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Q4 Report

2023 Employee Engagement Trends & Forecasts

Using the collective experience and expertise of Inspirus thought leaders and subject matter experts, this report dives into what we see trending for the fourth quarter of 2023, and our vision of how these trends will impact the future of our industry and our clients’ programs.

These trends and forecasts cover current business critical topics that HR professionals need to know:
  • Making space for AI in HR Tech
  • Leveraging benefits for recruiting & retaining talent
  • Rebuilding employee trust through employee engagement strategies
  • Supporting employee wellness during turbulent times
  • Fostering connection in the hybrid workforce
  • Upskilling employees for retention & skills gaps

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2023 Employee Engagement Trends & Forecasts: Q4

Thank you for choosing to read Inspirus’ Q4 2023 Inspirus Trends & Forecasts Report. This is the fourth installment of our new, shorter report format and we’re thrilled by the feedback we’ve received each quarter. For our new readers: our Trends Reports draw upon the collective wisdom and thought leadership of subject matter experts here at Inspirus. In this report, we’ll share what we see as trending now and our predictions for how these trends will shape the future. As I mentioned in the Q3 report, Inspirus is part of Pluxee, the leading global partner in employee benefits and engagement, which is owned by the multinational Sodexo Group. This means we’re able to use the collective support and learnings of employee engagement leaders in 31 countries to better support 1) U.S. organizations facing dynamic changes in the workplace and 2) employees who have increasing expectations of well-being and fulfillment.
What’s new for Q4? Fears of a recession have mostly waned, thanks to a variety of factors including economic growth that defied earlier predictions. Yet, Economists warn that recession could still be on the horizon for late this year or early in 2024. So, what do business leaders do when an economic crisis is averted but may simply be delayed? Many will continue to operate as though a sharp downturn could happen any day now. Business leaders may feel persistent pressure to control costs, boost ROI, and improve efficiency—all of which have been high priorities throughout this year. Continuing to leverage creative solutions for talent attraction and candidate engagement, alongside efforts to improve employee engagement, will help businesses in all industries meet these goals and, hopefully, weather whatever economic challenges lie ahead. 
Among the hottest topics in Q4 is artificial intelligence. From AI-powered tools used in candidate screening to emerging use cases for generative AI in various HR functions, it’s crucial for leaders to understand the opportunities, benefits, challenges and risks this emerging technology presents. We’re seeing a lot of confusion and mixed emotions around the future growth and implications of using AI in the HR space — and it makes sense. AI represents change and, because it’s still relatively new, there are a lot of unknowns. That’s why we urge leaders to learn as much as they can and proceed confidently, but with caution. In our chapter on AI, we’ll offer insights to help you navigate this new territory.
Employee engagement — and specifically the relationship of low engagement to ongoing retention challenges — is another area receiving a lot of attention as we move toward the end of the year. We see two key efforts taking place to positively impact employee engagement: (1) leveraging employee benefits as a strategic driver of talent attraction, employee engagement, and retention and (2) investing in practices to rebuild employee trust. Together, these two areas can help save organizations from toxic work culture and low morale, helping to reduce the negative impacts and costs associated with high turnover. We share our observations on the most effective strategies for strategic benefit offerings and building a culture of trust in chapters two and three, respectively.
This is just a small taste of what we’ve found. There is much more to chew on in the following pages. I hope you find this report holds value for you and your organization, and assists you in making informed decisions that help you achieve your employee engagement goals and give your organization a competitive advantage as we close out the year.
Yours in success,
Tatiana Frierson
Chief Executive Officer
Inspirus | A Pluxee company

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Future of HR Tech: Making Space for AI

In our Q3 trends report, we explored the transformative power of artificial intelligence (AI) in revolutionizing business operations. Since then, AI has continued to gain significant traction, transforming HR’s routine tasks and elevating the overall employee journey. A study by Gartner reveals that an impressive 81% of HR leaders are either exploring or have already implemented AI solutions to boost their organizational efficiency.

The integration of AI-driven tools into HR processes is not just a trend; it's a paradigm shift. Organizations are witnessing tangible benefits, from streamlined recruitment to tailored employee training and forward-thinking talent management analytics. In fact, The Conference Board CHRO Confidence Index indicates that 65% of Chief Human Resource Officers (CHROs) believe AI will positively transform HR in the upcoming years. Yet, the AI landscape isn't devoid of challenges. While it promises unparalleled efficiency and deep insights, it also brings forth challenges related to regulations, potential biases in automated decisions, and other concerns.

