2023 Market Reflections and 2024 HR Trends

As we approach the end of the calendar year, it’s always valuable to reflect on the year gone by and set our expectations for 2024.  

Whilst the Global economy did outperform expectations in 2023, it remained tough for many. Our own Global HR Survey showed that 52% of respondents felt negatively about the current economy, which is in line with data from our 2022 survey at 54% but represents an upward trend from 23% in 2021. 

For further insight into this we looked at our own business, where vacancy numbers are reminiscent of those seen in 2020 with requisitions down on what we worked on in both 2021 and 2022. 

Whilst the breadth of vacancies in our Global portfolio has remained vast, there were noted trends towards specialisms. This included Compensation & Benefits, Talent Management, Employee relations and HR operations / HR shared service. With retention, upskilling and efficiency key for many organisations this year. 

From years of experience, we know that the downfall of any market is always difficult to predict. From our own data, and when there is a chorus of negativity around the market, it tends to mean that the bottom has been hit. 

Goldman Sachs predict that the global economy will outperform expectations in 2024 — just as they predicted in 2023.

Whilst it is not anticipated that this will convert to a large spike in hiring next year. From data and market sentiment, it is believed there will be a shallow upward curve toward job numbers, and conclusively, 2024 will be more positive. With 39% of respondents in the 2023 Elliott Scott HR Global survey sharing that they will be hiring into their HR function in 2024 and an additional 18% planning to hire into specialist HR roles. 

2024 Trends

Cost reduction:

Whilst many HR functions may grow, we believe there will be ongoing scrutiny on the ROI of HR and its broader CoEs. We moved from the post pandemic hiring boom to a market of reduction in 2022/ 2023. With a focus on the HR function being ‘fit for purpose’ in 2023 and the expectation that this will continue into 2024. 

In conversations with our network, there is talk of repurposing headcount, either by hiring in a new role / different area / specialism or by hiring into a lower-cost location and reducing the broader operating cost of HR. 

We believe that the growth market for this will continue to be India, which has been identified as the top location for global business services. Our Delhi based team are already seeing this increased demand and are recruiting for shared services roles. The challenges to build these teams are similar to those of their global peers: 

• Talent shortage – this is being seen as an implementation barrier with many Global Business Services Organisations 
• Lack of career progression - organisations are actively focusing on well being opportunities and job rotation to retain talent.
• Compensation remains a key driver to retention whereas Culture previously featured highly. 
• Work-from home policies - are accelerating the digital agenda and flexible work hours help to retain talent in challenging environments. 

AI: 

Whilst digitally we moved forward by several years during and post pandemic, what has become more prominent in 2023 and will remain an ongoing focus, is AI. Especially the part that it can play within organisations, with many still not truly understanding its broader role in their workplace. 

AI's influence on HR and recruitment is happening faster than anticipated and as businesses undergo transformation. Keeping up with AI and technological advancements is integral to creating new opportunities. From our conversations however, HR are not at the forefront of early adoption of AI. Whilst many have concerns around data privacy, 63% of those who completed our Global survey advised their companies do not have an organisational policy for AI. 

Whilst there is the understanding that it can provide efficiency and analysis, there is still the huge unknown from many about how it can really be utilised. With HR needing to do more with less in 2024, the automation of tasks will free up time and ensure that HR resources are allocated towards adding value to the business. 

Therefore we we are seeing more HR leaders focussing on their own development within the topic. With some formally studying to understand how AI can be used ‘for good’ and the impact that it can have on their roles as business leaders.

For us as Recruiters and those in in-house Talent Acquisition roles, it’s also key that we understand the part it has to play here. In the UK, our TA Connect event in October focussed on AI’s Impact on Recruitment. With Nicky Garcea of Cappfinity our keynote speaker, introducing attendees to the idea of the imminent rise of the super recruiter - where AI and people would work hand in hand. 

The HR function needs to focus on the emerging legal landscape surrounding AI, its use, and its implications for case law. With a need for AI’s auditability, considerations are needed around its ethical use.

Employee experience:

In 2024, the landscape of employer-employee relationships will seek to address friction due to significant changes in where, when, and how work is conducted. A strategic focus is needed to positively impact engagement, performance, retention, and overall growth. The Gartner report on the Top 5 Priorities for HR Leaders in 2024 underscores challenges in on-site attendance compliance, unsustainable performance expectations, and a trust deficit, with only 50% of employees expressing trust in their organisations.

Employees are advocating for a superior workplace experience, valuing hybrid working arrangements, and holding higher expectations of organisational leaders. A survey from Qualtrics reveals concerning levels of disengagement and flight risk among new hires, particularly those with less than six months of tenure, emphasising the importance of effective onboarding and initial impressions.

In response to the evolving employee landscape, major HR vendors are directing attention to recognition and rewards tools. With these categories ranking among the top four spend areas for over 20% of organisations who will be increasing HR technology spend in 2024. Additionally, wellness technology, encompassing physical, mental, and financial well-being, is gaining interest as organisations grapple with labour shortages impacting hiring and retention strategies.

DEI initiatives will also play a key role in engagement and retention of employees in 2024. It is important that workplaces keep up with continuous internal education and training on DEI topics to remain equitable and inclusive in the eyes of their employees.

Addressing the skills shortage: 

Due to digital transformation, particular skills are needed to harness increasingly sophisticated and powerful tech, including the aforementioned prominence of AI. There’s been a lot of talk recently around focusing on specific skills and attributes than on education as referenced in this piece by Raconteur.  

A shift towards skills-based recruitment allows greater flexibility for recruiters and managers to identify and promote talent based on specific skills, especially in the face of evolving technologies. Leaders are also urged to foster a learning culture within organisations, recognising the notable gaps in their existing learning culture and the actual experiences of employees. Soft skills, such as management and interpersonal abilities, are highlighted as crucial for future workforce demands.

To address the challenges arising from technology evolving faster than workforce skills, the proposed solution involves a focus on apprenticeships, specifically in digital skills. The shift in learning valuation and delivery methods is deemed essential for effectively bridging the current talent gap.

These approaches offer opportunities to tap into underserved talent sources, increase economic opportunities, and make better matches between individuals and roles based on skills and abilities rather than traditional qualifications.

With the holidays often a time for reflection, the new calendar year often sees an increased number of individuals emerging from the passive to active Candidate market. With the first few months of the year being a strong time to start networking and driving early stages of hiring processes ahead of new financial year.

We would like to thank our HR Community for their support this year. Whilst the working year isnt quite over yet, as we head towards that final push, we are looking forward to seeing what 2024 has in store. There will be HR events every quarter in many of our regions including two global webinars in Q1; one a panel discussion looking at outsourcing and setting up Global Business Services functions and the challenges and learnings faced. The second will be an armchair disussion with prior podcast guest Ben Williams on Unravelling the role and value of Generative AI in Learning and Talent. You can register your interest via our event page. 

If you would like to get in touch with myself, you can do so at lb@elliottscotthr.com.