State of HR 2023 Report: The Great Resignation, Recession and Human Resources
Over 500 HR pros weighed in on the outlook for the HR profession, heading into 2023.
by Susan Snipes, GPHR, SPHR, MS HRM - January 5th, 2023
In this comprehensive report, we
Share valuable insights into the major HR trends as they relate to resignations, the HR profession, and the economy,
Explain the significant changes from our 2021 to 2022 survey results,
Hear opinions from subject matter experts on these changes and trends,
Supply possible solutions to some of HR’s greatest challenges in 2022 and
Predict future trends that may impact the HR profession and organizations in 2023.
Who We Surveyed
In Q4 of 2022, we served 534 professionals across 11 industry categories. 100% of respondents reported Human Resources to be their primary job function, and 63% said they spend all of their time focusing on Human Resources.
What We Found
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If you thought the fight for $15 was making things tough on employers, you may need to sit down for this news. To retain your lowest-wage workers in 2023, you’re going to have to pay them more right out of the gate. That's one thing we learned about the state of Human Resources from 500 professionals. Hourly employees also have a new perspective on what level of effort should trigger additional pay. Having a killer culture and competitive benefits offerings is not enough if the base pay and monetary incentives don’t meet workers' expectations.
Download the State of HR 2023 Report as a PDF
Many of the people in lower-paid positions are customer-facing, so they are critical to your operations. We found that lower-paid customer-facing professionals (including retail workers, patient caregivers, and tech support) are among those most likely to resign, specifically for better-paying jobs.
At the same time, lower-skill tasks are becoming more automated. Think chatbots, for example. Because more automation can mean fewer positions, increased automation is where your organization might make room for the needed pay increases and additional training costs. Those jobs that remain will be more fulfilling, enriched jobs that require more advanced knowledge, skills, and abilities.
Outsourcing of expert-level internal support, like IT and software consultants, will continue to trend upward into 2023. Oddly, despite increased automation, outsourcing and an influx of talent from major tech company layoffs, IT and software professionals are still choosing to leave their jobs. These professionals cite burnout as the main reason for quitting. (You mean working 24/7 for 2+ years straight with zero flexibility can cause burnout? Who knew?!) Not only are they quitting, but they are being very choosey about their next engagement. IT and software workers who remain in the industry won’t settle for anything less than flexible work arrangements, excellent total compensation packages, and great work culture.
We placed a special emphasis on the HR profession’s challenges in this study. Most company executives and HR workers we surveyed believe that a career in Human Resources is harder than it has been in past years. Our data also shows that neither job security nor job difficulty are primary factors impacting HR professionals’ mental health or intent to resign. Then what are the driving factors impacting mental health and resignations in HR?
We found that it’s all about respect! Our research shows that HR professionals’ mental health and job satisfaction fall when company leadership stops trusting HR or stops including them at the leadership table. HR professionals need to feel valued by leadership and employees. They need to be included in important people-related decisions. The difference is that now, with the perceived importance of the HR function increasing, HR/People Operations professionals finally have some leverage. Resignation Insights
Resignations, where employees choose to leave a company voluntarily, are often cringe-worthy events. Some employees leave quietly, and respectfully, providing the preferred amount of notice. Others bash your company on social media or make a huge, unprofessional scene in public on their way out the door.
Whether an employee leaves your organization for more interesting work, a better boss, or greater total compensation, HR is responsible for skillfully managing the employee’s exit, uncovering the underlying causes, and using the information to improve employee retention. And HR professionals have had their work cut out for them. The past few resignation-riddled years have made high employee retention seem unattainable for many employers. We've identified important voluntary turnover trends and insights to help you best support your organization’s retention efforts.
How Do Resignation Rates Compare to Last Year?
In 2021, we surveyed 500 HR professionals to uncover important resignation trends. We analyzed resignations by industry, company size, and several other variables. This year, we revisited some of last year’s questions to see how the resignation trends may have changed since 2021.
People are still leaving at higher rates. Overall, 52% of 2022 respondents stated that their resignation rates were higher this year than last year. This is the second consecutive year that we’ve seen a notable increase in resignations. And the majority of HR professionals surveyed in both 2021 and 2022 acknowledged a talent shortage. The massive number of employees leaving their employers voluntarily from 2021 to 2022 has been dubbed “The Great Resignation.”