Benefits of AI in HR

We’ve observed many ways AI tools can help HR teams with a wide variety of initiatives and goals. AI can help alleviate the burden of administrative work, speed up processes, and free up HR teams to do what humans do better than computers: build meaningful connections and create innovative solutions.

The key advantages of adopting AI in HR include:

Optimizing recruiting through automation: In addition to removing burdens for the humans on HR teams, AI tools can speed up the recruiting process, which can lead to better hiring outcomes. AI tools can help prescreen candidates, AI-powered chatbots can help candidates get answers to pressing questions 24/7, and AI can provide better (and faster) job matching based on candidate profiles. All of these pieces help reduce time to hire, which means a better candidate experience and higher likelihood of attracting and engaging with top talent.

Creating a better onboarding experience: A mind-boggling 80% of newly hired employees who report experiencing poor onboarding also report planning to quit, according to Paychex. AI can help improve onboarding by automating communications, tracking employees’ progress, and delivering learning materials. Streamlining the onboarding process with AI also means HR teams don’t have to be overwhelmed with administrative tasks and, instead, are free to answer employees’ questions and build meaningful relationships.

Personalizing the employee experience: We’ve noticed that AI tools can be especially beneficial with employee engagement goals, particularly when used to tailor training and development opportunities and assess employees’ strengths for job matching and mentoring programs. AI-based virtual assistant tools can also improve the day-to-day experience by automating tasks and improving efficiency, thereby reducing stress. A number of recent studies have found that organizations with happy employees see a 12% boost in productivity so there’s a clear ROI for reducing everyday frustrations — and AI tools help address that on an individual level.

Challenges of AI in HR

For some in the industry, AI is perceived as a disruption. Because the rise in popularity of AI tools represents a change, it is by definition a disruption but that doesn’t mean it’s entirely negative. It’s important to identify the challenges HR and organizations are experiencing with AI and to respond with appropriate solutions and strategies for navigating the adoption of these new technologies.

Many of the challenges around using AI in HR relate to compliance—a moving target in many places, as new regulations take effect or have not yet been implemented. HR leaders, as always, are charged with the task of monitoring new and upcoming legal requirements around using AI in HR processes, and then adjusting operations as needed. Currently, there are two main areas of focus concerning AI compliance:

Bias in recruiting: New York City, for example, recently approved legislation that requires HR departments to audit technology systems, including AI tools, for bias—and publish the outcomes. NYC’s AI bias law is the first of its kind and employers can expect to see similar legislation popping up in other major cities over the next few years. And because it’s common knowledge that AI tools can learn bias from humans, based mostly on data models, we feel it’s highly likely that auditing AI systems for bias will become standard practice for HR.

Accessibility requirements: Another challenge for HR involves ensuring new AI tools meet the requirements of the American with Disabilities Act. In July, the EEOC updated its guidance on how the ADA applies to people with visual disabilities, who may be unable to perform AI-powered tests used in hiring and employment. This means employers are required to offer reasonable accommodations for any decision-making tools that use an algorithm or AI—including prescreening questionnaires, skills assessments, and the like.

AI skillets: A third key challenge of AI in HR is somewhat easier to address. Many employees throughout organizations lack the necessary skills and knowledge to effectively use AI tools, which some business leaders worry could interfere with innovation and growth. Creating and executing skills training for existing employees and new hires can solve this problem, but not overnight. Upskilling employees to be productive in the era of AI can help open the door for new ideas and creative solutions, while offering the side effect of improving employee engagement and retention. One survey found that 76% of employees said that they were more likely to stay with an employer that offers continuous training—and in the same survey 86% of HR managers reported finding training beneficial for the retention of employees.

The integration of AI technology in HR processes has the potential to revolutionize the way organizations recruit, onboard, and engage their employees. With proper planning, implementation, and training, organizations can mitigate challenges and reap the benefits of this transformative technology.

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HR Leverages Strategic Benefits Offerings to Recruit and Retain Top Talent

Over the past few years, wage growth skyrocketed, and salaries became the main driver for attracting and retaining top talent. But recently, with economic challenges causing budgets to tighten, HR leaders have become increasingly more strategic when it comes to recruiting top talent and retaining high-performing employees. One effective way to do that is by leveraging the power of employee benefits and professional development opportunities.

