Engagement is the top HR priority for 2023

The world is on the brink of a recession. This is pushing employers to rethink and streamline their business strategies, including implementing hiring freezes and layoffs. Notable examples include Peloton, Twitter, Made.com, FedEx and Meta.

In this environment, Lattice’s survey of 800 HR leaders from the US, Canada, UK, Ireland, Germany and the Netherlands found that HR teams are re-prioritizing away from talent acquisition.

Instead, they are focusing on engagement and retention. This remains important because despite the looming recession and some slowing down in hiring, employees are still resigning in droves, particularly in the US.

In fact, engagement was HR leaders’ top priority for 2023 (41%), followed by manager training (35%) and learning and development (34%), according to Lattice’s 2023 State of People Strategy report.

Diversity, equity, inclusion and belonging came in fourth (30%), followed by performance management (27%) and compensation (25%). However, talent acquisition was only a top priority for 17% of the respondents.

Talking about the findings, Lattice’s vice-president of advisory services Dave Carhart tells UNLEASH: “The sharp drop in prioritizing talent acquisition in favor of retention and engagement efforts also indicates the increased importance of a people-centric HR approach in uncertain times.”

How to drive better engagement

Of course, focusing on retention and engagement is much easier said than done. Carhart notes: “The report also shows there’s a lot of work to do – and in some cases, an uncertain road ahead – as teams continue to build out the necessary processes, programs, and technologies to address these challenges.”

There is a lot that HR leaders can learn from high-performing teams. Lattice’s report found that high-performing teams are listening to their employees, collecting and analyzing data, and then investing what workers care about most.

Examples include coaching and upskilling, and genuine investment in reducing bias in hiring and promotions. Pay equity and transparency was also key to success in high-performing teams.

Lattice’s report “found that investing in compensation transparency and equity isn’t just the right thing to do; it also strongly impacts employee engagement and retention”.

The issue is that HR teams are reluctant to be transparent about pay – currently, in half of organizations only HR and finance has full transparency over hires, and in just 2% of organizations employees have access to data on everyone’s salaries.

But Carhart is clear that employers need to get on board with pay transparencies since job candidates and employees want more of it.

He tells UNLEASH: “The global movement toward pay transparency is going to catch many HR leaders and teams unprepared.

“While over half of HR teams report investing effort in pay transparency, it also uncovered that very little progress had been made in one of the foundations of open communication around compensation – ensuring employees understand pay bands for their roles and growth path.

“HR teams need to be investing significant resources and energy into developing a fundamental pay philosophy, substantiating pay bands, and communicating the methods behind them – and they need to be doing it now, or risk falling permanently behind a trend towards transparency that is only going to keep building momentum.

“The consequences of getting this wrong will impact everything from the health of your company’s culture to your ability to attract and maintain talent into 2023.”

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