Despite the year-over-year increase in resignations, only 24% of the HR professionals we surveyed claimed to have experienced the “Great Resignation” phenomenon first-hand. And 21% of respondents did not see the Great Resignation as an issue at all.
Who Is Resigning?
Customer service workers across multiple industries represent the majority of resignations.
Unsurprisingly, whether or not HR professionals experienced high numbers of employee resignations at their organization depended heavily on the respondent’s industry and types of workers. We found that respondents working for companies with more customer-facing positions experienced higher percentages of resignations. The industries that reported the highest percentage of resignations included Healthcare, Education, and Software and IT.
High Healthcare Resignations Are Likely to Continue Through 2025.
In some industries like Healthcare, where the percentage of “customer” (patient) service professionals is high, the mass exodus has resulted in a talent shortage that is already seeing wages increase to attract talent. 44% of those who reported a talent shortage in 2022 were in the healthcare industry.
Additional research predicts that healthcare worker resignations will continue well beyond 2022. 47% of the US-based doctors and nurses surveyed by Elsevier Health for their global 2022 Clinician of the Future report stated that they plan to leave their current role in the next 2 to 3 years. This is one of the highest rates of anticipated clinician turnover in the world, based on their survey results.
Why Are People Leaving?
Money, money, money! Compensation is the number one reason for the increased resignations in 2022. The economic factors identified in our research, combined with insights from other studies heavily support this assertion.
In preparation for the predicted recession,34% of surveyed professionals’ companies have delayed pay increases and bonuses in 2022. At the same time, the cost of living has been massively increasing. From September of 2021 to September of 2022, the Consumer Price Index (CPU) rose 8.2 percent. And the Social Security Administration’s cost of living adjustment of 5.9% for 2022 is the highest percent increase in 40 years. The Social Security Administration expects 2023’s cost of living adjustment to be even greater at 8.7%.
More than half of the workers surveyed by WTW for their 2022 Global Benefits Attitudes Survey said that higher pay was one of the main reasons they were looking for another job.
Low-Wage and Less Experienced Workers Are Leaving for Better Pay
It becomes increasingly apparent that compensation is a primary factor when we look at the types of workers who are resigning. In both GoCo’s 2021 and 2022 surveys, entry-level, associate-level, and Customer Service workers were reported to be most likely to resign. Less experienced, lower-skilled workers and customer support positions are often paid less than other roles in an organization. In fact, the majority of the 25 lowest-paying jobs in the US are customer service roles. These include attendants, waiters, hosts, counter workers, desk clerks, cashiers, and home health aides, among other roles. This tells us that lower-wage employees were among the most likely to resign.
Customer Service Workers Were Poached By the Competition
McKinsey & Company’s survey for their The State of Customer Care 2022 report showed that the main reason Customer Service employees have been resigning is that they have been recruited away by competitors (that presumably offer them more money).
The Great Resignation, combined with increased call volumes has resulted in 45% of companies reporting a Customer Support professional talent shortage. The main priority for businesses in 2022, going into 2023, is improving the customer experience via a higher number of better-trained Customer Care staff. Companies may be able to reduce the number of positions with greater automation of lower-skill tasks, but this will create the need for training on new technical skills for those remaining roles.
Losing your job is often a traumatic event, and employees never forget how they were treated when they were offboarded. Layoffs are at least easily enough explained (It’s not you, it’s me). Even though laid-off employees are not alone, and the decision is business, not personal, losing their job and benefits is a hard pill to swallow. HR professionals have the heartbreaking task of helping companies decide who stays and who goes, and they are often the people who interact with departing employees the most during offboarding. We asked our 500+ respondents some pointed questions about layoffs at their companies, and here is what we learned.
How Do Reported Layoffs Compare to Last Year?
29% of participants said that their companies were preparing for recession with layoffs in 2022. This is up from 18% in 2021. While the 2021 layoffs were in response to the COVID-19 pandemic, the layoffs in 2022 have been in response to the economy.
Which Industries Reported the Highest Percentage of Layoffs?
