HR Trends 2023 - HRNZ Member Survey

Around 85% of respondents provided organisational and personal classification data. The overall sample profile is similar to last year, though with a shift from private to public sector representation. Over half (55%) are in the private sector (65% in 2022), and a third in the public sector (up from 23% in the previous year). The proportion of respondents in not-for-profits (NFPs) remained the same at around 12%. 

A range of industries are represented with the most numerous professional services (23%); education and health (16%); manufacturing (11%); and construction (6%). A third of organisations have a nationwide or multi-centre profile, with the remainder mostly in urban centres across the country and one in ten were rural based. 

Most organisations were medium sized, with 12% employing 50-99 people and 39% having 100-499 employees; 19% employed fewer than 50 people and 30% 500 or more. Relatedly, most HR teams were small, comprising a single person in one in five organisations and between two and five in a further 41%. 

Our respondents were mostly senior professionals, with 27% described as HR director or GMHR and 19% a HR business partner. Line managers comprised one in five of the sample, twice that of last year, with the remainder consisting of HR Advisers (16%), HR specialists (9%), HR consultants (8%), and HR administrators (3%). Reflecting the seniority of the sample, 44% of respondents were aged 50 or over compared to only 8% under 30. Four in five (82%) were female.

These questions relate to perceptions of the overall functioning of HR in the organisation, then more specifically evaluating the domains of knowledge and HR capabilities. This section finishes with an assessment of how well the organisation and the HR function are placed to address current challenges.  

Status and support

Respondents were asked to evaluate their HR function across four dimensions:
•    overall influence of the HR function on their executive team
•    the overall strength of HR leadership in the organisation
•    the overall wellbeing of the HR team 
•    the technology used to support the HR function. 
These were rated on a scale of 1-10, with 10 being the best response.

The mean score for HR leadership increased from 6.8 to 7.2 and the others remained basically the same. HR influence scored an average 7.2 (last year = 7.1) and HR technology again rated fairly low, with a mean of 4.9 (last year = 5.0). A third (31%) gave current provision a score of three or less.   

The measure of HR wellbeing was a new item this year. This looks positive on the whole, with a mean score of 6.8. Two in five (43%) of respondents reported a seven or eight and a further one in five were very positive, scoring nine or ten. However, 13% indicated concerns with a score less than five, and 8% gave a three or less indicating the deleterious demands placed on some HR professionals and teams. 

Most of these assessments differ according to organizational size and sector (table 1). Respondents in smaller organisations are significantly more positive about the HR contribution overall, which could reflect closer proximity to senior managers as well as employees, as well as higher wellbeing. Perhaps relatedly, the influence, leadership strength and wellbeing of HR is reported as lower in public sector organisations and higher in NFPs. Differences in views of technology are less pronounced, though respondents in larger organisations tend to be less satisfied, possibly reflecting higher complexity and needs.

Table 1. HR influence, leadership, wellbeing and technology (mean scores) by sector and size (Anova, p), 2023

Domains of knowledge

Respondents were also asked to rate their HR function across seventeen knowledge areas (table 2). Not surprisingly, some of the biggest areas where improvement was needed concerned technology and analytics. Other important areas such as diversity, equity and inclusion and workforce planning also emerged as concerns. Though the lowest score was infrequently used, respondents were more likely to rate their organisation as effective or capable rather than excellent across these domains. 

In contrast, respondents were much more confident about HR administration, which also showed significant improvement over the past year with those rating their function as excellent rising from a third to a half. Improvements are also noted in the areas of attraction, recruitment and selection as well as employee engagement. More problematic was industrial relations, perhaps a product of the pace of change in this area but also the increasing public sector presence in the sample. Those rating their HR function as excellent fell from nearly a third to one in five, and those who saw performance as limited or in need of improvement doubled from one in ten to one in five. Otherwise, results were generally consistent over time.

Table 2. HR performance across the domains of knowledge (%).

