One of my favourite New Years’ traditions is making predictions. It’s a great chance to cross-reference knowledge and uncover the most likely trends ahead. So, when I had the opportunity to contribute to Hokodo’s 2023 Predictions e-book last year, I leapt at the chance! You can find my five forecasts here, where I focus on hiring trends in the B2B space. Nine months on, and I am combing back through 2023 so far… the highs, the lows, and the spirals. One thing is for sure – it’s been a rollercoaster ride for recruitment.
2023 started with creative and progressive employee benefits
Late 2022 to early 2023 was a time for businesses to experiment. There was a chasmic shortage of skilled workers, and companies were eager to snatch up talent. The appetite for technology know-how was insatiable, and they were willing to try new things to get the expertise they needed. It was truly an employees’ market.
Firms of all sizes needed to think creatively about how to attract and retain workers. Businesses were heading towards uncharted ground when it came to new levels of employee freedom. In January, Microsoft announced its discretionary time-off policy, leaving workers to decide for themselves how many vacation days to take. The tech giant was part of a wider trend, as around 19% of businesses in North America and Europe increased holiday allowances in January 2023. February saw The Bank of Ireland also offering employees an additional leave for family purposes. And around 6% of businesses introduced a 4-day week during this time, offering employees full-time pay with permanent three-day weekends.
The benefits kept flowing, becoming increasingly mindful and progressive. In March, for example, television outlet Channel 4 introduced period policies for staff. This gave women free workplace access to sanitary products, microwavable heat bags to alleviate pain and flexible working hours. Meanwhile firms like Sky offered discounts on childcare.
New working models blossomed during this time. Overall, between January and February, research shows 65% of businesses adopted flexible working, and 23% implemented remote working.
Redundancies and AI rumours saw a return to traditional models in May
As 2023 progressed, however, the pendulum swung back. In March, the collapse of Silicon Valley Bank ushered in a wave of tech and fintech redundancies. In 2023, an estimated 168,885 workers were laid off from US-based tech companies alone. The most significant job losses came from Amazon, Alphabet and Microsoft, slashing 16,080, 12,000 and 11,158 roles respectively. By April, the number of tech jobs in London shrank to less than half of what it had been before March. Across other sectors, there was also a 41.4% decrease in available IT roles. Highly skilled professionals flooded the market. According to one analysis, most laid-off workers were HR and talent sourcing professionals (28.7%) and software engineers (22.1%).
Around this time, the potential of generative AI was also taking the world by storm and raising questions about what kind of work can be automated. The most famous example, ChatGPT, had been launched as a demo in November 2022 and in the following six months it became a scorchingly hot topic. By May, it felt like the focus of almost every workplace meeting and social media scroll. There was a gnawing fear in the industry – which has still not fully passed – that generative AI could replace many of the day-to-day tasks of, for example, marketing teams and coding engineers. July 2023 research from Hubspot revealed that 53% of EMEA customer success managers believe that AI could make their job entirely redundant. And as far back as January, there were already rumours that the brains behind ChatGPT were building platforms designed to replace engineers.
The combination of mass redundancies and the buzz around the potential of generative AI in May changed the entire direction of employment strategies. As it became clear that the supply of expertise far outstripped demand, it became an employers’ market once again.
One of the side-effects of this was a return to more traditional workplace models. Huge corporations including Amazon, Meta and (somewhat ironically) Zoom all significantly reduced or ended their flexible work-from-home policies this year. As expected, other businesses are gradually following suit – not Hokodo though!
A more thoughtful approach to wellbeing
Interestingly, it’s not just the companies that are rethinking their terms. As the cost of living crisis bites, many employees are looking towards the security of traditional incumbent corporations, especially those whose employee benefits include comprehensive healthcare.
While flexible and remote working are still seen as important benefits by employees, they seem to rank lower compared to job security and compensation. In parallel, we’re seeing fewer of the zany benefits usually offered by tech companies like Google. The unlimited sweets, in-house laundry and massage chairs are descending into a thing of the past, as companies focus on reducing costs and improving (or achieving) profitability.
Today, we’re witnessing a more thoughtful approach to employee wellbeing. For example – despite cutting its workforce – Amazon offered term-time only contracts for parents in May.
As expected, compensation that keeps up with the pace of inflation is also top of the list for employees. One August 2023 study found that 44% of employees would leave their current employer for better financial wellbeing support. Getting through the cost of living crisis is a mounting pressure for workers. 62% reveal that financial worries are their biggest source of stress today while 26% of employees report being less productive because of financial worries.
New ways of working to follow…
As we move into the final quarter of the year the trend of companies being more cost-conscious continues. As companies focus on cash preservation and improving their bottom line, they hire more selectively (if they hire at all) and cut back on benefits and perks.
In order to retain top talent, companies should focus their efforts on supporting their employees’ growth, for example through training and stretch assignments, whilst compensating according to performance. This might mean not hiring a senior role full-time. For some candidates, this aligns to their desire for more flexibility. The rise of fractional roles – like a COO who supports a business as a contractor for one to two days per week – shows how a company’s talent needs can be met in innovative (and often more cost-efficient) ways.
As the balance between the supply and demand of qualified tech workers tilts in favour of employers, companies that are still hiring have the chance to attract great talent through offering job stability, market rate salaries, flexible working or a combination of these.
Missed our 2023 predictions? Check them out here.