For HR teams and the workforces they manage, 2023 may have felt like a level from Super Mario Bros.—a winding path full of gaps and obstacles to navigate before reaching the goal at the end.

The macroeconomic environment, for instance, brought mass layoffs and persistent but stabilizing inflation, creating uncertainty. Meanwhile, compliance with state, federal, and local regulations grew more complex due to new pay transparency requirements, enhanced protections for pregnant and nursing employees, and a resurgence of labor movements. Generative AI disrupted jobs of all sizes and types.

Yet the year also saw positive developments. For example, the talent market shifted in favor of employers, opening doors for companies to secure the talent they need. "We went through that extremely tight job market in 2022, and now we're receiving more job applications than we have in the past three to five years," said Wes Burke, Chief Human Resources Officer at Care.com.

Heading into 2024, HR professionals must manage an expanding scope of responsibilities within their organizations. The following trends represent some of the significant short- and long-term challenges the industry faces, based on sources who spoke with HR Dive.

Trend 1: Return-to-office policy disputes intensify

Despite the lingering effects of the pandemic, permanent remote work appears difficult to sustain for most organizations. In August, a Resume Builder survey of business decision-makers found that 90% of companies plan to implement return-to-office (RTO) policies by the end of 2024.

Whether employers mandate on-site attendance or maintain hybrid options, conflicts over return-to-office policies reflect strained employment relationships, noted Mark Whittle, Vice President in Gartner's HR practice. Data Gartner shared with HR Dive via email showed that in a late-2022 survey, 75% of HR leaders had on-site attendance requirements. But another survey that year showed nearly half of employees believed commuting costs outweighed benefits.

Hybrid work may become HR's default response to this tension, but Whittle cautioned against viewing it as a cure-all for return-to-office issues. "Although most organizations see hybrid as the future, this model is not yet settled," he said. "Thinking we can solve this in months or years is overly naive."

Executives interviewed by HR Dive detailed their organizations' experiments with attendance requirements and flexibility. Synchrony, a financial services company with a large hourly workforce, allows these employees to set their own work hours to accommodate childcare and other needs, said Aaron Brown, Senior Vice President and Head of Total Rewards.

Return-to-office policies can raise cultural issues HR may not have previously considered. Since Care.com implemented its RTO policy in May, Burke has noticed employees feeling anxious about certain office norms, even simple things like where to have lunch. The company's HR team has co-hosted events to make the office more attractive while maintaining a long-term hybrid model.

"Our focus is on hosting events that draw as many employees as possible," Burke said. "HR can be involved, but we also need to democratize the events."

Trend 2: AI has arrived, but questions remain

In 2023, chatbots took the world by storm, and AI has already left its mark on HR. In the new year, AI will become even more integrated into organizational processes with measurable impacts on productivity, Paulo Pisano, Chief People Officer at Booking.com, told HR Dive via email.

"In 2024, discussions about productivity—at individual, team, and business levels—will surface for HR leaders," he said. "As we focus more on this, I foresee AI, including generative AI, coming into view and accelerating that conversation."

For HR, the technology can help analyze large volumes of employee feedback and provide better answers to employee questions about benefits, leave, and compensation, Brown said. But employers need to take precautions to ensure data security. To that end, Synchrony has a responsible AI working group, including representatives from the company's HR and IT teams, studying how to implement AI with human oversight, Brown added.

Whittle noted that while HR teams are becoming more aware of AI and trying to master the technology, the average HR professional may need to rely on vendors to guide adoption.

"Gartner believes many HR functions will gain AI capabilities from existing vendors," he continued. "Your vendors are developing AI; they're working day and night to enhance existing software with AI. You can relax—the work is underway, and you don't need to be an expert."

Trend 3: Declining manager engagement creates training challenges

Increased responsibilities and difficulties in 2023 led to declining manager engagement, and Gallup research shows this group may also feel the organization doesn't care about their well-being.

Gartner similarly found managers are generally overwhelmed by their expanded scope of duties, a situation Whittle compared to a "panini press," where managers are squeezed between senior leadership expectations and subordinate needs.

"This is a serious problem," Whittle said. "The issue is that managers are not doing well." HR can work to lighten managers' workloads and rebuild the manager pipeline, he added.

Leadership development is a top priority at Care.com, Burke noted, as he observed a lack of connection between managers and their reports, especially after the pandemic halted in-person work.

"We as leaders, myself included, lost some key skills during that time," Burke said. "The challenge is that the company became very faceless, and you feel somewhat disconnected."

Burke said the company is prioritizing retraining managers in areas like communication, aiming to improve downstream retention. "The reality is, when you work with someone who connects with you and supports you, you want to stay with that person."

Trend 4: Economic volatility drives focus on financial well-being

Entering the new year, employees still face a tough economic environment. In September, a Bank of America workplace benefits report found that about two-thirds of employees said the cost of living was rising faster than their income, while 42% rated their financial health as good or excellent—the lowest percentage the company has tracked in 13 years.

Employers may have stepped up efforts to address rising costs, but this focus is equally important in 2024. Brown said Synchrony was trying to address financial well-being even before the pandemic by offering on-site health coaching services. In the years since, the company has expanded coaching to employees' family members.

Trend 5: Mental health needs drive tailored strategies

Similar to the above, mental health remains a persistent workforce challenge. In an annual large-employer survey released in August, the Business Group on Health found that 77% of respondents reported an increase in mental health issues in 2023.

HR can better tailor organizational mental health strategies by deepening its understanding of specific employee group needs. Burke said Care.com adjusted its strategy to better serve first-time parents, a group that makes up a significant portion of the company's new hires. Specifically, Care.com strives to ensure parents transition smoothly back to work after leave.

"You return to work and want to pretend everyone did a great job covering your duties while you were away, but there's always something waiting for you," Burke said. "How do we plan better for that?"

Leadership training is part of the solution, as HR can educate managers about the anxieties employees may face and which benefits or programs can offer support, he said. Burke added that Care.com is pushing leaders to think beyond short-term fixes; "not just a one-time measure for six months, but considering where employees will be a year or two down the line."

When addressing well-being issues, HR should not be afraid to pilot new initiatives. "If you think a program might help employees, try it," Brown said. "Moving quickly is the right approach, so employees see you're supporting them and acting on the feedback you receive."