The era of skills, innovations, and strong leaders – Deloitte named HR trends 2023

As part of the annual 2023 Deloitte Global Human Capital Trend survey, Deloitte Ukraine has released data on the Ukrainian domestic labor market. More than 10,000 business and HR leaders from 105 countries have been surveyed, which made Ukraine eighth in the world by the number of responses. 

Social, economic, and political turbulences are still affecting the labor market: lack of talent, high employee turnover, emotional tension, and deteriorated employee well-being are becoming more noticeable. Russia’s full-scale invasion of Ukraine has contributed to the severe difficulties existing in the Ukrainian labor market and presented new challenges, including increased unemployment, labor outflows, and regional disparities caused by displacement of people to safer regions.

Rapid and massive changes force organizations to review their traditional work models to ensure more flexibility and adaptability that have become crucial in fostering the development. Companies need a strong leader able to build resilient teams ready to cope with new challenges. There is a growing focus on people-related risks and the need in technologies to connect and empower teams.

Navigating the end of jobs

Since the beginning of the industrial age, the job has been the defining structure for organizing and managing every aspect of work. That approach made sense when business changes occurred slowly, and workers were just pieces in the industrial machine. Today, with rapid and massive changes, skills replace jobs as the focal point for matching workers with work. The majority of respondents—95% in Ukraine and 93% worldwide—say moving away from a focus on jobs is an important or very important driver of success for their organizations.  At the same time, 57% of respondents in Ukraine and 36% worldwide admit that they already identify roles and responsibilities based on the work that needs to be done rather than standard set of job duties.

According to the Deloitte survey, 62% of world’s companies and 49% of Ukrainian companies can effectively foresee the skills they will need within the next two years.

“In Ukraine, the trend towards moving from jobs can already be seen in recruiting of certain companies. To illustrate, some food producers and agricultural companies stress that they care more about an employee’s skills than his or her professional journey. Banks also adopt flexible approaches to work, engaging specialists from different business lines to jointly work on specific tasks. Deloitte and other professional services firms commonly implement knowledge sharing platforms for their employees to find necessary expertise within the organization, both in local and global markets. In the IT industry, employees have long been recruited and trained to fit specific tasks, whereas the situation is much more conservative in the public sector. However, I am convinced that building an organization based on employee skills will assume greater importance after the war is over. The companies will be required to quickly retrain existing employees and adapt work processes to new realities,” assures Iakiv Akulov, Head of Human Capital Advisory Services at Deloitte’s Ukraine.

Powering human impact with technology

With a rapid transition to remote work over the past few years, online meetings have become common in the work process. In Ukraine and around the world, HR leaders state that they use technologies primarily to organize interaction between team members, with their second largest application being the improvement of individual employee productivity.

However, Ukrainian professionals and their colleagues from other countries take slightly different views of how technologies will be used in the next 2–4 years. Foreign experts tend to see the modern technologies rather as a tool for developing employees and predicting their needs, while in Ukraine this does not appear even among Top-5 priorities. 51% of domestic business leaders expect the technologies to be used in the first place to help employees stay connected inside their teams and outside the organization within broader workforce ecosystem, thus ensuring elevated outcomes. It is about creating a single platform to bring together different types of professionals — freelancers, full-timers, contractors, etc. Employers will be able to view detailed information on all specialists potentially suitable for work that needs to be done, including their skills, experience, and history of cooperation with the company.

“Technology makes work better for humans and humans better at work. Innovations will not replace people but will augment and empower them instead. For example, today some Ukrainian agricultural companies are actively using artificial intelligence in production processes. It enables data-driven decision-making, which results in an increased employee productivity. According to our Global Human Capital Trends, artificial intelligence and machine learning will contribute to an increase in labor productivity by 37% by 2025,” added Iakiv Akulov.

Activating the future of workplace

Advancements in technologies are challenging our perception of the workplace as a physical space. 84% of respondents in Ukraine and 87% worldwide believe that developing the right workplace model is important or very important to their organization’s success. Therefore, organizations should defy traditional constraints and develop a physical, digital, or hybrid environment that meets employees’ different needs and desires. Organizations should do their best to align (or at least balance) their needs and desires with the needs and desires of their entire workforce.

According to respondents, key attributes in creating the future workplace are corporate culture (44% of respondents in Ukraine, 37% worldwide) and strong leadership (38% of respondents in Ukraine and 37% worldwide).

“In any organization, the leaders’ role is crucial in framing approaches to work, and it is them who drive changes. Leaders need to rethink how they interact with their teams. At the same time, only 22% of respondents in Ukraine and 35% worldwide indicated that they are reviewing their leadership development programs with a view to create the workspace of the future,” noted Iakiv Akulov.

