Best Practices

5 HR Trends Financial Executives Need to Know in 2023

by Monte Farrar

Adapting to a quickly evolving workplace will be the challenge in 2023 as businesses continue to evolve in the post-pandemic world. Companies’ core infrastructure, including policies, procedures, training, and technology, will require modifications as businesses strive to support their employees.

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As the “Great Workplace Evolution” continues to unfold, we have identified five HR trends that finance executives should be aware of. 

1. Protecting privacy and information in HR systems

Data privacy requirements continue to evolve and change to meet the demands of our increasingly complex digital world. In 2023, five states – California, Colorado, Connecticut, Utah, and Virginia – will have new privacy laws and requirements go into effect. Additionally, more privacy-related bills are in the works for other states and at the federal level. 

The California Consumer Privacy Act, which went into effect in 2020, and the subsequent California Privacy Rights Act, which goes into effect Jan. 1, 2023, are the most stringent of the state laws. Notably, the CPRA is the first to grant privacy rights to employees.

Under the CPRA, employees and job applicants who work in California will have rights regarding their personal information, similar to rights consumers have under the CPPA. Also, privacy notices, which companies may already be providing to consumers, must now be provided to employees and job applicants when personal information is being collected. 

For finance leaders, it’s imperative to devote attention to new requirements such as the CRPA and ensure their organization has the resources to be compliant. That may mean investing in technology if their current systems aren’t capable of data mapping – the process of knowing what data is being collecting and how the data is processed. Companies must now be able to pull details together to determine where the data is coming from and being stored, who has access to it, and how is it being consumed. 

Financial executives will need to work closely with their IT, HR, and legal departments to understand whether their current systems can handle new requirements or if third-party applications such as privacy management tools will be needed.

For companies with employees in California, it’s important to note the cost of noncompliance. In August, the California attorney general issued its first monetary penalty under the CCPA – a $1.2 million settlement with Sephora.

“Along with the penalty, the AG announced new enforcement sweeps, including against financial institutions and large consumer retailers,” writes lawyer Devika Kornbacher in “Data Privacy: Preparing for 2023 (and beyond) in California.” “In addition, the mandatory 30-day cure period for noncompliance becomes discretionary in 2023 – meaning the CPPA or AG can go directly to enforcement if they determine that that is appropriate.”

2. Targeted Strategies that Boost Employee Engagement 

Since the “Great Resignation” started in 2021, almost 100 million American workers quit their jobs. More recently, employee engagement levels have dropped, leading to “quiet quitting” in which employees perform the required duties and nothing more.

Our HR experts agree that a lack of employee engagement and dissatisfaction with pay are two key components driving this trend. But a lack of employee engagement isn’t a new problem. It’s often a statement about a lack of employer engagement, rather than employee disengagement.

Finance executives can quell this trend by communicating and listening to employees, finding out what matters most to them, and showing them their value within the company. Executives should also focus on retention efforts, as retention costs less time and money than recruiting new employees. Offering employees continuing education and defined career paths can help retain valued employees.

Finally, understanding the ripple effects of employee disengagement is vital. Consider that when an employee is only doing the minimum, another employee is likely picking up the extra work. This can frustrate engaged and hard-working employees. Eventually, the quality of the product or services will be impacted, which may lead to losing good employees and good customers. 

3. Workforce Management in a Complex Regulatory World 

Keeping abreast of the laws and requirements regarding employment practices, how employees are treated, and safe working conditions that have been introduced recently is no easy feat. But compliance with these laws and standards helps create a healthy and thriving work environment for employees.

Noncompliance, on the other hand, can be costly. Often, noncompliance is a result of finance executives and business owners not knowing or understanding regulations and how they impact their business. But the potential for fines, claims, and lawsuits is too great to ignore. 

Finance executives should regularly communicate with their legal team and HR professionals so that they fully understand the latest laws and consequences. Some key topics to keep an eye on in 2023 include paid leave, minimum wage changes, multistate compliance for remote employees, cannabis in the workplace, and data protection and privacy. 

Finance executives should work with their legal and HR teams to identify risks and seek experts for additional help, if needed. They should consider conducting an audit to evaluate compliance with federal, state, and local regulations. 

4. Integrating Flexibility with Organizational Structure 

Since the abrupt shift to remote work in 2020, employees have continued to lobby for more workplace flexibility. In fact, in Ogletree Deakins’ Survey of Key Decision-Makers, 72% of company leaders said their employees’ desire for remote work is much stronger than before the pandemic.

Whether executives prefer an in-office, hybrid, or fully remote workforce, it’s time to nail down the company’s stance. Then they can provide employees with policies, procedures, and the support they need to be successful within the model. Keep compliance in mind when creating remote work policies. For example, consider how and when employees should notify managers if they relocate while working remotely. 

If there are concerns about committing to a hybrid workplace, company leaders should weigh in on how it will impact culture and whether it’s possible to tailor an approach that supports the business. And if executives are not sure what employees want, they should ask them to be prepared to listen and act on their input. 

Leaders who are leaning toward an in-office strategy should be transparent with their employees on why they’ve made this decision. Provide clear communication and the opportunity for employees to ask questions and provide feedback. 

5. HR Can Help Companies Grow and Thrive in 2023 

As the workplace transforms in 2023, HR professionals will tackle a variety of new responsibilities. For example, they’ll need to facilitate change management, promote a supportive company culture, update workplace policies and procedures, rethink retention efforts, update training protocols, oversee compliance and safety efforts, and manage the transition to an in-office, hybrid, or remote workplace.

Some HR teams will have adequate staffing and support to handle these added responsibilities. Smaller teams, however, may need to seek assistance. HR outsourcing services can help by offering their expertise in areas such as employee satisfaction and retention and by negotiating better benefits to ensure offerings are competitive packages that will help attract and retain top talent. They can also manage daily HR and administrative functions – payroll and administering benefits – so the HR team can focus on more strategic initiatives. 

An HR outsourcing partner is also key in helping finance leaders remain compliant. They can help them stay abreast of the latest requirements, identify areas where they run the risk of noncompliance, and help avoid major problems that could lead to penalties, claims, and lawsuits. 

The key to being successful is the ability to adapt to change. It’s important for finance leaders to surround themselves with good and competent influencers to encourage, challenge, and empower efforts in creating an effective and profitable 2023 workforce strategy. 

Monte Farrar is the Sr. Strategic HR Advisor at G&A Partners