As we head towards the end of 2023 and the start of the new year, HR teams need to prepare their companies for success. It’s hard to believe we’re already thinking about 2024, but it’s time.
Employees and employers are facing significant challenges in the year ahead. For businesses, customer behavior is changing rapidly. This requires new approaches and ways of thinking. New tech, like Generative AI, is creating opportunities and redefining processes. Business leaders need to leverage tech to stay competitive.
Yet for employees, AI is increasing employee fears about job loss. An uncertain economy, continuing inflation, and growing worries about recession only add to stress. Many employees are feeling overwhelmed and burned out. They are also looking for more work/life balance.
HR execs need to take all of these challenges into account and take proactive action to keep their companies competitive. Let’s look at some of the key changes in the employee environment and what HR leaders should review as part of their end of year assessments.
Review Compensation and Benefits
It’s no secret that salaries are rising. The Conference Board reports that the average salary grew by 4.4% in 2023, a growth rate that’s the highest in the past two decades. Employees, especially those on the lower end of the salary scale, expect increases in 2024. Economic conditions may temper an organization’s ability to meet those expectations. So, transparency and communication about business conditions will be crucial.
While companies have slowed hiring, today’s top talent is still in high demand. Staying on par with peers when it comes to compensation and benefits remains crucial for retention and attracting high-performing employees.
Of employers, 40% are worried about employees leaving their jobs for better benefits — more than those worried about pay. Over the past year, about six in 10 companies have changed their benefits to stay competitive. According to Forbes Advisor, the five benefits employees want most include:
- Employer-covered healthcare
- Life insurance
- Pension and/or retirement plans
- Mandatory paid time off
- Mental health assistance
Employers should especially pay attention to their time-off policies. About a third of employees ranked this as the number one benefit they value, while it didn’t even make the top five benefits in employer surveys.
Employers should also make sure to inform employees about open enrollment periods and holiday policies to avoid conflicts.
Assess Employee Engagement
Monitoring employee engagement is an ongoing priority at companies and for good reason. Gallup’s 2023 State of the Global Workplace showed that engagement has reached a record high. That’s the good news.
The bad news is that the “record high” is just 23%. Globally, more than three-quarters of workers are simply not engaged with their jobs. Engagement in the U.S. is doing slightly better at 32%, but it has dropped two points in the past year.
There’s also a growing discrepancy between top-performing organizations and everyone else. In top performers, 72% of employees are engaged. Multiple studies show that an engaged workforce is more productive, has better morale, and substantially greater profitability.
HR leaders need to track engagement regularly. At the end of the year, it’s worth taking the time to take a hard look at the results and consider initiatives to improve engagement. If engagement is lacking, HR teams need to identify root causes and create action plans for change.
Evaluate Training and Development Programs
Despite challenges filling open positions, employees are still concerned about losing their jobs. There is increasing worry about technology either eliminating positions or requiring skills current employers don’t have.
HR teams need to evaluate training and development programs to provide the skills next-generation workers need. Up-skilling and re-skilling programs can help employees gain the skills they need to grow in their careers. Not only can this help employees, but relevant training and development programs improve retention and are attractive to job seekers.
The Global Talent Trends Report by LinkedIn reported that employees believe professional development is the best way to improve company culture and engagement. Companies that provide regular opportunities to develop skills also have a 15% higher internal mobility rate, offering greater advancement opportunities.
HR leaders should also consider whether managers are equipped to provide the training and development employees need. Providing training and guidance for conducting employee reviews, giving constructive feedback, and identifying development opportunities can pay dividends.
Analyze Diversity, Equity, and Inclusion Efforts
The end of the year is also a good time to assess diversity, equity, and inclusion (DEI) initiatives. By collecting and reviewing demographic data, leaders can compare data with benchmarks and demonstrate progress against goals.
More than half of workers in a Pew Research study said DEI efforts are important in the workplace, and about a third say it needs to be a high priority. Whether you have formal DEI initiatives in place, fairness and equity in the workplace are important.
However, most employees do not believe their work environment is fair. Just 18% of those surveyed by the Harvard Business Review said their employer provided an environment with high fairness.
HR teams should review salaries, compensation, and promotion through a DEI lens to make sure people are being treated fairly and look for signs of unconscious bias.
Confirm Compliance With Changing Regulations
Nearly every year, there are new regulations on the federal, state, and local levels that employers must address. Vigilance is crucial to remain in compliance to avoid fines, lawsuits, and damage to reputation. HR teams need to review all applicable labor laws and make sure company policies and budgets reflect any necessary changes.
Several states have minimum wage increases scheduled in 2024, along with new regulations concerning:
- Pay transparency
- Overtime regulations
- Paid leave and sick leave
- Pay rates for government contractors
- Notification requirements for remote workers
The end of the year is also a time to review company policies about compliance training and legally mandated training to ensure it has been completed.
HR leaders can stay informed on changing regulations by working with a professional employer organization (PEO) like Resourcing Edge to remain compliant.
Communicate Changes and Results
Besides open enrollment periods, HR teams need a strategy to communicate changes and priorities throughout the organization. Transparency is key to buy-in and engagement. Any time there are changes to procedures and policies, mandated requirements, or new development opportunities, HR leaders need to ensure all employees are aware of the changes.
Not all changes will likely be seen as positive by all employees. So, it’s important to be clear about what’s happening and why. Failure to explain the logic behind decisions can breed uncertainty and decrease motivation. This has become increasingly important amid changing environments. And nearly every industry is undergoing rapid change these days.
Gartner research uncovered that the average organization has undergone five major company-wide change initiatives over the past three years. Almost three-quarters of employers expect additional transformations in the years to come.
At the same time, however, as many as half of change initiatives fail. And barely more than a third are considered a clear success. Communicating changes effectively is key.
Year End Document Preparation and Reporting
HR teams will also want to audit documentation for wage and payroll records. These figures must match tax documents, including W-2s, and align with employee’s W-4 designations. Human resources teams may also need to provide information about health insurance plans, equal employment opportunity (EEO) forms, and other reporting requirements.
Year-end reporting will also need to true up budgets, revenue, and expenses to accurately assess performance. Monitoring trends, such as employee retention, can help uncover potential problems within an organization that need attention.
Planning for the Year Ahead
Besides a comprehensive review of 2023, it’s also time to put together the action plan for 2024. After assessing performance against goals and evaluating results, HR leaders need to build a targeted action plan to address shortfalls and drive new initiatives.
Companies today need to be agile amid constantly shifting environments. The right planning can keep employees focused. HR plans should align with company objectives and strategies, empowering employees with the tools and skills they need to execute.
With economic uncertainty and rapidly changing customer behavior, it’s also important to conduct contingency planning. Budgets and headcounts should take into account potential scenarios so that companies are ready to pivot if necessary.
If we’ve learned anything over the past few years, it’s that we need to be agile and adapt quickly when changes occur.
Here’s to a Successful 2024
As this year comes to a close, 2024 is sure to have its own set of unique challenges. HR teams that conduct year-end assessments and put together plans that align with company goals are setting the table for success.
Resourcing Edge can help.
Resourcing Edge is an industry leader in human capital management with decades of experience managing employee administration. Resourcing Edge assists with:
- Payroll and tax administration
- Benefits administration and consultation
- Risk management and compliance
- Cloud-based employee management software
- Human Resources services
- Direct-hire recruiting
Contact the HR experts at Resourcing Edge today to discuss your needs or get a quote.