The top three industries that reported laying off workers to prepare for the recession included:
Real Estate (56%),
Software and IT (45%) and
Customer Service (36%).
Human Resources professionals in these three industries were also the most likely to worry about their own job security.
Real Estate Industry Layoffs
Residential Brokerage: Despite the recession-related layoffs, there are many signs that residential Real Estate brokerage is thriving. Although the number of homes for sale has been decreasing for 6 consecutive months, the recession is not negatively impacting the price of housing.The national median home price actually rose 13.9% from September 2021 to September 2022. But fewer homes for sale means fewer sales opportunities for independent Real Estate Agents and Companies. Even so, the record number of home sales in 2021 frames the decrease in sales in 2022 as a return to normalcy vs an alarming trend.
To expand on our findings on Real Estate industry layoffs, we reached out to Bart McLeroy, a professor of Real Estate at Collin College:
“Real Estate is a blanket term that covers a number of industries and professions.
Mortgage Lenders: As soon as interest rates began to rise, mortgage lenders began to reduce headcount because their refinancing business had evaporated overnight, along with new mortgage lending slowing.
Title companies: Title companies also started cutting personnel, with fewer closings to keep escrow officers busy.
Commercial brokerage: On the commercial side, we are seeing the continued fallout from the COVID-19 pandemic. Some companies have completely reimagined the way they use office space (or done away with it entirely), others are sticking to their guns and insisting that remote workers come back to their cubicles. Meta recently made news with its plan to spend approx. $2 billion to terminate a number of its office leases, viewing that as preferable to having ongoing liability. Industrial is no longer the sure thing it was a year ago, and retail continues to be challenging, although it's challenging for as long as I've been in real estate. Many commercial investors are turning to the multi-family market, betting that the ongoing housing shortage will mean solid rental income for the foreseeable future.
Appraisers and Inspectors: There still aren't enough appraisers or real estate inspectors, or people going into those professions to replace those who are retiring.”
Software and IT Layoffs
Our survey data was collected prior to the mass tech layoffs of November 2022 (e.g. Twitter, Meta, etc.). Even prior to the major November layoff announcements, our results showed that a high percentage of respondents who reported layoffs work in the IT and Software industry. This was unusual because of the general economic outlook for the tech industry.
According to Gartner, worldwide IT spending is projected to hit 4.5 trillion USD by the end of 2022, which is a 3% increase from 2021.
Some of the technology executives interviewed by CRN in October of 2022 reported feeling confident that “their technology services and solutions are far too important to customers of all shapes and sizes to be significantly impacted by a slowdown in the general economy due to issues such as inflation.” This tracks with Forbes’ recommendation to invest more in core business, cloud-based applications that businesses need to function optimally.
64% of IT Executives surveyed by Garter also reported that talent would be difficult to find and keep in 2022. It certainly has been! Now that several major tech companies have laid off 10s of thousands of workers; however, the struggle to hire top software and mobile application developers should be greatly reduced.
Although IT industry layoffs have increased, so have IT professional resignations. IT professionals are primarily resigning due to a lack of career growth opportunities and a lack of flexibility in their work hours. The increased technology solution sales in 2022, combined with the IT talent shortage (supply + demand), somehow did not result in a lower percentage of layoffs in this industry. Only 9% of our survey participants work for an IT or Software company, so it is unclear why these layoffs represent such a high percent.
Brent Rager, Director of Information Technology at EZ-ERC, provided us with valuable insights into these trends:
“COVID changed everything for everybody, and the tech industry was no different. For many tech companies, the pandemic brought record growth. Industries faced an immediate need to move to the cloud to empower Remote Work culture. Those IT companies did their best to capitalize on that growth by hiring. In addition to increased IT hiring, remote work massively increased IT professionals’ productivity.
Unfortunately, it also negatively impacted their perks. The social benefits we’ve all come to love at our tech companies like foosball, social lunches, events, and even the somewhat therapeutic podcast time on commutes were replaced by endless project stand-ups and sprint plannings. This has led to employee burnout and resignations.
On the flip side, global political instability, inflation, and the threat of an imminent recession means that these same tech companies that scaled up too aggressively must now contract to protect their bottom line. But even with the tech industry layoffs and increased talent back on the market, tech professionals are disillusioned and highly particular about their next engagements.
