Research finds 45% of HR professionals report increased pressure to justify program spend, while just 27% believe the C-suite recognizes HR's impact on business revenue

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Dec 05, 2023, 09:00 ET

Lattice's annual State of People Strategy Report explores how this disconnect could be impacting HR teams, as well as how they are approaching AI, performance management, and more

SAN FRANCISCO, Dec. 5, 2023 /PRNewswire/ -- Lattice, the leader in people management software, today released its annual State of People Strategy Report, featuring insights from a survey of over 1,000 HR leaders and teams from companies around the world. The exclusive research explores the state of HR teams after another turbulent year and how they're setting goals and priorities for 2024. It also uncovers a fundamental disconnect between HR and the C-suite that could make it more difficult for teams to demonstrate the value of their work.

The good news: In the face of much uncertainty in the job market and the economy, HR teams are holding steady. Even as they bear increased pressure to drive results amid shifting business priorities, they are meeting their goals, feeling engaged in their jobs, and overseeing stabilizing budgets.

Despite this confidence in their day-to-day work, however, many HR teams have a problem: While they believe in HR's impact on the bottom line, many have difficulty proving it to their executive teams.

"Successful people teams and leaders are increasingly those who go beyond just taking a seat at the table to demonstrate the strategic potential of the function, implementing programs that move the needle for employees and drive business results," said Cara Brennan Allamano, chief people officer at Lattice. "This year's State of People Strategy Report reveals a missing link for some HR teams in demonstrating those business outcomes. We hope that by exploring some of the reasons behind this and how teams are overcoming it, we can help more HR practitioners prove the value of their work as absolutely crucial to the business."

From strengthening C-suite relationships to reimagining the connection between performance and engagement, there is a lot on the minds of high-performing HR teams this year. Key findings from the 2024 State of People Strategy Report include:

Performance and engagement tied as HR's top priorities for 2024

For the third year running, employee engagement topped the list as a leading priority for HR teams – but this year, it tied for first place with performance management, which saw a 40% increase compared to 2022.

Likely driven by a newfound focus from business leaders on productivity and performance in the wake of layoffs and a rocky economy, this finding also reflects the shared belief of HR professionals that engagement and performance should be considered and managed in harmony.

A troubling disconnect between HR and the C-suite

According to many of the HR leaders surveyed, there are critical gaps in alignment between HR teams and the C-suite – both in executive leadership recognizing the importance of HR programs and initiatives, and understanding the value HR provides to the business. Among the respondents:

Just 48% say their C-suites take the data from employee surveys seriously.
Only half say their C-suites recognize that a positive culture leads directly to better business outcomes.
Most worryingly, just 27% feel that company leadership believes in HR's impact on revenue.

This disconnect drives a significant difference of opinions around layoff recovery, something many teams faced this year and will continue to navigate moving forward. A significant majority of HR leaders (74%) say it takes between four months and up to a year for employee morale and productivity to bounce back after a layoff, while most say that their C-suite (66%) expects a full recovery within three months or less.

HR teams show resilience in a difficult year

Despite a challenging year of economic turbulence and mass layoffs across industries, many HR teams remain confident in their job security, budgets, engagement, and outlooks for the year ahead. Our research found:

64% of teams feel engaged, with 65% feeling confident about their job security.
79% say their budgets are the same or increasing, while 86% reported a flat or increasing headcount.

Many HR teams are also innovating in the way they get the job done: 76% are proactively looking to incorporate AI solutions into HR workstreams.

High-performing teams reveal their secrets to successful business outcomes

Lattice's research found that high-performing HR teams (those who report exceeding their goals) also have a better partnership with their C-suite leaders: 82% of these teams are confident in connecting their work to business outcomes (compared to just 58% of low-performing teams), and they are much more likely to report that their C-suite recognizes the impact of a positive workplace culture (62% vs. 44%).

High-performing teams are also:

More likely to have increasing HR budgets for next year (62% vs. 24%)
More likely to put more effort into DEIB programming and policies (39% vs. 13%)
2.6 times as likely to be using performance management software

For more insights on these trends and how HR teams can thrive in the year ahead, read the full 2024 State of People Strategy Report.

About the Survey
The 2024 State of People Strategy Report features survey responses from 1,052 HR professionals collected between July 18 and August 28, 2023. Respondents work across various industries and company sizes, with job titles ranging from HR generalist to head of people. They come from the US, Canada, England, Germany, France, and other global markets.

About Lattice
Lattice's people management platform provides interconnected and intuitive HR tools designed to drive high performance and build people-first cultures. Combining an HRIS with continuous performance management, employee engagement surveys, compensation management, and career development tools, Lattice's platform drives excellence and efficiency for HR teams by enabling them to invest in their people and accelerate business results. With offices in North America and the UK, Lattice serves more than 5,000 customers worldwide, including Slack, Gusto, Intercom, Ramp, Calm, NPR, Tide, and more. The company has ranked on the Inc. 5000 list of the fastest-growing private companies four years in a row and is rated as a Great Place to Work by 99% of its employees. Learn more by visiting the Lattice site.

SOURCE Lattice