Here a few ways we see HR using benefits and development opportunities to attract and retain top talent:

Pay transparency: Consistent pay transparency practices are helping organizations remain competitive in the talent market. While salary history bans and pay transparency requirements are still somewhat rare, the states and cities that have implemented them provide a forecast for the normalization of these practices, which are designed to help address wage gaps and empower people to negotiate appropriate compensation. Companies that adopt pay transparency practices — during hiring and throughout employment — are seen as proactive and forward-thinking, two qualities that younger workers find especially attractive. A pay gap survey by Beqom earlier this year found that younger generations of employees are more likely to discuss salary openly, compared with their older colleagues (73% of Millennials vs. 58% of Gen-Xers and 59% of Baby Boomers). And as Baby Boomers continue to leave the workforce, the proportion of younger workers will increase — meaning their attitudes about pay transparency will eventually constitute the majority of the active workforce.

Location flexibility: The hybrid workplace model has become the new normal but it’s still not quite the gold standard, which means offering flexibility gives employers a competitive advantage for hiring and retaining employees. The Bureau of Labor Statistics says only 27.5% of private-sector businesses reported that their employees worked from home or another remote location some or all of the time. Compare this to the 97% of survey respondents who told Buffer they would like to work remotely at least some of the time and it’s clear to see the opportunity. Offering location flexibility can help make an organization an employer of choice among job seekers as well as employees.

Expanded PTO: Organizations can — and do — offer unlimited PTO. It sounds expensive but the reality is that unlimited PTO doesn’t typically cost organizations anything extra and can in fact represent a cost savings if it replaces underutilized benefit offerings. Additionally, we’ve noticed employers are implementing company-wide weeklong breaks, a move that makes it easier for employees to unplug because nobody is sending emails or chatting on Slack. (This is especially common during the last week of the calendar year but many employers have adopted a mid-summer shutdown as well.) Mandatory paid wellness days are also becoming more prevalent as a way to encourage employees to rest and recharge before they reach peak burnout. All of these PTO offerings demonstrate the company’s investment in employee well-being.

Flexible benefits: Revamping employee benefits may mean swapping outdated offerings for modernized versions that appeal to a multi-generational workforce. Prioritizing employee-focused benefits, like flexible spending accounts that allow employees to choose how to spend their benefit dollars, is an effective way to serve a workforce with varied needs. After all, what a Generation Z employee needs can be vastly different from what a Generation Xer or a Boomer might look for. Personalized benefit options can also help retain employees — a challenge that could grow as younger people make up a higher proportion of the active workforce. Gallup reports that 54% of Gen Z employees report not feeling engaged at work, which is slightly higher than older generations. Offering flexible benefits can help by sending the message, “We see you and we value you.”

Inclusive benefits: As more members of Gen Z enter the workforce, inclusive benefits are becoming more highly sought after. Historically, employers have tended to offer one-size-fits-all benefits coverage that may not address everyone’s needs — especially younger employees without dependents. Now, it’s crucial to ensure that employee benefits serve everyone equitably, regardless of race, gender, sexual orientation, religion, background, work location or anything else. At minimum, this looks like broader medical benefits including comprehensive mental health care, domestic partner benefits, expanded parental leave, and access to gender-affirming care. Indeed has a helpful list of other inclusive benefits to consider.

Professional development opportunities: Offering learning opportunities is an often overlooked benefit for talent attraction as well as retention. Entice employees to join your organization or to not jump ship by providing opportunities for training and skill building, as well as coaching and mentorships. While it’s essential to offer learning opportunities that help employees fulfill their job duties — such as the AI training we suggest in Trend 1 — it’s important not to stop there. Offer optional training in soft skills and leadership so that employees can enhance their skills in alignment with their professional goals.

As the workforce continues to evolve, organizations that prioritize these benefits will position themselves as proactive and forward-thinking employers, thus attracting top talent and creating a more engaged and satisfied workforce.

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Rebuilding Employee Trust through Employee Engagement Strategies

Throughout 2023, employees have continued “quiet quitting” due to the negative impact of layoffs, lack of organizational support, and many other factors. Organizations are experiencing low morale and a high proportion of disengaged employees, which — if left unchecked — will contribute to ongoing retention struggles.

Deloitte research (reported in MIT’s Sloan Review) identifies employee trust as a key driver of engagement. Trusting employees are more motivated at work and less likely to quit. The challenge is that around a quarter of employees don’t trust their employer — and most leaders overestimate employee trust by a hefty margin (around 40%).