IT workers now know their worth, and they’re not in a rush to reward a new company by joining them without the right amount of money, benefits, time off, autonomy, work/life balance, respectful management, and flexibility commensurate with the value they bring.”
Another reason for the layoffs may be that many companies are outsourcing expert-level IT work to external consultants. Many companies are also outsourcing lower-skilled IT work to management service firms. Increased adoption of cloud-based technologies, increased use of automation and AI, and a greater focus on cyber security have also decreased the demand for lower-skilled IT roles and increased demand for newer, more niche roles that require high levels of expertise.
Despite HR professionals reporting high resignation rates for Customer Service industry workers, they also reported high layoff rates for the same group. 36% of Customer Service industry respondents stated that their employer has laid people off in 2022 to prepare for a recession. Customer service teams have been reduced across multiple industries as well.
Similar to the IT industry, possible explanations for increased layoffs
include workflow automation, customer self-service, remote offshoring, and an increased focus on fewer, more highly skilled workers.
While the percentage of layoffs reported for Customer Service in 2022 may be surprising to some, the job function was already predicted to decline. The BLS predicted that the employment of customer service representatives (CSRs) will decline by 4% from 2021 to 2031. It also projects 389,400 openings for customer service representatives each year, on average. But none of these openings are predicted to be new positions.
How Have Layoffs and Resignations Affected HR Professionals?
According to the 500 professionals we surveyed, HR job security is not great. 51% of HR professionals stated that they are worried about their own job security over the next 6 months. We found that HR professionals in the Software/IT, Customer Service, and Real Estate industries are the most worried about losing their jobs, while HR professionals in the Food and Beverage, Education, and Healthcare industries are the least worried.
HR professionals who work onsite are the most concerned about their job security, while HR professionals who work 100% remotely are the least concerned. Unsurprisingly, HR professionals who reported that their company has laid people off in anticipation of the recession were much more likely to be worried about losing their jobs than HR professionals whose company has not laid anyone off.
At first glance, the current economy or recession seems to play a major role in HR dissatisfaction. 46% of HR professionals who reported being very dissatisfied with their current job also stated that the current economy is making their job much harder. So they must be dissatisfied because their jobs are harder, right? To confirm this, we looked at other job-related factors. And what we found was surprising…
Poor job security does not seem to negatively impact job satisfaction. Despite the recession making HR professionals’ jobs more difficult, most dissatisfied respondents are not concerned about losing their jobs. 82% of HR professionals who fear losing their jobs in the next 6 months are either satisfied or very satisfied with their jobs.
Stay with us here…
Since HR professionals at companies with recent layoffs are among those most concerned about their own job security, and since those most concerned with their job security are also the most satisfied, HR professionals who are helping with layoffs may be some of the most satisfied with their jobs.
One reason for this may be the importance and significance of handling mass layoffs correctly and the impact HR can have on individuals and the company. HR is often more valued as a profession during turbulent times, when business owners lean heavily on HR professionals for support with health and safety, employee relations, or legal compliance. The COVID-19 pandemic and the 2022 recession have triggered an increased need for HR risk management. Layoffs, total compensation package redesign, injury and illness prevention plans, and remote workforce management are just a few of the heavy HR lifts from 2022.
Relationship Between Job Dissatisfaction and HR’s Mental Health
Job dissatisfaction correlates with HR professionals’ mental health. We asked our survey respondents how much better or worse their job satisfaction is this year over last year. Of those who reported their job satisfaction being much worse, 43 percent reported that their mental health has also gotten much worse.
Due to the weight of these findings, we at GoCo felt it was important to seek out specific causes and solutions to the problem of poor HR job satisfaction and related mental health decline.
Causes of HR Dissatisfaction
So is it the economy that is causing HR respondents’ job dissatisfaction? The recession? The talent shortage? It’s actually none of these major issues. In fact, the main drivers of HR dissatisfaction have nothing to do with their actual job responsibilities.
We found that HR professionals’ job satisfaction is most directly impacted by how valued they are by employees and leaders in their organizations. The less confidence employees and leadership have in the HR team, the more likely HR professionals are to be dissatisfied with their careers.