Another important factor is the option to work remotely and the possibility to choose when, how and where to work, depending on employees’ preferences and the needs of the company. Two-thirds of respondents from around the world (64%) say they have already considered (or would consider) looking for a new job if their employer wanted them back in the office full time. Additionally, remote work allows many Ukrainians who have become forced migrants due to the war to continue working for the same employers and relieves them from the necessity to more actively integrate into the economies of neighboring countries.

Elevating the focus on human risk

Human risks and their management are a new trend dictated by today’s reality.

85% of Ukrainian respondents and 81% worldwide recognize that it is important to consider and manage broader societal and environmental risks when making people-related decisions. In Ukraine, respondents’ chief worries relate to risks associated with political instability (80%) and migration (72%). At the same time, in other countries across the world, concerns are almost evenly distributed among various risks, without peaks (political instability — 32%, education and viability — 31%, economic inequality — 29%, etc.).

Education appears to be one of the key challenges both in Ukraine and globally; this risk is expected to increase over the next 2–4 years. The increased attention to education-related issues is caused by the gap between the student skill sets and modern workforce requirements.

“After the victory, the pivotal issue for the state will be how to return people to the country and how to prevent new waves of migration. In addition, the education remains a pressing problem as it does not sufficiently meet the needs of business. The job search is often tedious or ineffective for fresh graduates because they do not have the required skill set. On the other hand, onboarding and training of young specialists require from companies hefty investments. We need closer and more intensive cooperation between educational establishments, business, and state bodies to ensure Ukraine is able to meet its demand for qualified personnel,” said Iakiv Akulov.

Another challenge for companies, both in Ukraine and in the world, is heavy regulation of business activities by the state. The Ukrainian business community expects the impact of this risk to grow within 2–4 years. However, business is convinced that the labor market liberalization is needed to spur economic growth.

Cyber risks, which are a great concern for one fifth of respondents worldwide, appear to be of little importance to the Ukrainians. However, Ukraine should treat this issue as a priority, especially given the attacks of previous years, as well as wartime cyber threats.

“Multiple people-related challenges stem from the times even before the full-scale invasion. The current situation does not allow organizations to operate only responding to these risks. To ensure business continuity, organizations must anticipate all potential impact factors and plan actions to avoid or mitigate them. This work requires special attention and accountability at the level of top management, and the involvement of employees across the organization in the analysis and monitoring of possible risks affecting people,” said Iakiv Akulov.

Leading in a boundaryless world

Today, business realizes the inevitability of changes and the need for new approaches. The evolution of the working environment requires that leaders evolve in tandem with their employees. 97% of respondents in Ukraine and 94% worldwide believe that managers’ leadership capabilities and effectiveness are important or very important to their organization’s success, representing the highest importance score across all trends.

At the same time, 76% of respondents in Ukraine and 72% worldwide believe that their organization’s leaders currently have the capabilities necessary for effective management. The fact is that managers are struggling to identify what to prioritize because they are overwhelmed by the number and frequency of disruptive shifts occurring.

“The qualities needed for leaders are determined by the conditions affecting their work. In Ukraine, these are dictated by the breakneck speed of changes. In such circumstances, a leader should pay primary attention to seeking new solutions and creating resilient teams. In addition, people’s well-being has also become a serious issue at the moment, with the next step being the creation of an inclusive environment for the reintegration of people who have gone through the war. Considering the above, successful leaders should be, before anything else, ready for experiments, flexible, responsible for decisions made under uncertainty, empathic, and demonstrate genuine care for the people they lead, ensuring inclusiveness to unleash worker potential. To be highly effective, a leader also needs such important technical skills as understanding of technologies and their application, data-based decision-making, and risk management,” commented Iakiv Akulov.

For reference:
Deloitte Global Human Capital Trends is an annual survey conducted by Deloitte to explore human capital trends and understand the challenges companies face in this field. The survey is an important source of information for managers and leaders seeking to understand the most relevant trends and challenges in the labor market.

This year’s survey polled 10,000 business and HR leaders from different countries of the world, including the USA, and such regions as Europe, Asia and Africa. The survey involved leaders of organizations of different sizes and operating in different industries to ensure a true picture of the industry.

The Deloitte Global Human Capital Trends survey focuses on various HR aspects, including talent management, training and development, organizational culture, digital transformation, and the dependance of organizational performance on human resource management.

The results of the survey are included in the report that contains conclusions and recommendations on how companies can adapt to changes in human capital and ensure their effective operation.

The insights gathered for this report leverage Deloitte’s scenario planning methodology and are fueled by research findings from a combination of social media polling, live survey polling, AI-enabled focus groups, and interviews with business and HR executives across industries.

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With its global network and 25 years of experience in Ukraine, Deloitte brings world-class capabilities to its clients. Our services support clients by providing high-quality comprehensive integrated solutions for their economic activities in various sectors of the economy. Deloitte has firmly supported Ukraine from the first days of the war and has suspended all business operations from Russia and Belarus. Please see https://www2.deloitte.com/ua/en.html to learn more.