As HR teams prepare for 2024, they will need to be strategic about crafting a human-centric people strategy to drive business success. Moreover, leadership teams are relying on HR to help rebuild employees’ excitement in the workplace to improve productivity, profitability, and innovation – which HR teams can support by implementing well-designed employee engagement strategies.

Here are a few employee engagement strategies we see HR using to rebuild employees’ trust in their employer:

Collecting Real-Time Feedback: HR cannot address problems without first gaining awareness. It’s essential to get a real-time pulse of how employees are feeling, so HR can shape their strategy on the fly, especially with recent changes in the workforce like hybrid flexibility. Relying on annual or even quarterly employee feedback surveys is not enough. In order to effectively shape organizational culture and positively influence the employee experience, HR needs to gather insights that reflect what’s happening from day to day. With real-time feedback, leaders can respond quickly to trends and head off challenges before they are able to reach crisis level.

Recognizing and Rewarding Service Anniversaries and Milestones: Feeling underappreciated is a key reason for quiet quitting and it just might be the easiest aspect of employee engagement to improve. Foster employees’ feelings of belonging by implementing milestone and service anniversary rewards, which reinforce that the organization and leadership team values employees for their contributions and their presence. Building a culture of gratitude and recognition helps organizations retain top talent and attract job seekers.

Aligning Behavior with Company Values: Hold leadership accountable for reinforcing core values at the company. Some organizations even tie this type of accountability to leaders’ compensation — an effective way to drive desired behavior and show employees throughout the organization that your commitment to your values is real. What this looks like can vary widely from one company to the next. One example we’re seeing work for organizations today is a points-based digital employee recognition solution to highlight employees who uphold the company’s core values. Leaders and peers evaluate employees so it’s not just a top-down measure and, by collecting feedback from colleagues, it’s more likely to reflect actual day-to-day behavior rather than just one or two instances that gained wider attention.

It’s crucial that programs like this apply to all employees — managers included. Gallup surveys indicate that behind most instances of quiet quitting are complaints that trace back to managers. If managers feel disengaged, they’re unlikely to inspire engagement on their team. If managers are burned out, they may not have the mental or physical energy to invest in relationships. And if managers actively exhibit toxic behavior, they’re contributing to a toxic work culture and likely running off some top performers.  

Investing in Growth Opportunities: When employees don’t see clear opportunities for advancement within an organization, they may start thinking about looking elsewhere.

According to Qualtrics research, around three-quarters of employees say they have good opportunities to learn at work but only 61% say they clearly understand how to build their careers. This gap represents a long-term challenge to employee engagement.

Show employees you are invested in them by offering growth opportunities to help with retention and foster employees’ sense of purpose within the organization. In companies doing this well, this looks like skills training to address internal talent shortages and skills gaps with new technology, as well as long-term mentoring and coaching to help employees work toward advancement. Generally, employees also need more guidance around what to do to get to the next level, such as career road mapping, action plans to earn promotions, and concrete feedback if they are passed over. Simply offering a training or mentoring program is not enough. Leaders need to work proactively to cultivate the talent pipeline within the organization and HR can support this effort by educating and supporting leaders and holding them accountable.

Demonstrating and Promoting Transparency: Clear and consistent communication can help create a cultural foundation of trust. This works most effectively when it applies to all levels and forms of communication within the organization — from the way managers interact with their teams on a daily basis to how larger initiatives are communicated company-wide. It’s also important to consider vehicles of communication: one-on-one video meetings vs company-wide emails vs updates on your employee engagement platform. Choose the format and vehicle that is most appropriate to the content of your message, and your care will show in your actions. And speaking of action, it almost goes without saying that talk without action isn’t likely to spark trust and can, in fact, quickly degrade it. Be sure to share your timeline and action plan with employees whenever possible — and provide follow-ups along the way so nobody is left in the dark.

As organizations face ongoing challenges with turnover and disengagement, HR teams and organizations will need to prioritize implementing effective employee engagement strategies in 2024. By doing so, they can rebuild trust among employees and cultivate a motivated and committed workforce that fosters growth and sparks innovation.

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To See All 6 Trends Download the Full Report!

Trend #4

Supporting Employee Wellness During Turbulent Times

Trend #5

Fostering Connection in the “New Normal”: The Hybrid Workforce

Trend #6

Upskilling Employees to Solve for Skills Gaps and Improve Retention

Download the full report to read all of the Q4 employee engagement trends!