Report: Inflation, Labor Shortages Top HR Concerns in 2023
According to a report released by the Society for Human Resource Management (SHRM) on January 30, 2023, organizations will prioritize finding good job candidates and retaining employees. However, striking a balance between offering competitive pay and managing budget constraints may pose challenges, especially in light of concerns about inflation.
The SHRM State of the Workplace report for 2022-2023 is based on surveys conducted in November 2022, which involved 1,793 HR professionals, 276 HR executives, and 585 non-HR employees. The report examines the major struggles faced by U.S. organizations, how HR is addressing these challenges, the areas where organizations were most and least effective in 2022, and their priorities and plans for 2023.
Mark Smith, the SHRM director of HR thought leadership and author of the study, acknowledged that last year’s prediction about the critical importance of recruiting and retaining employees proved accurate. He expects these challenges to persist throughout 2023.
Recruiting and retaining talent emerged as top priorities for employees, HR professionals, and HR executives in 2023, as highlighted by SHRM President and CEO Johnny C. Taylor, Jr., SHRM-SCP. He emphasized that 2023 will be a crucial year for both employees and executives, with anticipated significant changes regarding budget concerns while addressing talent acquisition and retention challenges.
Key Challenges Faced by U.S. Organizations in 2022
Inflation and labor shortages emerged as the top external challenges for U.S. organizations in 2022. Additionally, employees from non-HR departments expressed significantly more negative views of their employers compared to HR professionals.
Inflation was a significant concern, with 86% of survey respondents identifying it as their organizations’ top worry, up from 73% in 2021. In June, inflation reached its highest point in 40 years. The Consumer Price Index experienced a jump to 7% in 2020 and further rose to 7.7% in 2022, according to the U.S. Bureau of Labor Statistics.
Consequently, many employees sought higher-paying jobs and alternative means to meet their financial obligations. The Federal Reserve Bank of New York’s November 2022 SCE Labor Market Survey revealed that the minimum salary employees were willing to accept for a job reached its highest level, nearly $74,000.
Labor shortages remained a top concern for 80% of HR professionals in 2022, slightly declining from 2021. While 30% of HR professionals indicated their organizations were effective at recruitment (a slight improvement from 2021), retention posed a greater challenge. HR professionals and HR executives identified the following as the most critical issues in filling positions:
- Lack of qualified candidates.
- Insufficient competitive compensation.
- Limited workplace flexibility.
Employee engagement remained a pressing issue going into 2023, as non-HR employees demonstrated significant disengagement. Compared to 2021, they were “substantially less likely to recommend their organization as a good place to work or to trust their employer to treat them fairly,” according to the SHRM report. Over a quarter (26%) of non-HR employees planned to seek employment elsewhere.
Although HR professionals reported a more positive sentiment about their jobs compared to non-HR employees, 24% of HR professionals still intended to explore other job opportunities in 2023. As the COVID-19 crisis subsided, HR professionals perceived diminishing reliance on and recognition of their contributions by senior leaders. However, HR executives strongly felt that they had a seat at the leadership table.