Here is the breakdown of the HR respondents who stated that their job satisfaction has gotten much worse or worse than last year:
38.25 % stated that leadership was less likely or much less likely to give them a seat at the leadership table.
10.07 % said that employees at their company believe that HR doesn’t care at all about culture and employee experience.
37.58% responded that leadership is less likely or much less likely to trust the HR team to make its own strategic decisions.
What Makes Human Resources Workers Feel Valued?
To gain additional insights, we asked an additional group of 265 HR professionals what makes them feel the most valued by company leadership and employees.
Valued by Leadership
We found that HR professionals are most likely to feel valued by leadership when leadership includes them in important decisions about the health and direction of the business. HR respondents also largely agreed that they felt most valued when leadership trusted them with more strategic-level responsibilities.
Since having leadership’s trust is so critical to the HR team feeling valued, we posed the following question to 497 executives: Has an HR professional who reported to you ever lost your trust or confidence?
53% of the participating executives said, “Yes”. So more than half of those company leaders surveyed had lost trust or confidence in an HR professional who reported directly to them.
It’s worth noting that the majority of the 263 executives who stated that they had lost trust in an HR professional also acknowledged that a career in HR is harder than it used to be.
Executives - HR careers are harder than they used to be
The perception that HR is harder than in past years could possibly be related to reasons the respondents gave for losing trust in HR.
Most executive leader respondents stated that they lost trust in an HR team member because that person made mistakes that forced the executive to question their competence.
Another main reason executives reported for their HR subordinates losing their trust was that the HR professional had the wrong communication style or personality for the role. This is not surprising given the wide range of technical and interpersonal skills a given HR professional is expected to wield.
We asked the same group of executives if there was anything that the HR professional who reported to them could have done to regain their trust. 64% said, “Yes”, and provided us with specific details on what the HR team member could have done to redeem themselves.
The most frequently mentioned ways that HR team members could regain lost trust included:
Taking responsibility/Admitting they made a mistake /Apologizing
Talking to the executive directly/Having better communication/Being honest about the situation
Changing the poor behavior/Stop making the mistakes
Being more polite/Behaving more professionally
noteworthy responses included:
Continuing their education to fill knowledge gaps/Getting certifications
Correcting their mistakes
Following directions/Paying attention/Listening better
Having better professional boundaries/Not getting too personal with employees
Our takeaway from these responses is that HR professionals can improve their own standing with leadership. HR professionals who report to executives should prioritize positive relationships with their supervisors, own their mistakes, correct their mistakes (if possible) and show that they will avoid those mistakes in the future. Human Resources workers should also accept feedback, listen and invest in continuing education. Based on the apparent connection between leadership valuing Human Resources and HR professionals’ mental health, these simple, healthy work habits may significantly improve Human Resources workers’ mental health.
Valued by Employees
The 265 HR workers we surveyed also provided insight into what was most likely to make them feel valued by their company’s employees.
The results for employees making HR feel valued are very similar to the results for the leadership team making HR feel valued. The top two things that make HR team members feel valued are:
Employees trusting HR to resolve their serious concerns, questions or complaints.
Employees letting the leadership team know that they think HR is doing a great job.
These surveyed HR professionals also mostly believe that a career in HR is harder than it used to be.
Here are the main takeaways from our research to keep in mind for 2023:
General Business Insights
If you want to retain your lowest-wage workers in 2023, you’re going to have to pay them more.
Automation of lower-skill tasks and outsourcing of expert-level support may continue to trend upward in 2023.
IT and software workers who remain in the industry won’t settle for anything less than flexible work arrangements, excellent total compensation packages, and great work culture.
Customer service representatives need better training to meet the business challenges of 2023.
Human Resources Job Insights
Most company executives and HR workers believe that a career in Human Resources is harder than it has been in past years.
When leadership stops trusting HR or stops including them at the leadership table, mental health and job satisfaction fall.
Human Resources team members can primarily repair broken relationships with the executives they report to by owning their mistakes and working to resolve them.
If your company wants to retain top HR talent, they need to make People Operations a highly visible priority and include HR professionals in important people-related business decisions.