Despite a cooler labor market and improved hiring outlook, HR leaders’ expectations continue to decline around two key areas — retention and employee engagement — according to a Dec. 12 report from The Conference Board.
Overall, The Conference Board CHRO Confidence Index dropped to 53 for the fourth quarter, down from 55 in the third quarter this year. Although a reading higher than 50 reflects more positive than negative responses, CHROs may still feel cautious going into the new year, Conference Board said.
“HR leaders’ optimism is waning as recession remains on the horizon to start 2024,” Diana Scott, leader of The Conference Board U.S. Human Capital Center, said in a statement.
Looking ahead to 2024, 75% of CHROs said their main human capital management priorities are employee experience and organizational culture. After that, 74% said they plan to develop leadership and workforce capabilities.
“With a third of CHROs expecting employee engagement to decline, it is reassuring that CHROs plan to strengthen employee experience and organizational culture in 2024,” Scott said. “And while the percentage of CHROs planning to hire workers ticked up after a steep drop last quarter, nearly a quarter expect to lose workers in the coming months. It follows that an overwhelming percentage of leaders say retaining existing workers will be a key part of their talent strategy next year.”
In the survey of 194 CHROs, hiring outlook increased since the third quarter. In fact, 44% expect to increase their hiring during the next six months, up from 38% during the previous quarter. Conversely, about 19% expect to decrease hiring, down from 26%.
The outlook on retention dropped, with 22% of CHROs expecting employee retention to decrease during the next six months, up from 18% during the third quarter. About half expect retention to remain steady.
Confidence regarding engagement has declined as well, with 31% of CHROs expecting engagement levels to decrease during the next six months, up from 25% during the third quarter. About a third believe engagement will remain the same.
In addition, 56% of CHROs said attracting and retaining workers is a major priority. However, the talent strategy will overwhelmingly focus on retaining current workers (80%) rather than fostering internal mobility (46%) or adding full-time workers (20%).
Even earlier this year, employers ranked retention as a top operational priority, according to a Gallagher report. In response, companies decided to adjust their compensation, benefits and employee experience.
However, despite HR leaders’ priorities, companies may pull back on employee experience, potentially creating an “employee experience winter,” according to a recent 2024 predictions report from Forrester. Although the company predicts that employee engagement will continue to decline in general, it said leaders can buck the trend by focusing on human-centered experiences and evaluating their current efforts.
For instance, employees continue to express concerns about return-to-work policies, and in-office mandates are creating a retention problem, according to a survey by NORC at the University of Chicago. When asked about incentives, hybrid and remote workers said they weren’t interested in social events or COVID-19 safety protocols, and instead, they’d be more satisfied if they were paid more for in-person work.