Comments explained that small firms face greater challenges in resourcing the HR function, including through HRIS. However even in larger businesses there is a need for development in analytics and data science to support workforce planning and decision making.  Staff learning and development is also rapidly emerging as a priority area given skills shortages and recruitment and retention pressures. This in turn requires better people management skills from line managers to help identify and support employee needs.

Effective change management skills are also seen as a priority in the current workplace context, as is cultural competency to deliver a relevant EVP. Developing a better employee experience and engagement is essential to tackling labour turnover and enhancing recruitment and selection. More fundamentally, it involves building a more positive workplace culture which will itself address issues around performance, attendance and turnover. Linked to this is a need to train managers to ensure more consistent delivery of HR initiatives around employee development and performance management.

HR capabilities

Such comments were echoed when considering what HR capabilities are most needed going forward. Results were remarkably consistent over the two surveys, and influence skills were seen as especially important (table 3). In support of this, commercial judgment was viewed as crucial to identifying relevant solutions and convincing operational leaders in a tough environment. Innovative solutions are increasingly important given the need to address costs and workforce needs and expectations simultaneously. In a cost-of-living crisis, but with constraints on remuneration, these include issues such as flexible working, role redesign and developing the people skills of managers. 

Table 3. HR capabilities – Importance in the year ahead (%)

Respondents highlighted the multiple demands on HR, juggling cost pressures with employee expectations around pay, flexible work and wellbeing; organisational change whether due to growth, redundancies or mergers and takeovers; and increasing workforce diversity. Comments also noted that some issues were context specific. For example, the need to better address biculturalism was seen as much more immediate in organisations with a higher proportion of Māori employees. 

Responding to challenges

The challenges for HR in the current environment were highlighted in response to questions looking ahead at capacity in 2024 (table 4). Confidence was highest around current HR skills though most respondents reserved judgement around HR capacity, especially in smaller organisations, as well as workforce skills.

Table 4. Looking ahead to the challenges of 2023/2024 (%)

Comments indicated that some of the biggest challenges remained around recruitment and retention. The tight labour market, employee turnover and staffing shortages – including in HR - increase pressures from a resourcing, wellbeing and cost perspective. The need to retain skilled and high performers is acute, and this includes attention to workloads and potential burnout. Management capability in terms of supporting staff is also vital in this context. As noted above, at the same time budget constraints limit what many employers can do by way of remuneration solutions at a time when the rising cost of living was increasing pay expectations and contributing to skills shortages and labour churn. 

This year, issues around the leadership ability of frontline managers were also to the fore. Some respondents commented that this was because people had been appointed into roles who weren’t entirely suitable owing to recruitment and retention problems. Longer term too, the changing workforce - it’s increasing diversity and expectations around work-life balance – meant that leaders required greater sensitivity and maturity in people management and their delivery of HR.

Professional accreditation demonstrates standards and achievements within and beyond professional boundaries and can be an important development tool. Two questions were asked in relation to this. The first was how important respondents thought professional accreditation such as Chartered Membership was for the HR profession in NZ. This was ranked on a scale from zero to ten as ‘extremely important’. Opinion was mixed, with a mean score of 5.6, the same as in 2022. However slightly more now think it is very important. In both years, 29% of respondents ranked it 4 or less, and in 2022 38% gave a five or six and 33% a score of seven or above. These were reversed in 2023, with 33% a five or six and 38% now scoring seven or above.

The second question asked how likely is it that you or members of your team will apply for HRNZ professional accreditation in the next year, from zero to 100 as very likely. The mean score in 2022 was 46.1, with 48% giving a score of 40 or less and 37% a score of 60 or more. In 2023 the mean dropped to 42.8 with 50% giving 40 or less and 32% 60 or more. This could be because more people are becoming accredited, though some respondents indicated they already had international accreditation or were not in a position to demonstrate knowledge of Te Ao Māori as a core capability.