The State of HR in 2023

The role of the HR team is only getting more and more complex. As work has shifted on its axis over the last few years, HR and People teams have been on the frontlines of managing this shift — both for the organisation, and for their people.

They’ve had to navigate company-wide layoffs and budget cuts while seeing cuts to their own teams, be nimble at a moment’s notice as hiring freezes destabilise growth plans — and manage entire workforces and their data from afar in the wake of remote working.

But while HR is central to navigating these current — and future — challenges affecting the global workforce and economy, few have delved into exactly how these shifts are impacting the people behind the role.

We wanted to find out how HR teams are responding to the current uncertain context, and if they’re feeling equipped for what’s coming next. We surveyed over 1,000 HR professionals from organisations at different maturity levels across the globe to find out how they felt about the state of their role, team, tooling, and how they feel the recent economic downturn will impact their function in the future.

We found out that HR teams globally are feeling understaffed, under-resourced, and unsure what the future holds. But within the uncertainty, there’s still cause for optimism: HR teams are ready for change — and they’re ready to invest in building new infrastructure that will better support their role and their organisation.

Read on to find out more.

1. The role of HR in 2023

HR teams are feeling understaffed, and uncertain about the future.

Over 50% of HR professionals think their role is more complex as a result of economic uncertainty.

The current macroeconomic context has caused many organisations to rethink their plans over the last few years, so it comes as little surprise that it’s causing downstream issues across the HR function as a whole.

When we surveyed HR professionals on how their role is shaping up in the current circumstances, 54% of respondents felt their role had grown more complex as a result. Only a quarter (24%) responded that their job had become less complex as a result of economic instability.

"Organisations now see the People function as a more strategic one that encompasses a more holistic view of the entire employee experience. People and HR leaders are thinking at a foundational level about how they’re working, and the processes and systems they need to put in place to develop their function in the future. There will always be that pull to hire the best people, but now, People teams are shifting their focus towards thinking about organisational development and how they can elevate the people experience, too."

Lauren Isabella Valenzi – Chief of Staff at Pento

Almost 60% of HR teams have reduced in size… And they want more hands on deck.

58% of HR teams said their team has reduced in size over the last 18 months, with 81% of respondents losing 10% of their team or more. The majority of respondents (39%) lost between 10% and 25% of their team in total.

And whether they’ve lost colleagues or not, all HR teams are starting to feel the pressure, with 60% of HR teams saying that their team feels understaffed to meet current organisational demands.

Macroeconomic uncertainty means HR teams are feeling guarded about the future.

When it comes to what’s next, the majority of our survey respondents are feeling more than a little uncertain about what the crystal ball holds for the second half of 2023.

45% of respondents believe that cost-cutting measures including layoffs, hiring freezes, and budget cuts will continue until the end of the year, while a further 27% remained unsure.

2. Attitudes to HR tech in 2023

HR teams are willing to invest in a tech stack that better fits their organisation’s evolving People needs.

76% of HR teams plan to invest in HR tech in 2023.

Despite the economic uncertainty, our survey respondents actually plan to invest more in their HR tech in 2023, not less — suggesting that teams see getting the right technology in place as essential to navigating their People challenges during uncertain times.

45% of respondents plan to invest in HR tech during 2023 — while a further 31% indicated that it’s on the agenda, but they’re holding off for now due to the current economic climate.

“When we build our People tech stack with the goal of scaling more efficient processes, we can eliminate all of these tiny points of friction that impact the employee experience. Your tech stack shouldn’t feel like a burden for anyone.”

Lauren Isabella Valenzi – Chief of Staff at Pento

63% of HR professionals say current HR tech solutions aren’t keeping up with the pace of change.

This strong appetite for investing in additional investment in HR tooling could be down to huge shifts in the way we work. Remote and hybrid working now mean organisations need better tools and platforms just to stay in touch, recruit employees, and manage the complexities of an increasingly distributed workforce.

But according to our results, these additional needs just aren’t being met. 63% of survey respondents said that their tooling hasn’t kept in step with the changing face of work, with 34% saying their tools could be doing much more.

