In recent months, America’s red-hot post-pandemic labor market has finally begun to cool, though substantial labor shortages remain as a long-feared recession failed to materialize in 2023. Under these more balanced conditions, a new survey of chief human resources officers finds that CHROs are increasingly confident about expanding their companies’ workforces: 44% expect to increase their hiring over the next six months, up from 38% in Q3.
Overall, The Conference Board CHRO Confidence Index fell to 53 in Q4 2023, down from 55 in Q3. Despite the improved outlook on hiring, expectations in the Index’s other two component areas – retention and employee engagement – continued to slide in Q4, driving down headline CHRO confidence.
“HR leaders’ optimism is waning as recession remains on the horizon to start 2024,” says Diana Scott, leader of The Conference Board’s U.S. Human Capital Center. “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. 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.”
The Index, conducted quarterly, was launched in Q1 2023 and is comprised of three components – hiring, retention, and engagement – as well as special questions included in each quarter’s survey. A total of 194 CHROs participated in the Q4 survey, which included additional questions on 2024 priorities. Key findings are below.
- The Index’s hiring component rose to 55 in Q4 2023, up slightly from 53 in Q3. Approximately 44% of CHROs expect to increase their hiring over the next six months, while 19% expect to decrease their hiring.
- The retention component ticked down to 51 from 54 in Q3. Nearly a quarter (22%) of CHROs expect employee retention to decrease over the next six months, while 28% of CHROs expect retention levels to improve. More than half (51%) expect levels to hold steady, up slightly from 48% in the previous quarter.
- The engagement component dropped to 52 from 57 in the previous quarter. Approximately 31% of respondents expect engagement levels to decrease, while 37% expect engagement to increase and 32% expect engagement to hold steady.
- In 2024, CHROs are prioritizing strengthening employee experience and organizational culture (75%). A close second, 74% of CHROs plan to develop leadership and workforce capabilities. Less important is addressing worker flexibility, with only 11% stating it as a priority.
- Engaging employees takes precedence over well-being, with 70% focusing on improving engagement at all levels while just 36% will focus on employee well-being initiatives.
- Only 10% of CHROs plan to bring workers back to the office full time. Instead, 52% plan to improve the productivity of hybrid work arrangements.
- More than half (56%) say attracting and retaining workers is a priority.
- Nearly two thirds (62%) plan to adjust wages to market rates, while only 35% plan to increase pay transparency.
- More than half (61%) are investing in AI to streamline HR processes, while 21% are investing in AI to create a competitive advantage.
- No CHROs plan to scale back DEI programs, though 63% plan to focus on attracting a more diverse workforce.
