The News: The State of People Strategy Report, which is new research released from Lattice, a provider of people management software, outlines continued challenges that human resources (HR) departments have in justifying program costs. The two groups are often not aligned in how they view the importance of HR programs and initiatives. On the positive front, HR budgets and headcount are stabilizing. More information on this research is available on the Lattice website.
HR Professionals Under Pressure to Prove Worth of Program Spend
Analyst Take: New research from Lattice, whose software platform includes capabilities for performance, compensation, objectives and key results (OKR) and goals, engagement, and development, points to the disconnect between C-level and HR professionals and pressure on HR to prove that investing in HR programs and strategies is worth the cost. The research found that 44% of HR leaders are facing increased pressure to justify program spend, while only 27% believe the C-suite recognizes HR’s impact on business revenue.
This finding is not surprising. A lot of progress has certainly been made in the employee experience (EX) segment in terms of recognizing that employees need support in a variety of ways and there are technologies that can help. But sometimes the internal “sell” is not easy.
Shifts in HR Priorities
The research pulled out comparisons of HR priorities in 2021 to 2023. While employee engagement is still a leading priority for HR teams, performance management is now viewed as an equal priority.
Other programs types have had notable drops in prioritization. According to the research, diversity, equity, inclusion, and belonging (DEIB) programs have had a notable drop over the past 2 years. In 2021, 30% of respondents said it was a top priority compared with 17% in 2023.
A Troubling Disconnect Between HR and the C-Suite
As mentioned, the most concerning data in the report was that HR and the C-suite may not really be on the same page in terms of how strong the value is to the company in instituting various HR programs. Data points include:
- Only half say their C-level executives believe that a positive culture leads directly to better business outcomes
- Just 48% say their C-suite takes the data from employee surveys seriously
- Only 27% feel that company leadership believes in HR’s impact on revenue
- The C-suite also has a different opinion on how long it takes productivity and morale to rebound after a layoff, believing that can occur within 3 months while HR leaders peg it between 4 months and a year
Not surprisingly, HR teams that are exceeding their goals, or deemed as high performing, partner better with the C-suite, reporting higher levels of agreement that the executives see the impact of a positive work culture (62%). This group also had much higher confidence in how their work connects to business outcomes (82% believe this compared with 58% of low-performing teams).
HR Teams Are Hanging in There
This year has been challenging for all levels within an organization and across the various departments. Even with that, HR leaders did report they have a decent confidence level regarding their own job security and budgets. Seventy-nine percent say their budgets are the same or increasing, while 86% reported a flat or increasing headcount. More than half of HR professionals (64%) feel fully engaged in their roles.
Key Takeaways
I always like digging into the latest EX trends and stats, and with the end of the year upon us, there has been a steady stream. My key takeaways from this bit of research are:
- Forty-eight percent of C-level executives are not taking employee surveys seriously? Voice of the employee should be table stakes at this point and the death of any VOE program is not listening and not taking action.
- Although not an overwhelming statistic, I did think it is a positive that 30% of the C-suite did see a connection between HR programs and customer satisfaction. This is something HR leaders should dig into in communicating the value proposition of these programs.
- I am not surprised on the disconnect between HR and C-suite. Yes, EX has gotten some focus over the past few years, probably more so than in recent history. But there is still a ways to go, particularly when budgets tighten up, in having dollars invested in it. As an analyst who sees the value in HR technology investments to support a better EX, I am also not disheartened, mainly because these conversations are happening and are increasingly commonplace. The connection to outcomes is just not crystal clear yet (but is getting there).
All of this points to more education needed and more data. The data piece is already here for those companies choosing to adopt technologies that help to capture their employees’ sentiment, enable communication, support positive performance management and development and reward, and recognize their employees. The hard part is tying the data together for a cohesive view and having C-suite executives buy-in to the importance of not only implementing EX-supporting technologies but also continuing to drive it forward.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other Insights from The Futurum Group:
Experience Unveiled: Talking with Workhuman’s President, Tom Libretto
Market Insight Report: Employee Experience Technology Provides Stability Amid Uncertainties
New Employee Experience Research from Qualtrics
Author Information
As a detail-oriented researcher, Sherril is expert at discovering, gathering and compiling industry and market data to create clear, actionable market and competitive intelligence. With deep experience in market analysis and segmentation she is a consummate collaborator with strong communication skills adept at supporting and forming relationships with cross-functional teams in all levels of organizations.
Sherril holds a Master of Business Administration in Marketing from University of Colorado, Boulder and a Bachelor of Arts in Psychology from Rutgers University.
