How the future of work will look in 2023
It’s the start of another trip around the sun. And despite recent high-profile layoffs, it’s a strong labor market with just a 3.7% unemployment rate—which is close to pre-pandemic levels (3.5%). According to the Department of Labor, unemployment is close to its lowest rate in 50 years… So, what does this all mean?
The unemployment rate measures the number of unemployed people actively looking for work. And yet, the unemployment rate is a “lagging indicator,” which means it rises and falls in response to changing economic conditions. When the economy is weak, the unemployment rate rises and when the economy recovers,unemployment rates go down. With many business sectors normalizing following restrictions imposed by the pandemic, the economy is returning to its new normal. But it's possible that it can all come tumbling down as economists continue to predict a recession…sometime in 2023.
In 2023, the theme will revolve around employee retention:
1. Businesses will boost retention efforts. The average cost to replace an employee is twice their annual salary— simply put, it’s just unaffordable to replace employees. This means employers will be more likely to negotiate benefits, pay, and other reasons an employee wants to hand in their two-week’s notice.
Pew Research Centers found that low pay, no opportunities for advancement, and feeling disrespected at work were the top three reasons employees quit. As a career expert, I’ve seen these reasons clearly echoed in my private practice. Other reasons included child support issues, lack of flexibility, poor benefits, too many hours, and COVID-19 vaccination requirements. The same Pew study found that 40% of employees quit because they’re working too many hours. In essence, this was the trend leading to quiet quitting.
But let’s be candid: Quiet quitting was always coming. Take a disengaged workforce, add a pandemic (and childcare) onto the plate, and an extra hour of work per day… Presto!
Workers first course of action should be talking to their employer about the reasons behind wanting to quit to find amicable solutions from agreeable management.
2. Redefining work from home (WFH). Spotify initiated a “Work from Anywhere” program in 2021 that allows employees to choose where they work. While many employers offer WFH and hybrid options, Spotify employs 6,500, making them a great case study. What they found was lower attrition (by 15%!), increased diversity, and less time to hire. Their African American and Hispanic employee base increased from 12.7% to 18% and their female leadership population increased from 25% to 42%. Spotify reduced its time to hire by 12.5%.
One of the key components to Spotify’s success was the changes it made to its salary banding policy. Salary was no longer defined by city or region, which truly offers employees the opportunity to live where they want. Spotify noticed that 6% of their employees moved. Spotify employees have an increased presence in 42 states, Sweden, Germany, Spain, and the Netherlands.
It is anticipated that more companies will follow suit. If you’re in a position where you can work from home but currently report for duty at the office, talk to your employer…prepared, of course, with data to support why it’s a good idea.
3. Pay transparency. This is the biggie for 2023. Many states (30, actually) already have pay transparency laws. While these vary from state to state, most include a provision that employees do not need to disclose salary histories. Some include provisions requiring employers to disclose salary in job postings. The purpose of pay transparency laws is to close the gap on pay discrimination. Many of these laws also make it possible to negotiate a pay bump when changing jobs because previous salaries can’t be used as a starting point in negotiations.
Pay transparency closes pay gaps, increases retention, reduces salary negotiations, improves employee satisfaction, and promotes employee cohesion. A study by Payscale found that most employees feel like they’re being underpaid… And 50% of those are willing to leave their job if they feel they’re not making what they’re worth.
One way to boost retention (see trend #1) is to implement a pay transparency policy. And as an employee, ask.
4. Revamping career paths. During the pandemic, employees were forced to negotiate in unchartered territory. The Great Resignation of 2021 saw a growth spurt in new business starts. Quit quitting dominated 2022. And in 2023, we’ll likely see a resurgence of career paths in the workplace as employers scramble to retain happy employees.
Employer-based career paths create an environment where ambition and hard work are rewarded with promotions and career advancement. It lists steps to take to progress into more advanced roles within the company. Developing in-house career paths lets the employee know they’re valued and will advance in their career without having to job hop.
Workers should ask their managers to work with them to reach their career goals, which may include on-the-job training, upskills training, and meeting delineated targets (goals).
Even with a certain amount of uncertainty entering 2023, job seekers should take advantage of low unemployment rates early in the year. Translation: don’t wait!
