The greatest issues American businesses must tackle today—talent recruitment and development, workforce health and safety, labor and healthcare costs, the future of work and even digital transformation—all share one common link: people.
Now the executives most focused on employees are saying they expect conditions to improve. A new flash poll of 134 U.S.-based CHROs conducted August 16-19 by StrategicCHRO360 in partnership with SHRM (the Society for Human Resource Management) reveals growing optimism among people chiefs that many challenges will be well behind us by this time next year. That is the key finding of our CHRO Confidence Index, which shows an increasing number of senior HR executives betting on brighter days ahead—despite their cautious stance today.
CHROs’ rating of the current business climate registered only a very small dip in August, as companies across the nation continue to grapple with a slew of issues from labor shortages to supply chain disruption and, of course, Covid-related challenges. Our CHRO Confidence Index of Current Conditions is now at 7.2 out of 10 on our 10-point scale (where 10 is excellent), compared to 7.3 the last time we polled CHROs in May 2021—before the Delta variant started to take a toll in the U.S.
Confidence has been declining across the entire C-Suite this month, as reported by our sister publications’ polling of CEOs, CFOs and CIOs—each of which have their respective Confidence Index readings. Considering the extent of some of those declines (down 7.5 percent among CEOs), CHROs’ rating this month is quite optimistic, particularly when factoring in all that’s happened over the past three months. An increasing proportion of America’s HR chiefs now forecast improving conditions for the year ahead—52 percent in August vs. 49 percent in May—surpassed only by CIOs (59 percent).
Our leading indicator, which assesses optimism when looking at conditions 12 months from now, returned a reading of 7.6 this month—down 2 percent since May but back in line with where we started the year. CHROs say they’re hopeful the challenges their companies and industries are facing today will be resolved by this time next year.
“I would have rated it a 10, as the business is excellent. Our challenge remains managing Covid and talent acquisition,” says Laura Mueller, CHRO at Convergint Technologies, a large Illinois-based security company.
“I believe this Delta variant will burn itself out, and we will be getting back to business as usual soon,” says Sandra Creyaufmiller, VP of HR for Marine Bank & Trust Company in Florida, echoing many other HR peers who believe this pandemic will soon be behind us.
Lee Brantley, CHRO at Tennessee-based consumer goods manufacturer Identity Group Holdings Corp, says that while areas of the hospitality industry his business serves “are significantly depressed as a result of Covid-19,” he expects overall business conditions to have improved by this time next year, rating his forecast for August 2022 an 8 out of 10 from a 4/10 today.
Many agree that the uncertainty of the crisis and its variants makes it difficult to navigate the current climate with great confidence. Supply chain issues, inflationary pressures, lack of skilled workers and rising labor costs are also factors polled CHROs say weigh in the balance when assessing conditions for business in the U.S.
“Workforce crisis can only improve if the federal and state governments curtail financial stimulus, unemployment compensation and Covid relief funding that makes it more appealing to remain unemployed,” says Neil Everett, vice president of human resources at Hattie Larlham, an Ohio-based nonprofit organization that works with children and adults with intellectual and developmental disabilities.
Troy Bond, AVP of HR at LCMC Health, a New Orleans-based, non-profit health organization, says low vaccination rates and the spread of Covid variants are affecting his outlook for the months ahead. “Cities having to reimplement masking and canceling large events…reduces participation and feels like we are stuck where we were a year ago,” he says, nonetheless adding that he expects things to get much better within a year’s time.
Overall, CHROs participating in our flash poll recognize the range of challenges facing American businesses but forecast a much brighter future in 2022. They are the most optimistic of their C-Suite peers, with a rating 13 percent higher than that of CEOs.
“Continued good sales despite pandemic,” is the main factor behind the senior VP of HR at a large retailer who anticipates the “staffing crisis will be over in 2022, which will also improve sales.”
The VP of HR at a DC-based real estate company agrees: “If we can keep the economy open, we believe that things will recover with gusto.”
The Year Ahead
When asked to forecast various aspects of their business, 83 percent of CHROs expect their companies’ revenues to increase over the next 12 months—and 78 percent say the same of profits. That is fittingly aligned with what CEOs, CFOs and CIOs are forecasting, and a good indication that CHROs are well in tune with their organization’s balance sheets.
Data shows a growing number of CHROs have been planning to add to their headcount in the year ahead, up 27 percent from the beginning of the year to 67 percent. While a similar proportion of CEOs (63 percent) agree, only 59 percent of CFOs are expecting to increase hiring over the coming months.
“It is encouraging to see that HR executives plan to increase their headcount over the next 12 months,” says Alexander Alonso, chief knowledge officer at SHRM and a partner in this research. “Talent recruitment and retention are going to be crucial for organizations to focus on, especially with the amount of turnover we’re witnessing in the job market right now.”
About the CHRO Confidence Index
The CHRO Confidence Index is a monthly pulse survey of U.S.-based CHROs and HR executives at organizations of all types and sizes on their perspective of the economy and how policies and current events are affecting their companies and strategies. Every quarter, StrategicCHRO360 partners with SHRM (the Society for Human Resource Management) to ask participating CHROs about their top issues and challenges for the months ahead. The results are released the following week on StrategicCHRO360.com.