When compared with other functions like Sales and Marketing, only 45% of respondents in HR said their tools were better. That leaves over half who were unsure, or said their tools were noticeably worse.

“Revenue, marketing, and engineering functions all use best-in-class product stacks to accomplish their goals, but HR has always been seen as a single function — so tools tend to cram a lot of features into one platform. But People and Talent is about four different functions wedged into one, and we need a tech stack that reflects that reality.”

Thomas Forstner – Director of People and Talent at Juro

60% of HR professionals have concerns about their HR tech stack’s data security.

So what’s missing from current HR tooling that isn’t helping HR teams stay in step with the changing world of work?

55% of HR respondents believe that the right tech is essential to increasing operational efficiency, but security is a huge concern as teams increasingly go global. A huge 60% say their current HR tech stack’s data security isn’t up to scratch, with 30% citing severe concerns.

With data security of paramount importance, organisations that fail to protect their People data with their HR tooling are leaving themselves open to a whole host of potential ethics and compliance issues.

HR people believe that integrating HR platforms can make them more efficient… But 50% aren’t achieving it successfully.

With HR teams increasingly turning away from the all-in-one core HR model in favour of a custom-built tech stack, we got curious: Do HR teams see product integration as the way forward for their tech?

56% said yes — and believe it can help them save time and budget, leading to greater operational efficiency. 50% also agreed that the right set of tools has the potential to drive greater value for their organisation.

But according to our results, teams will struggle to drive value and efficiency from their tools if they don’t select the right core HR system. 50% of respondents said that their current core HR system either doesn’t integrate with their other HR tools, or that they weren’t sure if it did or not. This suggests that while teams are aware of the value of creating a more efficient, integrated HR tech infrastructure, inflexible tooling and unclear routes to integrate data across different systems is causing them to struggle.

“Our philosophy to HR tech solutions in general is that we believe our tools should play their part — and do it well. But it feels like a lot of HR tooling on the market has rigid processes and systems you’re expected to fit into as an organisation.

“For me, I think the HRIS should do one thing: It’s a single source of truth. It needs to become that connective layer to all the other tools you’re using.”

Jessie Danyi – Senior People Leader at Pleo

A core HR platform that prepares your organisation for the future

From our results, it’s clear that economic instability will continue to have a stranglehold on HR and People teams globally. In the near-term, most HR professionals believe this will have a strong impact on their overall budget, team capacity, and tooling — leading to downstream inefficiencies at a team level.

And with 81% of our respondents losing over 10% of their total team, the economic context, combined with remote working and changing employee expectations of the workplace, are very likely to squeeze team capacity even further.

But there are reasons for optimism, too. 76% of HR teams plan to invest in tech to help them navigate the coming challenges, with over 60% acknowledging a need for new solutions that match the current pace of change, increase efficiency, and keep HR data connected and secure across the organisation. 50% of respondents were convinced that the right core HR system could enable them to reach those goals.

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About Humaans

Humaans helps globally scaling organizations transform their HR processes with a human-centric approach. Humaans offers flexibility and scalability to efficiently customize organizations' HR tech stack, seamlessly integrates with other best in class platforms and point solutions, such as Google Workplace, Slack, Okta, Greenhouse, Lattice, DocuSign and more. Humaans also reduces ongoing administrative work by 65% and onboarding time by an average of 55%.

Organizations are becoming frustrated with ‘one size fits all’ software platforms and poorly integrated HR stacks that slow down processes, exposing them to compliance risk. Humaans addresses this by enabling them to create a customizable HR stack. The stack enables companies to manage employee data, documents contracts, reporting, and people processes that power your entire HR structure.

Humaans has raised $20 million in VC funding to date. Investors include major Tech players such as Lachy Groom; Slack founder Stewart Butterfield; Shopify founder Tobias Lütke; Figma Founder Dylan Field; Linkedin ex-CEO Jeff Weiner; Stripe COO Claire Johnson; Y Combinator; Moonfire; Frontline Ventures; Exor and more.