December 21, 2022
By Leah Scanlan, Oak HC/FT
Quiet quitting. The Great Resignation. The battle between remote work versus hybrid work versus fully, in-office work. Staffing shortages followed by Big Tech layoffs. These all defined the state of talent in 2022. No matter the industry, size or stage of a company, these were battles everyone was facing. At the front of the battle line were what some might call true wartime heroes—our HR leaders and chief people officers.
The last few years have seen unprecedented disruptions in how, when, and why we work. Here’s what to expect in 2023:
Workforce planning will be a company’s holy grail tosuccess. Talent leaders in collaboration with business leaders across functionswill need to be more deliberate in their demand planning. The use of predictiveanalytics will become more prolific in forecasting to help identify the right roles, skills and geographies to focus on the changing business. While we anticipate a slow-down in hiring across most employers, workforce planning tools and AI will be key to supporting companies making more calculated decisions rather than knee-jerk hires to fill seats. HR and finance must be a match made in heaven. Of course, your HR leader and finance leader have separate focuses, but there is an undeniable link between the people you hire, how they perform, and an organization’s financial results driven by that work. It may sound obvious in theory, but an organization lacking a cohesive relationship between finance and HR will suffer greatly. In 2023, companies will need to take a much more measured approach to new recruitment and rightsizing their workforce.
Cultivating company culture
The tumultuous environment has had a lasting impact on every workforce over the past three years. Though many organizations have proven that workers can be just as productive working from home, a top focus in 2023 will be how organizations maintain—and potentially improve—their culture. Developing a philosophy around remote work, hybrid work models, flexibility, and in office will be crucial, and there’s no one size fits all. The hybrid model will likely continue to be the most sought after by both employers and employees, requiring businesses to focus on a culture that can exist harmoniously in the office and outside of the office. Not only will companies find more clarity in how they define a hybrid environment, (i.e. remote works as long as employees live within a certain radius to visit the office as needed) but they will need to re enforce emotional connections and not just physical, by proximity, connections to sustain a strong culture. We’ll see more heads of culture, DE&I, and community hired in 2023, and companies will drive initiatives to specifically develop these areas within their businesses because it will matter more than ever before. If companies want to maintain highly productive outcomes, they should expect an increased commitment and investment to the culture they develop.
Try before you buy: contract workers
Over the past several years, the concept of work-life balance for many has gone from a goal to a reality. You combine employees foregoing the traditional 9-to-5 for a more fluid schedule with an employers’ interest in cutting costs and rising labor shortages, and what’s emerged is the adoption of the interim or contract employee. For many, the benefits outweigh the risks. Interim or contract employees are usually mission-oriented, project-based and highly skilled. They assimilate quickly and can bring unique experiences. They can alleviate the need for a full-time employee. This also allows employers to test the need for the role and prove the ROI without overcommitting. For many employees, 2022 was a whirlwind, so for those exploring roles in 2023, there’s a heightened sense of being thoughtful and deliberate in what they do next. The interim or contract role allows a sort of try before you buy.
What’s next in healthcare and fintech
Fintech and healthcare have experienced the tailwinds and headwinds of the past few years, maybe more than any other industry. While all companies will have to adjust to this new market environment, a few things will ring true…
For our healthcare friends, CFOs and finance leaders will continue to be in high demand, especially those that can flex into broader roles and span across functions. Clinicians, especially clinician managers will continue to be sought after, and agencies that specialize in clinician recruiting continue to command high price points. The broader softening of comp packages and hiring will continue into 2023, however, top talent will still command high salary and equity packages to get over the line, particularly in earlier stage businesses with a higher risk profile and unclear product-market fit. This will make identifying, rewarding, and nurturing top performers critical in 2023. Companies will continue tore-evaluate their internal teams into 2023 beyond initial RIFs—particularly those who did not go as deep and wide as they initially should have—as market uncertainty deepens throughout the year. Continued consolidation in health tech will flood the market, particularly with engineering and technical talent which was once trading at a premium.
Our fintech friends, not surprisingly, will see similar trends, but perhaps most notably will be the increased focus on legal, compliance and risk officers, government affairs and public policy. Everyone in fintech is feeling the fall of FTX, Celsius, and others, so you better believe that there will be an increased focus on the legal function in both fintech and crypto/web3. The rise of the business-minded general counsel will prevail as companies continue to realize the importance of hiring one who can operate not only as a corporate legal partner, but also as a key business partner and strategist. Not dissimilar from what we’ve observed in healthcare, with many fintech companies having an increased focus on unit economics and operational rigor, having strong finance and people leaders regardless of stage is key.
Another outcome of valuation compression is increased M&A activity given lower valuations. A larger number of acquisitions will lead to an increased demand for financial business and people partners who have experience driving M&A and leading integrations. On the flip side, an increase in acquisitions means more CFOs and Chief People Officers hitting the market as those are typically redundant roles once an implementation is complete, so be on the lookout. Overall, some of the market volatility and uncertainty has created receptivity to new opportunities, and for the first time in maybe a decade, people at companies notoriously hard to recruit from, such as Stripe and Square, are willing to pick up an eye, lift a near and hear you out.
Spotlight on people leaders
As we look to 2023, wartime executives will likely have the biggest impact in helping us navigate the changing market conditions. It’s no coincidence that the year started out by highlighting our people leaders, and now we wrap the year up with similar sentiments. While everyone can admit 2022has been a year for the books, it has also been a trying year for many companies. We saw some companies hit new heights as they soared in valuation, headcount and market growth, and then just as fast as they rose, many of those same companies crumbled. What felt like a straight up sprint the last 2 years, came to a screeching halt overnight. And, to no one’s surprise, it’s our HR and people leaders who will take the spotlight once again as we navigate the market ahead.
Colleen Cozzens, head of talent, healthcare and Stephen Dierks, associate director of talent, contributed to this post.