nearly

The slowdown in the economy will postpone this trend, however once the economy rebounds, we are going to see job hopping at almost record levels. I say "almost" because we will not see the exodus we saw during The Great Resignation. CNBC, the cable news channel reported that in a recent study, the mega job board Monster related that 96 percent of the people they polled expect to be changing jobs this year. Since I am now sensitized to the possibility that results may be self-serving, I must add that in the past, results of Monster's surveys were mostly a lot lower than 96 percent, with numbers often in the 40s. Leading the way in expected continuing workforce shortages is the healthcare industry with an average increase in job postings of 7 percent per month.

3. The Value of Employee Wellbeing Becomes More Real

Studies conducted by the Milken Institute, the University of California at Davis, EU-OSHA, and Gallup detailed the outrageous cost of unwellness. In the US alone, the lack of wellness costs employers USD $2.2 trillion. That's 12 percent of the country's Gross Domestic Product! Within that huge number, chronic disease costs USD $1,100 billion, while the cost of work-related stress is USD $300 billion and the price of disengagement at work is USD $550 billion. As a result of the effects of the pandemic, corporate leaders have become aware of the need for attention to wellbeing, especially in the area of mental health. That is why the following engagement solutions in #4 will be so vital to corporate success. now and in the coming years.

4. Engagement Solutions are More Important Than Ever

Technology, especially AI-augmented software will make a significant difference for employers. There are many platforms that deserve consideration; I have highlighted two: First, Ingomu is a group coaching mobile app, that informs and inspires personal growth. On this innovative platform, high-quality, credentialed coaches, including me, share their knowledge and insights in an engaging way in live sessions, scheduled twice monthly. The app offers coaches in four areas: Life, Soul, Wellness, and Work. Second, and I have covered this company before, is Work Human, a pioneer in using technology for workforce engagement and employee recognition solutions. Using AI and video communication, Work Human helps leaders regularly communicate with their people, so that employees always know where they stand with their supervisors, and it meaningfully facilitates the vital acknowledgment of a job well done.

5. One Size Still Does Not Fit All

One thing I have consistently reported is that "One size does not fit all"---in desired experiences, in relationships, and in preferred benefits. The great news is that with the current technology, we are now able to tailor these areas to the wants and needs of each specific employee. And companies are just beginning to understand the power of using technology in these ways. As we move into the future and more employers are left behind (unable to recruit competitively), they will see the light and embrace these and other technologies.

6. Only Top Talent will Enjoy Remote Work

As I outlined in my Herman Trend Alert called "The End of Remote Work," most employees will be called back into their congregate workplaces. Without a life-or-death pandemic to promote remote work, more and more employers seem to be losing their tolerance for this arrangement; obviously, they are thinking that productivity will be higher when they can keep an eye on their workers by having them in the office. What these short-sighted folks are overlooking are two key bits of information: First, their employees will now have to spend more time commuting to and from work, cutting their personal time and creating a stressor that has been blessedly absent for years now. Second, the Pandemic caused a values shift that resulted in many employees shifting their priorities to put their families and personal lives first. So . . . those employees considered "top talent" (not easily replaced) will be able to write their own value propositions, including whatever flexible scheduling and work arrangements they desire. At the same time, most employees will have to settle for what their employers insist on. If employers are smart, they will find a hybrid schedule that will work for everybody.

7. HR Analytics Grows in Importance

Powered by AI, HR Analytics marches on to the point that it is now embedded in most suites of HR software. The Paychex.com suite of services can now include over 160 standard reports, plus a Compensation Summary to help show employees their full financial pictures, Diversity and Equal Pay, analyzing the compensation employees with employment and pay data, and a New Hires and Turnover Report to help employers view their new hire turnover and even benchmark against other companies in their market segments. But the most impressive to me is their Retention Insights, which assesses the likelihood of losing an employee, based on the predictive index and three other top factors affecting retention, allowing an attentive employer to address possible issues---before the costly exit takes place.

