2023 will be the year when…
...changing working practices change the corporate culture
Working trends, some of which were starting to get underway before the COVID-19 pandemic, became firmly entrenched because of it. Out of necessity, remote working became the norm around the world. Now, more than two years later, we’re beginning to see a return to the office.
In the EU, hybrid working, as it’s now known, typically means three or four days per week in the office and one or two days at home. In the UK and the US, fewer days are spent in the office, and in Asia, where strict isolation rules still apply for some, fewer still.
“When you don't see your boss and you don't know your colleagues; when you don't gather by a water cooler to have a chat or a bit of a moan, distance is created. You don't share a culture and you have no loyalty. And it makes it easy to walk away from a job."
Laurence Renard,
Partner, Simmons & Simmons
Employers are keen to encourage a return to work, believing it is better for the mental health of employees, improves productivity and provides opportunity to chat, exchange ideas and bond. The sense of belonging and value that comes from being physically engaged with the team and with the business can lead, potentially, to improved employee loyalty.
But a return to work comes with downsides too. On a practical note, downsizing by companies during the pandemic, means office space may now be too small to accommodate everyone. And that puts new pressure on team building. Some employees, of course, have lingering concerns about exposure to COVID-19, perhaps due to the vulnerability of family members. Public transport for getting to and from work is considered especially risky by some. Employers are hamstrung. If they mandate a return to the office in 2023, negative sentiment and employee tribunals could follow.
…mental health gets more headspace
Mental health awareness, already on corporate agendas before the pandemic, has grown in prominence. For many, ‘new normal’ working practices took their toll.
The blended home and office environment, and little or no separation between the two worlds, exacerbated the stresses and anxiety that came with lockdown. Post pandemic, hybrid working can be isolating too. Employees may struggle to do their jobs remotely; managers may struggle to manage remotely.
Mental health awareness has prompted a huge shift in corporate behaviour and the need to provide the right levels of support. This will continue, undoubtedly, into 2023 and beyond.
…Gen Z shakes up corporates
Changes in working practices coincide with the arrival, in the workplace, of possibly the most disruptive of all generations. Gen Z, young people in their early 20s, are very clear about what they want from a job, the hours they’ll work and what they are prepared to give. They adhere strictly to personal principles and social values. Salary does not have the same motivational pull for Gen Z as it did for the Boomer generation, who are now reaching retirement age. Instead, the Gen Z employee is motivated by work-life balance, mental health support, good ESG behaviour, sustainability, etc.
And, of course, Gen Z’s ideals and motivations contrast dramatically with previous generations, who now have to manage these new workplace entrants. Businesses will be challenged to listen to Gen Z employees and to try to evolve their business models to accommodate them. Loyalty, however, already fractured by hybrid working, is likely to be a big concern in 2023. The World Economic Forum finds that 40 per cent of these young people – belief-driven employees as it calls them – will use whistleblowing protections to call out their employer for failings on ESG.
…the digital nomad keeps on travelling
For many people, the shock of the pandemic and restrictions imposed by lockdown, prompted a reassessment of personal choices and values. Among them are millennials and Gen Z employees. They are re-evaluating their work-life balance, perhaps opting to work fewer hours, or seeking out opportunities to combine work with travel.
A 2022 study by MBO Partners found that 16.9 million American workers now describe themselves as digital nomads – people who embrace a location-independent, technology-enabled lifestyle – up 9 per cent on 2021 and a staggering 131 per cent on 2019.
The exodus seems set to continue through 2023, as people opt for freedom to roam over a location-bound job. Employers are learning to enable this type of lifestyle. However, the digital nomad who stays too long in one destination risks becoming subject to local tax.
For this trend is to continue, international agreement must be reached on employment laws and taxes, and on residency and immigration rules. Treaties take time to enact, so a global remedy to support the digital nomad lifestyle seems very unlikely in 2023.
… the slowdown bites
Talent acquisition and retention was a big concern in 2021 and early 2022, as economic activity picked up sharply. In 2023, expect lower-paid industries, like construction, to continue to struggle to attract and retain workers. Retention among Gen Z, with their very particular demands, is likely to remain difficult too.
However, as economic support packages come to an end in most nations, and with slowdown on its way, struggles with talent acquisition and retention could give way to restructuring and redundancies in some sectors.
Certainly, some companies have already begun to finetune their operations. They are starting small scale, with any major restructuring unlikely to happen until the end of 2023. Nonetheless, redundancies seem probable. Although unemployment is currently at an all-time low across Europe, structural unemployment, arising from a mismatch between available skills and demand, is likely.
Laurence Renard's top tips for talent in 2023
- Enable a return to work. It can enhance the wellbeing of employees and create a sense of belonging, which translates, in turn, into improved loyalty.
- Consider how to build mental health awareness into corporate behaviours to better support employees.
- Include Gen Z at the table. Try to understand what they want and how you might accommodate them. Build bridges. And remember, Gen Z is also your potential customer, so lessons learned internally will apply externally too.
… in conclusion
Expect more of the same for talent in 2023. Legacy COVID-19 practices will continue to influence how we work, although the balance might tip in favour of more days in the office than at home. Technology will remain an enabler but will not replicate watercooler-type interactions and the loyalty that comes with in-person encounters in the office. Mental health awareness and ESG will remain top priorities for corporates, while judgements on performance are just as likely to come from inside the business as from outside. Look out for our regular updates during 2023 and find out where we’re at, versus where we expect to be.
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