8. Money, Money, Money---but Flexibility, Too

For blue-collar employees feeling the painful pinch of inflation, it's all about the money. Employers used to have greater latitude to negotiate with these folks with other benefits, but now, it's: "Show me the money!" That is not to say that culture plays no role, because it still does, however, when the economy causes a major disruption in the ability to shelter and feed a family, money quickly becomes the deciding factor in employment decisions. That said for white-collar employees, the name of the game is "flexibility." Particularly women---but men, too, are looking for flexible work arrangements to allow them to be there for their children and aging parents. And due to the large number of childcare center closings during the Pandemic, there is still a major problem finding quality, affordable childcare. This shortage will lead to more employers reconsidering facilities onsite.

9. Leadership Makes the Difference

As in the past and almost every report we have issued, over the 20-plus years we have been doing this forecast, leadership remains the most important factor in organizational success---whether the enterprise is profit or non-profit. Mainly, workers are looking for two qualities in the leaders they follow: First, and foremost, is empathy. They want leaders who really care about them, not just give lip service to caring. Second, and related to empathy is that they want leaders who will care about their well-being---mental, emotional, and physical. I am reminded of the 30-something general manager of a hotel in Siem Reap, Cambodia I worked with years ago. This fellow was a runner and offered to take some of his staff running with him. The running group started with two or three of his direct reports and grew to 15 from all departments throughout the hotel. One of the lower-level folks shared that he had been thinking about leaving, but stayed because he enjoyed running with his GM and fellow employees so much. This enlightened leader also used this opportunity to teach his people about persistence and the value of not giving up. As a result of the Pandemic lockdown, mental health challenges (outlined in #3) are at the forefront, and leaders who make sure that their people are taken care of will be rewarded with lower employee turnover rates and higher profits.

10. Experience Rules!

For years now, I have been watching as experiences have become increasingly important. Marketers will tell you, gaining repeat business is all about the experiences you deliver. By the same token, it is the experiences that employers offer to their people that define the quality of relationships and the levels of loyalty that workers feel and act on. Furthermore, those experiences engender deeper engagement, and that involvement is directly related to profits. My new book, Experience Rules: How Positive Experiences Will Drive Profit Into The Future, has three chapters on the employee lifecycle, including covering the new technologies of AI, AR, and VR, gamification, and simulations, as well as neuroscience. Additionally, there are chapters on the other stakeholder groups and how to best develop relationships with them as well. (If you are a Kindle reader, stay tuned for a special promotion the week of February 10th when that edition will be available for 99 cents!)

11. Quiet Hiring

Without a lot of fanfare---the opposite of Loud Layoffs---employers are quietly hiring from within---to their great advantage. They are eliminating the investments of time and money in publicly advertising job openings and paying for job fairs, as well as in many cases, paying recruiters' fees. This approach can help companies fill positions quickly with a high degree of accuracy, as they are able to tap into the networks of current employees and trusted industry contacts. As companies can actively seek out candidates who may not have considered applying for a job opening, Quiet Hiring can also be a useful tool for recruiting underrepresented groups and diversifying the workforce. Expect to see a lot more Quiet Hiring happening under the radar in the coming year.

12. Re-Recruiting and Re-Orientation

Finally, and now I feel like a broken record here, wise employers will re-recruit and re-orient their valued employees with "Stay Interviews" and an updated orientation. Using this tactic, employers will communicate their appreciation for their employees' contributions. But most importantly, they will have identified the "dissatisfiers" and be able to stop turnover before it happens---saving tons of money.

In conclusion, the Chinese have a proverb, "May you live in interesting times;" 2023 promises to be an interesting year.

Next Week's Herman Trend Alert: The Future of Independent Bookstores

For years, small, independent booksellers have struggled to hold their own against the big chains. As I head to New Orleans in a couple of weeks---no, not for Mardi Gras---I intend to visit a bookstore that I believe is a harbinger of what it will take to succeed into the future. With its own podcast studio, their neighborhood bookseller is a magnet for the community, as well as a source for the latest published tomes. Baldwin & Co., named after the author James Baldwin, draws folks from all over the city to come to their events. Be sure to read next week's Alert for more.

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